For many entrepreneurs and CEOs running fast-growing tech firms, there is perhaps no greater enemy to business than the United States patent system.
Basically, it's an expensive, out-of-date system run by a few big trolls that has cost the U.S. economy about half a billion dollars since 1990. According to a report released Tuesday, trolls (aka Non-Practicing Entities) filed 4,200 lawsuits in 2012 alone. The average cost for a start-up to defend a patent lawsuit is $800,000.
Clearly, the model is broken. As the Electronic Frontier Foundation puts it: "Patents may have been created to help encourage innovation, but instead they regularly hinder it." Some critics, like Internet billionaire Mark Cuban, say the best way to fix the system is to just get rid of software patents altogether.
Well, that's pretty much what New Zealand just did.
Of course, it's a little more complicated than simply banning every single software patent that already exists. But the new bill essentially says software itself isn't an invention in the traditional sense--and thus cannot be patented. Previously awarded patents will still stand.
"By clarifying the definition of what can be patented, we are giving New Zealand businesses more flexibility to adapt and improve existing inventions, while continuing to protect genuine innovations," New Zealand's Commerce Minister Craig Foss said.
This isn't completely without precedent. In April 2013, the German Parliament introduced a joint motion against software patents. For many here in the U.S., these court decisions represent a clarion call for American lawmakers to take action, too.
"This is a welcome trend," Adi Kamdar of the EFF wrote recently. "Though there have been many proposals to limit the harmful effects of patent trolls in the United States, the discussion has stayed away from addressing a larger, root issue: the flood of software patents. While many in the U.S. are bogged down in discussions of demarcation between what is software and what is not, the rest of the world is taking bold action."