Analysis: Tindall, Morgan-backed software company resigns from NZICT amid Patents Bill spat

Auckland-based sofware company SMX has resigned from industry lobby group NZICT, citing opposition to the lobby group's stance on the Patents Bill - which it sees as a reflection of NZICT being dominated by off-shore companies.

SMX makes email filtering software, and numbers Sir Stephen Tindall and Sam Morgan among its investors. Mr Morgan came onboard to bankroll a push into the Japanese market. It has also enjoyed success with giant Indian outsourcer Tata.

Yesterday, NZICT strongly backed a government back-track that saw software included under the Patents Bill. NZICT members include the likes of Microsoft, Cisco, IBM, Dell and HP, plus local high-flyers like Datacom and Gentrack and Fronde.

Most multi-national tech companies have pushed for software to be covered by the legislation, while local outfits have tended to see it as an impractical, expensive measure that hinders innovation by smaller players.

In the open letter to NZICT CEO Candace Kinser, SMX co-founder and chief technology officer Thom Hooker says in his company's efforts to satisfy investors on patent issues "the only winners were the IP [intellectual property] lawyers.

"It's great to see another Kiwi-owned company taking a stand," NZ Open Source Society president David Lane told NBR.

"It helps to underline the fact that this isn't an 'open source community vs. the rest of the world' situation. This is really a showdown between software developers vs. US multinational corporations and IP lawyer pals."

Candace Kinser responds
"Our release and comments in your recent article clearly address many of the stated concerns put forth by Mr Hooker," Ms Kinser told NBR this afternoon.

"For what its worth, today I have received a number of emails and phone calls from our members (and some who aren't) who are as small or smaller than SMX thanking us for our stance.

"We don't support pushing NZ out to sea as a solitary vessel to try and navigate global patent waters alone. We do support giving software and tech companies the choice to patent or not, as they see fit for their business needs.  This Bill is in support of both of these ideals."

She added, "It is disappointing that Mr Hooker has chosen not to contact me or the Board - that I am aware of - seeing that this debate has been going on for a long while, and has chosen to address his concerns through a third party being the media. NZICTs statement should be of no surprise whatsoever, as our position has not waivered and we always welcome dialogue with our members."


Dear Candace

SMX is one of your members and we find NZICT's recent engagement with the NZ government to convince them to change their position on software patents repugnant. As a result we are canceling our NZICT membership, effective immediately.

We feel that NZICT does not represent NZ software companies' interests, as its tier 1 membership, board and funding is derived from large off-shore companies or their local partners. These off-shore software companies have a huge amount invested in the software patent gravy train and in stifling local competition.

SMX believes that innovations in software can and do occur without the need for patents and that patents only serve to further entrench the large international software vendors' position in the market. Patents also stifle innovation, something New Zealanders are told we're good at yet NZICT would prefer to see software developers handicapped in the race to innovate? SMX has had a lot of success overseas without lodging a single patent, but how many future New Zealand startups will not succeed because of the (perceived) software patent problem?

SMX has grown beyond the startup phase but we spent a lot of time and money during fund raising rounds to satisfy our investors around software patent issues. These investigations ultimately led nowhere and invariably the only winners in this process were the IP lawyers. How many other New Zealand startups are faced with the same costly patent investigations and how many innovations will now not happen because of the extension of this bill?

As to your release today stating that " the clause would have been unique in the world", what is wrong with that? Surely NZICT recognise that New Zealand was leading the world in an innovative way of dealing with the software patent issue? This innovation has now been shutdown by the likes of NZICT and your members are only representing their own interests in this debate and not what is best for New Zealand software developers. To draw a parallel from history, what if New Zealand had not taken a position that was "unique in the world" at the time by allowing women to vote in the late 19th century?

SMX is a big supporter and user of open source software. Where would the Internet be if UCB had patented BIND, for example, the primary DNS resolver family used on the Internet to this day? Or email as described in RFC822? Software should not be eligible for patent because it strangles innovation and only works to entrench the existing patent oligarchs and SMX would like nothing to do with an organisation so diametrically opposed to our beliefs.

SMX calls on other NZICT members who have the same concerns as SMX to cancel their NZICT membership as well.

Thom Hooker
CTO & Co-founder

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