It is a major piece of legislation and could change the way we know software. It is a move that is expected to improve the system and drive further innovation. The New Zealand parliament on Thursday passed legislation that bans software patents. The motion was passed by a 117 to four vote and followed five long years of parliamentary debate. However, the legislation will only affect new patent applications. It means that existing software patents in New Zealand will continue to remain in force.

Passing the bill, the country's parliament specified that a computer program "is not an invention", and therefore software is not eligible to be patented under the Act.

The legislation further states that a patent claim "relates to a computer program as such if the actual contribution of the alleged invention lies solely in it being a computer program".

The importance of this piece of legislation can be gauged by the fact that the Washington Post covered the story saying, "New Zealand just abolished software patents. Here's why we should, too."

The Post, in its report states that, although most people cite problems with patent trolls or low patent quality. Referring a recent study by the U.S. Government Accountability Office, the Post argues the real problem is that patents on software do not work. Post says that "most of the patent system's problems are really problems with software patents."

IT professionals and legal experts in New Zealand have welcomed the new legislation.

News reports quoted, the Institute of IT Professionals chief executive Paul Matthews as saying that legislation sent a clear message that New Zealand would not tolerate "the vexatious practice of patent trolls," who patented software with the sole purpose of bringing costly litigation against inventive technology companies.

"The patents system doesn't work for software because it is almost impossible for genuine technology companies to create new software without breaching some of the hundreds of thousands of software patents that exist, often for very obvious work," Matthews was quoted as saying.

With regard to process patenting, the New Zealand legislation however clarifies that, processes in general will continue to be patentable, provided they meet the relevant patent criteria for processes. It pointed out that computer programs that do not implement a patentable process will no longer be patentable "as such".

Reports say its implication suggests that hardware will still be patentable even if it includes a computer that runs software, but the mere fact that a piece of software code runs on a general purpose computer will not be enough to see it awarded a patent.

Conveying industry opinion, the media quoted New Zealand MP Clare Curran, involved in the patents debate, as saying that the heads of software firms complained that "obvious things" were being granted software patents. Such trends, "in general software patents," industry feels "are counter-productive".

"Patenting software would have stifled the local industry and favoured largely foreign companies by allowing them to use monopoly rights over inventions inside New Zealand to discourage competition and innovation," Curran said in a statement.

Supporting the legislation, New Zealand Commerce minister Craig Foss hailed the passage of the bill and said it was a "significant step towards driving innovation in New Zealand."

It is believed that the new patent regulation will help several overseas IT companies which wanted to transfer their business to New Zealand because of the more favourable environment for software development.