Commerce Minister Simon Power said that he had instructed the Intellectual Property Office of New Zealand (IPONZ) to develop guidelines to allow for the patenting of inventions that contain embedded software.
In a statement, Power said: "IPONZ will formulate draft guidelines and seek the views of interested parties."
The drafting process will start after the Patents Bill has been passed.
Power added: "My decision follows a meeting with the chair of the Commerce Committee where it was agreed that a further amendment to the bill is neither necessary nor desirable."
Commenting on the decision, the chief executive of the New Zealand Computer Society, Paul Matthews, told iTWire: "The Patents Bill, set to become the new Patents Act, states: 15(3A) A computer program is not a patentable invention. This is clear and unambiguous - software will no longer be patentable in New Zealand."
He added: "The side effect the lawmakers didn't want is for bona fide inventions that happen to have a software element in their implementation to be deemed unpatentable, hence being clear in the law but using guidelines to define where that line is drawn. This is as per the unanimous recommendation of the Commerce Select Committee.
"Hence, the IP Office of NZ will define guidelines differentiating systems that may contain embedded software. The reason for this is that, whilst software itself is now specifically and unambiguously unpatentable, non-abstract inventions that happen to have a software component will still remain patentable.," Matthews said.
"For instance, if an appliance manufacturer invented a flash new way of washing dishes it could still potentially be patentable even though the implementation might partially contain a software element (i.e. as part of a system, as opposed to purely abstract software).
"This removes what would clearly be a ridiculous situation where the dishwashing process was only patentable if implemented mechanically, but not if controlled partially by software."
A few weeks ago ago, there were hints that, following lobbying by pro-patent groups, New Zealand would re-examine its patents bill and go down the path of software patents. This appears to have been nipped in the bud.
Matthews said: " (The) net result: Software is unpatentable in New Zealand. Wider inventions that may contain some software in their implementation are still patentable (even though the software is not).
"Obviously the drafting of these guidelines is important, and it's important to ensure these are not obfuscated to the point of opening loopholes for software patents, so there's still some work to be done."