New Zealand: Patent law change in New Zealand - five reasons why NOW is the time to act

Last Updated: 11 August 2014
Article by Jack Redfern and Gareth Dixon

New Zealand's Patents Act 2013 - Commencing 13 September 2014

Introduction

New Zealand's new Patents Act 2013 commences on 13 September 2014 and introduces higher patentability standards as well as increased official fees. A PCT national phase entry or a Paris Convention complete application filed in New Zealand before 13 September 2014 will be examined under the current, less stringent provisions and will be subject to lower official fees during prosecution. Moreover, a patent granted before 13 September 2014 will be subject to lower renewal fees over its lifetime if those fees are paid in advance. Accordingly, unless there are strategic reasons for doing otherwise, we recommend that (a) Applicants file "complete" applications/enter national phase before 13 September 2014 and (b) patentees of already granted New Zealand patents consider upfront payment of renewal fees before 13 September 2014 to save, in some instances, several thousand dollars over the lifetime of the patent.

The new Act

New Zealand's new Patents Act 2013 (the "new Act") commences on 13 September 2014 and replaces the long-serving Patents Act 1953 (the "old Act"). A patent application proceeding under the old Act is to be distinguished from one under the new Act by the filing of a complete specification in the Intellectual Property Office of New Zealand ("IPONZ") before the date of commencement of the new Act. The new Act will bring about many significant changes to the existing laws. Prospective New Zealand patentees can still file an application "early" to gain the benefits of the old Act, although only for a limited time.

Transitional provisions - reasons to file now

The transitional provisions of the new Act hold that any complete patent application (for example, a PCT national phase entry, or a Paris Convention complete application) filed with IPONZ prior to commencement of the new legislation will be examined under the old Act provisions and will be subject to the existing legislation throughout its lifecycle. Conversely, a complete application filed with IPONZ on or after 13 September 2014 will be subject to the somewhat stricter provisions of the new Act.

This gives rise to five very good reasons to act now – even if that means acting earlier than would have otherwise occurred – to file a New Zealand patent application to gain the benefit of the old Act, or to pay renewal fees in advance. The five reasons to act NOW are:

  1. The patent application will be subject to a more relaxed patentability standard.
  2. The patent application will be exposed to less official fees, as substantive examination will not have to be requested separately.
  3. The application will be examined rapidly, typically within a matter of six to nine months from the date of filing a national phase application or within one to two weeks of filing a Paris Convention application.
  4. An already granted patent will be subject to fewer renewal fees if those fees are paid prior to the commencement of the new Act.
  5. The application can be a parent to any number of divisional patent applications that will also proceed under the old Act. That is, the divisional applications, in addition to enjoying the lower patentability standards, will also allow for compounded savings in official fees.

New Zealand has been, and will continue to be, a cost-effective jurisdiction in which to seek patent protection for most technologies even after commencement of the new Act. The new Act brings many of New Zealand's patentability standards into line with those of her major trading partners. The economic rationale for doing so is that, as a net importer of technology, New Zealand requires patent legislation that encourages foreign investment and trade. Overly-broad patents granted under the relatively relaxed criteria of the old Act, it was argued, may have restricted New Zealand's economic progress. In this respect, it is well to note that New Zealand patent law is currently governed by legislation enacted shortly after the end of World War II. When considered against how the world of business and IP has changed over the past six decades, to state that the new Act was "overdue" may be something of an understatement. For instance, the old Act was based upon the UK's 1949 Act, which was repealed nearly forty years ago.

Computer programs "as such" excluded from patentability

Perhaps the most controversial public policy issue dealt with by the new Act relates to the patentability of computer software. The political machinations involved in reaching a conclusion on this subject contributed to the delay of close to four years in passing the new legislation. The earlier debate led to the new Act borrowing heavily from the substance and style of the European Patent Convention. In particular, the new legislation excludes computer programs "as such" from patentable subject matter. This, in effect, means that a computer program characterised by largely conventional programming steps is unlikely to be patentable. On the other hand, a program that tangibly affects the way in which a product works may be eligible for patent protection

Main features/points of note in the new legislation

Whereas the software subject matter aspects dominated the headlines and debate leading up to the passage of the new Act, there are several other salient features (or notable absences) in the new legislation. The provisions that appear most significant – either on the basis that they are different to New Zealand's current position, or that they are at odds with the position adopted by many of New Zealand's major trading partners, are:

  • A formal request for examination must be filed as part of the prosecution of any application filed under the new Act. The official fee for this step is expected to be NZ$500 (approximately US$450) and is not offset by any reduction in the official fee paid when filing the application. In contrast, an application filed under the old Act will continue to be examined automatically, with the examination funded from the existing filing fee of NZ$250. That is, bringing forward the modest filing costs will save considerably in official fees relative to deferring the initial expenditure until after the new Act commences.
  • Examination criteria for applications filed under the new Act will be extended to include absolute novelty and inventive step.
  • A patent application filed under the old Act when used as a "parent" for a subsequently filed divisional patent application, will allow that divisional application to also gain the benefit of the old Act. This applies irrespective of when the divisional application is filed (assuming the various formalities are complied with).
  • A divisional application filed under the new Act will very likely be subject to a five-year deadline from its antedated filing date for requesting examination, which will effectively limit the time in which a divisional application can be filed. In essence, this is similar to the recently-repealed practice of the European Patent Office, which was not well received by the broader IP industry and which did not achieve its stated objectives. Divisional applications that gain the benefit of the old Act will not be subject to this restriction.
  • The time limit to file divisional applications under the new Act is also a motivation to bring forward the filing of any prospective patent application likely to encounter a unity of invention objection before IPONZ. This will allow these applications to benefit from the old Act and to gain more flexibility in seeking protection for the different inventions. This is relevant, for example, to any PCT application presently in the international phase and for which a unity of invention issue has been flagged.
  • The status quo will continue in New Zealand concerning the absence of an extension of term for patents for pharmaceuticals. In this respect New Zealand remains at odds with the positions adopted by many of her closest trading partners, including Australia.
  • Patent applications and patents filed under the new Act will be subject to annual maintenance/renewal fees from the fourth to the nineteenth anniversaries. This change brings New Zealand law into line with the laws of many countries, including Australia. It also amounts to a notable departure from the 4-, 7-, 10- and 13-year fee schedule specified under the old Act. Interestingly, upon commencement of the new Act, all the applications pending under the old Act will also revert to an annual maintenance fee schedule once respective patents have granted on those applications. All the patents granted under the old Act will revert to an annual maintenance fee following from the payment of the next renewal fee due under the old Act. However, as is the case at present, no fees will be payable during the pendency of a patent application to which the old Act applies.
  • Methods of medical treatment of the human body will be excluded statutorily under the new Act. The net change here is likely to be negligible as such methods are presently banned under New Zealand's common law.
  • Following commencement of the new Act all patents will be subject to an experimental use exception to patent infringement. The relevant wording of the new Act states that "[i]t is not an infringement to do an act for experimental purposes relating to the subject matter of an invention (which includes determining how the invention works, its scope, or the validity of the claims, or seeking an improvement of the invention) if that act does not unreasonably conflict with normal exploitation of the invention".
  • Applications proceeding under the new Act can be refused if they are deemed "contrary to morality". This change codifies and clarifies a rather ambiguous status quo, itself resulting from past IPONZ decisions. Interestingly, a recently-proposed amendment to Australia's patents legislation contemplates a similar change.

There are also some other factors that may assist prospective New Zealand patent applicants in deciding whether or not to file early or to act early. In particular:

  • As-yet-unpublished PCT applications can be used as a basis to enter the national phase in New Zealand.
  • Existing administrative procedures will allow a newly-filed New Zealand patent application to remain unpublished until after the publication of the PCT application (or other foreign patent application) upon which the New Zealand application is derived.
  • Filing early to obtain the benefit of the old Act will involve the payment of significantly less official fees during the pendency of the application.
  • As mentioned above, an application proceeding under the old Act is distinguished from one proceeding under the new Act by the physical act of filing the complete specification with IPONZ. Unlike the situation experienced last year in respect of Australia's Raising the Bar reforms, a request for examination need not be made to ensure an application is governed by the old Act.

Given all the above it is difficult to see any disadvantage to filing early in New Zealand, with the possible exception of bringing forward some relatively modest costs. On the contrary, there appear to be several tangible advantages, such as the lower patentability criteria (resulting in broader patent claims), and lower overall fees.

Impact on Trans-Pacific Partnership

While the new Act may have been long overdue, the timing of its commencement remains somewhat imperfect. More particularly, New Zealand – along with Australia, the United States and several other Pacific Rim countries – is currently in the throes of negotiating the Trans-Pacific Partnership ("TPP") Free Trade Agreement. It is well known that the draft Agreement seeks to impose some fairly strict IP-related obligations upon TPP signatories. New Zealand's new Act stance of not offering an extension of term for pharmaceuticals, banning methods of medical treatment and purporting to impose heavy restrictions on software patents is unlikely to be acceptable to many of the TPP signatories. It is therefore conceivable that in the near future the New Zealand Government may need to make a choice: abide firmly by the content of the new Act and risk foregoing the TPP (and with it, the many economic advantages the TPP may provide); or alter many of the provisions of their new legislation to accommodate the TPP.

Summary

In conclusion, New Zealand's new patent legislation can be viewed as something of a double-edged sword. On the one hand, the new Act represents an opportunity both to patentees, who can easily avail of the old Act patentability criteria should they wish and to New Zealand at large, as modernised patent laws have been shown to encourage foreign investment. On the other hand, the new Act can also be viewed as somewhat of a threat as patents for some technologies – and especially software patents – may become more difficult to obtain.

As with any change of this nature there will undoubtedly be winners and losers. As such, prospective New Zealand patentees are encouraged to review their portfolios to ascertain which pending or proposed applications should be filed in New Zealand before 13 September 2014.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

Shelston IP has been awarded the MIP Global Award for Australian IP Firm of the Year 2013.

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