New Zealand's Patents Bill 2008 is presently awaiting its second Parliamentary reading and is expected to come into effect from late 2012. Two changes that will surely be effected under the new Act will be a shift from local to absolute novelty and an extension of Patent Office ("IPONZ") examination criteria to include an assessment of inventive step. In theory, the balance of the "patent bargain" will be shifted in favour of the government – and the patentability threshold lifted as a result.

One consequence of "raising the bar" on patentability in New Zealand is that many applications that would have been eligible for patent protection under the old legislation are likely to be denied under the new Act. This, in turn raises the question as to whether low-level applications denied the full benefit of Letters Patent are nonetheless worthy of some measure of protection – for instance, by way of an "Innovation patent" system similar to that of Australia.

The Australian Innovation patent system is still in its infancy – but is nonetheless considered to have been relatively successful thus far. Rather than the requirement that a Standard patent defines an inventive step, an Innovation patent requires only an "innovative step" pitched such that the application differs from the prior art in a way that makes a "substantial contribution to the working of the invention". Accordingly, an "obvious" variation may still satisfy the innovative step criterion. The patent bargain is again shifted such that in exchange for offering only an innovative step, a patentee is afforded only an eight year monopoly as opposed to twenty. On the other hand, obtaining a "certified" Innovation patent is relatively cheap – and given the practical difficulties in disproving an innovative step, the limited case law has shown them to be extremely difficult to revoke. There are, of course, other relativities, advantages and disadvantages between the Standard and Innovation patent systems.

Historically, second-tier patent systems (e.g., Australia's Innovation patent, UK's defunct Petty patent and the German Utility Model) have been pitched so as to encourage local businesses to develop incremental inventions/innovations for the local market. In the context of New Zealand, "locally" can be extended to include Australia, given proximity and trade relations between the two. The majority of Australasian "locals" to whom a New Zealand Innovation patent system may be attractive (especially when operating in unison with an Australian equivalent) are small-to-medium enterprises (SMEs), who typically require a relatively swift return on a relatively small investment (which, in turn means less R&D, less "invention", and thereby less suitability to the Standard patent system).

The "old" New Zealand legislation (i.e., the Patents Act 1953) has effectively allowed many Australasian patentees an undue monopoly in the New Zealand market; this facility will likely be surrendered under the "new" legislation, where incremental innovations will be denied patent protection. Given that one of the overriding incentives of any patent system is to stimulate economic activity, it may be argued that the revamped legislation should contain provisions that protect not only the large corporates by way of Standard patents – but also, "the little guy" through adoption of a New Zealand Innovation patent.

Whilst the new legislation undoubtedly creates scope for an Innovation patent system in New Zealand, it is worth noting that a second-tier system of patent protection was considered prior to drafting of the Patents Bill 2008 – but did not "make the final cut". On the other hand, perhaps this is really a case of "too much too soon". It is generally accepted that adopting one new patent system will be challenging enough given the virtual revolution that will be required at IPONZ level. To that end, taking on two new systems at once was probably never an option. Given that the Australian and New Zealand economies are becoming increasingly intertwined, the best that local SMEs can probably hope for is a separate government review sometime in the not-too-distant future.

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