Australia: Is New Zealand's New Patents Legislation About to Get a 'Shot in the Arm'?

Last Updated: 4 September 2012
Article by Mark Vincent and Gareth Dixon

New Zealand patent law is in the throes of reform. The original exposure draft of the Patents Bill was released in 2004 – and indeed since that time, we've penned a series of very similar articles, each entitled something along the lines of "Progress Toward New Zealand's New Patents Act".

Of course, the term "progress" has been somewhat subjective. Nearly eight years have elapsed – and we're still waiting for the new legislation to be passed. At the risk of being wrong once more, we suspect that things may be about to change. The Patents Bill may finally be getting a "shot in the arm" and prioritised by the Government. In the past week, it has gone from #50 to #7 on the Parliamentary Agenda – and as it turns out, there's even method to this madness.

The New Zealand Government has recently released its "Building Innovation" Report. Some of the key data included in the Report were a comparison of GDP per capita between New Zealand and "comparable" countries such as Australia, Ireland, Denmark and Finland over the past three decades. Suffice it to say, it did not make for "pretty reading". The remainder of the Report then focused on "how do we turn this around"?

Hopefully we all know where this is heading...

Buried on page 20 of the Report is half a page dedicated to "Improving Intellectual Property Settings". All the appropriate buzzwords and key phrases seem to have been captured: "incentivising innovation", "the Government is committed" – and so forth. However, one mission statement recognises the requirement to: "complete the passage of the Patents Bill to more closely align New Zealand's patent settings with its trading partners". In effect, this is what our profession has been trying to tell the New Zealand Government for years!

The links between foreign investment and local prosperity are well established – as is the relationship between foreign investment and a strong and effective intellectual property regime. The more idiosyncratic a country's patent system is, the less attractive it will generally be to foreign investment. To generalise slightly, two of the more idiosyncratic of the world's patent systems are New Zealand and the United States. Patentees will file in the US, irrespective. However, New Zealand is a nation of four million people – with patentees currently forced to endure too much hassle for too little reward, it is unquestionably in New Zealand's best interests to align more fully with the patent systems of its closest trading partners. In that respect, it comes as no surprise that the Patents Bill is similar in many respects to Australia's Patents Act 1990.

Now, it's just a matter of getting the Patents Bill passed...

On 28 August 2012, a Supplementary Order Paper was tabled in New Zealand's Parliament. The SOP proposes certain amendments to the wording of the Patents Bill 2008. Most are fairly insignificant and merely reflect the fact that the Bill has been effectively gestating for the past three years while the rest of the world has moved on. However, one potentially significant change comes in relation to computer software.

This is also an area what we've written on in the past. After initially proposing to allow software patents, the New Zealand Government bowed down to a well organised anti-software lobby during the public consultation process. However, the Government was then made aware that excluding software patents on this basis was actually contrary to their obligations under the TRIPS agreement. Accordingly, the "compromise" position is now that rather than excluding a computer program from being a patentable invention, only computer programs "as such" with be subject to the exclusion. The amended clause is more consistent with both overseas precedents (particularly, Europe) and New Zealand's obligations under the TRIPS agreement. The amended clause makes it clear that it is only computer programs themselves that are ineligible for patent protection. Under the revised Bill, a patent may still be granted for an invention that meets all of the criteria for patentability (for example, novelty and an inventive step) despite the fact that the relevant invention involves a computer program in some respect.

As with the ongoing saga relating to computer software, the remainder of the Bill is not "perfect" – and we've prepared a series of articles touching on its shortcomings in terms of what we perceive to be "missed opportunities" – especially as they pertain to Trans-Tasman harmonisation. That said, if it was passed "as-is", tomorrow, then we believe that the New Zealand Government would have gone some way toward meeting their stated objective of providing "effective intellectual property settings that create an environment where businesses can effectively create, manage, and utilise intellectual property".

The Bill now is awaiting a second reading. It will need to undergo a further Commerce Select Committee review and a third reading before being passed. The software patent saga may not be over yet, but the recent developments certainly suggest that we are much closer to a new patents regime than we might have thought.

Shelston IP has an office in Auckland, providing New Zealand legal advice on intellectual property matters. In addition, each of Shelston IP's Australian Patent Attorneys is dual-registered in New Zealand, where we practice extensively. We retain an active interest in seeing New Zealand's present, outdated patents legislation modernised appropriately, to the expected benefit of all stakeholders.

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.

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