Australia: A week is a long time in patent law – Australia and New Zealand both move on second-tier patent systems

As reverse manifestations go, this one was pretty good. Within a week of our previous article, which effectively said progress toward New Zealand's proposed second-tier Advancement patent had stalled, it then resumes in the very next Parliamentary session!

Meanwhile, across the Tasman, draft legislation that purports to cull the Innovation patent system has re-emerged.

This article will be necessarily short – all we really need to cover is what's happened over the past week – but what a week it's been...

New Zealand: first reading resumes – but is again "interrupted"

As readers may recall, a Private Member's Bill ( Patents (Advancement Patents) Amendment Bill 2018) was tabled in New Zealand's Parliament on 5 April 2018. A stroke of good fortune saw it drawn from a ballot system and its first reading commenced on 16 May 2018. However, in the time available, only two of the eleven scheduled speeches were completed – and the first reading was "interrupted".

On 25 July 2018, the first reading resumed. However, it was again interrupted with the final two speeches still to come. Slow progress, but progress nonetheless.

When will the first reading continue/conclude?

Given the nature of Private Members' Bills, there remains scope for it to "yo-yo" up and down the agenda for quite some time. However, the fact that the first reading resumed after a relatively brief interruption suggests a strong resolve on the part of Parliament to move this Bill on to the next stage – whatever that may be.

What is the next stage?

The next stage is binary – sink or swim, depending upon how the Bill is received in Parliament. As we'd suggested previously, there was a strong indication that the (governing coalition majority) Labour party would not support the Bill, which on a purely numerical basis, means that the legislation's only chance of survival is for the (governing coalition minority) New Zealand First party to cross the floor. Based on its Deputy Leader's speech during the resumed first reading, it's safe to infer that the coalition will not be breaking ranks. The Greens (confidence and supply agreement with coalition) also appeared to keep their end of the bargain.

On this basis, and at the risk of stating the obvious, the odds of the Bill passing muster don't look great. If Members vote as foreshadowed, the result will be 63-55, against. And that's just to ensure passage to the next stage of the legislative process – the Select Committee phase.

Meanwhile, across the ditch in Australia...

Probably more by coincidence than design, Australia's death-row Innovation patent has been in the news again. We've been following New Zealand's Advancement patent and Australia's Innovation patent in tandem due to an enduring interest in the Trans-Tasman "Single Economic Market" harmonisation initiatives, which date back to 2009. The end goal of the SEM reforms, as the name would suggest, is to create unitary market conditions on both sides of the Tasman. Save for the common currency and the obvious differences in respect of scale, the SEM reforms seek to develop the Australia-New Zealand common market along European lines. Under SEM conditions, it would be somewhat incongruous to encourage innovation in Australia by way of the Innovation patent, but not to have a New Zealand equivalent (and vice versa).

So, what's happened in Australia over the past week?

Readers may recall that Australia's Innovation patent had been on death row, but then received something of an Easter resurrection, when clauses providing for its abolition were mysteriously removed from legislation tabled in Australia's Federal Parliament on 28 March 2018. As proponents of the Innovation patent system, and active lobbyists for its retention, we were hopeful that this signalled a change of heart on the part of the Australian Government.

Unfortunately, however, another reverse manifestation appears in progress and Patentology reported earlier this week that the Innovation patent is once again on the chopping block under a recently-published exposure draft, the Intellectual Property Laws Amendment Bill (Productivity Commission Response Part 2 and Other Measures) Bill 2018. The proposed measures are the same as they were previously – in other words:

  1. The legislation is passed into law on "date-X"; it takes effect from "date-Y", which is 12 months from date-X.
  2. At any time prior to date-Y (e., between now and date-X, and then between dates X and Y), new Innovation patent applications can be filed. In other words, nothing changes until the legislation takes effect on date-Y.
  3. As of date-Y, no new Innovation patent applications can be validly granted. However, an existing standard patent application (having a filing date prior to date-Y) can still be converted into an Innovation patent, or can have a divisional Innovation patent filed from it. With Innovation patents having an 8-year term, it will be appreciated that under the proposed system, all Innovation patents will have expired by "date-Z" (effectively, date-Y+8).

The proposed transitional arrangements also give rise to another interesting consequence: added matter restrictions. An Innovation patent claim having a priority date on or after date-Y cannot be validly certified. This guards against effective US C-I-P practice such that a claim reliant on added subject matter may not be entitled to its original priority date; if its revised priority date falls after date-Y, the claim cannot be certified following examination and is thereby not enforceable at law.

A coordinated approach across AU/NZ Governments, or mere coincidence?

Inevitably, the latter. Conspiracy theories outlining coordinated parliamentary schedules tend not to hold much water. However, if it's mere coincidence that sees second-tier patents regimes being considered simultaneously across Australia and New Zealand, then, as proponents of such regimes, we'll take it.

Next steps

In New Zealand: the first reading of the Advancement Patents Bill needs to be completed and voted on. As noted above, the end may come swiftly and relatively painlessly.

In Australia: the exposure draft is open for public submission until 31 August 2018. One would anticipate a spirited debate. The worst-case scenario is a slow, painful death as outlined above.

As always, we'll keep readers duly informed of developments.

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 ranked one of Australia's leading Intellectual Property firms in 2015.

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