Australia: Consultation Paper Released On Proposed Changes To New Zealand's Intellectual Property Laws

Last Updated: 21 August 2019
Article by Michael Caine and Scott Sonneman

The New Zealand Ministry of Business, Innovation & Employment (MBIE) recently released a consultation paper on proposed changes to New Zealand’s intellectual property laws. The consultation paper raises issues that relate to the Patents Act 2013, the Trade Marks Act 2002, the Designs Act 1953 and the use of artificial intelligence (AI) by the Intellectual Property of New Zealand (IPONZ). We discuss the proposals that relate to patents and designs below. MBIE is seeking written submissions on the issues raised in the consultation paper. The deadline for providing submissions is Friday 2 August 2019.

The following is a summary of the proposals as they relate to patents and designs.

Patents

The patents proposals relating to divisional applications and multiple/partial priorities appear the most concerning to patent applicants.

Divisional applications

Currently divisional applications filed from parent applications proceeding under the repealed Patents Act 1953 (the 1953 Act) are treated as divisional applications under the 1953 Act, and are therefore not subject to the more onerous provisions of the Patents Act 2013 (the 2013 Act) that replaced the 1953 Act. MBIE proposes to change this so that, after a specified date, any divisional application filed from an application proceeding under the 1953 Act (including from a divisional application proceeding under the 1953 Act) will be examined under the novelty, inventive step and support requirements under the 2013 Act. It is unclear why MBIE has not also specified that the enablement requirements under the 2013 Act will be not applied, and it is also unclear whether the test for priority will be the old "fair basis" test under the 1953 Act or the new "support" test under the 2013 Act. In view of New Zealand's adoption of the whole of contents novelty approach to "secret" prior art in the 2013 Act, this proposal may cause problems if the priority test for a divisional application is different from the priority test for the parent application. However, we cannot see a significant difficulty with adopting the proposal if MBIE decides to retain the same priority test for new divisional applications (filed from parent applications proceeding under the repealed 1953 Act) as applied under the 1953 Act.

MBIE is also proposing to place restrictions on the filing of divisional applications to prevent what it calls "daisy-chaining". According to the consultation paper the preferred option is to require all divisional applications to be filed, examined and in order for acceptance within 12 months of the date of the first examination report issued on the original parent application. All divisional applications will need to be filed early with an examination request. This will completely prevent applicants from maintaining pending applications in New Zealand, and will require applicants to make final decisions on claims to be pursued to grant at an early stage. If there is difficulty obtaining allowance of claims it will be necessary for applicants to request hearings with the Commissioner of Patents on any outstanding objections, since the filing of divisional applications to obtain additional time will not be permitted. MBIE points out this is the approach taken in the United Kingdom, and refers to s 30(3)(b) of the UK Patents Rules 2007. We do not believe MBIE's proposal is workable in New Zealand, however, because we expect it will give rise to a significantly larger number of hearings. IPONZ is already struggling to deal with a large backlog of active proceedings before the Hearings Office. At present, the average wait for a patentability hearing is typically about 6-12 months.

Multiple/partial priorities

The 2013 Act includes whole of contents novelty provisions for dealing with earlier filed, but later published, applications. Unfortunately, the 2013 Act also specifies that each claim can only have a single priority date. This means that the only way to achieve full recognition of multiple and partial priority claims is to split claims so that each claim only encompasses matter disclosed in a particular priority application. This problem also gives rise to the problems of poisonous priority and poisonous divisional applications. Regrettably MBIE is not convinced the best way to deal with these problems is to introduce a provision similar to art 88(2) of the European Patent Convention which allows a claim to have more than one priority date. Instead the incomplete solution proposed by the MBIE is to introduce a provision that prevents collision between parent and divisional applications. All priority related issues mentioned in the discussion paper could be addressed by introducing a provision that allows a single claim to enjoy more than one priority date.

Examination requests

Under the 2013 Act it is necessary to request examination within five years of the original filing date or within two months of issuance of a Direction to Request Examination, whichever occurs first. For divisional applications the request for examination must be filed within five years of the filing date of the original parent application. In consequence, any divisional application must be filed within five years of the filing date of the original parent application. However, the 2013 Act does not specify the fate of an application which has been filed, but where a request for examination has not been filed within five years of the original filing date. Such “zombie” applications are currently in a state of limbo. MBIE proposes to introduce a provision to provide that applications lapse if examination is not requested in time. While we are not in favour of the effective five year limit for filing divisional applications, we agree that applications should officially lapse if they cannot be progressed to grant.

Extensions of time when hearing requested

If an applicant has difficulty obtaining acceptance of an application by the 12-month acceptance deadline, it is possible to request a hearing. However, in view of the limited resources at IPONZ it is likely that the hearing will not occur (and in consequence, the decision on the hearing will not be available) until after expiry of the acceptance period. There is presently no specific mechanism for extending the acceptance deadline. Hearing Officers are currently dealing with this omission in the legislation by retrospectively extending the acceptance deadline after a hearing decision using s 230 of the 2013 Act, which applies when there is a delay caused by the Commissioner. MBIE proposes to address this problem, and currently applied pragmatic but not ideal solution, by introducing a new extension of time that would allow applicants a period of time after the hearing decision to take any action that might be needed to place the application into order for acceptance. The time period will need to be at least 20 working days, which is the current time period for appealing a decision to the High Court of New Zealand. MBIE also proposes to introduce a provision to specify that an application will lapse if a hearing request is withdrawn after the acceptance deadline has expired. Both of these proposals seem reasonable, provided they allow a sufficient time (say three months) after the decision to place the application into order for acceptance.

Utility

Under the 1953 Act a claimed invention is only considered useful if the invention as claimed meets the "promise" set out in the specification. This is referred to in the paper as the "classical utility" requirement. Accordingly, a patent can be revoked if something within the scope of the claims does not meet the promise. Object statements or statements setting out what the invention can achieve are normally used to identify the promise, and this is why we usually delete or amend these statements when we identify them in a specification. However, s 10 of the Patents Act 2013 states: "An invention, so far as claimed in a claim, is useful if the invention has a specific, credible, and substantial utility". It is unclear whether the s 10 definition encompasses or replaces classical utility when it comes to assessing utility. We would hope that a New Zealand Court would follow the lead of other jurisdictions and assess utility solely with reference to the language used in s 10. In Canada, for example, the Supreme Court recently ruled that the equivalent "promise doctrine" is not the correct approach to assessing utility under the Canadian Patent Act.1 Classical utility is a relic from the past that is inconsistent with the scheme of the 2013 Act. For this reason it may be preferable for s 10 to remain as it is. The consultation paper appears to be premised on s 10 encompassing classical utility. Accordingly, any amendments would be more likely to clarify that classical utility is still a ground of revocation.

Swiss-claims v EPC2000 claims

MBIE has given consideration to introducing provisions that would make EPC2000 claims allowable in New Zealand. However, MBIE has formed the view that such claims are broader than Swiss-claims and that broader claims could adversely impact New Zealand's health budget by increasing the amount that New Zealand pays for patented pharmaceuticals. Accordingly, MBIE do not propose to make EPC2000 claims allowable. Such claims are also not allowable in Australia.

Exhaustion of patent rights

Current New Zealand patent law does not deal with exhaustion of rights. MBIE proposes to amend the 2013 Act to provide for international as well as domestic exhaustion of rights, thereby allowing for parallel importation of patented goods into New Zealand. It would appear that New Zealand is free to make this decision in view of art 6 of the TRIPS Agreement and art 18.11 of the CPTPP agreement. MBIE points out that parallel importation would only be permitted if other requirements, including regulatory requirements and product safety requirements, were met.

Attorney General's right to intervene

Under the current law, the Attorney General can challenge the grant of a patent or otherwise intervene in patent proceedings. Further, under the 2013 Act, "any person", as opposed to an "interested person" as specified in the 1953 Act, may oppose the grant of a patent. However, in order to make it clear that the Attorney General can also oppose or otherwise seek to revoke a patent MBIE proposes expanding "any person" to "any person, or the Attorney General". It is unclear what has triggered MBIE to propose the change in language, which will not have any material effect.

Availability of documents for 1953 Act applications

According to the 1953 Act, file wrappers relating to patents and applications are confidential. For applications filed under the 2013 Act, file wrappers are publicly available. It is unclear in that regard, however, how the transitional provisions in the 2013 Act should be applied to patents and applications filed under the 1953 Act. MBIE proposes to amend the transitional provisions to clarify that the confidentiality provisions of s 91 continue to apply to patents and applications that were filed under the 1953 Act. This clarifying amendment seems appropriate because the alternative would be publication of documents that were prepared and filed under the 1953 Act, with the understanding that they would remain confidential.

Designs

The designs proposals are mainly “technical” amendments that address inconsistencies between the Designs Act 1953, and the Patents Act 2013 and Trade Marks Act 2002, and do not appear to be controversial.

Substitution of applicant

It is currently not possible under the Designs Act to record an assignment changing the applicant of a design application with IPONZ. The change of ownership can only be recognised once the design is registered. MBIE proposes to amend the designs legislation to allow for substitution of the applicant, consistent with the Patents Act.

Requirement to use IPONZ case management system

At present the requirements for documents (including applications) to be filed under the Designs Act, or documents required to be sent to a person by or under the Act, may be satisfied by sending the relevant documents by post or email. However, IPONZ no longer uses the post to communicate with applicants, and no longer accepts postal communications or emails. IPONZ instead communicates with applicants through IPONZ’s online case management facility (CMF). Accordingly, MBIE proposes to amend the designs legislation to mandate all required information and documents be filed with IPONZ through the CMF, and to similarly allow IPONZ to communicate or serve any information or document to a person through the CMF, consistent with the Patents Act.

Costs and security for costs

Under s 38 of the Designs Act, the Commissioner of Designs can require security for costs to be given if an application is made for cancellation of a registered design, or for the grant of a licence for a registered design, if the applicant (for cancellation, or for grant of a licence) neither resides nor carries on business in New Zealand. If security is not given, the application may be treated as abandoned. However, the provisions of the Designs Act are inconsistent with the corresponding provisions of the Patents Act and the Trade Marks Act, which each provide the Commissioner can require security from a party to any proceedings, including oppositions. MBIE proposes to amend s 38 so that it is consistent with the corresponding provisions of the Patents Act and the Trade Marks Act.

Hearings before the Commissioner of Designs

The Commissioner of Designs must give an applicant for registration of a design an opportunity to be heard before exercising, adversely to the applicant, any discretion vested in the Commissioner under or by the Designs Act. However, it is unclear if a person other than an applicant for registration of a design is also entitled to be heard before the Commissioner makes a decision involving the Commissioner's discretion. For example, any person may apply to the Commissioner for cancellation of a design registration, but nothing in the Designs Act requires the Commissioner to give that person or the owner of the design registration an opportunity to be heard if the Commissioner decides to refuse the request for cancellation. MBIE proposes to amend the Designs Act to provide that, before the Commissioner makes a decision involving the Commissioner's discretion, any person adversely affected by that decision must be given an opportunity to be heard. We agree with the proposed change, which as MBIE points out, would seem to be required under the principles of natural justice. The new provisions will be also consistent with the approaches in both the Patents Act and the Trade Marks Act.

Authorisations of agent

An applicant for registration of a design who appoints an agent to file the application must file an authorisation of agent to that effect. However, this requirement is inconsistent with both the Patents Act and the Trade Marks Act, which no longer require an authorisation of agent to be filed with an application. We welcome MBIE’s proposal to remove this requirement for designs applications.

Proceedings before the Commissioner of Designs

The current designs legislation provides little guidance about how proceedings before the Commissioner of Designs, such as proceedings in relation to the registrability of a design, or in relation to a request to cancel a registration, should be conducted. This contrasts with the Patents Regulations and Trade Marks Regulations, which each contain extensive and detailed provisions about how proceedings before the Commissioner should be conducted. MBIE proposes to amend the Designs Regulations to include provisions setting out the procedural and evidential requirements for proceedings before the Commissioner that are modelled on the corresponding provisions of the Patent Regulations to ensure that proceedings are conducted efficiently and without undue delay.

Please contact us if you have any questions about any of the issues raised in the consultation paper, or would like help making a submission on the paper.

Footnote

1 AstraZeneca Canada Inc v Apotex Pharmachem Inc [2017] SCC 36.

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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