New Zealand
Changing times for IP legislation
Mark Gavin and Libby Beadle
Russell McVeagh
The principal IP legislation in New Zealand includes the Patents Act 1953, the Trademarks Act 2002, the Copyright Act 1994 and the Fair Trading Act 1986. After years of little reform the legislation relating to trademarks and copyright has been amended in recent years. Meanwhile, the review of patent and plant varieties legislation continues with the release of the draft Patents Bill in late 2004 and the draft Plant Variety Rights Amendment Bill in August 2005. The government has also announced its intention to prepare discussion papers on a number of IP-related areas. This chapter reviews the recent proposals and discussion papers in the context of their practical effects for IP owners in New Zealand.
Patent law
Patent law in New Zealand is undergoing a major overhaul. A draft Patents Bill was released in December 2004, but at the time of writing it had yet to be introduced into Parliament. The new legislation is not expected to come into force until 2007 at the earliest.
The bill represents the most significant proposal in relation to IP legislation since the enactment of the Trademarks Act 2002. It is intended to strengthen the patent system by ensuring that patents are granted only for genuine innovations and, accordingly, that patents will be valid once granted. To do this, the bill tightens examination procedures and removes the previous presumption of patentability. An additional stated purpose is to bring New Zealand patent law into line with that of comparable jurisdictions. The key amendments proposed in the bill are discussed below.
Strengthening examination procedures
The most significant changes relate to the requirements for patentability. Under the bill an invention must be novel, inventive (ie, non-obvious) and useful in order to receive patent protection. These amendments bring the New Zealand patent examination criteria into accordance with international patent examination requirements.
Perhaps the most significant change in this regard is the shift to absolute novelty. Under the bill novelty and non-obviousness will be measured against anything that is known from use or publication anywhere in the world. In contrast, the current act uses the outdated ‘local’ novelty test, whereby only prior art available in New Zealand is relevant in determining whether an invention is novel. The bill also requires that patent applicants inform the commissioner of the results of documentary searches conducted by or on behalf of a foreign patent office in relation to a corresponding application.
The usefulness requirement has also been defined in the bill. To comply with the new definition an invention must have a “specific, credible and substantial” utility. Further, the bill provides that the standard by which patent applications are examined is the balance of probabilities, removing the current presumption in favour of patent applicants.
Most of the amendments relating to the examination process will be welcomed to bring New Zealand patent law into line with international developments. However, although to an extent the bill simply codifies existing practice, the more stringent examination procedure is nonetheless likely to increase compliance costs both in applying for a New Zealand patent and in its examination.
Exclusions
As well as the existing ‘contrary to morality’ exclusion, the bill introduces further exclusions from patentability for “human beings and biological processes for their generation” and “diagnostic, therapeutic or surgical methods for the treatment of human beings”, as well as plant varieties.
The exclusion for methods of medical treatment is in line with the 2004 Court of Appeal decision in Pfizer Inc v Commissioner of Patents. However, it stands in marked contrast to the Australian regime, which allows patents for methods of medical treatment of humans.
Removal of opposition proceedings
Publication of specifications will occur automatically 18 months from the priority date, rather than at acceptance. The bill also contains provisions for re-examination by the commissioner both pre and post-acceptance, as well as after the patent has been granted.
Probably the most controversial amendment is the removal of pre-grant opposition proceedings. Instead of opposition proceedings the bill provides for pre-grant assertions after publication and before acceptance, as well as a three-month period in which anyone may request re-examination of a patent application. Assertions are published and must be taken into account as part of the examination process. However, the grounds for re-examination are limited to lack of novelty or inventive step. Further, neither lodging an assertion nor applying for re-examination will allow a third party to become a party to proceedings. Accordingly, a number of grounds that are currently available in opposition proceedings, as well as the right to be heard, will become unavailable should the bill be enacted in its current form. While the opportunity for parties to seek revocation of a patent through proceedings at the New Zealand Intellectual Property Office (IPONZ) has been expanded, the removal of opposition proceedings appears incongruous with the stated policy of providing greater certainty regarding the validity of granted patents.
This proposal is expected to be the subject of vigorous debate in Parliament.
Term
The patent term remains at 20 years, with no provision for extension of term. This regime has been in place since 1994 when the patent term was extended from 16 years to 20 years to bring the Patents Act into line with New Zealand’s obligations under the World Trade Organisation Agreement on Trade-Related Aspects of Intellectual Property Rights.
Internationally, the springboarding provision (introduced in New Zealand in late 2002) has generally been introduced where extended patent terms are available to the original patent owner when much of the patent term is used up in obtaining regulatory approval. No doubt the omission to provide for such extensions in New Zealand will be lamented by the pharmaceutical industry.
Parallel importation
The bill does not address parallel importation. Parallel importation has been legal under the Copyright Act since 1998. Amendments to the Trademarks Act in 2003 ensured that the two regimes are consistent, so that parallel importation of genuine products does not infringe registered trademarks of an authorised distributor in New Zealand. However, neither the Patents Act 1953 nor the Designs Act 1953 contains provisions that specifically address parallel importation. While it appears that the broad rights conferred by a patent (which under the bill are extended to include importing a product) prohibit parallel importation, it would be preferable for the bill to address parallel imports expressly.
Trademark law
The Trademarks Act 2002 came into force on August 20 2003. The main changes involved in the introduction of the new act were discussed in the New Zealand chapter of IP Value 2005.
Further amendments to the Trademarks Act 2002 were introduced into Parliament on February 18 2005 as part of the Statutes Amendment Bill. Statutes amendment acts are omnibus statutes that are designed to carry out a number of technical amendments to a range of acts. Accordingly, the majority of the amendments are minor. However, the most important amendment to the Trademarks Act 2002 is outlined below. The bill is not expected to come into force until at least late 2005.
Proprietorship
The most significant amendment proposed in the Statutes Amendment Bill relates to the ownership provisions. The Trademarks Act 2002 introduced a prohibition on the registration of a trademark made in bad faith. The wording of the section is almost identical to Section 3(6) of the UK Trademarks Act 1994, and UK cases have made it clear that bad faith extends to situations where improper claims to proprietorship are made in an application.
Under the previous act proprietorship was assessed objectively: an application could be successfully opposed if the trademark had been used for the same goods and services by a prior user. On the other hand, ‘bad faith’ plainly encompasses a degree of subjectivity. The intention and knowledge of the applicant are key aspects in determining whether an application has been made in bad faith.
The proposed amendment will reintroduce the requirement that an applicant be the person “claiming to be the owner” of the trademark. This revives the wording from the Trademarks Act 1953 and reintroduces an objective test for proprietorship.
Colour marks
A recent IPONZ decision regarding J H Whittaker & Sons Limited’s opposition to Cadbury’s application for the colour purple has provided some useful discussion on applications for single colour marks in New Zealand. Cadbury, an international chocolate manufacturer, applied for a trademark for “the colour purple” in relation to “block chocolate, chocolate in bar or tablet form”.
In order to meet concerns regarding the precision of colour marks the commissioner held that applications for such marks must include a Pantone (or similar) reference. This is now required by the IPONZ Practice Guidelines; however, it will also be required for applications commenced before the guidelines were introduced.
Further, the commissioner held that while it is difficult to show distinctiveness in a single colour, it is not impossible. The difficulty was especially pronounced in Cadbury’s case as the colour mark had been substantially used in conjunction with other, more traditional, trademarks. That said, Cadbury was able to demonstrate use of the colour purple over an extended period of time (since the 1920s). It could also show a concerted strategy to educate the public that the colour purple functioned as a badge of origin for chocolate, and market surveys established that the public did in fact associate the colour purple with Cadbury. Accordingly, Cadbury was granted a trademark registration for the colour purple (PMS 2685C) as applied predominantly to the packaging of block chocolate. The practical implications of the registration will prove interesting. For example, which colours are sufficiently similar to PMS 2685C for the mark to be infringed?
Madrid Protocol
The government has recently announced that it is preparing a discussion paper on New Zealand’s possible accession to the Madrid Protocol. Sixty-six countries are currently parties to the protocol, including some of New Zealand’s major trading partners (eg, Australia, the United Kingdom and the United States). The outcome will be awaited with interest.
Copyright law
New Zealand copyright law has been relatively static following the recent readjustments to reflect the changing approach to parallel importation.
That said, the government has been considering its response to the developments in digital technology for a number of years. Amendments to the Copyright Act 1994 designed to address these developments have been drafted but, at the time of writing, were yet to be publicly released. The amendments are expected to relate to communication rights, transient copying and circumvention devices, as well as the liability of internet service providers and exceptions to liability in relation to format shifting and decompilation of software.
Fair Trading Act 1986
The Fair Trading Act 1986 is New Zealand’s primary piece of consumer protection legislation. It impacts on IP law primarily through its civil provisions, which can be used by traders to monitor and take action against the unauthorised use of trademarks and copying product get-up. It is this aspect of the Fair Trading Act which has enabled the act largely to subsume the common law action of passing off.
The government is proposing changes to the Fair Trading Act to increase the powers of the Commerce Commission, which enforces the criminal provisions of the act. Any amendments will be watched with interest.
Plant variety rights
In New Zealand, the Plant Variety Rights (PVR) Act 1987 provides protection for new plant varieties. A PVR gives the owner the exclusive right to produce for sale and to sell reproductive material of the plant variety concerned.
On August 9 2005, following a protracted review process, the government released the draft PVR Amendment Bill. As with the Patents Bill, at the time of writing the PVR Amendment Bill is yet to be introduced into Parliament, and the new legislation is not expected to come into force for some time.
The proposals are generally non-contentious and the most significant changes proposed by the PVR Amendment Bill are as follows. First, the definition of ‘owner’ is extended under the PVR Amendment Bill so that it is clear that there must be some human input into a variety for it to be protected (ie, protection cannot be obtained by mere discovery of a plant variety). Further, the rights granted by a PVR will be extended so that a rights owner can prevent others from producing, importing or exporting a protected variety. The rights will extend to varieties which are “essentially derived” from a protected variety. An explicit exception is also proposed to enable farmers to save seed from crops of a protected variety.
In a rare decision regarding PVRs, the High Court clarified the scope of a New Zealand PVR. The PVR Act provides that a PVR prevents others from “[producing] for sale and [selling] reproductive material of the plant variety concerned”. Winchester International (New Zealand) Ltd arranged a shipment of a barley variety which was protected by a PVR. Winchester argued that because it did not actually sell the barley, there could be no breach of the act. This argument was rejected. The High Court held that procuring a breach of a PVR (ie, arranging for the sale of a protected variety) also amounts to infringement of the PVR. The decision is also important as it demonstrates that exemplary damages can be awarded in the event of a flagrant disregard of owners’ rights.
Domain names
The implementation of a dispute resolution policy for the ‘.nz’ domain has taken a step forward with the recent decision to adopt and implement a procedure based on the UK Nominet model. At present, the registration of ‘.nz’ domain names is on a first come, first served basis. Disputes are then resolved by legal proceedings, usually on the basis of trademark infringement, breach of the Fair Trading Act and/or passing off.
The UK Nominet model involves a free informal mediation by a neutral third party. If this step is unsuccessful, the dispute is then determined by an independent expert, with a right of appeal to a panel compiled of three experts. Fees for the expert determinations are payable by the party seeking determination, with indicative levels of fees at NZ$1,500 to NZ$2,000 for an expert determination, and NZ$7,500 for the panel appeal.
Concluding remarks
The numerous proposals for New Zealand IP law reflect the changes in the environment in which IP rights operate. The proposals demonstrate an ongoing attempt on the part of the government to strike an appropriate balance between the rights of IP owners and the interests of consumers. Both IP owners and practitioners will await the developments with interest.
