Patents Bill finally introduced in New Zealand

COMMENTARY ON THE NEW PATENTS BILL

A Patents Bill was introduced to the New Zealand Parliament in July 2008. The Bill is the culmination of the Government’s review of patent legislation, begun in 1990. It will ultimately replace the current Patents Act 1953.

Significant aspects of the Patents Bill

For our life sciences and pharmaceutical clients, the most significant aspects of the Patents Bill are:

• no patent term extensions
• methods of treatment, diagnosis, and surgery on humans are not patentable
• a springboarding provision to allow production of information for regulatory purposes
• an experimental use exception to patent infringement
• abolition of pre-grant oppositions
• expansion of the ‘contrary to morality’ exception to patentability
• examination for obviousness and world-wide novelty requirements
• obligations to advise of search reports from overseas applications.

General comments

With the exception of a couple of significant developments, the Bill is essentially the same as an exposure draft bill released for consultation in late 2004.

In some ways the Bill provides a welcome update of current New Zealand practice, by bringing it into line with international practice. However, the mindset behind the more controversial changes appears to be that the public need protecting from the potential social cost of patents.

Some aspects of the Bill—no patent term extensions, retention of springboarding provisions, broadening of the contrary to morality objection to patentability—do little to create a patenting environment that is friendly to biotech and pharmaceutical companies.

Patent term extensions

Patents will have a 20 year term, which cannot be extended.

In 2003 the Government’s Biotech Taskforce recommended allowing patent term extensions to stimulate growth in the biotech sector. The Government has presumably decided that patent term extensions would upset the balance it says it is trying to strike between providing adequate incentives for innovation, and protecting the interests of the public.

Exceptions to patentability

Methods of treatment, diagnosis, and surgery on humans are not patentable under the Bill.

These exclusions codify the judicial ruling in Pfizer v The Commissioner of Patents that methods of medical treatment of humans are not patentable. It goes further, however, and excludes methods of diagnosis and surgery. The Intellectual Property Office of New Zealand (IPONZ) is already refusing claims to methods of diagnosis and surgery on the basis of statements in Pfizer. Methods of prognosis are currently patentable following a decision of the Commissioner of Patents. IPONZ is likely to rely on these new exclusions to resist any developments to patentability in this area.

Also excluded are plant varieties, and human beings and biological processes for their generation.

No pre-grant oppositions

The Bill abolishes the current procedure for opposing a patent before grant. Instead, it allows for re-examination at any time in the life of the patent, including pre-acceptance. However, the Commissioner may only re-examine for novelty and inventiveness. For novelty, the Commissioner may only look at prior published documents—that is, prior use is not relevant.

The Bill allows for revocation proceedings to be taken before the Commissioner or the court at any time in the life of the patent.

According to the Bill’s introductory policy statement, these changes are being made to ‘streamline’ the grant process by reducing cost and complexity.

Abolishing pre-grant oppositions seems at odds with the Government’s concern to keep invalid patents off the register. Perhaps the Government perceives that with the more stringent examination process, manifestly untenable patents (which currently are the only ones refused in an opposition proceeding) will not be accepted. The re-examination process will allow a form of challenge to the patent before acceptance, but only on very limited grounds. Those who object to a patent will not be able to fully argue its invalidity until after grant, at which stage they may already be infringing the patent.

It is also unlikely that challenging a patent will be cheaper under the new regime. Revocation actions before the Commissioner and the court are unlikely to differ significantly in cost, particularly in complex cases. Also, if the patentee brings a counterclaim of infringement the revocation action will have to be transferred to the court.

Springboarding and experimental use exception

The Bill retains the springboarding provision that allows patents to be worked to produce information required for regulatory purposes— for example, conducting safety or efficacy experiments..

The Bill provides that acts done for experimental purposes relating to the subject matter of a patent are not infringement, provided that they don’t unreasonably conflict with the normal exploitation of the invention. Permitted acts include determining the validity of the claims, and seeking an improvement of the invention.

This is a new development since the exposure draft was released in 2004. Case law currently provides an exception to patent infringement for experimental use, but it is not always clear when the exception applies.

‘Contrary to morality’ and Māori advisory committee

The Bill expands the ‘contrary to morality’ exception to patentability. Currently the Commissioner may refuse an application where it appears that the use of the invention would be contrary to morality. Under the Bill, an invention is not patentable if the commercial exploitation of it is contrary to public order or morality. ‘Public order’ is a term borrowed from the TRIPS Agreement, and encompasses concerns about matters threatening the social structures tying society together.

The Bill creates a Māori advisory committee. The Bill provides that the Commissioner may seek advice from the committee, or any appropriate person, to decide whether an application should be refused as ‘contrary to morality’. The committee will advise the Commissioner on inventions that are derived from Māori traditional knowledge or from indigenous plants or animals, and whether the commercial exploitation of the invention is likely to be contrary to Māori values. The Commissioner is not bound by the advice of the committee, but must consider it.

The contrary to morality provision will allow examiners to object to patents on a range of grounds, including religious or cultural grounds. We are already struggling to have claims covering stem cell technology accepted, and the situation is likely to worsen under the new regime.

The Māori advisory committee is likely to be most relevant to New Zealand companies developing products based on native plants or animals.

Other changes

The Bill makes changes that align New Zealand and international practice. These include the following:

• patent specifications will be examined for inventiveness and utility.
• patent specifications will be published at 18 months from the earliest priority date.
• the prior art base for assessing novelty and obviousness includes documents published and acts done anywhere in the world before the priority date—that is, the Bill introduces an absolute novelty standard.
• all documents on the official file of an application will be open to public inspection following acceptance of the application.
• applicants will have a duty to inform the Commissioner of search results carried out by foreign patent offices on overseas equivalent patents.
• where the claimed invention is, or involves, a micro-organism, the written description requirements in a specification will be met by the deposit of the micro-organism in a recognised depository.

What happens now?

After its first reading the Bill will be referred to the Select Committee, which will hear submissions on the Bill. Currently the Bill is fairly low on Parliament’s agenda of business, and so it seems unlikely that the Bill will reach the Select Committee stage this year.

The text of the Bill can be seen at http://www.legislation.govt.nz/bill/government/2008/0235-1/latest/DLM1419001.html?search=ts_bill_patents+bill&sr=1

Please contact Kate McHaffie or your usual A J Park contact if you have any questions about the new Bill.