The discussion paper on the IP Amendment Bill was issued recently and submissions are being received at the moment (details here).
I’m going to do a series of posts highlighting the key issues in each of the sections of the discussion paper, starting with patents.
Daisy-chaining of divisionals is keeping the old Act alive on life-support
If I had to put money on the most pressing issue from IPONZ’s perspective, I would guess the daisy-chaining of divisionals under the 1953 Act.
In broad terms, the transitional provisions under the new Act provide that where a patent application was filed before 14 September 2014 but a divisional was filed after that date, the divisional is treated as being made under the old Act. This is advantageous to applicants because the standards of patentability under the old Act were more lenient.
Further divisionals from those original divisionals are also treated as being made under the old Act. As matters stand, we could end up having 1953 Act divisionals popping up until 2034! It must be a logistical nightmare for IPONZ. It has had to bring in a huge number of new patent examiners to deal with the 2013 Act examination standards, and now it also has to get those new examiners up to speed with the provisions of the old Act as well, because daisy-chaining means that the old Act could potentially be relevant for such a long time.
To make matters even more complicated, the decision in Xyleco, Inc [2019] NZIPOPAT 7 shows that where there are question marks as to whether a divisional is fairly based on the original application, it is not always easy to tell whether the divisional should be dealt with under the old Act or not. Things can get very messy.
My suggestion would be to get any further divisionals prepared soon, because I think a cut-off date for 1953 Act divisionals is highly likely to be imposed.
Drop-dead provision: s 71(1)
For applicants, one of the most pressing issues must be the “drop-dead provision”: s 71(1). Section 71(1) provides that an application must be in order for acceptance within 12 months of the issue of an examination report. If it is not in order at that time, the application is void.
Unfortunately, s 71 just does not work in situations where an applicant has requested a hearing, because there will almost never be time for a hearing within the 12-month time frame (particularly at present, as there is currently a lengthy backlog of cases). The Australian Patents Regulations allow a period of three months from the date of the Commissioner’s decision on an examination hearing for an application to be placed in order. New Zealand has no such equivalent.
The usual process in the lead up to a hearing is a series of back and forth exchanges between the applicant and IPONZ. Typically, some issues will be resolved, leaving a small number of issues in respect of which an impasse is reached. The exchanges of correspondence will have already eaten into the 12-month time-frame. By the time an applicant requests a hearing, there is insufficient time left for a hearing to be held and a decision issued.
This is precisely the situation Assistant Commissioner Casey QC grappled with in Biocon Ltd [2018] NZIPOPAT 2. In that case, in order to avoid obvious prejudice to the applicant, she pressed into service the only available tool: s 230. Section 230 provides for time limits to be extended if they cannot be met due to a delay by the Commissioner.
The Assistant Commissioner said:
The circumstances of this case however illustrate that the radical change in position from the 1953 Act may not have been fully appreciated by practitioners. Nor has IPONZ adopted a practice of urgent examination hearings to ensure that objections can be challenged and, if upheld, addressed within the 12 month period. …
…
While it is up to the applicant to ensure that they comply with the processes and requirements of the Act, I am concerned that in this instance the lack of clarity…may have caused prejudice to these applicants. They have expressly sought an amendment that appears to address the objection raised by the examiner, apparently without realising the implications of the new regime outlined above. For that reason, I am prepared to exercise my discretion under s 230 to further extend the time period under s 71 to allow the examination hearing process to continue, and under reg 156 to direct that the examination hearing be adjourned for the applicants to file their proposed amendment.
It is clear from this passage that the band-aid might have worked once, but it isn’t going to be a long-term solution. We need a legislative fix.
Exhaustion of rights/parallel imports
For the country as a whole, probably the most significant issue is the exhaustion of rights. Both the 1953 Act and the 2013 Act are silent on this issue, and so it isn’t clear whether parallel imports of patented products would amount to patent infringement. This is something of an anomaly, as both the Copyright Act and the Trade Marks Act allow for parallel imports without infringing copyright or trade mark rights.
New Zealand is a net importer of patented products. According to the issues paper, about 90% of New Zealand patents are granted to foreign applicants, so allowing for parallel imports is likely to lead to a net financial gain for the country.
At the moment, the discrepancy between the Patents Act and other legislation gives room for an argument that Parliament intended a different test to apply to patented products. This loophole should be closed.
Submissions
Submissions are due by 5pm on Friday 2 August 2019.
I get the feeling that patents are a high priority for MBIE (on a crude, by numbers analysis I see that 55 pages of the issues paper are devoted to patents, 19 pages to trade marks, and 5 pages to designs), so if this is your area, get involved.
