Possible changes to the New Zealand Patents Act 2013

The Ministry of Business Innovation and Employment (MBIE) has released a discussion document calling for submissions about changes to New Zealand Intellectual Property laws which could be included in an IP Amendment Bill covering multiple Acts and Regulations. The document includes discussion of possible changes to the Patents Act 2013, the Trade Marks Act 2002 (discussed here) the Designs Act 1953, as well as a discussion of the role of artificial intelligence in examination (see our article here).

The specific patents topics discussed include:

  • Restricting the continued filing of divisional applications under the Patents Act 1953.
  • Restricting daisy chaining of divisional applications under the Patents Act 2013;
  • Addressing incongruities in the requirement to request examination;
  • Providing for extensions of time for examination hearings;
  • Addressing poisonous priority/poisonous divisional issues;
  • Amending the utility requirement;
  • Allowing for the use of EPC2000 type claims in New Zealand;
  • Codifying exhaustion of patent rights.

Continued filing of divisional applications under the Patents Act 1953

Under the transitional provisions of the Patents Act 2013, divisional applications from an application filed under the Patents Act 1953, will continue to proceed under the Patents Act 1953. This means it is essentially possible to keep a divisional application pending for up to the 20 year life of the patent and have that patent subject only to the lower standards of the Patents Act 1953, including local novelty, fair basis and a lack of examination for inventive step.

This topic is a continuation of a consultation document issued in September 2016 and discussed in our article here. There are still a number of divisional applications pending under the Patents Act 1953 and MBIE considers that this may be undesirable both to New Zealand based manufacturers (relying on submissions of two such manufacturers) due to uncertainty in scope and the breadth of patents which are able to be granted under the Patents Act 1953. MBIE also comments that there is a burden on the Intellectual Property Office which needs to maintain the capability to examine these applications under a different law.

The discussion document suggests three potential options:

i) No change (the status quo); or

ii) Provide that, after a specified date, it would not be possible to make divisional applications from a parent patent application that is, or is treated as, a 1953 Act application; or

iii) Provide that, after a specified date, divisional applications made from a parent application that is, or is treated as, a 1953 Act application under section 258 of the 2013 Act, will be examined under the criteria set out in the 2013 Act.

MBIE's preferred option is the third option which would continue to allow for the filing of divisional applications, but require that they meet the substantive standards of the Patents Act 2013, thus restricting the grant of broader patent applications.

Daisy chaining of divisional applications under the Patents Act 2013

Under the Patents Act 2013 it is possible to file a divisional application out of another divisional application, a process known as "daisy chaining".

It should be noted that while it is currently possible to daisy chain divisional applications, it is practically restricted to applications filed within five years of the original filing date due to an interpretation on the requirement to request examination of a divisional application. However, MBIE has suggested a change to this (as discussed below in relation to requesting examination.

MBIE considers that the ability to daisy chain divisional applications creates uncertainty in the mind of the public and businesses. They suggest that the presence of a filed, but not granted divisional application may cause businesses to decide not to introduce a new product which could fall within the scope of the divisional application if granted.

MBIE suggests there are three options:

i) No change; or

ii) prohibit "daisy chaining" entirely; or

iii) Amend the 2013 Act to provide that the fate of all divisional patent applications divided from a particular original parent application must be determined by a specified date.

MBIE proposes option iii), with a restriction that the divisional application be placed in order for acceptance by the same date as the parent application. This will mean that a divisional application can be filed at any time prior to acceptance of the parent application, whether before or after the five year deadline. However, any and all divisional applications must be accepted by the acceptance deadline of the parent application.

Incongruities in the deadline for requesting examination

The Patents Act 2013, and accompanying regulations sets a deadline of five years from the filing date for requesting examination of an application. It also allows for this deadline to be advanced to within two months of the Intellectual Property Office issuing a direction to request examination. Incongruously, the Act provides that if an applicant does not act within two months of a direction issuing, the application will be treated as abandoned, but makes no such provision if the five year deadline is reached. This has led to so-called 'zombie applications' which can never be granted but can be maintained as a pending application for as long as maintenance fees are paid.

As noted above, the five year restriction also applies to divisional applications, calculated from the filing date of the original application. This restriction has caused issues where examination on the parent application has not been conducted by the time of the five year deadline, leading to the filing of precautionary divisional applications in case the examiner considers there is a unity objection. This issue has been exacerbated by growing backlog for conducting first examination at IPONZ

MBIE proposes to remedy cure the zombie application issue, by stipulating that failure to meet the five year deadline will result in the application being abandoned. In addition, they also propose to remove the five year requirement for divisional applications and replace it with a requirement that examination be requested on filing of the divisional application.

Extensions of time for examination hearings

The Patents Act 2013 allows for an applicant to request a hearing where they disagree with how the Commissioner has exercised his/her discretion. In general this is a hearing in relation to a refusal by an examiner to allow an application to proceed (an examinations hearing). However, the Act does not give any provisions regarding the time period once a hearing has been requested. Thus arguably the Act envisages that the hearing be instituted and concluded within the normal period for placing the application in order for acceptance (12 months from the first examination report). This has caused significant problems as practically it is not usually possible to institute a hearing within this time frame, in part due to a lack of resourcing at the Intellectual Property Office.

Section 230 which relates to extensions of time due to delay of the Commissioner is currently used to extend the period for an examination hearing. However, there are questions as to how valid this may be.

MBIE has identified two options:

i) Continue to use the provisions of section 230 of the 2013 Act to extend the time;

ii) Amend the 2013 Act and/or the 2014 Regulations to provide that, where a hearing has been requested under section 208, the time allowed for putting an application in order for acceptance can be extended to a specified date after the issue of a hearing decision.

MBIE's preference is for the latter option, whereby an Applicant will given a period of at least 20 days following the hearing to place an application in order for acceptance. This would further give the Applicant time to make any amendments which may address the remaining issues at the hearing.

Addressing poisonous priority/poisonous divisional issues

New Zealand potentially has similar issues to those that were seen in Europe resulting from the "whole of contents" type citations. However, unlike Europe, where this issue was addressed by allowing a single claim to have multiple priority dates, New Zealand law is clear that a claim may only have one priority date. This means that the potential solution adopted by case law in Europe and Australia is not currently available in New Zealand.

MBIE notes that there do not appear to be any instances of poisonous priority/poisonous divisional applications preventing grant or rendering a patent invalid but asks for further information on this. This discussion document suggests that MBIE recognises the issue with poisonous divisional applications, but is less convinced that there are issues with poisonous priority.

MBIE has identified two possible options for dealing with the poisonous divisional issue:

i) Amend the 2013 Act to provide that a divisional patent application cannot be part of the prior art base for its parent application, and vice versa (an "anti-self-collision" provision); or

ii) Amend the 2013 Act to provide that the claims of a complete specification can have more than one priority date.

MBIE's preferred option is to amend the Act so that a divisional application cannot be part of the prior art base for its parent application. They suggest that option ii, allowing multiple priority dates may not clearly solve the poisonous divisional issue and have unintended consequences.

Amending the utility requirement

The Patents Act 2013 introduced a requirement that an invention have specific, credible and substantial utility. However, it is not clear that this provision over-rules the common law requirement under the Patents Act 1953 that, in order to meet the requirement of being useful, an invention must meet the promise in the specification. This so called "promissory doctrine" has recently proved problematic in Australia and has been overruled in Canada. MBIE is open for submissions on this, however they are as yet unconvinced there an issue requiring amendment.

EPC2000 type claims

New Zealand does not allow for method of medical treatment claims. However, compound for use type claims (sometimes known as EPC 2000 type claims) are not an allowable means of protecting a second medical use, since the proposed use is not considered as being limiting on the claim. This leaves Swiss-type claims as the only method of protecting a second medical use in New Zealand. Allowing EPC2000 claims would require amendment of the Act.

The Discussion Document considers whether the Act should be amended to allow for EPC2000 claims, thus realigning New Zealand law with Europe and the UK. However, MBIE is concerned that EPC2000 claims may be broader than Swiss-type claims and thus broaden the scope of the monopoly granted to a second medical use. In addition, they do not consider there is a true problem to be solved. In light of this position, MBIE does not suggest any change although further discussion is invited.

The issue of exhaustion of patent rights

The Patents Act 2013 does not deal with the issue of exhaustion of patents rights, nor was there any provision in the Patents Act 1953. This despite exhaustion of trade mark and copyright rights being dealt with in the Trade Marks Act 2002 and Copyright Act 1994. It further appears that case law further has not considered the issue in any detail in decades.

MBIE noted that the current common law position, which suggests that the rights granted by a patent are only exhausted by a sale within New Zealand is out of step with the Trade Marks Act 2002 and Copyright Act 1994 which both allow for 'parallel' importing of a product which has previously been sold overseas. MBIE further notes that it might be out of step with the position in the United States in Impression Products, Inc. v. Lexmark International, Inc which also allows parallel importing.

MBIE suggests three options

i) Do nothing (the status quo);

ii) Provide for domestic exhaustion only; or.

ii) provide for international as well as domestic exhaustion.

MBIE prefers option iii which would allow for parallel importing of goods in line with the Trade Marks Act 2002 and Copyright Act 1994.

Further Discussion points

The Discussion Document further discusses minor issues such as the ability for the Attorney General to intervene in patent proceedings, the public availability of documents filed under the Patents Act 1953; and clarifying that the abstract cannot be taken into account for interpretation and/or invalidity provision.

The issue of the Discussion Document is the first of many steps in the path to enactment of the amendments. Following the consideration of the submissions in response to the discussion paper, MBIE will make recommendations to the Government as to what changes should be made to the Act. The Amendment Bill will then be drafted and will progress through the usual legislative process which will include an opportunity for public submissions on the Bill.

The Discussion Document represents a wide ranging opportunity to consider and alter New Zealand intellectual property laws. If you wish any further information on any of the above, or wish to suggest any further changes please do not hesitate to contact us. Submissions close 2 August 2019.

We will keep you informed of any developments.

David Nowak - July 2019

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