Reinventing patent law
The Patents Bill will make the most significant changes to New Zealand’s patent law in more than 50 years. Adrian Evans and Frank Callus review some of the proposed changes.
The long-awaited legislation to replace the Patents Act 1953 (the 1953 Act) had its first reading in Parliament on 5 May 2009. The announced intention of the Patents Bill (Bill) is to raise the standard of patents granted in New Zealand. Many of the changes proposed in the Bill will be welcomed by New Zealand businesses for bringing New Zealand’s patent law into line with other countries.
The 1953 Act is based closely on the repealed UK Patents Act 1949. It requires only that inventions be novel in New Zealand, and does not allow the Commissioner of Patents (Commissioner) to examine patent applications for obviousness or usefulness.
Worldwide novelty
The 1953 Act allows the Commissioner to refuse a patent application if the claimed invention is “published in New Zealand” before the application is made. New Zealand is one of the last countries in the world to require that an invention only be novel within its borders.
Publication of information on the Internet has not only made the concept of local novelty outdated, but rendered it impossible to administer. The Bill requires an invention to be novel in light of material made available anywhere in the world, whether by publication or by any other means.
Examination for obviousness
Under the 1953 Act, the Commissioner cannot, in the examination phase, refuse a patent application on the ground that the claimed invention is obvious. Obviousness is available as a ground in pre-grant opposition and post-grant revocation proceedings. This situation reflects the view, expressed often by courts both here and in the UK, that obviousness can only be determined with the benefit of expert testimony. In an apparent departure from this view, the Bill allows the Commissioner to refuse a patent application if the claimed invention is considered, by his examiner, to be obvious. This should be of assistance in reducing the number of patents granted for inventions which, although novel, are minor variations of what is already known. It will be interesting to see how examination in this area develops without the benefit of expert testimony.
Another change that may affect the approach to examination for obviousness is the proposed move away from ‘benefit of the doubt’ being given to the applicant, to the more rigorous test of the ‘balance of probabilities’. It will be interesting to see how this approach works in practice!
It is worth mentioning that the Court of Appeal in Pharmaceutical Management Agency Ltd (Pharmac) v The Commissioner of Patents [2000] 2 NZLR 529 stated that at the examination stage, an application should be allowed to proceed “unless on no reasonable view can it be regarded as meeting the requirements of the Act” (at [15]). The ‘benefit of the doubt’ rule has been valuable in allowing the broad definition of an “invention” in section 2 of the 1953 Act (“any manner of new manufacture”) to keep pace with the considerable changes in technology over the years and to protect inventions that the drafters of the 1953 Act could never have imagined, for example, inventions relating to stem cell research.
It is arguable that, given the more stringent examination criteria of the Bill, the more appropriate standard of proof is to give the applicant the benefit of any reasonable doubt about the patentability of the invention.
Examination for usefulness
The Bill also allows the Commissioner to refuse a patent application on the ground that the claimed invention is not useful. In order for an invention to be useful, the invention must demonstrate a “specific, credible, and substantial utility”. This test is intended to prevent the grant of patents for genetic material, such as DNA, about which little information is known. Most inventions are not expected to have any difficulty in satisfying the usefulness requirement.
Exclusions from patentability
The 1953 Act does not specifically exclude any subject matter from being patented, although a number of exclusions have arisen at common law. The Bill proposes to exclude the following subject matter from being a patentable invention:
Human beings and biological processes for their generation;
A method of treatment of human beings by surgery or therapy;
A method of diagnosis practised on human beings; and
A plant variety (protectable under the Plant Variety Rights Act 1987).
The Bill will also exclude an invention from being patented if the commercial exploitation of the invention is contrary to public order or morality.
Excluding methods of medical treatment of humans from patentability can create difficulties in protecting a known composition that is useful in treating a disease for which it was previously unknown to treat. In such a case, neither the composition (being known) nor the method of treatment (being excluded) can be patented. This has necessitated that the invention be claimed in a form known as a “Swiss-type” claim, for example, “The use of composition X in the manufacture of a medicament for treating disease Y”.
In Pharmac, the Court of Appeal held that Swiss-type claims are allowable in New Zealand, but stated that, given the rationale for the method of treatment exception, there should be no interference with a medical practitioner’s diagnosis and treatment of patients, “perhaps the logical approach would be to permit claims to extend to the method of treatment using the compound or composition but to require from the patentee a disclaimer of any right to sue the practitioner” (at [65]). The Court stated that this would leave vulnerable as indirect infringers those providing the product for the purpose of the new treatment.
United States patent law contains a provision preventing a medical practitioner from being sued for infringing a patent in the course of performing a medical or surgical procedure. The introduction of a similar provision into the Bill would achieve the same goal as the exclusion from patentability, but without the difficulties in claiming protection for a new medical use of a known composition.
Maori advisory committee
Importantly, the Bill attempts to deal with the concerns of Maori, and provides for a Maori advisory committee to advise the Commissioner on whether a claimed invention is derived from Maori traditional knowledge or from indigenous plants or animals and, if so, whether the commercial exploitation of that invention is likely to be contrary to Maori values.
The Maori advisory committee is an initiative unique to New Zealand patent law. An advisory committee has been advising the Commissioner of Trade Marks since the Trade Marks Act 2002 came into force on whether the proposed use or registration of a trade mark that is, or appears to be, a derivative of a Maori word or imagery is likely to be offensive to Maori. The trade mark experience has been very positive.
Third party challenges
One area of controversy is the proposed removal of the ability of an interested party to oppose the grant of a patent at a hearing before the Commissioner. Under the 1953 Act, pre-grant oppositions have been a valuable tool used by New Zealand businesses to attack and limit the scope of troublesome, overbroad patent applications before they have an opportunity to be granted. Replacing oppositions, the Bill proposes a limited re-examination process. Re-examination has been unpopular in other countries, largely due to the exclusion of the objector from the process after a re-examination has been initiated.
The Bill does not contain any provision for a hearing after a re-examination has occurred. The consequences for the patentee of an adverse report following a re-examination are severe, namely refusal of the patent application or revocation of the granted patent. Therefore, patentees may be disadvantaged by not being able to present their cases at a hearing. The absence of a hearing will also mean that no official record of the decision will be published. Under the 1953 Act, the decision that issues following an opposition hearing is published and assists in developing the patent law in New Zealand.
No extensions of term
The Bill sets the maximum term of a patent at 20 years from the filing date. For many inventions, this is an adequate period of time for the patentee to recover the costs incurred in developing the invention. However, in the case of inventions that require regulatory approval before they can be sold to the public, such as pharmaceuticals, a significant portion of the 20-year term can be spent performing the testing necessary to obtain regulatory approval. This effectively reduces the term of the patent for these types of inventions.
A notable omission from the Bill is a provision extending the term of a patent where commercial exploitation of a patented product is delayed due to the need to obtain regulatory approval. Almost all comparable countries contain a provision in their patent law that allows an extension of the term of a patent in appropriate circumstances. The absence of such a provision in the Bill is particularly disappointing for patentees whose own commercial exploitation of their invention is delayed by the need to obtain regulatory approval, as the Bill contains exemptions from infringement for an act done for experimental purposes or for the development and submission of information required to obtain regulatory approval. These ‘spring-boarding’ provisions favour generic manufacturers at the expense of patentees as they allow generic manufacturers to commercialise their own products as soon as the patent expires.
Conclusion
The Bill has been referred to Parliament’s Commerce Committee to consider public submissions on the Bill. The Committee must report back to Parliament by 5 November 2009. The Bill contains many provisions that will be welcomed by New Zealand businesses for bringing New Zealand’s patent law into line with international practice. However, there are a number of areas in which the Bill could be amended to improve the patent system both for patentees and those who wish to challenge a patent. The report of the Committee will be awaited with interest.
By Frank Callus and Adrian Evans. This article appeared in New Zealand Lawyer on 10 July 2009.
