Trade Marks (International Treaties and Enforcement) Amendment Bill

Part 1 contains amendments to the Trade Marks Act to give effect to the Government’s decision to ratify the Singapore Treaty on the Law of Trademarks and to accede to the Nice Agreement Concerning the International Classification of Goods and Services for the Purposes of the Registration of Marks, and the Protocol Relating to the Madrid Agreement Concerning the International Registration of Marks. Look, effectively, the aim of these international treaties is to reduce the business compliance burden for businesses registering trademarks, especially where businesses are seeking to register their trademarks overseas.

Part 1 also amends the Trade Marks Act to augment police enforcement of the criminal offence provisions relating to, and dealing with, counterfeit trademarks and counterfeit goods—something members will, no doubt, be turning their minds to for the Rugby World Cup, as part of that particular incentive. It does this by empowering the Ministry of Economic Development and the Customs Service to enforce those offences. Enforcement officers of the Ministry of Economic Development are being provided with a warrantless ability to enter places that are open to the public and to search and seize counterfeit goods where they have reasonable grounds to believe that those goods are evidence of a criminal offence under the Trade Marks Act. Customs officers are being provided with a warrantless ability to seize counterfeit goods under their control at the border as evidence of an offence. These investigative powers for customs officers will augment their existing powers available under the Customs and Excise Act 1996.

My memory is that all parties in the House supported this legislation through its first and second readings, so I imagine that we will be dealing with a swift and well-clipped Committee stage on this bill.

Finally, Part 1 introduces a number of minor amendments to the Trade Marks Act to clarify the intent or effectiveness of particular provisions, to include a small change to border protection measures for preventing the importation of trademark-infringing goods, and to increase the efficiency and effectiveness of administration by customs. Included is an amendment to allow customs to temporarily suspend enforcement of a border protection notice from a trademark owner under certain conditions.

I would like to acknowledge the accuracy of the remarks of the Minister of Commerce but regret they were not delivered with more passion. The main challenge facing the Committee this evening is to not fall asleep.

The Trade Marks (International Treaties and Enforcement) Amendment bill is important. It is important legislation, but it is, in the eyes of many, not as interesting as watching paint dry, as the saying goes. The reason it is important—well, all of the legislation is important—is that we are talking to Part 1, which is about trademarks. The legislation, by the way, was introduced under the previous Government, and I do not know whether I introduced it; it might have been Lianne Dalziel. I cannot remember. Is she here? She is not. One of us introduced it, it went off to a select committee, and it took 3 years to come back. But there you go!

The short of it is that we need to update our trademarks legislation simply because it is a bit of a moving feast. We need to keep up with changes in international treaties, etc. In the case of trademarks, I am just trying to remember the names of the treaties. I think it is the Protocol Relating to the Madrid Agreement Concerning the International Registration of Marks (Madrid Protocol). Is it not the Singapore Treaty on the Law of Trademarks, as well?

💬 Dr Paul Hutchison: Yep, that’s right.

It is? Oh well, good on me. So the Madrid Protocol and the Singapore treaty make up the international trademark registration system. If I am correct, the role of the Singapore treaty is to reduce some of the compliance costs and make things a little simpler for trademark registration offshore. It is for the defence of trademarks offshore, for indeed there is no point in having one’s trademark well known if it is going to be dicked over by some counterfeiter in an offshore market. But we will get to the idea of the importance of strengthened enforcement in due course.

For the moment we say to the Government, straightforwardly, that we will be voting in favour of this legislation, and that we will be seeing its passage through this House in a timely, but not necessarily speedy, manner. My instructions are yet to arrive in that regard—

💬 Clare Curran: Keep going.

Keep going? But we do know that unless trademarks legislation is maintained to be roughly consistent with the legislation where international conventions, treaties, and agreements get to, then sooner or later law falls behind practice. We are, of course, following these treaties already; it is in the nature of the beast that they are agreed to by parties, that they are put into place, and that the law follows, rather than the other way round, as I understand it. None the less, failure to keep up with the changes by laws means that a certain amount of dissonance arises between what is practice and what is New Zealand law.

I will now get to some detail. We have changed the powers of the police. I think that what we have done with the cops is that we have said in new section 134X, inserted by clause 17—this is a very large piece of legislation; it runs to about 80 pages—that the police have all of the powers that are currently accorded people like customs officers. I see that the officials are looking at me in a bemused sort of a way, which is what officials do when they disagree. But I think the police have been given the powers to exercise all of the rights that customs officers have. In other words, we have a standing army that is made bigger by this legislation when it comes to the point of enforcing trademark miscreant behaviour.

💬 Dr Paul Hutchison: How long has he got to go?

💬 Jonathan Young: Too long.

💬 Dr Paul Hutchison: 3½ weeks.

Three and a half weeks to go—no problems! So that is helpful, because it means that we will have more people able to do the enforcing.

It is a matter of fact that the Ministry of Economic Development, which is responsible for this legislation, is also responsible for a thing called the regulatory impact statement. There is a little rule in this little country, which is that when we have a piece of legislation we have to add to the back of it the regulatory impact statement. The Ministry of Economic Development folk go around and they beat up on other departments for having insufficient or inadequate regulatory impact statements. And they do it rather well in a jocular and pleasant way, and they offer to assist other agencies to make sure their regulatory impact statements are up to scratch. The reason for having regulatory impact statements is that we—ordinary members of the public here representing the people of New Zealand—are able to work out whether this legislation is, in a regulatory sense, a bit of an impost. That is very, very important to the ACT Party, because that party does not like heavy-handed regulation and it is committed to getting rid of heavy-handed regulation, but so far it has made precisely no progress. It does not matter, however, because the regulatory impact statements are part and parcel of our legislation these days.

So when we have a regulatory impact statement that has been written by the authors of the standards of regulatory impact statements, the question is how good they are at meeting their own standards. Answer—pretty damn good! I had a good old look at that regulatory impact statement, and looked at the options about doing it this way or doing it that way. There is a certain formulaic way in which they have put it together, because that is what officials do, but I would just like to note in passing that the Ministry of Economic Development has managed to put together a reasonable regulatory impact statement; I have seen a lot worse. So I say good on the ministry and I wish it well.

There are, apparently, some Supplementary Order Papers in respect of Part 1. I do not quite know what they do, but when I sit down I shall read them and see whether I can work it out. I see they are about commencement clauses, and so forth. One is completely nonsensical to me, but I will try to work it out. I therefore intend to resume my seat presently, and I hope that we will be able to hear further from members on the Government benches, especially from Dr Paul Hutchison, known affectionately as “Dr Paul”, which is why I said that in a low voice. We hope that he might be able to get to his feet and tell us a little more about trademarks, so that we can all be engrossed by the matter.

I am pleased to take a call on this important bill, the Trade Marks (International Treaties and Enforcement) Amendment Bill. As my colleague Pete Hodgson quite eloquently put it, this is actually very important legislation. We support it, as we support important pieces of legislation, primarily because, as he pointed out, this bill was brought into the House while Labour was still in Government. Here we are 3 years later and it is back in the House.

I do not think there have been massive problems in not having this legislation in place, but the importance of this bill is that it protects much of New Zealand’s intellectual property. When we look at New Zealand today and where it is going, we see that much of New Zealand’s wealth is derived from intellectual property. That is both in the agricultural sector and, more important in some ways, in the way the high-tech and telecommunications sector is going. New Zealand companies in this sector add about $6.5 billion worth of revenue to the country, and nearly 80 percent of that is exported in the form of ideas and pieces of property. It creates enormous wealth per the individual who is involved in constructing this intellectual property, whether a product, a piece of software, or an idea. The figure is nearly $300,000 per person in the high-tech sector. It is of great value to New Zealand. Therefore, protecting our intellectual property and ensuring that is reflected in our legislation is extremely important.

I will move on to the purposes of this bill. The purposes are obviously in relation to the three treaties the bill brings into effect. The Protocol Relating to the Madrid Agreement Concerning the International Registration of Marks (Madrid Protocol), first of all, is a protocol that provides a system that simplifies the procedures required for a trademark owner to protect their trademarks overseas. Obviously that is important. Joining that protocol will provide New Zealand trademark owners with the possibility of having their trademark protected overseas by filing one application for registration of a trademark with the Intellectual Property Office of New Zealand, and designating one or more overseas countries that are also members of the Madrid Protocol where protection is sought. So it is a reciprocal arrangement between New Zealand and other important countries where we would like protection as well.

The second of the agreements is the Nice Agreement Concerning the International Classification of Goods and Services for the Purposes of the Registration of Marks, which provides a classification system for goods and services for the purposes of registering trademarks. The Nice classification is widely known and widely acknowledged. Those countries that are party to the Nice agreement must apply the Nice classification to registered trademarks, although those countries not party to it may still apply the Nice classification. New Zealand has applied the Nice classification to registered trademarks for many, many years, so we have acknowledged it. It is updated on a five-yearly cycle, and parties to the Nice agreement meet on a semi-regular basis to consider whether there need to be or should be amendments to that classification. By becoming part of the Nice agreement, New Zealand would be permitted to participate in those meetings where amendments are considered and influence the future development of the Nice classification so that it best meets the needs of New Zealand businesses. In this context the bill will clarify the latest edition of the Nice classification that must be used with all new applications for the registration of a trademark.

Once again, it is New Zealand coming into the context of a series of treaties—the last one I will talk about is the Singapore Treaty on the Law of Trademarks—so that New Zealand is covered under international law. Lastly, as I said, there is the Singapore treaty, which aims to make national trademark registration systems more user-friendly and to reduce business compliance costs for trademark owners.

Part 1 of the Trade Marks (International Treaties and Enforcement) Amendment Bill refers to amendments to the Trade Marks Act 2002, and specifically allows New Zealand to become a party to a number of treaties, as has been outlined by previous speakers.

Clause 5 deals with the classification of trademarks by repealing section 31(1) and substituting the following subsection (1): “Goods and services must be classified, for the purpose of registration of a trade mark, according to the edition of the Nice Classification in effect at the time of application for registration of the trade mark.” The Nice Agreement Concerning the International Classification of Goods and Services for the Purposes of the Registration of Marks resulted from the Nice Diplomatic Conference of 1957. As my colleague David Shearer said, the Nice classification is updated every 5 years. Given that it has been around for quite some time, New Zealand has been applying the principles of the Nice classification, and this bill will codify and formalise it in the legislation.

The Nice classification is an authoritative classification of goods and services for use in registering trademarks and service marks. It is a list of 45 classes of goods and services, thousands of specific types in each class—which I will not be tempted to list—and has detailed descriptions of most of those. [Interruption] It is good to hear that Rahui Katene is listening; somebody is. The Nice classification is currently in use in 148 countries. The advantages of using the classification system are that national trademark offices have the ability to apply trademark applications in a coordinated manner with reference to that single classification system. Filing of trademarks is thereby greatly simplified, as the goods and services to which a given mark applies will be classified in the same way in all countries that have adopted the system. That the Nice classification system exists in several languages also saves applicants a considerable amount of time in filing their work internationally.

In January 2009 there were 83 signatories to the Nice agreement. These countries have officially adopted the classification system and apply it in the registration of trademarks. In addition, 65 non-member countries, four organisations, and the international bureau of the World Intellectual Property Organization also use the Nice classification. I am guessing, not having been a member of the Foreign Affairs, Defence and Trade Committee, that we fall into one of those 65 non-member countries and this bill will allow us to become one of the member countries. Therefore, when the classification system is next reviewed, we will have a much greater opportunity to have a say in the way that the classification system takes place.

One of the other protocols that has been codified in Part 1 of the bill is the Protocol Relating to the Madrid Agreement Concerning the International Registration of Marks (Madrid Protocol). It provides a system that simplifies the procedures required for trademark owners to protect their trademarks overseas. Joining the Madrid Protocol will provide New Zealand trademark owners with the possibility of having their trademarks protected overseas by filing one single application for registration of a trademark with the Intellectual Property Office of New Zealand, and designating one or more overseas countries who are also members of the Madrid Protocol where protection is sought. Overseas trademark owners would also be able to use the Madrid Protocol to protect their trademarks here in New Zealand, so it is a two-way process. Joining the Madrid Protocol would also simplify the subsequent management of overseas-registered trademarks. It is possible to renew or record subsequent changes to the trademarks registration in each country using the Madrid Protocol through a single procedural step, rather than making a request directly in each country.

The bill introduces amendments to the Trade Marks Act to facilitate the implementation of the international registration regime for trademarks under the Madrid Protocol, including providing for regulations to be made for the purposes of giving effect to New Zealand’s obligations under the Madrid Protocol.

The third treaty that is being ratified is the Singapore Treaty on the Law of Trade Marks, which other members have referred to. It aims to make national trademarks registration systems more user-friendly and to reduce business compliance costs for trademark owners. It does this through the simplification and international harmonisation of national registration procedures.

Thank you for the opportunity to speak on Part 1 of the Trade Marks (International Treaties and Enforcement) Amendment Bill. As we have heard, Labour supports this bill, and, as my colleague the very esteemed Hon Pete Hodgson has said, it is a moving feast and it is important. It is important for a range of reasons.

I would like to make a couple of points about this bill. The first is that it is interesting that the bill was first introduced into the House in, I think, September 2008, and had its first reading at the beginning of 2009. I was just flicking through some information about it and noted that an article in an esteemed publication, I think it was the Independent, talked about how the bill was going to be passed in 2009, and I note that it has taken a while to come back and finish its hearing in the House.

The bill has not had a lot of public discussion. There has been a bit of public discussion on it, but when we actually contrast it with another piece of legislation that dealt with copyright issues that has been before this House and was recently passed, earlier this year, which certainly did have a lot of public discussion on it, it is quite interesting to make that contrast. The contrast I make is essentially a positive one in the sense that this bill is about harmonising our laws with international standards, which makes a lot of good sense. It is about New Zealand playing its part and leading some areas of standards development in this area. It is about enabling innovative New Zealand companies to more easily protect their trademarks in multiple jurisdictions. Those are really important things.

The key to that—and the thing that I am trying to point out here—is that it is what we should have been doing with the other controversial legislation that came before the House in this term and, admittedly, in the previous term, particularly around harmonising and playing a part in leading the way, enabling innovation to occur, and encouraging our own business community. That legislation is still surrounded by controversy, because it has not been dealt with or acknowledged as being part of a much bigger issue, which is about how to deal with a very fast-changing environment, how to deal with private sector involvement in it, and how to deal with the role that the Government should play. Those are really important points, because, essentially, we are still confronted with that issue in this country. We have passed legislation that is essentially propping up failed business models.

I am making that point in relation to Part 1 of this bill, because there is a growing problem around the world relating to the manufacture, distribution, and sale of counterfeited goods and pirated works for the purpose of selling them—not for the purpose of downloading them and then sharing them with our mates or watching them ourselves, but accessing them and then selling them. The World Customs Organization estimates that counterfeiting and piracy accounts for 5 percent to 7 percent of global merchandise trade, which I think was estimated as being up to US$500 billion. This comes from the Ministry of Economic Development regulatory impact statement on this bill. The World Health Organization estimates that up to 10 percent of medicines sold worldwide are counterfeit, which is extraordinary when we think about it. Goods typically targeted by counterfeiters are those items sold at premium prices and well in excess of the cost to manufacture.

I move, That the question be now put.

That was an outrageous contribution! I think it is time for the Committee to become more aware of the import of this legislation and of the issue of counterfeiting as it affects New Zealand.

💬 Dr Paul Hutchison: What’s the name of the bill?

How does it relate to the Trade Marks (International Treaties and Enforcement) Amendment Bill? The whole idea of copyright and trademarks is to deter counterfeiting and to enable people to enforce action against those who would counterfeit. How many infringing items were detained by customs officers in 2004-05, I ask the member opposite. Answer: 185,000—185,000. How many a day is that? It is 500 counterfeit items seized at the border in any one day by our enforcement agencies. And the member thinks that this legislation should be passed through without due comment on their efforts to sustain the truth and honesty of our merchandising system by ensuring that we have good enforcement of copyright and trademark laws!

However, the problem is not getting any easier. By the following year—2005-06—that figure of 185,000 had risen to 260,000. Members get the idea that this is a serious issue. What did the Retailers Association have to say? These are the people who hock off this stuff, you know. They do not make it; they are at the other end of it. They are the people hocking it off, and so that they can lie straight in bed at night, they want to hock off only the real McCoy. No counterfeits for them. They want a tough approach to counterfeiting, do the retailers. That is a little surprising. I would have thought that the manufacturers and owners and so on were the people who want it to be really tough. I would have thought that the retailers really could not care as long as they get cash for goods, if members see what I mean. But, no, they care all right.

The association said to the Foreign Affairs, Defence and Trade Committee that it had “increasing concerns about the growth in counterfeit merchandise …”. It went on to say, a little surprisingly, I thought: “We are … continually concerned at the personal health and safety risks [that] New Zealanders are subjected to by a vast range of poor quality counterfeit goods …”—this is exploding pyjamas and stuff like that. In fact, it went on to say that “these can range from car parts to pharmaceuticals and perfumes”. It did not mention exploding pyjamas, but it might have. It did say that it thought that the national enforcement unit, the people who are our counterfeit cops and our trademark cops, should be given a greater role—indeed, this legislation does that—to enable the enforcement of criminal offences, and on it goes.

Interestingly, a press statement from 2009 that was mentioned by my colleague Clare Curran has an alternative point of view. Let me tell members what patent attorney Elspeth Buchanan has to say about these matters. “Patent attorney Elspeth Buchanan”—the newspaper tells us breathlessly—“knows how hard it is to tell knock-offs from the real thing.” It then quotes her as saying this: “ ‘I’ve been judging trademark infringements for 40 years professionally,’ ”—so Elspeth Buchanan is in her later years—“ ‘and I often can’t tell between the genuine and the fake,’ she said.” That is a pity, because that is what she is paid for. It is a bit of a shame, but anyway, there we are. She said that she has devoted her entire life to telling one from the other and she cannot, so I just wish her a really happy retirement, I do. It is just a shame that she has spent her life not being able to do what she is being paid to do. She said, however, that sometimes the right-holders cannot achieve that either, like the people who own the stuff. The people who made the Rolex could not tell the real Rolex from the other Rolex—

💬 Hon Steve Chadwick: Just drop it on the concrete and you’d know.

“Just drop it on the concrete”, said Steve Chadwick, who obviously knows a thing or two about this. Elspeth Buchanan’s point of view is the opposite of that of the retailers, even though she is involved in enforcement, as well. She said she is worried that “the proposed new enforcers”—this is the national enforcement unit, I think—“of trademark and copyright laws”, customs officers and Ministry of Economic Development officials, “won’t be able to judge the real from the rip-off …”. After all, she cannot, after 40 years of trying, so probably officials will not be able to either—they being mere officials—“but they’ll be thwarting legitimate business while they try.”

In other words, the retailers cannot get on with hocking off the counterfeits, because the counterfeits have been seized. They will be some of those 260,000 items that are seized every year, or at least that was the 2005-06 figure. The article states: “These Government agencies under the new legislation will be able to search for, seize and investigate suspected trademark offences. Buchanan”—this is patent attorney Elspeth Buchanan, who has been doing this for 40 years—“says that the proposed changes are ‘spectacular’.” I do not know whether she means spectacularly good or spectacularly bad. I think she means spectacularly bad, because she goes on to say: “The hit squad”—this is Elspeth Buchanan, patent attorney—“from the Ministry of Economy Development will be raiding warehouses for hot copyright infringers, leading to criminal prosecution for infringing T-shirts,”. She is clearly pretty unhappy.

She said she had a client who imported exercise gear and missed last year’s Christmas market because a customs officer was unable to make a formal determination on whether the products were counterfeit. It turned out that they were not, she said, although she said earlier that she had not been able to tell one from the other. The customs officer was unable to make a formal determination because of staffing issues.

The point is that this patent attorney, Elspeth Buchanan, is of the view that we might be making too much of a meal about this copyright and trademark stuff, and that maybe it is better to let it go through. After all, she says, we cannot tell one from the other, so who gives a damn. She has been trying to do so for 40 years and still she cannot, so I say good on her for her frankness. She holds the view that this legislation will hold up business, and that there will be too much of an impost on the honest trader who wants to flog off a few counterfeit goods because no one can tell one from another. Well, not on this side of the Chamber—we do not agree with that. We think Elspeth Buchanan is wrong, with a capital “R”. We think that Elspeth Buchanan should stand in favour of action against counterfeiters and people who are cheats and liars and stuff like that. She is a lawyer! She went to a law school, and she is letting these cheats and liars off. It is a disgrace.

We stand with the Government on this bill. We think it is excellent legislation.

💬 Clare Curran: Because we introduced it.

Because we introduced it—which leads me to make another point. I said that I was unsure whether I or Lianne Dalziel had introduced it. Well, guess what? Silly old me; neither of us did.

💬 Hon Tau Henare: But nobody cares.

Tau Henare says nobody cares. I care.

💬 Hon Tau Henare: Yeah, but you’re nobody.

Tau Henare has said that I am nobody. I have been called a nobody by Tau Henare—that is wonderful.

💬 Hon Simon Power: Judith Tizard.

The legislation was introduced by the Hon Judith Tizard.

💬 David Shearer: I wasn’t going to bring that up.

My colleague was not going to correct me; he should have. That is why I was unsure whether it was me or Lianne, because it was neither of us. My honourable colleague Judith Tizard, who I believe is within the precincts of the building tonight—I am not sure—

💬 Hon Rodney Hide: Call security.

I cannot hear what Rodney Hide says, but it does not matter, because he will not be here much longer. I think Judith Tizard is within the precincts of the building. In any case, she introduced this legislation, which is now, I think, in the name of the Hon Simon Power, who is going the same way as me, and not before too long. I now think that, in very short order, I will resume my seat.

I move, That the question be now put.

I felt compelled to take a call after hearing Tau Henare interjecting across the Chamber. This was his moment to rise and take a call on what is an important bill. It is an important bill, and I would have thought that the member would stand up and talk about the Toi Iho brand, and about the counterfeiting of Māori products that we are seeing infiltrating into the market.

This bill gives the powers of enforcement to the Ministry of Economic Development, the Customs Service, and the Police, and strengthens their powers. The member opposite should be fighting to say that these powers are absolutely significant for us. This bill is incredibly important, but of course Mr Henare belongs to a Government that, as one of its first moves when it came into Government, said that the Toi Iho brand was no longer significant—and that is the brand that marks genuine Māori product.

The Government cut funding in its first Budget for maintaining and spreading the marketing of the value of the brand of Toi Iho. We in Labour stood up and said that the Ministry of Economic Development must have strengthened capacity to sell that brand, so that we could pick up counterfeit models. We shamed the Government into bringing back the Toi Iho brand and saving it in time for our incredibly important cultural products in New Zealand.

There is another aspect to this bill that will give protection to the departments, and I am pleased they have these reinforced powers, and that we have some alignment across the ministries. In Rotorua we have been particularly concerned that products are being brought into the country from offshore, and sold as pounamu. We would like to see stronger enforcement on that, because we in New Zealand are very proud of our greenstone, our pounamu, and we are not happy when we see cheaper products coming into the market—having copied our taonga—and being sold in our souvenir shops as genuine New Zealand souvenirs and artefacts. That is a very important aspect of this Trade Marks (International Treaties and Enforcement) Amendment Bill. Tau Henare has gone very quiet now, because he realises that he could have been constructive in this debate.

Part 1 is a very significant part, and it is about strengthening those powers. Goodness me, we need more of them. Our officers will not be rushing through retail outlets and saying that they will ping this or that person. It is about the public eyes and ears bringing to the attention of customs officers, police, and Ministry of Economic Development officials that there is an influx of product that is causing us concern. As a small island country we should be supporting our own manufacturers and our own products for export to international markets.

This is a very good bill. I congratulate Judith Tizard on bringing in the bill. She understands the value of New Zealand’s products and that is one reason why she brought in this bill. The problem that we have—

💬 Hon David Carter: Who is she?

We should not take lightly the issue of counterfeit goods. I have travelled overseas with the member who is laughing opposite, and we all rather enjoyed seeing the “Gucci” sunglasses that were not Gucci sunglasses. I think the member knows what I am talking about. Those are the sorts of cheap products that we do not want to come into our country and clutter the market when we are trying to encourage our own producers of exports to produce products that are second to none, to sell on the world stage.

Unfortunately it has taken too long for this bill to get to the Committee stage. It is one that is very significant and important for New Zealand as we are trying to strengthen our role as a trading partner on the world stage. I congratulate the members of the Foreign Affairs, Defence and Trade Committee on getting the bill back to the House, and we are able to have the Committee stage today.

I move, That the question be now put.

Motion agreed to.

The question was put that the amendments set out on Supplementary Order Paper 268 in the name of the Hon Simon Power to Part 1 be agreed to.

Amendments agreed to.

Part 1 as amended agreed to.

Part 2 Copyright Act 1994