Patents Bill

There is a real story to tell about this bill, the Patents Bill. It is a story about patience and tenacity. The tenacity is particularly the tenacity of a growing economic force in New Zealand, which I would like to call the vanguard of the new economy. This force is the software developers, who could also be described as our new frontiers people, the forgers and the creators of our new economy. It is a story of progressive law, and we have actually got there. This might seem like an unusual thing for a member of the Labour Opposition to say, but this is a progressive law. We have finally got there. It has taken 3½ years to get here, but it does appear that we are here today discussing in the Committee stage the patents law and the revision of the Patents Act 1953.

When the Commerce Committee reported back to the House on the Patents Bill on 30 March 2010, it was the product then of parliamentary work at its best—the repeal of an Act that was clearly out of date. That was the Patents Act 1953, which was modelled on a United Kingdom Act from 1949. It certainly did need revamping. It was very out of date. The revamped Act proposed a regime to align the criteria for granting a patent with international practice. It aimed to promote innovation and economic growth, while also providing a balance between the interests of inventors and patent owners, and also society as a whole.

The new bill that was sent back to the House was a major accomplishment. It was seen as a major accomplishment then. At the heart of that bill and the changes to it was a commitment to provide a real incentive to help grow the New Zealand economy through its software industry and through its weightless economy. An awful lot of work went into that debate at the Commerce Committee, and I do want to pay respect and tribute to the officials who did that work back at that time, and also to the chair of the select committee at that time, the Hon Lianne Dalziel, who chaired a united committee that only a few of the original members are still on. But it was a united committee on this particular bill. That select committee did a very good job of working through all the issues and sending those issues back to the officials to go away and do more work.

What that bill sought to address was that New Zealand’s existing patent law was too generous to the people seeking patents and that there were too many corporations getting monopoly rights, and many of those corporations were multinationals that could get patent rights to inventions inside New Zealand that would not be protected overseas. That discouraged innovation and growth, the committee felt, which was the last thing that we wanted to do as a nation. In relation to software, that meant having more software companies being taken to court and tied up for years to stop those companies from inventing new software because of the threat of patent lawsuits.

When that bill came back to the House in 2010, the Commerce Committee proposed something groundbreaking and innovative. The select committee proposed, after hearing much evidence and discussing it in depth with officials, to exclude software as being patentable. It was one of a number of exclusions that were proposed. Those exclusions included methods of medical treatment of humans, human beings and biological processes for the generation of human beings, plant varieties, inventions whose commercial exploitation would be contrary to morality or public policy, and computer programs. This was historic. This was the first time in the world—that we knew of—that a piece of law included such a proposal. It was seen as being groundbreaking.

The reason for this was that the existing regime allowed patents for anything that met the relevant criteria, whether or not they were implemented in software. When you think about it, I suppose in 1953 this was not an issue, so the bill simply was out of date. I think everybody acknowledged that. But when software applications first arose, the Intellectual Property Office of New Zealand and the courts had no legislative guidance. Early applications were knocked back, but were faced with no provision saying that they should not be granted. Software patents were generally available in New Zealand from the mid-1990s, but they were starting to get to a point where they were exploding. There was a view put very strongly to that select committee that the trickle of software patents worldwide had turned into a flood, and so it was decided that our patent law would come into the 21st century and that software patents would be on the agenda.

I do want to take you through the history of this, and if it takes a little while, then so be it, because it is such an important new groundbreaking piece of law. There were four options that New Zealand could have chosen from when we were considering this. The first was to allow patents on anything under the sun, which really was to use a description of the US regime and allow software patents without any particular restrictions—in other words, the status quo. This option was rejected. It was ruled out by the Commerce Committee because we accepted that software patents were becoming increasingly problematic. That view has been borne out in the United States in recent years, with software patents coming under fierce criticism. I spent a month in the US last year. This issue is being hotly debated in the US right now, even though the regime does still favour software patents. It has even been acknowledged by President Obama and in studies highlighting the economic and innovative harm that software patents are causing.

The second option was to implement a partial or a weak exclusion of software patents, as the European Union has done. It has been contended that it is unlikely that this is what the European Union actually intended, but this is what it has ended up with as a result of the now infamous “as such” provision, which has received a lot of coverage in New Zealand. It is one little phrase that has received a lot of debate as to what it actually means. It is a term that is vague and has effectively negated the software patent exclusion in the European Union and led to much confusion and criticism.

The third option was to implement a broad, strong exclusion of software patents, such as in the UK. The UK also uses the “as such” language, but judges have taken a much more robust approach than their counterparts in the European Union, and in 2006 they developed a legal test that specifically evaluated patents involving software. That was known as the Aerotel test. The result of that was that the UK now has tougher criteria for software patents, rather than the European Union countries.

The fourth option, which was what the Commerce Committee actually decided back in 2010, was to chart our own course, take a new way forward, and clearly exclude software patents. This was the preferred option of many of the submitters who appeared before the select committee, particularly New Zealand’s Kiwi innovators. But there was a lot of concern around whether this would give rise to international trade obligations, and also about whether there should be a definition in the bill around what embedded software is—for example, where you have an invention, such as a Fisher and Paykel washing machine, and within that you have a piece of software, where does the beginning and the end of the software happen?

But it was considered by the select committee that it was simpler to exclude software from being patentable altogether, and we asked that the Intellectual Property Office of New Zealand would be writing the guidelines as to the embedded software. This came back to the House. The Minister at the time—

I wish to take only a very brief call on behalf of New Zealand First as far as Part 1 of the Patents Bill is concerned. The Minister’s amendments set out on Supplementary Order Paper 120 will be supported by New Zealand First. Those amendments are, with the support of the amendments to Supplementary Order Paper 120 on Supplementary Order Paper 237, consistent with the bill as a whole, and we think they add value—mainly in respect of technical aspects, but also they clarify some important sections in the bill.

Concerning new clause 10A(1) and (2), New Zealand First supports Supplementary Order Paper 237 to add a new clause 10A(3). Clause 10A(2) is unclear without new subclause (3), which says: “A claim in a patent or an application relates to a computer program as such if the actual contribution made by the alleged invention lies solely in it being a computer program.” We think that this now makes sense of the words “as such” as they were used in subclause (2). The clause, we feel, had been a cause of considerable complaint as the bill had been introduced, because of the uncertainty around what it had meant. But we now feel that the amendment, to add new clause 10A(3), solves the problems with the clause. Accordingly, we will support the bill on the basis that it is amended in that way, and New Zealand First will not, accordingly, be supporting Clare Curran’s Supplementary Order Paper 123.

Can I acknowledge the previous speakers and also the work they have done to get us to where we are today, and the speakers who I think are going to follow me, particularly Clare Curran. The Labour Party has been quite reasonable in our discussions in and around what have been some contentious issues in this bill, the Patents Bill. I also acknowledge the support of New Zealand First, which initially showed reservations concerning my Supplementary Order Papers but is now supportive, as per the member Denis O’Rourke’s speech. So thank you very much. I also understand where other parties—but I will let them talk about it—are supportive of the bill, which starts to be a bit of a worry sometimes, with everyone supporting this bill.

It has been a journey. Most of the issues around Part 1 and Part 2, new clause 10A, and what was in clause 15, which other members have talked about, concern the part around computer programs, so I will just touch on that. It has been a journey. I think we now have legislation in front of us that achieves the intent of the Commerce Committee. I do acknowledge that the select committee, when it was going through these very same issues, wrestled with all sorts of scenarios and came to a reasonable space, although when I inherited the bill and looked at the bill—and I will touch on this again in a moment—I was concerned about what was in the commentary versus what was actually proposed as part of the statute. We have got to the point now where the examples that the previous speaker Clare Curran talked about and that are in the commentary—for example, the washing machine, as far as embedded software is concerned—are now codified in the bill as an example, as a pointer, to what could or could not be allocated or allowed and given patentability. I think we have done a pretty good job.

On that note, I do want to thank the many, many people who have been involved with this bill since its gestation in 2008, I think. I think we have had three Ministers involved—the Hon Lianne Dalziel, the Hon Simon Power, and now me. We have had the select committee, some members of which are still with us and still on that committee in Parliament. I must fully acknowledge the officials who have been working with this bill for quite some time, who have been very, very keen to see it progress. I fully acknowledge that some of them took a bit of the heat during some of the parliamentary debates through the time, but I also acknowledge that those same officials have helped to get us to where we are today. It is a great example, I think, of the parliamentary process working in action and of joint ownership of this quite significant legislation, which modernises 50-year-old patent law in New Zealand.

I also acknowledge my colleague from the ACT Party, John Banks. I particularly want to acknowledge the Hon Peter Dunne of United Future, who did play quite a role in the communications with various sector leaders, information and communications technology players, industry people, and interested bodies, again to get us to the point where we are now. As I said, I acknowledge New Zealand First and Labour, and I believe that the Greens are now supportive of the bill.

I have to thank the many innovative New Zealand businesses and stakeholders that have given feedback on this Patents Bill for their engagement to getting us to this point and helping us pass it. This Patents Bill guarantees that genuine inventions are protected and that Kiwi businesses can continue to grow and prosper. I am proud of where we have got to and the process of this bill over the last year. I am very proud to have a major stake in that, to where we have arrived. I fully acknowledge that there have been some bumps along the way of that journey. But, again, professionals who have looked for solutions have helped us to get to where we are. When I became Minister of Commerce I took on a bit of a mission to have a look at this bill and understand what was holding it up and what the issue was, and there really was only one key issue: the discussion around the patentability or otherwise of computer programs. So we spent a fair bit of time on that—again, a good journey perhaps takes a long time—but, as I say, we are there.

My Supplementary Order Paper 120 to try to tidy that up last year did create a bit of concern, to be fair. That is absolutely fine, but, interestingly, we have gone from a period where there was major concern in the information and communications technology sector about my particular Supplementary Order Paper to where we are now, and the entire sector actually cannot wait for the bill to be passed in its new form. So I appreciate all of that.

The concern was about that Supplementary Order Paper. Opposition did intensify around that time around what was believed to be my not following the intent of the committee. I can assure the Committee that at all times—and it is reflected in my correspondence with different professionals and people in the sector—the intent was always to follow what the committee pointed to. But I realised there was a problem in the bill in that form where, in fact, New Zealand could have been exposed to World Trade Organization action. Of course, none of us wanted that. But I was surprised at the time because my intent was to follow through as earlier indicated.

The bill has been strengthened as reported back initially. There is just one person I want to quickly acknowledge. I will not mention the person, but when concerns, organised protests, campaigns, emails, and tweets and things were really going, I had a chat to a person who is in the information and communications technology sector. At that moment, everyone seemed to actually start to engage a wee bit more. When I told the person that we had about 250 software patents in New Zealand over the last couple of years, I listed some of the programs around at that moment that are well known that are patented in New Zealand and not elsewhere, and I pointed to my willingness in wanting to follow the UK process and where it is at, as opposed to the euro area and where it is at. That was a pivotal point. Everyone started to engage a bit more and a bit better, again leading us to where we are now.

I fully acknowledge the key issues. My Supplementary Order Paper, the new clause 10A, and the previous clause 15—that is where the contentious issues are. I think we are now over those. Again, let me acknowledge and thank all those who helped us to get to this point and for their support of the bill, I believe, at the coming stage.

Labour will be supporting this Patents Bill, and I thank the Minister of Commerce for his contribution. There have been many Ministers who have contributed to this over the years. I think I am right in saying that its introduction dates back to the time of the Hon Judith Tizard in this House. It has been around a wee while. The bill has made steady progress and now we are here, debating the final form but with more Supplementary Order Papers on the way. So it is a journey—it is indeed a journey.

We support the bill because when we look at the purposes, at its most fundamental, Part 1 covers the purposes of this bill, it says that “The purposes of this Act are to—(aa) provide an efficient and effective patent system that—(i) promotes innovation and economic growth while providing an appropriate balance between the interests of inventors and patent owners and the interests of society as a whole;”.

So often when we debate these intellectual property issues we come back to the question about how the interests of society as a whole are protected. The debates around software patenting and innovation in that sphere often revolve around whether the interests of society as a whole are served by protecting inventors to an extent that may be beyond what is necessary to encourage innovation in that sector. There are plenty of people who say that innovation is rife in many sectors and that very little patenting or intellectual property protection is required. In other sectors, when we think it through, pharmaceuticals require a huge amount of investment when it comes to intellectual property. The billions of dollars that go into drugs that are of benefit to society as a whole simply would not be invested without the appropriate protections in place. That is why this kind of intellectual property law needs to find the right balance between the interests of the inventors, what the incentives need to be to ensure that they do invest in stuff that is good for society as a whole, and the benefit that accrues to society, and whether it would be more or less, depending on the incentives that are put in place.

We could question some of things that are being debated in the leaked Trans-Pacific Partnership agreement, in the negotiations, and the issue always comes back to whether the interests of society as a whole are being served by the changes that are proposed. The one that is in the public domain most often is the extension of Disneyland’s intellectual property protections and whether that is actually of use to society as a whole, given that no new creative content is likely to arise from historic material.

This bill itself—[Interruption] My colleague Clare Curran says—I do not know whether I heard her correctly—that that is a Mickey Mouse proposition, but, if not, I am extrapolating, and there may be some truth in that. Of course, we do not know what the final shape of those arrangements will be, and we are not privy to the negotiations. That is, of course, something New Zealanders are concerned about because we all want not only the interests of society as a whole but our national interests to be taken care of. Mr Lotu-Iiga, I am sure, would agree with me if he had the opportunity to speak on this matter.

Part 1 covers those purposes, the preliminary purposes that I mentioned, striking that balance. It also mentions there, in the opening gambit, New Zealand’s international obligations, and the Agreement on Trade-Related Aspects of Intellectual Property Rights springs to mind for me. Those agreements are, in terms of the World Trade Organization expectations, what serve to make sure that international trade is looked out for, and that we all as countries are encouraged to create new intellectual property—and that is good for society as a whole—broader than just national boundaries.

These purposes in the bill look at the criteria for granting a patent, they provide for procedures that allow the validity of a patent to be tested, and they provide certainty for those patent owners and users of patent interventions. They address some Māori concerns relating to the granting of patents for inventions derived from indigenous plants. Of course, Wai 262 is something that many members of this Committee will be familiar with from the debates over the years. It is something that is not finally settled, and is something that I personally believe needs the attention of the Government. The failure of this Government to progress that matter fully is also a concern, and it should be a concern for this House.

When we look further into Part 1 we see that it covers the meaning of “novel”, which of course is a simple and basic requirement of outlining what a patent is.

💬 Hon Trevor Mallard: It’s a book. I know.

My colleague Mr Mallard says he has read the book on what novel is about. It is the meaning of an inventive step, so what it actually means to invent something new, because, of course, if that is not defined correctly, we can have people who are trying to claim that they have rights to something that, again, does not benefit society as a whole, if it is something that already exists, if it is something from which we already derive benefit, and then somebody is seeking a private rent—seeking to make profit from something that does not belong to their own intellectual property contribution. That, then, is a net drain on society as a whole. So it is important that we lay out exactly what each of these things is.

It also covers the meaning of “prior art base”, and I would ask the Minister in the chair, the Minister of Commerce, to clarify that as I have not been particularly engaged in the discussion about the prior art base. I think the Committee would be interested to know exactly what that looks like in practice, and what it means in those clauses that describe the prior art base. Then, of course, there are disclosures and the meaning of “useful”, because we are talking here—to come back to those first principles—about what is useful for society as a whole.

As I said from the outset, Labour will be supporting this legislation. New Zealand’s existing patent law is, in our view, too generous to those people seeking patents. Too many corporations get monopoly rights, and many are multinational corporations that can get patent rights to investors inside New Zealand that would not be protected overseas. We are pleased to see that this is being upgraded. It has happened over a long period of time, being first introduced in 2008 by the Hon Judith Tizard, as I said, and it is still being debated actively today. But it is great to see the bipartisan nature of the debate here in Parliament.

I will not speak for much longer. I am simply interested, though, in hearing further from the Minister about the meaning of “prior art base”, so that the Committee can understand that a little better. It is also for my own ignorance on that matter that I might have it clarified by the Minister. Thank you very much.

Kia ora, Mr Chair. Ngā mihi nui ki a koutou. Kia ora. It is a privilege to rise in the Chamber and speak in the Committee stage on Part 1 of the Patents Bill. I thought I was the only one in Parliament who thought patents was an interesting, fun, and cool area to study.

💬 Clare Curran: Sexy.

Sexy as well, Clare Curran says. We often feel a bit lonely when we talk about patents at parties or social gatherings, but it is good to see some other people in this Parliament who also find them interesting, like Dr David Clark and Clare Curran. Obviously, I would like to acknowledge the work Clare Curran has put in over the years as part of the coalition, putting in a Supplementary Order Paper and trying to fix up some of the software patent issues. So I would like to congratulate her. I would also like to congratulate the Minister of Commerce, because when other Ministers would rush straight ahead, maybe blind to opposition or calls for common sense from industry or the public or experts, Minister Foss did listen. He did move, and I would like to acknowledge the Minister’s role in shepherding this bill through and for taking a common-sense approach to patents.

This bill is incredibly important to our economy, to our prosperity, and to how we go forward. We are a country that wants to trade on our innovation, on our ideas, and on our niches. Intellectual property issues, particularly patents, are a critical part of that. It is high time we reviewed our antiquated, Westminster-derived 1953 Patents Act. In previous readings I talked about how it was literally being laughed at by patent experts and interested parties because it was just so out of date. It was high time we revisited it. This bill represents a step forward. It is obviously not an ideal solution, but it is a step forward, and that is why the Green Party will be supporting it. Overall, it is an improvement on existing law, not a step backwards.

When you look at Part 1 of the Patents Bill, it contains the purposes clause—the purposes around an efficient and effective patent system, around the criteria for granting patents, and providing greater certainty for patent owners and, I believe, critically, in a Treaty relationship addressing Māori concerns, which the Green Party takes incredibly seriously. This is very much a live, debatable issue. I think it goes some way, although, again, it is not an ideal solution or one truly reflecting a Treaty relationship that we should have in New Zealand, but it is a step in the right direction.

I am interested because this patents issue is incredibly interesting internationally and it is stimulating a lot of discussion. I would like to quote very briefly from Nobel Prize - winning economist Joseph Stiglitz, who has written recently on the link between patents, intellectual property, and inequality. Stiglitz writes that “corporate interests prevail in intellectual property rights,” and that the policies of the American Government are increasing inequality abroad. He writes: “it’s our intellectual property regime that contributes needlessly to the gravest form of inequality. The right to life should not be contingent on the ability to pay.” He was talking about a very specific example where a company had basically patented genes and some breast cancer and other cancer identification genomic research, and it substantially increased the cost, driving the cost out of the reach of many people. It went through the legal system in the United States, and now, as a result of losing that court case, the cost of that genomic research has dropped substantially. People are getting the medical attention they need. It is positive and is just another example of how patents can impact inequality.

When it comes to the exclusions to patents, this is where I think we really are genuinely seeing a step forward in terms of this bill. The bill is going to allow exemptions to patent human beings, medical techniques, plants, and inventions contrary to public order or morality. That is very much a step in the right direction. The bill does not, however, prevent all biological patents, of course, provided that the absolute novelty and inventive step is there. This is something that my colleague Steffan Browning is addressing with his Supplementary Order Papers 124 and 336, which try to tighten up those exemptions and expand them. Obviously, the patenting of genes, indigenous knowledge, and native flora and fauna in very different countries is a very live issue internationally.

When it comes to the Treaty and Māori relationships aspect, which is looked at in clause 3 of Part 1, I believe that this is going a step in the right direction. But when you read the submissions—and unfortunately I did not have the pleasure of sitting on the Commerce Committee; I think we have had about twice as many MPs work on this bill as the Government has had Ministers work on it—what you see from a lot of Māori submitters and iwi organisations and the Māori Law Society is that they wanted to wait for Wai 262, the Waitangi Tribunal case, to report back. That did report back and it recommended a Māori advisory committee but with binding powers. Of course, the fear of many of those submitters is that this advisory council to the Commissioner of Patents could perhaps be perceived as tokenism, and that perhaps their voice will not be heard. Hopefully, that will not be the case, but, of course, we would have preferred that this was a binding advice provision on the Commissioner of Patents, reflecting the Wai 262 recommendation but also that Treaty relationship that I touched on.

Of course, the interesting thing, and the big victory in this bill, is the software patent exemption. As Clare Curran notes, this has quite a bit of history. It came out of the select committee with the unanimous recommendation to take this bold, innovative, supporting step. It was congratulated broadly around the world, and in New Zealand it was a positive announcement. I think everyone got incredibly disillusioned when the bill sat on the Order Paper for so many years, when people were not given the sense that it was going to be progressed. Then when the Minister came out with Supplementary Order Paper 120, which went backwards on the issue of software patents, many people were upset and disillusioned, but they also got angry and they got organised.

I would like to congratulate those involved in that campaign, who did change the Minister’s mind—the likes of Orion Health, Catalyst IT, InternetNZ, and Jade Software. It was a huge campaign, and I would like to acknowledge all the members behind it. My only regret, though, with the Government listening to the experts and to the industry and putting the software patent exemption back in, is that I cannot give the speech that I wanted to give to the Minister about what a fantastic Minister he was, as such, and how he was supporting New Zealand industry, as such, because it was those two little words—“as such”—that made the whole issue clear as mud. That would have seen our information technology sector focused on litigation, not on innovation and not on coding. So I will not be able to take the mickey out of the Minister in that speech, but I would much rather be giving a speech in congratulation and acknowledging the role played there.

This bill is about jobs and innovation. It is about supporting our thriving information and communications technology sector, which grew by $3 billion in the last 2 years. Our high-tech sector is a critical part of our economy and a critical way that the Greens see jobs and prosperity going forward. Obviously, patents issues and debates do not end here. This bill is by no means ideal. It is a step in the right direction, but what we need to do is have a fundamental conversation about what intellectual property looks like in the 21st century. What does intellectual property patents copyright look like in the internet age? It is deeply disappointing that we will not be seeing a copyright review. Copyright is a significant driver of not only economic development but also freedom of speech and public discussion, and it is deeply disappointing that we are not going to see that review.

In the midst of the Anti-Counterfeiting Trade Agreement and the Trans-Pacific Partnership negotiations, which are not public and which could curtail some of our current exemptions or fair dealing, or which could take a much more punitive approach to intellectual property issues, these are live issues. The people behind the software patents win cannot give up. There is a whole bunch more that we need to address when it comes to intellectual property issues to keep our country going forward.

In summary, the Greens are supporting this bill in Part 1. We recognise that it is a step forward. It is not ideal. We do have concerns around patenting of life. We do not think the Māori advisory committee is as strong as it should be. But, still, the bill is a step forward, a step in the right direction, and we will be supporting it. Kia ora.

It is always my pleasure to take a call when I can give a speech that talks about the innovative economy and job creation—[Interruption]; thank you, Mr Mallard—because this is New Zealand’s natural advantage. This is about our raw material, which is the talent that underpins New Zealand’s future, and underpinning that is our intellectual property law. Specifically, it is our patent law and how we are going to protect our economy in the 21st century and protect what that economy is based on, as colleagues have talked about. I want to acknowledge the work of members right across this House. I want to acknowledge the hard work of my colleague Clare Curran, next to me, who I am sure will be taking a call on this in the very near future to finish the story she started telling about what this law means to New Zealand.

I want to acknowledge the work that has gone on around the House, because this bill, the Patents Bill, does balance the two interests that need to be balanced within any considerations of intellectual property. First, it allows innovators to profit from their inventions. It allows the people who put in the work and their talent and their ideas to commercialise their ideas and to make businesses out of them. In Labour, this is something that we celebrate, and it was one of the reasons why we thought that having a research and development tax credit was a reasonably good idea. These are the kinds of measures we need to have to celebrate innovation. But what we also need to be very careful about as legislators in this country—and I think this bill does this very well—is that we balance out the monopoly rights that accompany patents and make sure that they are not unduly exploited. That is really important.

About 3 weeks ago I had the pleasure of attending the launch of Shaun Hendy’s excellent new book, Get Off the Grass, which talks about innovation in New Zealand. This was a book that Shaun started with Sir Paul Callaghan before Sir Paul’s death, and Shaun finished it off. One of the things that Shaun talks about extensively in this book is the innovation networks that exist in New Zealand, and one of the ways that he explores these innovation networks is through our patenting system. Who is collaborating with whom? Who is it? It is this ability for people to work together and to commercialise these ideas that underpins this. I really encourage people to go and look at this, because it is the culture of innovation and these innovation networks that underpin this. We see universities sitting at the centre of this. They are committed to research-based excellence, and flowing out from this are all kinds of opportunities that can be commercialised. But in order to do that—to have New Zealand businesses that can make successful companies out of these ideas—we need the ability to protect our intellectual property. In New Zealand, much of our expertise does lie in our ability in the agritech sector, and we do need to realise that much of our intellectual property is in the form of living organisms. It is our plant variety rights and our ability to utilise these.

The ability for us to protect plant variety rights in this country is the basis of the business model under which Zespri operates. Hort16A, or golden kiwifruit, which is the other name by which it is known, is a plant variety right that was developed by what was HortResearch, and it is the very basis of why Zespri is able to make its way in the world. It has the proprietary rights on this fruit and it is the way in which it can survive. Not only are things like Hort16A incredibly important to us and our need to be able to protect those technologies but also we need to understand New Zealand’s technological future in a very complicated way. It is not just about factories pumping things out, although these are important. It is not just about software, although that is undoubtedly important. But the technological basis of what our agricultural sector will be and how we will transform ourselves as an agricultural nation from being a mere commodity producer is something that we need to think about in a sophisticated way, and we need to think about what will underpin that.

Not only do we have the example of Hort16A, the plant variety right that is crucial to the commercial success of Zespri, but when we think about our apple imports and what that is worth to our economy, we have over $1 billion a year in apple exports alone, and 70 percent of those exports is premised on four varieties. One of those varieties is the Jazz apple. Again, that is a plant variety right that was developed by some excellent talent in this country at HortResearch. It is something that can be protected under plant variety rights, and it is really important that we have the ability to do this.

Another example where we do actually have to think about what a 21st century economy is—one that is sustainable and has absolutely at its heart our ability to protect our intellectual property in terms of our pasture in New Zealand—is how New Zealand is going to radically reduce its greenhouse emissions. It is through the development of new pastures. When our dairy sector is one of the largest emitters in our country, we need the ability to protect some of the excellent work that the Grassland Association is doing around various pasture types. I am going to talk more about some of these examples and what the ability to protect this kind of intellectual property means when we get to Part 3 of the bill.

I would like to congratulate colleagues across the House. I think this is a timely piece of legislation. It has had a long time in gestation and a lot of hard work has been put into it. Thank you.

Just in speaking on Part 1 of the Patents Bill, in clause 3, “Purposes”, it is very clear that there is to be an understanding between the interests of inventors and patent owners and the interests of society as a whole, and I will go into this a little bit more in Part 2. But there are some elements, of course, that are inappropriate. Again, the bill seeks to address some of those.

I would like to congratulate the Minister of Commerce on the elements that have been included as exclusions from this, but it does need to go that little bit further. It will be interesting when we look at the purposes and overview of the bill when some of these issues in the areas of life and organisms come up in the courts, where it will be considered whether something is absolutely new, or whether it is new only because different components have been pulled together. It could be clearer. It certainly allows for genetic engineering, and that is one of the real risks of this bill.

We were just hearing about the Plant Variety Rights Act. That is very, very strong. It does look out for people breeding plants in New Zealand, and it is good to see that plants have been excluded. But in terms of the purposes clause, I think it could have been stronger, and the Supplementary Order Paper following will address that in part. It is great that there was this cross-party effort to deal with issues around software and the like, and it is fantastic to see a national approach, in the truest sense of the word. A countrywide approach is something that we can all be proud of.

The inventiveness is really a concerning part when it comes to life, and then also the interpretation. Moving to clause 5, “Interpretation”, with regards to the Budapest Treaty, and the Agreement on Trade-Related Aspects of Intellectual Property Rights as well, I am concerned that, unfortunately, those sorts of treaties that we enter into outside Parliament, when our negotiators and others go over there, could actually be pulled into New Zealand regulation and whatever through this bill. So things may happen that we do not intend because of the inclusion of the Budapest Treaty and some of the ramifications of that. I am not quite sure that other members actually understand the lengths that that can go to.

The Greens will be supporting this bill because of those positive parts, but we will address some of the others in the Supplementary Order Papers and will seek support on those. Thank you.

I want to acknowledge what my colleague Megan Woods said about the importance of a modern patent regime that allows for the fundamental underpinning of our intellectual property system and enables the commercialisation of our inventions and our ideas, for the benefit of New Zealand’s economy. That is fundamentally important. There will be much discussion on the Supplementary Order Paper that has been proposed by the Green Party member Steffan Browning, which Labour will not be supporting, but there will be room for more discussion on that later on as we get through the parts of this Patents Bill.

I also want to acknowledge what the Minister of Commerce said when he took a call on this part of the bill, Part 1, and the work that has been undertaken to get to the point that we are now, and I will elaborate on that in a minute. But I do want to finish the story of how this bill came to be back in this House 3½ years after coming back from the Commerce Committee and, with regards to the exclusion—one of the key exclusions in this bill—which is for software to be patentable, why that was so important, and what happened after it got back to the House. When it came back, there was that clear, simple exclusion. There were concerns because the bill sat on the Order Paper for such a long time. There were questions to the Minister of Commerce at the time, Simon Power, about whether there was still a commitment to the intent of the select committee. Those commitments were given. But unbeknown to us on this side of the Chamber, the pressure certainly had come on and had come on from those who had not submitted at the select committee and who represented, essentially, the multinational software corporations, notably Microsoft and IBM. Also, I have to acknowledge some of New Zealand’s big companies, including Fisher and Paykel Appliances, which did remain concerned about the lack of definition in the bill of embedded software.

As we feared, in August 2012 the current Minister, Mr Foss, who was trying to deal with this situation—and, ultimately, we would contend, at that point made things worse—amended the bill to include, as my Green colleague Gareth Hughes said, that controversial “as such” language. Although the Minister said in the Chamber today that his purpose was simply to clarify the intention to exclude software patents, that amendment proved to be hugely controversial. Our contention then was that the multinationals had, in effect, won, and that they had got a clause that would suit their purposes rather than those of the local IT industry. That industry mounted a concerted push back on that unclear “as such” language, that amendment. An industry petition was launched that was backed by groups such as the Institute of IT Professionals New Zealand, InternetNZ, NZRise, and the New Zealand Open Source Society. They set that up and it gained huge support almost immediately. That petition called on the Government to remove the ambiguous “as such” language and replace it with a simpler clause that would clarify that underlying intention. I adopted that petition’s proposed alternative clause as a proposed amendment to counter the Minister’s amendment at that time, and other MPs in this House got behind that and raised concerns about the lack of clarity in the bill.

That was in September last year. It is now the end of August in 2013. It took between then, September last year, and May this year and the concerted efforts of many people and political pressure for there to be some very good work done on providing what is perhaps now an even better bill—and I say this in the Committee today—than the one that came back to the House in 2010. So I do want to acknowledge that work.

The new clause 10A that we are now seeing in the Committee today is very carefully worded. It has wide support. It ensures that we will not go down the European Union path by effectively hard coding those parts of that UK Aerotel test, which I mentioned earlier. It means that even if the UK approach to patent law does drift towards a more liberal regime to allow more software patents, New Zealand will not. I think that is something that all of us in this Committee today can be hugely proud of.

I want to recognise the hundreds and hundreds of New Zealand software developers and innovators who worked tirelessly and patiently to explain their industry to us members of Parliament, and to explain how innovation in code occurs and how it can be stifled by the might of a multinational that claims the right to a piece of code. It is, in effect, a mathematical algorithm, like a phrase in a book or a piece of music—a series of notes in a piece of music that cannot be locked up in a metaphorical box, for if they are, we all lose out.

I want to acknowledge some people individually. I want to acknowledge Paul Matthews from the New Zealand Institute of IT Professionals, and Don Christie and Daniel Spector from NZRise, which represents New Zealand IT companies to promote Kiwi innovation. I also want to acknowledge Guy Burgess and Dave Lane, experts in this field. I want to acknowledge the Greens for sticking to their guns, New Zealand First for taking the time to listen and understand, and also the Māori Party and Mana for backing Kiwi innovation. I actually want to acknowledge Peter Dunne. We do not agree on many matters, but on this particular matter he did the right thing, and it was his vote that actually mattered. Finally, I want to acknowledge the work that the Minister has done, because he knuckled down with the officials. He listened, he knuckled down with the officials and the industry, and he worked out a compromise that could see us with one of the best pieces of law in the world in this area of intellectual property.

It is not long to go until the lunch break, so I intend to take only a brief call on Part 1 of the Patents Bill. I was very interested to see that the very first subclause in clause 3, “Purposes”, was actually added by the Commerce Committee, and it says that the Act is to “provide an efficient and effective patent system that—(i) promotes innovation and economic growth while providing an appropriate balance between the interests of inventors and patent owners and the interests of society as a whole;”.

I think there is an increasing awareness in our communities of how important that balance is. If we weigh that balance too heavily towards the patent owners and inventors, then that can entrench inequalities, particularly between large multinational corporations and small businesses, entrepreneurs, and innovators trying to commercialise their ideas and to grow new businesses. And, of course, if we do not recognise the efforts of inventors and patent owners, then that itself stifles innovation. Striking that balance is of enormous importance.

When thinking about the interests of society, I think in particular of the way Pharmac works, and Pharmac’s ability to purchase off-patent medicines. At the moment in New Zealand, medicines come off patent after 20 years. I know that there is some international pressure for us to change that approach, but I think that 20 years is a good balance. It allows inventors of new medicines to reap the rewards of their research and development, but it also means that society can benefit from those lower-cost generic medicines once they come off patent. I think that is a very, very good example of the balance that paragraphs (aa)(i) and (aa)(ii) in clause 3 are trying to achieve. I know that in the near future we will be debating more and more—

Debate interrupted.

Sitting suspended from 1 p.m. to 2 p.m.