Patents Bill

Before the lunch break I was talking about the new clause that the Commerce Committee added to the “Purposes” clause of the Patents Bill, which is around getting the balance right between the rights of the patent holder, and the person who invented a particular item to which a patent applies, and the interests of the well-being of the wider society.

I think there are two aspects to this. One is the fact that if we clamp down too tightly with patent law that is too restrictive, that stifles innovation. A very important aspect of innovation is building on previous ideas—taking an idea that someone else has had and adding something new to it. If patent law is too restrictive, then it is not possible for that type of innovation to be carried out.

But there is also the societal good side, and I think that Pharmac is a particular example of this. Pharmac makes use of the fact that medicines come off patent after 20 years, and can therefore provide cheaper access to medicines than is otherwise possible whilst medicines remain on patent. It is important that drug companies are able to patent medicines and reap the rewards from the research and development that they have carried out and the invention of that new medicine, or the discovery of the ability that a particular product has as a medicinal property. But after a period of time, when they have justifiably held a monopoly on the rights to such a product, it is important that they are opened up.

There is a debate going on internationally about how long medicines should stay on patent, and I know that New Zealand is under pressure from a number of different organisations and from people located in a number of different countries to change our patent law in a way that would keep medicines on patent for a lot longer. The purpose of this bill speaks to that. It speaks about the balance that has to be struck between the rights of the patent holder and wider society, and I think that we have a good balance in New Zealand between the rights of the holder of patents of pharmaceuticals and the well-being of wider society. I think New Zealand should be firm on its stance in holding to that 20-year period, because, as this bill says, that is a fine balance that must be struck carefully.

I call Clare—no, I am sorry, that member has had her four calls. I call Chris Hipkins.

Thank you, Mr Chair. I will have a go. I am very happy to take a call on Part 1 of the Patents Bill, and I am sure that Mr Henare, who seems to be so amused over there, is just preparing his thoughts on what he wants to say on the Patents Bill, because, after all, it was a Labour bill that has been sitting on the Order Paper now for 5 years, due to the inefficiency of this Government. So completely hopeless is the Government that, after 5 years of being in Government, it has suddenly decided that it needs to progress this bill under urgency.

💬 Hon Tau Henare: Do you support this bill?

It is 5 years since the Labour Government introduced this, possibly longer, and then, finally, this Government brings it forward and allows it to be introduced. Mr Henare asks me whether the Labour Party supports this bill—yes, yes. The Labour Party does support the bill. The Labour Party does support the bill—it is actually a very important issue. It is a very important issue. It is a very thick bill. The debate on this, I am sure, is going to go on for quite some time, with all of the significant amount of content that there is here in the Patents Bill.

Let us have a look at what the purposes of this bill are.

💬 Hon Tau Henare: OK, you go and have a look.

We turn now to the “Purposes” clause, for Mr Henare’s benefit. That would be clause 3. It states: “The purposes of this Act are to”—

💬 Hon Tau Henare: What’s it say?

What does it say? I am happy to enlighten the member. I am very happy to enlighten the member. I am sure that I can read it to him faster than he can read it for himself. So “The purposes of this Act are to—(aa) provide an efficient and effective patent system”—

💬 Hon Tau Henare: I don’t know about that. Is that because I’m a Māori—or what? Is that because I’m older than you?

What was that?

💬 Hon Tau Henare: You heard.

No, I did not.

💬 Hon Tau Henare: Oh yes, you did.

I was busy talking.

💬 Hon Tau Henare: Oh yes, you did.

I was too busy talking.

💬 Hon Tau Henare: You heard.

Oh no, I did not. Look, he is welcome to repeat himself. I know he is very familiar with repeating himself. He is welcome to do so. So one of the purposes of the Patents Bill in clause 3(aa) 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;”. That is incredibly important. It is a very important balancing act.

💬 Hon Tau Henare: Wow! The man can read! The boy can read!

It is an important balancing act—for Mr Henare. I know that balancing is something that he has a great deal of difficulty—very great deal of difficulty—with these days. The purpose is also to comply “with New Zealand’s international obligations;”. Well, that is not something that Mr Henare is interested in at all—complying with New Zealand’s international obligations—but that is something that I think is important. If we move to paragraph (a) within the “Purposes” clause of the bill, it is about ensuring “that a patent is granted for an invention only in appropriate circumstances by—(i) establishing appropriate criteria for the granting of a patent; and (ii) providing for procedures that allow the validity of a patent to be tested;”.

💬 Hon Tau Henare: So much for the whip protecting the leader.

What was that?

💬 Hon Tau Henare: So much for the whip protecting the leader.

Oh, come on, that is not relevant to this debate. That is not relevant to this debate. I tell you what. Mr Henare should be patented because he is clearly one of a kind. He is clearly one of a kind. I do not think I have ever found a member quite like Mr Henare in this Chamber. We should be quite grateful for that. We should patent Mr Henare and then make sure that there is a clear restriction that no more are to be produced—that no more are to be produced after that particular point in time.

Anyway, we are getting into the further detail of the Patents Bill. This bill, as I mentioned, of course, is a bill that was introduced by Labour. We will support it, unless our amendment is voted down, because it can be added to the long list of improvements to the business and regulatory environment that were made by the previous Labour Government. Of course, we are actually interested in improving the business regulatory environment, unlike this Government here. It talked a lot about cutting red tape. Actually, the only red tape it is interested in cutting is the stuff that its mates want to get rid of; it is not actually interested in protecting consumers and protecting New Zealanders.

The bill attempts to balance the interests of the innovators, who should be entitled to make a profit from their inventions—I think that is quite important—but also we have to look at the interests of society as a whole. I think there is a general view that the existing patent law is too generous for those people who are seeking access to patents, and too many corporations end up getting monopoly rights. So, in a way, I am surprised that the National Government is progressing this legislation, because, of course, we know that this Government’s priority is the top 10 percent—the people who are more likely to be able to access the patent rights—rather than the rest of society. I am pleased, and I want to congratulate the Government. It is actually taking a very positive step now in making sure that society’s interests are balanced against the interests of those who might be able to access the monopoly rights to patent. So, overall, I think this bill has a lot of merit.

I would like to start off by absolutely disagreeing with my colleague the chief whip, Chris Hipkins. I know that will not do me much good, but if he had looked carefully at this Patents Bill, especially clause 10, he would know that Tau Henare is not patentable, because to be patentable you have got to be useful. You have got to be useful. Clause 10 states: “An invention, so far as claimed in a claim, is ‘useful’ if the invention has a specific, credible, and substantial utility.” And any suggestion that Tau Henare has a specific, a credible, or a substantial utility can only be a lie—can only be a lie—and therefore there is no question that Tau Henare is patentable.

I think it is also worth having a good look at clause 9 of the bill, “Disclosure to be disregarded in certain circumstances”. I think this is something that Mr Henare could have a good look at, because it is an area that he would be particularly interested in. What it does is go to things being obtained unlawfully or in breach of confidence. I invite Mr Henare to consider his relationship with his leader and matters of confidence—and matters of confidence. I think it is fair to say that members on this side of the Chamber had a lot more confidence in him when he was attempting to elevate his status than the Prime Minister did, and I want to just thank the Hon Tau Henare for the disclosures that he made in that particular area—the disclosures that he made to the House and the disclosures that he made to the country about his availability.

💬 Andrew Williams: He’s gone quiet.

Yes, he has gone quiet.

I am going to accept that it has been a long time since I had a look at this bill. I think that the last time I had a detailed look at it Simon Power was the Minister of Commerce. I note that this lazy Minister of Commerce has not progressed it at all. In fact, he has not progressed it far enough even to put his own name on the bill. Craig Foss has got his name on the Order Paper, but he has not worked hard enough on this bill, has not made enough progress on the bill, and has not made a proper contribution even to the extent that when one goes to the title page of the bill. We see that it is still in the name of the Hon Simon Power.

💬 Hon Member: On the cover it is.

No, no, it is not on the front. I am working by the report-back copy.

I do want to say thank you to the Minister, though, on the question of the information and communications technology programming issues around patents—the fact that in the end he got to the right decision. I think it is fair to say that as someone who has been involved in both patents and, earlier, in the copyright area, mine was one of the in-boxes that tended to act as a magnet to the objections when the Minister attempted to overturn the decisions of the Commerce Committee, and I do want to say that I think that the select committee worked hard on it.

I think it is also fair to say that the select committee was much less influenced by overseas information and communications technology companies than were the Minister and a number of the officials. Without making any specific comment, I think we do need to watch very, very carefully the influence of the major information and communications technology companies in this area.

I am looking forward to the contribution of the Hon Maurice Williamson in this area, because I know that he is someone who has quite a good knowledge in this area. He did some programs himself, which probably had copyright on them. They involved the National Party’s canvassing system. Unfortunately, he left them in George Hawkins’ office at one stage, I think, along with a floppy disk that had a letter to the transport department asking to be let off a fine for speeding in a period before he was a Minister. So I think it is fair to say that these things are relatively easily discoverable, especially if people are careless and leave their floppy disks down the back of the couch as the Hon Maurice Williamson did.

This is getting towards being a good bill. There are some important Supplementary Order Papers. There are a couple that the Labour Party will not support. I do want to indicate that I am slightly surprised with one of the later Green Supplementary Order Papers in that it does not appear to be drafted in a way that addresses the interpretation section of the bill. Although Supplementary Order Paper 348 is attempting to take the “advisory” out of “Māori advisory committee”, the Supplementary Order Paper is slightly sloppily drafted in that it does not address Part 1 in the way that it probably should if it was carefully drafted and if there had been consultation on it. I am not saying that if there had been consultation on it we would have supported it. Probably we would not—giving Māori a veto over patents is something we are not up to yet. Listening, hearing, taking advice is important, but I think taking the word “advisory” out of the “Māori advisory committee”—I am going to be interested to see how the Hon Tau Henare votes on that particular amendment—

💬 Hon Tau Henare: I’ll be voting with the Government, brother, just like you.

He is going to be on my side again. On that note, I will leave it to my colleagues.

This bill, the Patents Bill, as my colleague Chris Hipkins has said, was introduced into this Parliament quite some time ago—on 9 July 2008, in fact when the Hon Judith Tizard’s name was on the bill as Associate Minister of Commerce.

💬 Hon Ruth Dyson: Who was the Minister?

Of course, I was the Minister of Commerce at the time. When the bill was referred to the Commerce Committee, though, I was no longer the Minister of Commerce. I was, in fact, the chair of the select committee. I will take all of those encouraging words that I just heard from the Hon Trevor Mallard to be an endorsement of my chairmanship of that particular committee, and I want in turn to acknowledge Clare Curran, who actually acted as a very strong liaison person for a range of interests that were needing to be heard.

I think that when the original set of submissions was heard on the bill, we were left with the position—and we had a very good meeting with Simon Power, who was the Minister at the time, which basically gave us comfort that the position that we would ultimately adopt would be one that would be acceptable to the Government. He was very accepting of the fact that we were engaging, quite appropriately, with the wide range of interests that were expressing quite strong views on both sides of the argument. I think we came to a very good position, and we did so in a very robust way.

It was of great disappointment, I think to both Clare and me, that we ended up in a situation where a new Minister, a fresh Minister having another look at the legislation, decided to overturn all of that good work and thereby create exactly the same environment that we had confronted when we heard the submissions.

I want to comment on this because I am not going to be here for very much longer, so it is an opportunity just to say that when I was a Minister I found that allowing the select committee to have the leeway to work closely with officials and to even meet off-line with people who had very strong interests actually enabled people to reach sensible conclusions. Sometimes there is no need to stick to a formatted process just because that is the way things are always done. Sometimes things get missed in the to-ing and fro-ing, and sometimes it is actually better to get people to go off-line and have these conversations, and to show a bit of trust.

I think that trust was certainly experienced with Simon Power as the Minister. I felt as the Minister that I had that relationship with him, and then afterwards as the select committee chair, again there very much was flexibility from that particular Minister to enable the officials to also go off-line and to have conversations with the people who were making submissions.

I really want to kind of endorse the process and invite Parliament to think very carefully, because I notice that we have had a letter for an update of our Standing Orders. In fact, it may be worthwhile having a look at that, because at a select committee hearing, during the select committee process, you cannot provide briefings to people who are not members of the committee. Well, you can to other MPs, but you cannot provide briefings outside unless there is a report to the House, and then that enables information to be made publicly available.

I think that some of those rules could actually be looked at, if it was done by agreement. It seems to me that the Standing Orders of Parliament would be improved if, in fact, our select committees were able to facilitate that level of engagement with the officials and the protagonists. This is in relation to this one clause that is in Part 1. It is absolutely related to that because Supplementary Order Paper 120, which brings in the definition of a computer program, amends clause 10, which is in Part 1. That is why I think that it is absolutely critical, because what we ended up seeing was that the Minister himself obviously went off-line, in a process as a new Minister, and then came back with what was, in fact, an unacceptable option, without discussing it with the members of the select committee who had—

💬 Hon Ruth Dyson: Which Minister was this?

Well, it was the Minister of Commerce, who is in the chair now. I do not know why that happened, but putting that particular clause out into the public arena, on a Supplementary Order Paper, caused a furore, because there really had been an acceptance that we had reached a good decision, we had used a good process to get there, and the select committee had actually contributed, I think, very positively to this bill.

I think what the Minister has, unfortunately, done by going down this pathway—and it actually picks up on what Trevor Mallard was saying before about the timetable and about how he had not seen this particular piece of legislation since it first had Simon Power’s name on it. In actual fact, this could have been dealt with a lot sooner, and the legislation could have been passed and in place prior to the 2011 general election. I think it would have been incredibly helpful to have had that matter resolved, although, admittedly, he did not take over that role until after the 2011 election. But here we are in 2013, and we have wasted literally 2 years of our time generally to update patent law.

The legislation itself obviously has lots of different provisions within it, but because this particular provision is so important for where we get to in terms of the IT sector and the definition that the legislation will now contain—and I have got so many Supplementary Order Papers here that I am just trying to find exactly the correct one that has the new wording in it, which is that “(1) A computer program is not an invention for the purposes of this Act. (2) Subsection (1) prevents anything from being an invention for the purposes of this Act only to the extent that a patent or an application relates to a computer program as such.”

The wording “as such” is still there, which is not as helpful as it could have been, but it is better than the previous wording. The one example that we kept coming back to at the Commerce Committee was what we called the “Fisher and Paykel example”, where the particular embedded software within the machine itself is not a computer program in its own—

💬 Jonathan Young: Yes it is.

Well, it is not a computer program, but the purpose of patenting it is for the type of washing machine that it is, rather than the software process per se. I suppose that means “as such”, does it not? What it does mean is that the mere execution of a method within a computer does not allow the method to be patented, and I think that is the core difference in respect of the wording that has finally been agreed.

So I think that we are all on the same page. This is essentially what the select committee agreed to do, with slightly different wording, and we could have avoided the significant level of delay that has been incurred if we had been able to get together and probably resolve these issues before it came out the way that it did.

I think it is kind of a warning to others who are in this situation: when there are competing interests, then I think trusting the select committee to play a role in terms of seeking to broker a compromise is actually not a bad thing to do. But then when you have trusted it to do that, please let that continue and do not try to overrule it without going back to the people who brokered that compromise. Sometimes legislation will be compromised if you have really strong competing views. Sometimes there is a way through the issue, as I think we found in this particular case. We were all on the same page, and it would have been helpful if the Minister had decided to join us there much earlier.

I will make a brief contribution to this part of the debate. I think, as the Minister of Commerce and most in this Committee will understand, patent rights involve a trade-off that is thought to be in society’s interests. If we enable the people who make discoveries and go to the trouble of investing in the research that leads to discoveries and we allow them a reward from their efforts, then society is better off because people will go to the effort of making those discoveries. If there was no protection of the discoveries they make that have utility, and if there was no protection for them for the economic benefits that flow from those discoveries, they would not do the research in the first place, and, as a consequence, society would be poorer for it. We would have fewer medicines and we would have fewer discoveries in engineering across society. We would be poorer in a wealth sense, we would be in poorer health, and we would have worse environmental outcomes were it not for those discoveries.

This tension between the monopoly rights that you confer upon a patent holder to enable them to get the fruits of their labour, rather than having them being ripped off by someone who has not put the time and investment into the discovery, immediately upon that discovery becoming public is dealt with in a public policy sense by limiting both what it is that you can patent and the term of the monopoly right that flows from the patent. This legislation, the Patents Bill, attempts to do that.

Where you stand on how broad patents should be, or on how broad what should be able to be patented should be and the period for which patent protection should exist, seems to depend in part from the point of view of some countries on what is in their economic interests. Countries that end up owning a disproportionate share of the world’s intellectual property rights as protected by patents seem to think that, from an economic sovereignty point of view, that justifies their trying to push the boundaries of what can be protected and how long it can be protected for. We see that, and we perhaps will see that, playing out in the Trans-Pacific Partnership negotiations that are under way. In respect of that, I would suggest that even those who have lots of intellectual property should be hesitant to extend protections too far, because it stymies innovation even in their own countries. If you extend patent rights too far—and I am coming to how this is relevant in respect of the definition of computer programs and of what can or cannot be programmed in respect of computer programs, or, indeed, in respect of DNA code—you stop other people innovating.

One of the concerns that the New Zealand computer industry has, both in terms of patent law and copyright law, is that the New Zealand Government will go too far in adopting what countries like the United States want, to which the Australians actually agreed in their free-trade agreement with the Americans, notwithstanding their Treasury advice that it came at significant economic cost to the Australian economy. If you go too far that way, you actually block innovation in your own country, because the computer programmers who might want to design or write a software solution—for example, in medical technologies, which New Zealand is very strong in—could be blocked from doing so because their freedom to operate is effectively prevented by the terms of patent law protecting prior inventions that have been allowed to be patented under patent law. So if you push it too far, that is the consequence, and then the societal outcome of that is that you actually have less innovation, which runs in the opposite way of what the underlying intention of patent law is. This is the balance we are trying to strike.

In my opinion, we always need to be very wary about those who claim extensions to patent rights, because their attempts to extend the terms of their monopoly rights is often motivated by their financial interests, rather than by the societal need for more knowledge, which should be what drives patent law. So it is with that somewhat long and complicated—necessarily so, I think—description of what it is that underlies the principle we should be judging this amendment to insert proposed clause 10A as to whether it gets the balance right. As the Hon Lianne Dalziel has said, it tries to say that where you have some computer software that is intrinsic to the working of a mechanical device, then the fact that the mechanical device includes some software does not stop it being patented. Yes, I agree with that. But if you go so far as to say that source code can be protected by way of patent—this is not copyright; this is patent—then you can go too far, because you can block other people from innovating.

Similarly, in respect of some of the lines that we have to draw round DNA related - technologies, there was a time in the United States when you could patent a string of DNA that had been decoded. There was no invention in that step. There was nothing that should have been patentable in there. It was essentially a list, using a technology that might in itself have been patentable. The patentable technology that allows you to read the list might very well be properly patentable, but the list that you read in DNA as a consequence, and other DNA when you are reading that, should not be patentable. That particular branch of the law was closed off even in the United States, when it realised the folly of its way and cut back on patent rights.

That is an example of why you need to be very careful about not extending the scope of patents in a way that does not meet the underlying purpose. The underlying purpose is to stimulate investment in the research and development that increases the sum of knowledge in society in a way that would not otherwise occur, so justifying the time-limited monopoly rights that are conferred, because, as a society, we are better off. I would like the Minister to explain, on the basis of that principle, how he has arrived at this amendment that he proposes to insert clause 10A in respect of computer programs.

The question was put that the amendments set out on Supplementary Order Paper 237 in the name of the Hon Craig Foss to the proposed amendments set out on Supplementary Order Paper 120 in his name to Part 1 be agreed to.

I raise a point of order, Mr Chairperson. I would just seek your advice as to why my amendment to Part 6 of the bill was put during the vote on Part 1.

I will just have to seek some clarification. The answer is that it has amendments to clauses 4 and 6, which form part of Part 1.

I raise a point of order, Mr Chairperson. Does that mean that the amendments to clauses two hundred and something—I cannot recall the exact numbers now—will be put during the vote on Part 6?

That is correct.

Part 2 Patentable inventions and patent rights