Patents Bill

I move, That the Patents Bill be now read a third time. The bill will repeal and replace the Patents Act 1953, other than the provisions relating to patent attorneys. The passage of this bill marks the conclusion of a lengthy process to reform and update New Zealand’s patent legislation. I would like to take this opportunity to highlight key features of the bill that will contribute to ensuring that New Zealand’s patent legislation supports innovation, while ensuring an appropriate balance between the interests of patent owners and society as a whole.

The Patents Act 1953 does not achieve this objective. Its criteria for the grant of a patent are relatively weak compared with the criteria applied in most other countries. It is possible for patents to be granted for inventions that are not new or that are merely obvious variations of what is already known. The grant of such overly broad patents can impose unnecessary costs on consumers and businesses by restricting access to products and services that should be free for all to use. Such patents can actually inhibit rather than encourage innovation. Most innovations build on what already exists. If existing innovations are too heavily protected by patents, it can be difficult for subsequent innovators to build on them. This bill tightens up the criteria for grants in order to, as far as possible, ensure that patents are granted only for inventions that are genuine innovations—that is, innovations that are new, that are not obvious, and that have identified real-world use.

The Commerce Committee, in its report to the House on the bill, recommended the inclusion of a provision that computer programs should not be patentable inventions. Supplementary Order Paper 237 introduced a number of amendments in the form of a new clause 10A of the Patents Bill, which deals with the patentability of computer programs. The amendments were designed to provide additional guidance on the proper interpretation of new clause 10A in a manner that is consistent with New Zealand’s international obligations under the Agreement on Trade-Related Aspects of Intellectual Property Rights. The amendments also provided an appropriate balance between the interests of inventors and the interests of society as a whole, which is one of the key purposes of the Patents Bill and was already provided for in clause 3 of the bill.

The Supplementary Order Paper amended the Patents Bill to provide additional clarity as to the meaning of the phrase “computer program as such” in new clause 10A. The “as such” wording was taken from the European Patent Convention and the United Kingdom Patents Act. In the United Kingdom, the “as such” wording has been interpreted to mean that patent applications that involve or make use of a computer program are ineligible for patent protection if the alleged inventive feature lies solely in it being a computer program. Supplementary Order Paper 237 introduced two new subclauses to the bill, subclauses 10A(3) and 10A(4). The effect of these two additional subclauses is to codify in legislation the first three steps of a test set out in an English Court of Appeal decision, known as the Aerotel test. The amendments provide a clarification about how clause 10A should be interpreted. The Commissioner of Patents and the New Zealand courts should apply the Aerotel test and subsequent English jurisprudence that applies the test, when considering patent applications involving computer programs.

Given the lack of New Zealand cases in this field of patent law, the ability to refer to UK case law will assist New Zealand practitioners when providing guidance to their clients. The effect of the test set out in new clause 10A is that it will not be possible to obtain a patent for an invention that involves or makes use of a computer program, if the alleged inventive feature lies solely in it being a computer program. However, a patent may still be granted for an invention that makes use of or involves a computer program, if the actual contribution made by the invention, first, lies outside of the computer, or, second, affects the computer itself but is not dependent on the type of data being processed or the particular application being used. The amendments in clause 10A as embodied in Supplementary Order Paper 237 provide improved assurances as to the intention behind clause 10A, and thus enable the passage of this important piece of legislation.

Also included in the bill are measures to take account of concerns expressed by Māori and others regarding the granting of patents over plants and animals. This includes the establishment of a Māori advisory committee to advise the Commissioner of Patents where patent applications involve the use of traditional knowledge or indigenous plants and animals, and providing for patents to be refused where commercial exploitation of an invention will be contrary to morality or public policy. I am aware that the Waitangi Tribunal made a number of recommendations for changes to New Zealand’s patents legislation. Some, such as the establishment of a Māori advisory committee, were already included in the bill. The Government is in the process of considering the other recommendations, but no final decisions have been made. The passage of this bill will not prevent any subsequent amendments if the Government decides to accept any of the other recommendations.

These features, together with the other changes introduced in the bill, will provide a simpler and more open environment for innovation to take place in New Zealand. Although patents will be more difficult to obtain, patent owners will have greater certainty that their patents will be valid and enforceable. Those undertaking research and development can be confident that their efforts will not be unfairly restricted by overly broad patents. The Patents Act 1953 also contains provisions regulating the patent attorney profession. These provisions will remain in force for the time being while a single regulatory regime for New Zealand and Australia patent attorneys is developed. I intend to introduce legislation implementing such a regime once it has been developed.

I would like to thank everyone who has contributed to the bill and the policy process that led to it, including the members of the Commerce Committee, the Parliamentary Counsel Office, officials, and members of the public and industry representatives who participated in the various submissions and policy processes. I want to particularly thank one of my intellectual property officials, Warren Hassett, who has been working on this bill for over 10 years. I am very pleased to commend this bill to the House.

This is a historic day for intellectual property in New Zealand, and Labour supports this bill, the Patents Bill. This bill was introduced on 9 July 2008 by the Hon Judith Tizard. It had its first reading on 5 May 2009, and the Commerce Committee, which was chaired by the Hon Lianne Dalziel, reported back on 30 March 2010. It has had a long journey.

It has some core principles that underpin it. Those principles are to attempt the balance of two interests: first, to allow innovators to profit from their inventions and, second, to ensure that the monopoly rights that accompany patents are not unduly exploited. New Zealand’s existing patent law is too generous to those people who seek patents. This law has to be updated. It has to be modernised. But we believe that too many corporations have monopoly rights, and many multinational corporations can get patent rights to inventions inside New Zealand that would not be protected overseas.

As I said, this is a historic day for intellectual property in New Zealand. Our economy is still reliant largely on exports that are weight exports—on products that are loaded on to ships and channelled through our ports. Increasingly, we are seeing a weightless economy emerge, where the new innovators use code as their currency, and where inventions rely on their ability to adapt and adopt technology. They rely on the ability to invent and innovate on the basis of lines of code. Those inventors are our new artisans but they are also our artists, because they build on what has gone before, as do musicians, painters, authors, and dancers. We need to back them. That is why this bill is so important. It sets the framework for intellectual property in New Zealand, and it sets the framework on which we can build more intellectual capital.

I would like to briefly note some of the comments that were made by the IT industry upon the conclusion of the negotiated settlement around the exclusion of software from being patentable, which is included in this bill. I would also like to again commend the Minister of Commerce for ultimately understanding and being prepared to listen to the industry and for allowing that negotiated settlement, which has resulted in Labour supporting this bill today.

The Institute of IT Professionals has thanked the Minister for “responding to industry concerns, clarifying the Patents Bill’s intention to remove patentability of software and for taking extra steps to ensure the law around software patents is clear and unambiguous.” The chief executive officer, Paul Matthews, said: “The patent system doesn’t work for software. We believe it’s near impossible for software to be developed without breaching some of the hundreds and thousands of software patents awarded around the world, often for ‘obvious’ work. Thus many software companies in New Zealand, creating outstanding and innovative software, live with a constant risk that their entire business could be threatened due to litigious action by a patent holder.” Ian McCrae, chief executive of New Zealand’s largest software exporter, Orion Health, said: “We welcome the announcement. Under the current regime, obvious things are getting patented. You might see a logical enhancement to your software, but you can’t do it because someone else has a patent. In general, software patents are counter-productive, often used obstructively and get in the way of innovation.” John Ascroft, the Chief Innovation Officer of Jade Software Corporation, said: “We believe the patent process is onerous, not suited to the software industry, and challenges our investment in innovation.”

These are the heavyweights of the new economy in software development. These are the people who needed to be listened to and, thankfully, they were.

I would also just like to point out that New Zealand is not alone in heading in this direction in our jurisdiction. Our position on excluding software patents has been met with acclaim around the world in IT industries in many countries. Currently the German Parliament, the Bundestag, has adopted a joint motion against software patents—in just recent months. The resolution urges the German Government to take steps to limit the granting of patents on computer programs. The German Parliament said that patents on software restrict developers from exercising their copyright privileges, including the right to distribute their programs as free software. Patents help to create monopolies in the software market, and hurt innovation and job creation. The German Parliament called on the German Government to make sure that free software development was not restricted by patents. That resolution is being discussed currently in the German Parliament and it is looking hopeful that it will progress.

Finally, I want to say that vigilance is required on this issue. Vigilance is required, because I think we have to be watching closely to ensure that this new law provides a sufficient exclusion of software-based patents. Only time will tell that. They are notoriously complex, controversial, and much litigated. There is not even agreement on what constitutes a software patent. Many can be dressed up as business method patents, which are not directly addressed in this amendment.

That is why we need to remain vigilant. We need to ensure that we do maintain momentum around the boundaries of the exclusion because they will be tested in due course. We have to watch that the Intellectual Property Office of New Zealand and, eventually, the courts do enforce this new law robustly, because there may be a challenge required to ensure that the intention of this new law is upheld. What is clear is that the New Zealand IT community—the new developers, the new economy, those who represent our new economy—will not tolerate patents that threaten software innovation. That is to be applauded, and that is why we support this bill.

I am very pleased to stand in support of the Patents Bill at its third reading. In New Zealand a patent may be granted for an invention that is a manner of manufacture. What it does is it gives the patent owner the right to exclude others from making, using, or signing a patent invention during the 20-year term of the patent. When it comes to patents, competition, innovation, and all of these issues it is very complex. Although we want goods to be available for the common good, we also want to protect the interests of people who are inventors and innovators, so that they can get a just and deserved reward for their efforts, and so inspire people to continue to innovate.

We know that our patent law here in New Zealand had become quite outdated. It was based on laws in the United Kingdom. Our Patents Act was established in 1953 and it was based on the United Kingdom’s Patents Act of 1949, so it is well over 60 years of age and no doubt has had amendments all along the way. A complete rethink and a reworking are important as we live in this modern age where we have not only weightless products but also weighed products that need to be protected and recognised through patents.

During this time I have no doubt that other members of the Commerce Committee received emails from many people. I thank them very much for their contributions. I thank the submitters who came and spoke to us during the previous Parliament. Their views have been considered. I believe that the Minister of Commerce was right in addressing some of those areas. We need to understand that we live in a complex world where so much information and sharing of ideas occurs. How to do that in an appropriate way that not only protects the originality and the inventors’ interests but at the same time enables innovation to occur is important.

One of the things that we need to understand here in New Zealand is that we rely on the rest of the world, incredibly so. Eighty-five percent of what we make we export, and so it is very important for us to have understanding around international treaties. A lot of people emailed and said we were bowing to Big Brother, whoever that might have been, but we understand that these international treaties enable us to reach out into the world with our products. They protect our interests, and very much so.

A lot of good debate has taken place this afternoon around the issues of the Patents Bill, which is before us. It is good to see that we are making progress, and today we shall complete this third reading and enact this law. I want to thank all the members of the Commerce Committee. I am now the chair, and I want to just acknowledge Lianne Dalziel, a former chair, and the work she did as well. I acknowledge the Hon Simon Power, and I acknowledge the Hon Craig Foss for the great work he has done in bringing this bill to the House. I think we have got it right. Thank you very much.

It is with some degree of pleasure that I rise to speak on this Patents Bill. It is very nice to be able to support a Government bill.

💬 Hon Simon Bridges: How much?

I am invigorated, if that is what the member is asking. I am invigorated by this opportunity to speak on the bill. It is with some pleasure that I speak, because this is a Government, as we know, with the worst economic record of any Government in the last 50 years, and it is not often that we get a chance to actually speak in support of some of the policies that it puts through. So you, Mr Speaker, and the members of the House will understand how pleased I am to be speaking on this bill, as a consequence.

The Labour Party believes in the importance of a clean, green, diversified economy that creates sustainable jobs for New Zealanders. The issue we have is that this Government is not creating that kind of economy more generally. We know, for example, that in my home district of Otago there is the highest number of unemployed people in 22 years. There are 7,800 people unemployed currently, and that is not a proud record for this Government. But here we have a genuine attempt, I think, to diversify the economy.

💬 Hon Simon Bridges: You need more mining in Otago. Dig it up.

So I compliment the Government on this. The research and development tax credits are an issue. Mr Bridges across there raises the issue of mining, and no doubt he is trying to draw attention in this context to the cuts at Oceana Gold that have taken place in the last week in Otago under this Government because of its lack of growth generally and because of its poor economic record.

But here we have an attempt to genuinely diversify the economy, to look at the issue of patents, and what the right balance is between the interests of inventors and patent owners and the incentives on them to develop and produce new technologies, new ways of doing things, and new ideas, and the interests of society as whole, which we know can result from these new inventions and ideas. We think that this is a good bill because it does attempt to balance those two interests: first, allowing innovators to profit from their inventions; and, second, ensuring the monopoly rights that accompany patents are not unduly exploited. That has got to be recommended to the House.

The absolute novelty test—New Zealand will finally catch up with the rest of the world on that. It means that a patent will be invalid if the invention was not new or was obvious in light of information available anywhere in the world at the application date. So the bill does tighten New Zealand’s overly generous patent law.

I want to just pick up briefly on something that the previous speaker Mr Jonathan Young, the current chair of our Commerce Committee, raised. He raised the issue of Big Brother and tried to frame this debate in terms of international trade, and particularly the Big Brother issue. I think, though, it must be on record that the complaint that New Zealanders have about the process with the passing of the Government Communications Security Bureau Amendment Bill was that it was not properly investigated. The previous illegal spying acts had not been investigated, Mr Young. The Henry report, the leaking of the Kitteridge report, and the various issues and bungles by the Government were not exposed to transparency, and not even to an independent investigation. New Zealanders want to know that their spy agencies are acting in their interests and not in some other interests. It would have been good process for the Government to appoint an independent inquiry to sort out those matters before the law was changed to make illegal what was previously legal.

I think it needs to be put on record that these two things are not easily likened and pulled under the same banner. Mr Young is drawing a very long bow there. New Zealanders are not happy with the progress of that bill. But here we are protecting ideas and concepts using patents and protecting the intellectual property that will create the kind of economy we need to ensure a prosperous future for our country—a country that is going to prosper from the likes of the ideas of the HamiltonJet, the Gallaghers of this world, the Scott Technologies, and so on, to make sure that the appropriate protections are in place and the public-good interests are protected in the longer term. Thank you.

I rise to speak to the third reading of the Patents Bill. Clearly we are disappointed that the Supplementary Order Papers that take away the ability to patent life or the traits of it and that provide some more support and substance to the committee that would be looking at issues affecting Māori were not agreed to.

Because the bill—and we are supporting it—has substantive improvements on the previous Act, what is showing up is that the bit that is really missing is around life and around the ability for Māori to actually have a serious meaningful part, an assured part, in the outcomes. It comes down to that essence of life—right down to the genetic material. I was disappointed to hear that Labour is supporting the bill, because it is supporting genetic engineering effectively, and that is the significant difference here. The bill is a very, very good bill, but it has a lack in that it supports genetic engineering in New Zealand and suggests that that might be a way forward for New Zealand, and it clearly is not.

I think it is time that New Zealand had a serious discussion around that. We have had significant years where all we have had are field trials, except for one commercial release of something that has not yet been used—a genetically engineered vaccine for equine influenza that has not been used, as far as I know. Everything else has been field trials. Every one of those field trials has had compliance issues, and has had issues of contamination. I have brought over Australian farmers, who have showed what the issue is when they have gone down the genetic engineering track in Australia, and the issues in the community, the conflict in the community, when neighbour contaminates neighbour and actually degrades the value of their crop and degrades the value of their land.

I will be visiting another farmer in Western Australia in a couple of weeks who is actually—

💬 Hon Simon Bridges: What’s his name?

His name? You have a look. Google it up. You will be right. I will be visiting him. He is appearing in court, along with his neighbour, supported by Monsanto—David versus Goliath. Why should that farmer have lost the value of his crops just because his neighbour allowed something to drift over on to his place, which has devalued the premium that he and his other neighbours were getting? Why should the councils in that area be subject to clean-up costs because this sort of material has got loose?

I think that is a real question for New Zealand. We have not gone down that track yet, and that is good. We can claim it as a benefit for New Zealand to get a premium for our goods, our primary production in this country. The bill would have been extra special if it had effectively banned genetic engineering from being able to be patented here.

💬 Hon Simon Bridges: What would the Greens do?

We have a very good vision, and in New Zealand—remember—we have not got it. We have not got it commercialised in this country now and, according to some, we are doing just fine.

We have got a vision around sustainability of clean agriculture, clean primary production, and maximising that when we go out to the world, with the best possible value and the best possible brand. Genetic modification has no place in that brand. It is not wanted by consumers internationally. More and more information is coming about the negatives in that. We do not need it for biofuels. We do not need it out in our environment at all. We do not need it in our food, even more. There is a real issue around the amount that might be in our food, but the current Government—in fact, the previous Government as well—was remiss in the level of compliance assurance around what was in our food. We have got GE food labelling laws that are so so, but they are not even being reinforced by auditing or having a check on them.

We have experts in this country, and I will talk about Jack Heinemann from Canterbury University, who is internationally renowned. He has got a book here, Hope Not Hype: The Future of Agriculture Guided by the International Assessment of Agricultural Knowledge, Science, and Technology for Development. This is a big lump of scientists who have looked deeply into these things to see what is actually sustainable for the future, what has gone wrong with this technology in the past, and how we can learn from that. We are so lucky that we have not gone down the track that the US and certain South American countries and a few others have gone down. A number of them are pulling back from it, and regions are pulling back because they are having very negative effects into their environments. They have also had limitations in public-good science because of the patents on organisms. It has reduced the ability to have the absolute best we could get, through medical science, because what is considered to be locking up for innovation, to give rewards to those corporates, ends up being a monopoly, a manipulation, or a strategic measure to block other research and other users out of what is everybody’s—what is life and what belongs to every one of us.

We support the bill for those really positive things, and, as I say, we are very, very concerned about the major, major gaps in there. They are the ability for Māori to have some genuine influence on things that matter to them—the essence of life in there—and the fact that we can see life patented. New Zealand could have been extra special there. It is great that we have seen the development around software and computer programs. What a fantastic day it is today when we are going to be voting that through, and that is very, very good. But for the rest of it, it is unfortunate. So as I sit down I will still commend the Minister for the positive parts of the bill, and the rest of our colleagues who are supporting the bill in its major substance. Thank you.

It is a pleasure to speak on this, the Patents Bill, and to support the Minister of Commerce, the Hon Craig Foss, and the Commerce Committee, which did some fine work on this bill in terms of getting it through the House process.

Patents are important. I think we have all said that this afternoon. They are important because they are about innovation and advancement. They are about invention, new ideas, and new processes. That is the future of New Zealand’s economy and New Zealand business. Patents are important in that respect. Patents are important because it is appropriate to balance research and development and the interests of innovators and inventors with the interests of users of that technology or patented technology and patents. Although patents protect business innovators, they are also about providing goods and services for consumers and the people of New Zealand. Patents are important because in a small economy like New Zealand, which is becoming increasingly reliant on technology—especially in my electorate of Maungakiekie, where there are high-tech manufacturing companies that rely on intellectual property rights—patents are important for our economy, and they are important for jobs and opportunities in this country, going forward.

It is pleasing today that for once this year we have the Labour Party supporting a bill that supports jobs and opportunities, and supporting a bill that supports families and communities out there that need legislation to support our economy. It may be indicative that the Labour Party is supporting this bill because it is currently leaderless, it is currently rudderless, and it is currently in need of some direction.

The Patents Act is outdated. We have all acknowledged that fact. Patents are not new. In the 1600s the English Parliament passed a Statute of Monopolies that granted new monopoly rights around manufacturing. Our Act was put in place in 1953, so we can see that we are 60 years in the making in terms of changing and updating this Act. I think we on all sides of the House can take credit for that.

The bill is about bringing our patents legislation and making it more closely aligned with our trading partners and the people whom we do business with across the world. In particular, it is about looking at a single trans-Tasman patents application and examination regime that will bring down the costs of business and bring down the time delays that are involved in patent applications both here and in Australia. So I support this bill because I know that this bill will make a difference to our economy and will make a difference to our communities and to employers and employees out there who rely on this type of technology.

May I finally just acknowledge the Minister and the moves that he made around Supplementary Order Paper 237, which has been talked about. There was wide consultation with the industry and close deliberation, and I think we have a solution around computer programming that is workable, that is realistic, and that will bring positive outcomes for businesses and for inventors alike. So I support this bill because this Government is once again bringing legislation to this House that is promoting the economy, promoting jobs and opportunities, and leading us into the future. Thank you.

Debate interrupted.