Patents (Trans-Tasman Patent Attorneys and Other Matters) Amendment Bill

As I outlined in the last part of the process a couple of weeks ago, Labour will support the bill. We will not labour the process tonight; there will be a number of calls from colleagues. This is a piece of legislation that we should get through, but I want to pose a number of questions to the Minister—and I am sure he can anticipate some of those questions. This is a bill that, in large part, proposed originally an amalgamation of the single patent application process and single patent examination process systems, in large part, I suppose, as we on the select committee saw it, to benefit the acquisition and processing of patents in a global sense, trans-Tasman. The Government in its infinite wisdom chose to reverse that process for a number of reasons.

I have to say of the original Government proposal, Opposition members supported it—in line with amalgamations around banking, accountancy, and other industries that have had their processes amalgamated in the past. We felt that this was a good idea from the Government. Our focus was about ensuring that those who are involved in innovation, who are involved in intellectual property, and who seek patents, which are (1) expensive, and (2) difficult to obtain, especially for the smaller end of town—if this could ease that transition and provide a cheaper process, provide lower compliance costs etc., then we felt it was a good idea. We were surprised, I have got to say, when the position was reversed.

The position that was advanced by officials was that after some analysis—if I can put it that way, such that it was—this proposal was of no greater benefit to the industry. It is interesting to define what they meant by “industry”, because our view was that they were talking about the patent attorneys as opposed to the innovators. We had a couple of submissions from the likes of Fisher & Paykel—huge contributors to intellectual property not only in New Zealand but around the world—but we as members, I think, across the divide were interested in the benefits, or lack thereof, for the smaller innovator. So officials told us, basically, that the scales had fallen from their eyes and this was no longer a viable proposal because it had not a lot of net benefit to the industry.

On probing those officials over many days, we asked, for instance: “I wonder whether the Minister might be able to respond—what costings, cost savings or cost-benefit analyses have been done around these proposals?”. I remember writing that down, and my colleagues, I am sure, on both sides of the aisle will recall this—the officials saying “Well, back of the envelope”, and “Our best guess is”. Those are direct quotes—and then they would rattle off some figures. I recall saying to officials: “Well, I actually have—and I do put on record—some sympathy for the Minister, because if that was the depth of the analysis that was served up to him, is it any wonder that there was some delay and some conjecture about which way we should go on this?”. At one point in the select committee—and I am very thankful for it, as it was rather unusual—in a private session, the Minister’s senior adviser was good enough to come down and sit in on the meeting so that we had a direct pipeline to the Minister. So that the Minister would understand the angst that not only Opposition members were feeling but also, I would wager, Government members about—to be blunt—the lack of quality advice that we were receiving before the committee.

This is not a political bill. We agree, and we will support the bill, and we would have supported the original premise that was put to us. But it is a little ironic when a Government simply takes the major provision out and reverses it; there has to be a substantive reason why. So, Minister , what I would ask of you, through you, Mr Chair, is whether you could give us some reassurance that this reversal is for the benefit of the innovators; that it is the case, as officials told us, that the net benefit to innovators of the trans-Tasman amalgamation was so minuscule that it was not worth doing. That begs the question as to why this proposal was ever served up to a Minister and a Cabinet. Could you give us some assurances around that, because I am loath to criticise officials—I do it very rarely. I think we have world-class public servants, but I have to say—and I do not know whether Government members will admit this publicly—that there was a loss of cross-party unanimity in trying to get this bill back to the House so that it would work.

There is actually no politics in patents, for goodness’ sake. We actually want the bill to work. But what we were met with was, at best, substandard advice—where officials had not gone away and done a proper cost-benefit analysis, and where a select committee was confronted with an analysis that was “back of the envelope” or “best guess”. Then we diligently undertook—and the chair of the committee, I have to say, was extremely good in letting us—a free-flow interrogation, if you will, of these ideas so that we could tease out the policy propositions. But when you are left with that sort of advice—and the other advice was, basically, “just trust us because we are the experts”.

The thing that we found difficult also, Minister, was that the “industry” had actually not been consulted with—because my colleague Clare Curran and others went and subsequently, with the agreement of the committee, consulted with the innovators. Clare Curran will identify some of those in her contribution. When they actually consulted with them, they had never been interacted with before. Our objective was simply to get a piece of legislation that would facilitate the protection of intellectual property for the innovative community, especially those at the smaller end of town, to protect those fabulous and good ideas that our entrepreneurs have in this country.

It is extremely expensive and extremely difficult to get patent protection. I have got to put on record that the committee was less interested in the notion of patent attorneys changing—it was sort of put to us that life as we know it would end: the patent attorneys would go out of business, they would leave town, and they were incapable, almost, of adjusting to a market that may change through legislation and regulation, and this somehow was a doomsday scenario. Well, I have got to say that I was less interested in that and more interested in what the benefits or otherwise could be for those entrepreneurs and those innovators—not for those patent attorneys whose incomes are derived by charging fees.

I would simply put, through you, Mr Chair, to the Minister: could he give us some background and some assurance that this proposal is the valid one, given that it is a Government reversal, and that there is some net benefit for that smaller end of town innovator? Because at the moment even though the Labour Party is supporting legislation, we do so with a degree of reticence given the poor quality advice that we received during the select committee process. As I say, I feel some depth of sympathy for the Minister. If what was served up to us was served up to him, then I suspect he had some difficulty in coming to a decision as to which was the best course of action to take in respect of this bill. We want to expedite this tonight but I would appreciate it, through you, if the Minister could give us some assurance on those points.

I will take a slightly different point of view from that of my colleague Clayton Cosgrove, although it was a very harmonious committee that considered this bill. The one point that I would question a little is his praise for the Minister in the chair, the Hon Paul Goldsmith, and the advice that he was given. I honestly believe that Ministers themselves have a responsibility for the legislation they put forward to this House.

We are here this evening debating legislation that has been proven to be inadequate and not sufficient for the purpose it was originally created for. Here we are passing through the Committee a bill that does very little indeed. The changes that are going through in this bill could easily have been rolled into an omnibus bill, and hundreds of thousands of dollars, I suspect, of taxpayers’ money could have been avoided being spent on paying all of us and all of our staff to be here in the evening debating a bill that virtually does absolutely little of any value.

We are happy that it does little, in fact; for the one reason that it was likely to do harm. That is where we got to. That is where the back of the envelope - type calculations that my colleague the Hon Clayton Cosgrove got to—that it may well indeed do harm. But ultimately we do not know. We do not know because the analysis was not done in a way that could give us the confidence to know whether this was a good thing we were doing or a bad thing.

The small changes and tweaks that are going through in the bill we do support, so we do end up, on balance, supporting it. I would be interested in the Minister in the chair giving us a little bit of a history of how he came to put this legislation forward, because the story I heard, and what came out in the select committee, was that this was ultimately the result of a promise that John Key had made when he was out kayaking—I cannot remember whether it was with Kevin Rudd or somebody else—that they would try to unify the arrangements in New Zealand and Australia, which on the surface seems like a sensible thing to do. I would like the Minister to give us the reasoning behind it, and the reasoning he has now reached as to why we should be doing exactly the opposite. If he could slip on his flip-flops and get up and explain to us how he came from one position to the extreme opposite—maybe with a slight Australian twang for some amusement along the way—that would probably be doing a public service. At least we would be entertaining the public, but we might also learn what he hopes the bill will now achieve.

I think it is important to understand why we are here, why we are passing this legislation, and why this could not have been done through an omnibus bill—whether, in fact, there is another process that has been considered for the bill from here on through the House. That may be something we would have to take technical advice on, but it would save the House some time. We could get on with what would be, hopefully, more important legislation in the wider interests of the country. The one thing I will say is that this bill is emblematic of the Government’s wider efforts. It is a Government that has said it wants to get exports up to 40 percent of GDP, and that requires us diversifying our—

The CHAIRPERSON (Hon Trevor Mallard): Order! I apologise for interrupting the member, but I have let him go now for about 3 minutes and I want to remind him that we are on the Committee stage of the bill. The bill has been accepted in its current form and principle, and all we are trying to do is make sure that the detail is actually consistent with the principles accepted at the second reading. His speech was probably marginal for a second reading one, but it is certainly not good for the Committee.

💬 Hon Clayton Cosgrove: Point of order—

The CHAIRPERSON (Hon Trevor Mallard): I am still on my feet, Mr Cosgrove. What I am going to ask the member to do now is to stick to the detail of the bill.

💬 Hon Clayton Cosgrove: I raise a point of order, Mr Chairperson. I do not wish to challenge your—

The CHAIRPERSON (Hon Trevor Mallard): You had better not be.

💬 Hon Clayton Cosgrove: I know you too well to do that, in a lot of ways. But one thing I would say about the member’s speech is that it is a very unusual situation that we face in the Committee in that a proposition was put forward by the Government and then reversed. There was an extreme amount of conjecture around that, some extremely flimsy analysis around it, and part of, as you say, checking the accuracy or the detail in the Committee stage—

The CHAIRPERSON (Hon Trevor Mallard): OK; thank you. I have heard enough.

Thank you, Mr Chair. Let me read from new Part 6, inserted by clause 6: “The purpose of this Part is to regulate the provision of patent attorney services by giving effect to the joint registration regime in accordance with the Arrangement.” That is precisely the issue. Does this bill really give effect to a joint registration regime in the way that it was intended when the bill was lodged with the House? I do not think it does anymore. That is what I am arguing. I think the bill has changed in such a fashion that I am questioning whether it really achieves the original purpose put forward by the Minister, and I would appreciate his response on that.

Thank you very much for the interventions by the previous two members, David Clark and Clayton Cosgrove. I should not have to explain to the previous speaker, David Clark, why he is here. I do not know why he is here myself. But the purpose of this bill is a very clear one, and that is to introduce a modern licensing regime for the patent attorneys. There seems to have been a great deal of confusion on the other side where it has conflated two different elements of the bill.

The fundamental part of the bill is to introduce a trans-Tasman licensing regime for patent attorneys because the one that we have been operating under for a number of decades does not have some basic elements, such as a code of conduct, any disciplinary regime, and all the sorts of things that we would normally expect to be part of a licensing regime.

As has been mentioned, the idea in the trans-Tasman setting with the agreement between the two Prime Ministers was to introduce that trans-Tasman regime as part of the broader single economic market that we have been making good progress towards. The idea of that is to have a quality patent attorneys industry across the Tasman so that New Zealand businesses can protect their intellectual property more effectively.

The two elements that they—my friends across the other side of the Chamber—keep on referring to relate to the single patent application and the single examination processes. These were two processes. When this was introduced—

💬 Dr David Clark: This is the main substance of the bill.

No. It is not the main substance; it was one of the substances. The primary substance of the bill was introducing a patent registration regime. If I could relate the history for the benefit of the members, when the bill was introduced to the House in November 2015, it included the proposition that it was a bespoke trans-Tasman single patent application and examination process.

Running parallel to that had been a long, ongoing conversation at the World Intellectual Property Organisation, the WIPO level, to develop an international examination process called the Electronic Patent Cooperation Treaty (ePCT) system. There was a great deal of uncertainty as to whether or not that would actually occur. So when we introduced the bill we included the trans-Tasman operation as a good way of operating, but we were also conscious of the fact that it was possible that an international regime could come along and supersede it. That, indeed, is what has happened subsequent to the bill’s introduction. In June this year—to the surprise of many, actually—the WIPO ePCT system had been concluded and had general agreement around that. So the rational thing to do, given that development, was to say that it no longer makes sense to try to develop a bespoke trans-Tasman single examination process when we can achieve the same thing at an international level.

We got very strong feedback through the process, and that is why that part of the bill has been withdrawn. We are left with a bill that does a very effective job, I believe, in drawing together a trans-Tasman patent regime for the registration of patent attorneys. I do welcome the broad support that this bill has across the Committee. I do welcome the contribution from the member Mr Cosgrove to say that there is no politics in patents, and I think we should keep it that way. Thank you very much.

I rise to address the bill, and I am very aware that Part 1 of the bill has undertaken substantial change. I think we would not entirely agree with the rather optimistic view expressed by the Minister of Commerce and Consumer Affairs.

Certainly, from our perspective, the starting point for this bill was a political announcement between Prime Ministers Key and Rudd in August 2009, and that political announcement, we think, was not well thought through in terms of the practicalities. It was followed in November 2011 by Cabinet’s so-called regulatory framework, and we think that provided, again, an inadequate starting point for the development of the bill.

Combined with a poor process and a lack of consultation, the bill that was presented to the Commerce Committee needed considerable work, and I think it is to the credit of the committee that there has been a new proposal that has now been brought back to the House with a withdrawn single patent application and withdrawn single patent examination process. We do support the fact that those elements have been dropped from the bill.

We also note that there is retrospective legislation here. Retrospective legislation should be very much a last resort and should not, by any means, be a regular occurrence. We are aware that there were failings in the past in not considering the implications of the 2013 legislation carefully enough.

With regard to Part 2 and the proposal for the trans-Tasman licensing regime for patent attorneys, we do agree with the need to modernise and update the original framework agreed under the Patents Act 1953—it is no longer fit for purpose—but we notice that the proposal in the bill was opposed by all 13 submissions from patent attorneys, as well as a submission from Fisher & Paykel Healthcare. We think that joined-up thinking and a more complete examination of this issue would have put key elements in place before this legislation—for example, the New Zealand trademark attorney scheme, a New Zealand qualification scheme for attorneys, and an extended period for New Zealand attorneys to register in Australia.

We think that, to some extent, the legislation has been put in place without those elements there that should, in fact, be there for the system to work to the advantage of New Zealand patent attorneys. We would urge the Government to put those pieces in place as quickly as possible. That will help defray some of the additional costs that are of obvious concern—

The CHAIRPERSON (Hon Trevor Mallard): Order! I am going to refer—the member sits down when I stand up—members to Speakers’ ruling 52/2, dating back to 1931, which makes it clear that “Members must confine their remarks to the bill before the House and cannot make irrelevant matters relevant by suggesting they [should] be included in the bill.”

So what we are debating now is the bill we have got, not other matters. The member has been going for 4 minutes and, I think, at least half his speech could have been regarded as being irrelevant. So that is a reminder.

Thank you for your advice, Mr Chair. I will take your advice. With regard to the bill, we remain concerned about the governance arrangements—for example, New Zealand patent attorneys have to travel to Australia for disciplinary proceedings, and we consider that the New Zealand subcommittee to the governance committee would ensure that New Zealand issues are not lost in an Australian-dominated governance committee.

However, despite some of these criticisms and our concern over parts of the bill, there are significant improvements that have been made during the committee stage. For that reason, we do support the bill as amended, and we commend this for agreement. Thank you.

Thank you for this opportunity to speak on behalf of New Zealand First and, in particular, on behalf of Ria Bond, who is a member of the Commerce Committee, and who has been part of the process thus far. The feedback has been a process of asking the question: why are we actually here? It seems to echo some of the earlier contributions of members on this side of the Chamber.

💬 Hon Member: It’s an existential question.

It is an existential question for Mr Goldsmith. The reality is the legislation itself—I think, the Minister will acknowledge—came to the House in the first reading and then to the select committee in a flawed manner. It did not serve the purpose for which he intended. The committee had a great deal to say about that and a great deal to explore around why that was the case. The feedback from the New Zealand First member was that the to-ing and fro-ing with MPs and officials was such that the select committee process probably failed the purpose for which it was intended, and that is the question I raise in the House tonight. Listening to other contributions tonight, you are not achieving what you set out to achieve. If there are any gains, they are minimal.

Reading submissions in preparation for my contribution this evening seems to suggest—and I am loath to read them out because this is not in the bill, but it is what should be in the bill.

The CHAIRPERSON (Hon Trevor Mallard): Well, do not read those out.

So I am well advised not to read those submissions out. Thank you, Mr Chair.

What I will acknowledge is that new Part 1, new section 92(4)—which seeks to remove the right to operate a grant of patent on the grounds of a claim or claims related to one or more inventions—seems to have been supported by the committee and submitters. But, essentially, from then on—around the single patents application process, the single patent examination process, then Part 2, clause 6, where all 13 submissions opposed the implementation of the joint regime—we have come to a point where I suggest, respectfully, to the Minister, that he and his officials need to take this back for due and thoughtful consideration, because, I submit, it is not achieving what he set out to do.

It is a short contribution, but it is a sincere one. I hope the Minister takes what we have to say into consideration. Thank you.

We, the Opposition on the Commerce Committee, actually did the Government a huge favour with this piece of legislation. Minister Goldsmith should actually be getting up and thanking us, because what could have come back to the House was the bill in its original form. If it had come back to the House in its original form, then that Minister would have had to introduce, embarrassingly, a major Supplementary Order Paper to remove the substance of the bill because it was shown to be so woeful.

In our minority report on this bill, we described the whole process as unedifying and sloppy, and that is being kind. As my colleague David Clark has pointed out, what we were given was a piece of legislation that was somebody’s bright idea, which had not been tested, and, in fact, was acknowledged during the select committee process as being—and this is the single patent examination process (SEP) and the single patent application process (SAP) for patent registration—a pilot.

As my colleague Clayton Cosgrove has pointed out, there was no cost-benefit analysis, and, in fact, nobody wanted it. The reason nobody wanted it was that it was going to cost the industry more. When I went and talked to the innovators—because they are actually the ones wanting to register patents—about the impact of this, none of them had been consulted. Secondly, all they wanted to know was whether this was going to take more time and whether it was going to cost more. The answer, essentially, was yes.

The problem was that this Minister had not done his work. He had not done the due diligence before this bill came to the House for its first reading. There had been no testing of the principles behind it. I do not even know whether he had read it. That become patently obvious—see what I did there—as we went through the select committee process, because the officials had to go back to the Minister not once, not twice, not three times, not four times, not even five times but six times during the select committee process—six times. Do you know how we know that? Because we had to drag it out of them as to what was going on and how on earth we had got ourselves into this situation. We had to write to the Australians. We had to find out what process had been gone through.

💬 Hon Clayton Cosgrove: Don’t forget the confidential documents.

Oh, yes. There were confidential documents, but we cannot talk about them. Mr Chair, this is so relevant because this is why the SAP and the SEP—which are major substances of this piece of legislation that none of the submitters wanted and that the industry affected had not even been consulted on—was not effective. We discovered that there already was an international process being developed that superseded this and, really, it was not going to work at all, and that is why it had to be dumped.

So we did the Government a favour by doing the responsible thing, behaving like a select committee should, working together, and actually saying that this really should go. That Minister really should get up and thank us, and next time he puts a piece of legislation to the House for a first reading, could he please read it and could he test with officials whether or not it has got sound principles so that we do not waste everybody’s time, and probably a lot of money, and end up with what really is a pretty minimal and pretty embarrassing piece of law.

I just want to revisit some of the questions I asked the Minister of Commerce and Consumer Affairs because, with respect, they were not answered. Fundamentally, what Labour members and other colleagues who have taken calls want to know—because we could not get it out of officials—is whether this bill will work given the reversal of the primary Government proposition. For instance, if we look at page 2 of the commentary it talks about, given the reversal, the “Lack of benefits either to businesses or to patent attorney firms making applications on their behalf:”. It talks about “Increased administrative costs to New Zealand businesses:”. It talks about on the following bullet point “Significant costs”.

Then we go to consultation and quantifications of cost. “We consider that there was a lack of”—this was the Commerce Committee’s report, Minister—“consultation with patent attorneys and the rest of the industry before the development and proposal of these enabling provisions. Moreover, we consider that quantification of likely costs—that is, the costs of developing and implementing these processes, and the compliance costs to the industry and patent applicants—was inadequate.”

My simple question is, as we posed in the Labour minority view, given that there was no cost-benefit analysis done or demonstrated, unless one accepts that the notion of “back of envelope” and “best guess”—I am trying to think of the figure that was given to us but, forgive me, I cannot remember—is appropriate cost-benefit analysis, and I am just going to take a short call, is can the Minister give the industry, and by that I mean the innovators, not the patent attorneys, the innovators; not those who charge fees, but the innovators who need intellectual property protection, an assurance that this reversal will work to their benefit? If the answer to that question is yes, could he demonstrate that by quantifying a cost-benefit analysis, which I assume his officials will now have done, now it is some weeks that it has been from the select committee process?

Could he quantify that, and could he tell us what the benefit of this reversal will be? Because, as other colleagues have said, we are supporting it. We supported the original proposition, it was reversed, and we are supporting this proposition because we want to see this legislation work for the benefit of the innovators. But we remain—and we have made this clear in our minority view—none the wiser, with respect, and it is a rather unusual legislative position to be in where legislators will go through a process, support legislation, but still have a major question mark as to whether the rationale that they were presented with was so flimsy, such that it was, that it will actually give effect to the intent of the legislation.

So we simply seek assurances around its effectiveness. And if the answer is yes, it will be effective for that innovative industry, those entrepreneurs, then can that be demonstrated? Can some evidence be provided in respect of quantification of costs and benefits? I think that is a reasonable, non-political request to make, and I am sure all the constituencies in the sector will be grateful for those assurances by the Minister.

Bill to be reported without amendment presently.

House resumed.

The Chairperson reported the Drug and Alcohol Testing of Community-based Offenders, Bailees, and Other Persons Legislation Bill with amendment, and that the Committee had divided it into five bills, the Civil Defence Emergency Management Amendment Bill with amendment, and the Patents (Trans-Tasman Patent Attorneys and Other Matters) Amendment Bill without amendment.

Report adopted.