Patents Amendment Bill

Thank you, Mr Speaker. I present a legislative statement on the Patents Amendment Bill.

SPEAKER: That legislative statement is published under the authority of the House and can be found on the parliamentary website.

Hon SCOTT SIMPSON: I move, That the Patents Amendment Bill be now read a first time. At an appropriate time, I will move that it be directed to the Economic Development, Science and Innovation Committee for a consideration period of six months.

This bill supports innovation competition in New Zealand as part of our Government’s Going for Growth plan. It does this by amending the 2013 Patents Act. In a few minutes, I will say more about the bill and the issue it addresses, but first I’d like to give the House some background on patents and how they support innovation, manufacturing, and, ultimately, economic growth in New Zealand. Patents provide the right to prevent anyone else from making, using, or selling an invention for up to 20 years, and patent holders may, of course, license others to use their invention. The law around patents gives an incentive for inventors to develop new technologies that benefit society. Businesses have the opportunity to be financially rewarded from the sale and licensing of their invention before others may lawfully use that invention for commercial gain. By giving inventors exclusive rights, patents also help foster a competitive environment where companies are encouraged to develop new ideas.

To be worthy of a patent, there are criteria an invention must meet. Firstly, it must be a novel idea. Secondly, it must have what is called an “inventive step”, and this means that it can’t just be an obvious variation on an existing product or technology. Lastly, it must, of course, be useful. New Zealand has a long, proud history of granting patents. The first patent for an invention here was granted in 1861. The Intellectual Property Office grants around 2,000 patents a year.

Since patent legislation was first enacted in 1860, there have been several significant reforms made to it. The most recent reform, and the one most relevant to this bill today, is the Patents Act of 2013, which replaced the Patents Act of 1953. For simplicity, I’ll refer to the 1953 Act as the old Act and the 2013 Act as the new Act. The replacement of the old Act modernised a 60-year-old system and it introduced stricter criteria for the granting of patents. Stricter criteria were introduced to ensure only deserving inventions could qualify for and therefore benefit from a grant of patent.

Earlier, I mentioned that in order to be patented, an invention needs to be novel, inventive, and useful. However, under the old Act, the examination of a patent application does not require an inventive step, meaning patents could be granted for inventions that are merely obvious variations on existing technology, and this can disadvantage local businesses and hinder competition by preventing them from commercialising products that do not obviously improve existing technology. It can also unnecessarily increase the price consumers pay for those products. Although the old Act allows third parties like business competitors to challenge the grant of a patent for inventions, the lack of the inventive step process acts as a cumbersome and expensive procedure. It also creates uncertainty—the legal risk for those third parties.

Currently, applications for patents under the old Act and subsequent applications related to the original patent are still dealt with under that old 1953 Act. These related applications are called divisions and are most often filed where an application really consists of two or more separate inventions. There are currently around 80 applications still pending under the old Act. New divisionals filed from these outstanding applications could hinder New Zealand’s business from developing, manufacturing, and selling products, in fear of infringing any subsequent patents granted for them, and this could lead to unnecessary costs as businesses try to innovate and protect their intellectual property.

My intention today with the introduction of this bill is to bring the treatment of all new applications related to the old Act into alignment with the new Act. This bill supports competitive business settings and that pillar of our Going for Growth plan. It does this by ensuring that the patents law regulatory settings provide businesses with the confidence to innovate, manufacture, and sell new products that benefit Kiwi consumers. And on that note, I commend the bill to the House.

The question is that the motion be agreed to.

That is why this is called a first reading—Minister Simpson needs a new pair of glasses so he doesn’t have to have the paper quite at his nose next time. But not to worry!

Look, we support this bill going to select committee. We agree with the Minister that good, functioning intellectual property law is an important part of our economy. I mean, this bill—let’s face it, it’s not the most exciting bill. It’s really just smoothing out an inconsistency where a new scheme was introduced. The old scheme was, essentially, grandparented in, but the tests are different. I see that the number of patents that are outstanding under the old scheme have been diminishing over time, so, in fact, this amendment won’t affect a large number of patents. I think it’s around 80.

As the Minister said, under the modern law, patents have to be inventive. That is to say, they have to do something a little surprising. I mean, there’s an interesting question around what the distinction between a kind of obvious improvement and a kind of innovation is, but that’s for intellectual property lawyers, not for us. But having two different tests was problematic. The irony is that it didn’t necessarily lead to a lower standard overall. It led to a challenge to that patent being made and it being clarified, but that’s just a waste of time in many senses and a poor use of resources.

Of course, the other thing to note is that the old patent framework isn’t consistent with international obligations and intellectual property law. Probably more than any other, it has to meet international frameworks because intellectual property is, essentially, borderless, and we’re not in tune, if you like, with the European Union in this regard.

So this work—I must say, we’d better support this, because we started this work. It was actually the Labour Government that kicked this off. But it is important that we are consistent with our main trading partners, and, of course, with the EU free-trade agreement, we have obligations to make sure that our intellectual property law is up to a particular standard.

So, really, this tightens up some standards for those old divisional applications, so that’s a good thing. It gets rid of that loophole where, if you took the divisional application route, there was apparently a lower threshold, and, of course, it protects parties who have competing intellectual property claims as well.

So yes, this is good intellectual property law. It’s necessary. This is a useful tidy-up, domestically. It’s an important piece of reform to make sure we’re internationally consistent, and we’ll be supporting this legislation.

Thank you so much, Madam Speaker. I want to acknowledge that the history of this bill comes from the fact that we did have the Patents Act of 2013 that did create a bit of wiggle room for people to keep applying the Patents Act of 1953, basically, as part of having transitional rules to allow older applications to be considered under that former Act—that was the idea of preventing an unfairness where people who were still going through the process would then not be able to continue doing so. But now, after more than 10 years, we do have—as other speakers have noted—that loophole that exists that people can, basically, continue using that transitional rule, and it’s good that we are looking at closing it.

Back in 2013, the Green Party did support the bill that was going through the House and we noted that it was well overdue for review. We also specifically noted at the time that we supported the tougher absolute novelty test and some of the specific exclusions from patent protection. So that’s important to note, and part of that is because now that we’ve been a party in Parliament for over 25 years, we’re able to actually pull the Hansard and note some of those quite historic positions we took.

The member previous to me, the Hon Dr Duncan Webb, noted that patents have to be invented under modern law. I think, to me, that also raises the issue that, as we modernise our patent laws and close loopholes, the idea that we want to support people to be inventive and innovative requires also a Government that is adequately investing in, for example, our science sector. So as we look at closing some of these loopholes, if we want to have modern patent laws that predominantly are centred on supporting people who are inventive and genuine innovation, I think this should be, in my view, compounded by adequately resourcing our science and innovation sector and our scientists, who, at the end of the day—and, actually, creatives—

Francisco Hernandez: And polytechs and unis.

RICARDO MENÉNDEZ MARCH: Thank you for the talking points, my fellow colleague. Ha, ha! But the tech sector also is an important part of it. I think it’s an interesting juxtaposition to see, I guess, such a unanimous agreement here in the House for this—well, what so far seems to be unanimous agreement for this bill, despite cuts to the science sector that in and of themselves hinder innovation.

I also wanted to acknowledge something that has been said before, but it’s worth noting that this bill has its history rooted in the work that the previous Government was doing at the time. I think there’s been some bills that have been brought forward by this Government that have that. That doesn’t necessarily mean it has to be an inherently cynical talking point. I think sometimes there is worth in actually acknowledging that if good work was started by a previous Government, there is no reason for the current one to drop it. I do, at the same time, wish that Government members could front-foot that, rather than that being an Opposition talking point or a sort of “gotcha” moment. Because we have seen other incidents where, for example—whether it’s in the housing space or otherwise—the Government is talking about thousands of Kāinga Ora homes being built, but there’s an acknowledgment that it was something that a previous Government was actually starting.

Finally, I want to note as well what was already noted around this helping us being in line with our trading counterparts. That is important in order for people in the tech sector—whether it’s scientists, etc.—to feel like their inventions genuinely will hold up to the standards that we’re expected to at the international stage hold true. It’s important that they have confidence in a Government that is genuinely modernising our patents law. In this case, while I agree that this bill isn’t the most transformative bill when it comes to patent legislation, it does close a loophole that required addressing, particularly because if we have these transitional rules for over 10 years, one can see why this needed addressing.

I did find it curious, though, that this was introduced as part of the Budget week process, under a period of urgency. I think that, to me, was a bit of a quirk, especially because we’re only debating its first reading now. So, yeah, I did want to note a bit of the sort of process that was followed here in relationship to using the Budget urgency process to introduce this bill that in my view did deserve select committee scrutiny, and I look forward to it.

Thank you, Madam Speaker. It’s my pleasure to rise and speak on the Patents Amendment Bill. Look, I think we’re happy on this side of the House to acknowledge that this work was started under the previous Government, and I think, as Mr Menéndez March has noted, actually having a set of laws that everyone can sign up to—which patent law has actually been going on for a very, very long time, and making sure we’re modernising is not something unusual, so I think we should embrace that. As the Minister outlined, actually having a strong patent system ensures that we are actually able to bring forward innovation, and that companies actually do invest in it.

You might be interested—Madam Speaker, you’re probably not—but I actually did toy with being a patent lawyer when I was at university. My highest law mark, actually, in my law degree was in intellectual property law, but hence I chose a different career path, and I’m here with you today. But this is—while it is, really, a technical bill, just aligning our previous law with the new law, it is very important that we do get this done. Patents are very important, and, in fact, in my previous career in the medical industry before coming to Parliament—again, patents play a very important role in ensuring that we have new medicines and treatments for when very serious diseases develop. So I commend this bill to the House.

I’m pleased to rise on behalf of New Zealand First to support this bill, as well. It’s great to see the collegiality around this. Hopefully, what that means is that the bill will go through the House not only quickly today but through all the stages of its process quickly and efficiently, so we can get on with other business as well—so there’s a challenge for the Opposition, in particular.

Look, it’s great to see the collegiality, as I said. I want to thank the Minister of Commerce and Consumer Affairs for what was a very, very clear explanation of the bill and the purpose of the bill. What it is about, for me, is making it easier and clearer to protect intellectual property (IP) for the divisions, effectively, as you say—from those pieces of invention which might be a little bit more dated before 2013.

I just want to finish off by saying: why is IP important? Because we, as a country, know we need to grow our economy. We grow our economy by innovation, by invention, and by creativity. Without that, we are not going to be able to grow our economy, and we’re not going to be able to get better, smarter, and more efficient. So it’s absolutely essential. We are a nation of inventors. There are many, many things that New Zealanders have invented. I’m not going to go through a great long list, because I know we want to get on to the next issue, but whether it’s being pioneers in flight, boating, a lot of medical research, all sorts of areas, New Zealanders are pioneers—world pioneers. The people who do that work, the people who have that creativity, deserve to have their intellectual property, their intellectual effort, protected and supported, and that is what this bill is all about.

As I travel around our country, I see so much more innovation, so much more creativity that we need to support. That’s what we should be doing. This, effectively, is supporting the people who were the creatives of days gone by, and that’s important. So I commend this bill to the House.

Thank you, Madam Speaker. It’s a pleasure to rise in support of the Patents Amendment Bill. This is an important piece of work to improve the integrity and trust within our system so that people can see that when there are patents that are applied, they are all of equal kind and standing. I have many inventors and fantastic businesses in my electorate who I know care deeply about intellectual property, and I’d just like to mention two of them: Argus ManuTech and Chiptech, who have incredible inventions and I know care about intellectual property. I commend the bill to the House.

Thank you, Madam Speaker. It’s a pleasure to stand and speak in support of this bill. I noticed that my colleague Todd Stephenson referenced the fact that patent law has been around for some time, and I pulled up this quote that says, “the issuing [for] patents for new discovery has given a spring to invention beyond my conception.” That was actually a quote from Thomas Jefferson, so patent law has indeed been around for some time as a tool to spark innovation.

I think there’s a little bit of irony in the fact that, in terms of the way patent law has developed in regards to divisional patent applications, there is the risk that that overuse will limit innovative practice and innovative design. So, essentially, this bill is trying to find the appropriate balance between protection for patents and that intellectual property, but also allowing innovation to occur.

Divisional patents are interesting. I did not believe that I was going to be a patent lawyer, but I’ve learnt rather a lot about it in the last wee while. They contain subject matter from a previously filed or a parent application, and in many cases they will retain the date that the parent application was filed on. So they have multiple terms—some will refer to them as cascading patents—and you can have multiple—it’s not necessarily just one, but actually multiple divisional patent applications. I believe, in the last round of legislative change, they were referred to as daisy-chain divisional applications, as well.

Now, some people might say that rather than limiting the scope of divisional patent applications, the better way to manage this would just be to allow legal challenge. But I do think we’ve seen an alarming trend internationally where it’s been recognised that, particularly in the pharmaceutical sector, there’s been a strategic use of divisional patent applications to, essentially, delay generic or biosimilar market entry of other pharmaceutical products. I think we saw, even in the last year, the European Commission found Teva guilty of abusing their dominant position in relation to their multiple sclerosis drug Copaxone. Last year, they ended up fining them €462.6 million for their breach. Teva’s behaviour included behaviour such as filing multiple divisional patent applications and then withdrawing them—essentially, kind of creating this haze of what they had ownership of and what they didn’t have ownership of, which made it very difficult for competitors to get into the market. Essentially, it was a delaying tactic. So there is a very valid reason, in my view, for us to look at how divisional patent applications are used.

I just did want to respond to my colleague Andy Foster’s comment that we’re seeing consensus in the House at this first reading stage and that’s good; hopefully, we’ll see it continue—yes, and maybe no. I think it’s important for the House to behave as a House, and listening to submitters on bills is important, which is why it’s good to see this bill come out of urgency and be placed on a normal time frame.

I look forward to hearing from submitters, including from the Law Society, whose intellectual property policy team actually commented on the exposure draft. Their comment was actually just a very short letter. They attached their submissions to previous attempts to pass legislation on this through the House. They objected to some of the proposals. They made some proposals around inclusion of things that had been included in the 2013 round and, I think, beyond, that aren’t included in this proposal, as well. So I do think that we need to be open to hearing those very valid submissions from intellectual property lawyers, as well. But at this stage, I am happy to support the bill through to select committee, and I commend it to the House.

I rise to support the Patents Amendment Bill. This is really a necessary reform, to ensure that New Zealand’s patent system is modern, fair, and internationally credible. We’ve heard a lot in this room about people who wanted to be a patent lawyer. My career before this was on the other side, as a scientist, and this is very important to actually drive innovation here in New Zealand—and innovation is, of course, the backbone of progress. It helps drive our economy, it fosters creativity, and it ensures that businesses can invest in new ideas.

We’ve already heard of some businesses in New Zealand that have done that very successfully. I think of some in my electorate. There are plenty that pop to mind, but of course Tait Communications is probably one of the bigger ones. These businesses have really benefited from patent law, and it’s really important that we continue to protect the innovators in New Zealand. We are an innovative nation. We just need to look to the fact that now, our advanced aerospace industry is actually worth more than our wine industry. This is really important to make sure that we have a modern and fair system. The old Act had needed to be tidied up. This is closing the loophole and, therefore, I commend it to the House.

Kia ora, Madam Speaker. I was looking into intellectual property and what it actually means. I love the definition: it refers to creations of the mind that, obviously, don’t just stay in your mind, but they leave the creator’s mind and create inventions—they create great artworks, they create beautiful books and poems and designs and symbols, and they’re used for everything from the arts to commerce to science and everything in between.

It’s good to reflect on the fact that intellectual property is something that we do have laws and protections around, and, obviously, this legislation has been traversed already. It is around tightening those up. As my colleague the Hon Duncan Webb said, when work was first done on it, there were at least 700 pieces. We’re now down to about 80. So, obviously, work has been done; it is being progressed. But none the less, we’re here and we will support this legislation.

Very much, it’s about looking—as it goes into the select committee process—into the people that it affects and impacts, and getting the balance right of the intellectual property owners, those innovators and creators. So as it leaves this House, as it goes through the select committee process, let’s ensure that we get the balance right—that those innovators, those designers, those creators are front and centre when it comes to ensuring that when the bill comes back to the House, it’s in better shape than it is now. Therefore, this side of the House, in Labour: we will support this bill.

As a scientist, I know firsthand how vital patents are—that’s what Dr Carlos Cheung told me earlier when we were discussing this bit of legislation. I don’t know if my mathematical physics degree will quite qualify me for that. He was talking about, from his scientific career, how important it was to protect their ideas, their intellectual property, to give inventors the confidence to share their discoveries. Of course, in return, we all benefit from the knowledge and the work that they do.

Now, I see this firsthand on the Kāpiti Coast. I think of a local business that I went to visit, like Stanmore Farm. Now, these guys are fantastic. I think of Harry and Kate and Tim that run this family business that is, effectively, a nursery for all the vineyards not just across New Zealand but they’re also exporting around the world. While you might not naturally think of Te Horo as being the centre of the New Zealand wine industry—in fact it is, and probably every glass of New Zealand wine has a connection right back to Te Horo, as they grow from scratch, and graft, and all the technical stuff that I don’t tend to know about—and I leave that to Stuart Smith—these vines which then get sent around the country; they have to be replaced every few years. In return, as they grow and produce some marvellous wine that’s part of our export plan to double the value of our New Zealand exports, that is a part of the story, not just in the root stock that they send overseas but also, of course, the wine it produces.

How is that connected to patents? Well, one of the reasons they’re successful is because they’re a great, Kiwi-owned business. They have come up with some really clever technology—and I’m trying to be a little bit careful here to pick my words, because, of course, there’s a competitive advantage to them as a business and they’re clever in what they do. They took us through and showed us some of this technology that they have developed that helps them and the way that it has been able to set them ahead, the way that they do things that no one else in the world can do, and of course we want to make sure that this is protected.

As I’ve travelled around as part of the select committee and seen other places, I think of the Turners and Growers packhouse that I went to with Catherine Wedd over in Hawke’s Bay, and the technology that they have on the production line. They have developed new technology and new processes not just used in Hawke’s Bay but also used all around the world as they export that. Now, we want to make sure that we are protecting their work in an appropriate way, that we are aligned with international best practice, that we are protecting their work and giving New Zealand the best competitive advantage.

These technologies, often, like I saw with the Turners and Growers packhouse, get sold around the world now into North America and into Canada. It’s not just that it’s made them more effective and more efficient and get a better value for money but then they sell that overseas. It’s like a version of a double-edged sword where it gives in two ways, because we get the advantage here and then we sell it overseas. That’s why this legislation is so important. That’s why I commend this legislation to the House.

Motion agreed to.

Bill read a first time.

The question is, That the Patents Amendment Bill be considered by the Economic Development, Science and Innovation Committee.

Motion agreed to.

Bill referred to the Economic Development, Science and Innovation Committee.