The reliability of environment claims made by businesses is difficult to assess, precisely because a universal easy-to-apply standard is unworkable. Some will consider a hybrid car is eco-friendly, others that it is just less damaging to the environment.

So, when is it ok to say you are green?

Marketing a product or a service is very often about conveying an immediate impression to customers. When you're in the supermarket, for example you're often in a hurry and some companies will take advantage of that. With a logo, a tagline or a picture, companies want you to think that the product or service you are about to buy is "green", "recycled", "safe", "carbon neutral", "sustainable" etc. Green marketing is on the rise and so is greenwashing - making misleading or deceptive environmental claims. They're not always flat-out lies, but can often be gross exaggeration.

So when is it okay to say you are green? You can view the full article recently published in Celsias  here.

This article first appeared in Celsias and Element e-newsletters and was written by Sebastien Aymeric. To contact Sebastien please email him on sebastiena@jaws.co.nz or phone him on Tel 09 914 6793

Your company's point of difference may be reducing your costs due to improved processing/manufacturing efficiencies you have developed.  This may allow you to compete on price, yet maintain a higher profit margin. 

Alternatively, you may have developed a novel added value food product which none of your competitors have, allowing you to charge a premium. 

However, as many of you will appreciate, it is only a matter of time before your competitors, either based in New Zealand or overseas, catch on to your point of difference.  Suddenly, you are on equal playing fields, or quite possibly at a disadvantage due to the challenges discussed above. 

As such, many of you are doing your company a disservice by not protecting your competitive edge through IP protection, such as patents.

Of course, in many cases patents may not be a suitable strategy, and other forms of IP protection are better suited, such as trade secrets.  The take home message is to at least have a discussion with a patent attorney before any disclosure or sale.  This can help you identify what form of IP strategy is best suited to your company's goals.

As outlined below, patents can allow your company to really leverage your point of difference for much longer periods of time than achieved just through speed to market and/or maintaining trade secrets.  For example, such secrets are often lost, for instance when your employees go to work for a competitor; a common problem seen in New Zealand.   

I also outline how patent rights can lead to a host of other growth opportunities, besides simply protecting your patch.

 Path to market

One of the great advantages of the food industry is, when compared to the likes of the human pharma, the path to market is relatively short and without needing to go through clinical trials. 

This actually makes patents in the food industry particularly valuable because the 20 year monopoly can be put to its maximum use during the commercialisation of your product or process.  This links in well with our country's expertise in getting a new food product to market quickly.

A relatively fast R&D process can also help to avoid ongoing patent costs for a "dead duck" concept.

This also means there is provide a window of opportunity to withdraw your patent application prior to publication (normally 18 months after an initial filing).  This can be a fall back position to allow for trade secrets or to avoid your competitors from learning from your R&D mishaps.

Multi-industry applications

In many cases, R&D in the food sector will have multiple applications.  For example, development of a new food processing technique could lead to improved efficiencies for both the seafood and beef industry.

Therefore, you can retain rights to your patented technique in your industry of interest, while cross-licensing in a different industry or even your same industry in another country.  This adds passive income, generates ongoing collaborations, and can synergistically add to our export market.

We only have a small pasture

The geographical size of New Zealand means we cannot mass produce compared to the likes of South America, USA or China.

Indeed, John Key has signalled a key area for growth in our export industry is through food exports which should treble to $58 billion p.a. by 2025¹.  If we have any hope of meeting this target (and similar growth of your company), it will need to be from added value products or improved processing techniques to boost productivity or lower costs.

Low threshold for patent exemplification

Compared to other areas in biotech, the food industry is a relatively predictive art.

What this means is if you are able to show the effectiveness of a new antimicrobial agent for preserving poultry, it is also likely that you could seek valid patent protection for preserving other meats, other food products, and potentially even other uses with very little supportive data. 

As discussed above, this opens up a world of licensing opportunities.

Advertising

Overseas companies are becoming increasingly IP savvy and regularly review patent filings and publications.  They may then approach your company if your technology looks promising or synergistic with theirs - this can lead to new business opportunities and income streams through licensing to avoid patent infringement issues. 

You can also use patents to advertise your company's innovative nature to the general public.  Patented technology instantly helps to give your product and company an element of sophistication.

 References:
 ¹http://www.stuff.co.nz/sunday-star-times/business/5910489/Whats-the-plan-National

This article first appeared in Food NZ - April/May edition and was written by Peter Brown,  Registered Patent Attorney. To contact Peter please email him on: peterb@jaws.co.nz or phone 0800 strategy.

James and Wells employees have shown great commitment to the IC3 certification programme achieving consistently high marks.

The IC3 is a Global standard certification for core computer skills.  James and Wells have undertaken to put all their staff through the IC3 as part of the Kiwi Computer Challenge. 

The Kiwi Computer Challenge aims to increase New Zealand's productivity by ensuring our workforce understands how to use their computers effectively.  The goal is to encourage companies to put all their staff through the IC3 to provide a vital benchmark for key computer skills in their organisation. 

Most people have taught themselves to use a computer and so don't know what they don't know.  By completing the IC3 they fill in the gaps in their knowledge, saving them time and frustration.  By passing the internationally recognised IC3 certification they can prove their skill level.

Law practices in particular have demonstrated very variable levels of computer skills with some lawyers being dependent on their Personal Assistants for documents and emails.

James and Wells are now on track to become the first company in New Zealand to certify all their staff.  Achieving this goal will grow productivity.  Courses such as the IC3 have been shown to save an average of 20 and 30 minutes per day which is around 120 hours a year. 

That's the million dollar question for businesses looking to license out their technology. In other words, how are they going to get rich?

It is not a question that is easily answered.

Royalties are determined by applying a rate (usually a percentage) to a base (usually some definition of sales).

For decades many practitioners have used a particular rule of thumb for determining a likely royalty rate range, dubbed the '25% rule'. Under this rule, projected profits to the licensee are the starting point. The assumption is the innovator should be entitled to about 25% of the gross operating profit from the innovation. 

Some who like this rule advocate allocating and deducting non-manufacturing operating expenses relating to the product, in addition to the cost of sales. The operating profit should be before interest and tax.

The application of the 25% rule will often give an unrealistically high figure - and other factors may be taken into account to lower the royalty rate. Adjustments to a royalty established under the 25% rule should be made with regard for factors like licensee competencies resulting in low cost of sales relative to that of competitors, the strength and breadth of IP protection and the availability of viable substitutes.

Part of the difficulty with the 25% rule is that there are many interpretations of it, which can lead to very different results.

These difficulties, and the validity of the rule itself, were vividly brought to light in the Uniloc case, decided in January 2011 by the US Court of Appeals for the Federal Circuit. The court ruled the 25% rule inadmissible, saying it had no scientific or empirical basis and did not tie a reasonable royalty base with the facts of the case.

The million dollar question just got harder to answer.

Regardless of whether the US court considered the rule admissible, I'm sure many licensing professionals will continue to use it as, at the least, a yardstick in their royalty negotiations - if only because it is fairly quick and simple.

How else do decide appropriate royalty rates?

Royalty rates for groups of technologies based on established and successful licensing arrangements may be useful. Benchmarking against similar products or technologies relies on the availability of sufficient public information.

Research companies may, for a fee, provide royalty information on products and industries, based on surveys and data from various sources. Royalty Source (royaltysource.com) and Tech Agreements (techagreements.com) are examples of such companies. There are also published studies of royalty rates that can be accessed freely (see the studies published by the Licensing Executives Society International).

However, there are inherent difficulties using this methodology. Most deals between businesses, other than publicly listed companies, are confidential and not published. By definition, a patent is given to a unique innovation, so how do you find truly comparable technology? 

Licensing deals can vary enormously in their terms, from upfront payments, duration, territory and exclusivity to minimum performance requirements and the supporting IP that's licensed, such as trademarks or know how. All will impact on the royalty rate and whether the deal is truly comparable.

There is no easy shortcut to determine an appropriate royalty rate. Lots of steps are needed: a thorough analysis of the technology, the competitive landscape, the scope of the IP protection, the available comparable deals, the value of the patented product in promoting sales of other non-patented items, the profitability of the patented product and the proportion of that profit directly attributable to the patented features, the degree of innovation and the actual terms proposed for the licence.

Whether you use a rule of thumb like the 25% rule or a full economic analysis to justify the royalty rate you put forward in your licence negotiation, one thing is for sure - your counterpart will have a very different number on their piece of paper. The reasonable royalty rate will only be settled through robust negotiation.

This article first appeared in Unlimited Magazine and was written by Simon Rowell. To contact Simon please email him on simonr@jaws.co.nz or phone 09 914 6740.

This article gives practical guidance with a case study example to get you thinking about your IP options and to help you talk with confidence to potential investors as well as lawyers, patent attorneys and accountants.

The trick to thinking about IP is to recognise that one product will often include several types of IP, each of which can be valued, sold, transferred or licensed separately.  Each type of IP has a different use and different rules governing its creation, ownership and use. Furthermore, IP rights are territorial. Take patents for example. There is no such thing as a world-wide patent; patents are granted in individual countries or regions. So if you have a patent for the same invention in six countries, each of those six patents is a separate piece of property.

Here are five reasons why this is important:

1. Asset management: Identifying each asset helps you make sure that each is working hard for you and that you manage the whole portfolio of IP in a cohesive way.

2. Competitive advantage: Each type of IP has different rules about how it comes into existence, who owns it, and what you can do with it.  Identifying the type of IP is the first step to making sure you get the IP rights you need to retain a competitive advantage for your particular business.

3. Offshore strategy: Understanding the territorial aspect of IP is essential for exporters and for anyone wishing to license overseas IP rights to others rather than exporting directly. 

4. Better tax position: Tax treatment varies from one type of IP to another, so being able to identify each piece of IP will help you optimise your tax position. 

5. Partnering for success:  Identifying and understanding the various IP rights relating to a product increases your negotiating options and makes it easier to get to "yes".

How does this work in practice? Suppose that Clever Medical Devices Limited (CMD) has developed a new personal medical monitoring device.  

• Patents: CMD applies for patents for one novel function in the device.  Patents cover ideas which are new, useful and inventive, and give the owner the exclusive right to make, use or sell the invention in the countries where it has a patent. CMD should file patent applications in countries where it plans to make or sell the device.  
• Copyright: There is software embedded in the device, and copyright would subsist in that software if it is original. Copyright protects the expression of the idea, but not the idea itself, so it restricts someone from copying CMD's source code but not from writing other software that does the same thing. In New Zealand, copyright might also exist in physical components such as moulds for the plastic cover.  Copyright is not registered in New Zealand, but the scope of copyright varies from country to country as do the circumstances in which registration is necessary.
• Registered Designs: CMD designs a stylish face plate for the display panel, for which it might apply for a registered design in New Zealand and other countries (some of which use the term "design patents").    This protects the distinctive look of CMD's product and helps to stop others from making look-alike knock-offs.  It is essential in countries where copyright does not apply automatically to manufactured articles.
•  Trade Marks: CMD develops a great brand name for the equipment and applies for a New Zealand registered trade mark in relation to the medical apparatus and instruments.   This can then be used to prevent someone else using the same or similar name for similar products.  Again, FGL should apply for a trade mark in each country where it wants to protect that brand name.  
• Confidential Information: Confidential information which CMD has about the manufacture of the device is also valuable providing it is kept confidential.

Of course, CMD is not a real company and not all types of IP will necessarily be relevant for all businesses, but it is typical of many of New Zealand's leading exporters and manufacturers.  Go forth and conquer!

The above information is of a general nature and is not intended to be comprehensive.  Readers are advised to seek specific advice before acting on any information provided.

This article first appeared in Connectme,   a NZMEA  publication and was  written by Shona Foster. To contact  Shona please email her on shonaf@jaws.co.nz or phone 07 957 5675.

Kokako's distinctive logo - a stylised image of the endemic kokako bird - is a symbol of sustainable and ethically produced food. James & Wells partner Simon Rowell says the key has been to protect this logo and the company name in all relevant categories, including a diverse range of product and services.

The IP strategy has also included an emphasis on protecting future Kokako expansion. A potential move into the Australian market has been protected through pre-emptive registering of the relevant trade marks.

Through a focus on IP protection, Kokako can face its exciting future with a strong suite of IP protecting its valuable business.
 
Full  Case Study Article

From its famously moreish Gluten Free Chocolate Brownies and Ginger Crunch, to its Fairtrade Organic coffee, multiple award-winning company Kokako has a product range which has gained an enthusiastic following and increasing commercial success in New Zealand.

The company's distinctive logo - a stylised image of the endemic kokako bird - is a symbol of sustainable and ethically produced food, and a company which supports New Zealand's endangered fauna.

As was shown with the recent trade mark shock involving the Horowhenua Library Trust and its Koha cataloguing system, and a major US company, it is important for fledgling organisations to consider their intellectual property (IP) from the outset, and get expert advice.

Thankfully, Kokako founder Mike Murphy had the insight to obtain trade mark registrations for the original version of the company's logo in relation to class 30 (a trade mark class in New Zealand which covers coffee and some food items).

The company sought advice from James & Wells Intellectual Property when it began to grow and expand, having developed a new logo.

Simon Rowell, a Partner and trade mark expert in James & Wells Intellectual Property's Auckland office, says: "Mike wisely realised IP protection needs to be updated as a business diversifies into new areas or changes part of its branding and name."

"Out-dated trade marks are just as ineffective as non-existent ones. It is crucial to closely manage an IP portfolio, and have a long-term strategy in place."

Kokako did not have a trade mark registration for its new logo, and it had over the years expanded its product and service offering considerably.

James & Wells recommended three new trade mark applications, covering a much broader scope of goods and services - including a greater range of foodstuffs and beverages, as well as café and restaurant services. 

Kokako now has trade marks registered in four further classes:  29 (processed foods); 31 (fresh fruit and vegetables, seeds); 32 (non-alcoholic beverages); and 43 (provision of food and beverages).

"It is important to have every part of the business covered. You have to think about product and service lines currently offered, and those that are likely to be offered in the future," says Rowell.

James & Wells' recommended trade mark strategy was three-pronged, and designed to fully protect Kokako's highly distinctive brand.

First, a separate application for the plain word KOKAKO, which protects that word irrespective of the stylisation applied to it.

Second, an application for the new stylised version of the word KOKAKO used by the business. This covers a situation where someone uses similar font or styling as the new KOKAKO logo, but with a word sufficiently different to KOKAKO to avoid infringement of the plain word registration.

Finally, a separate registration for the Kokako bird pictorial device that is used consistently on the company's packaging and promotional materials. This protects this pictorial representation, irrespective of any word or logo used with it.

Murphy says: "It was fascinating for us to see how clever a comprehensive IP strategy has to be to prevent our valuable brand being at risk."

"James & Wells was able to.comprehensively understand our business and most importantly our position in the market. The value of investing in an IP strategy cannot be underestimated, particularly given the brand equity we have successfully developed for Kokako."

Simon Rowell says discussions with Kokako aimed at discovering all possible avenues of IP protection required indicated the company sees Australia as a possible future market. So James & Wells recommended conducting a trade mark search in Australia. 

When the search results showed the name was not registered across the Tasman, James & Wells recommended filing an application in Australia for the key KOKAKO brand element - which it has now done.

"This ensures Kokako cannot be locked out of Australia, which it could have been if a competitor registered a similar mark before Kokako had done. Clients are often surprised how easy it is for this to happen across international borders, and the Koha case is a prime example."

Simon Rowell says James & Wells, a finalist in the national Sustainable Business Network Awards this year, and member of the New Zealand Business Council for Sustainable Development, enjoys working with clients which have a sustainable focus.

Kokako aims to source only the best fair trade and organic ingredients for its products, both locally and internationally. It supports kokako rehabilitation by sponsoring organisations which work to regenerate pest-free natural habitats.

"James & Wells is putting in place a lot of steps to reduce our environmental impact, and it is great to have strong relationships and share ideas with companies such as Kokako," says Simon Rowell.

"We are driven to help innovative New Zealand companies succeed. If we are to remain internationally competitive and have ongoing economic prosperity, New Zealand needs to protect the nation's intellectual property with clever thinking."

For specialist IP advice contact Simon Rowell on Simonr@jaws.co.nz

IN BRIEF:

Latest Media: Patents pending - The devil is in the detail - Applications open for MSI research funding

Out and About:  Top 5 IP developments - Chinese company tries to register Cookie Time logo

Clients' Successes Recognised:  Energy Mad wins International Business Award

Juice on JAWS: James & Wells wins Chambers of Asia Pacific 2012 China Awards - New staff

In business there's no such thing as risk elimination - just risk management, points out Gus Hazel, Senior Associate at James & Wells. He advises contract law is fundamental to managing risk and discusses three broad levels of contract protection.

You can view the full article and business interview with Gus Hazel published in the recent Exporter Magazine 

For further information email Gus Hazel at gus.hazel@jaws.co.nz   

The funding usually matches the contribution of the recipient.

This is great for encouraging R&D and helping developed products get to market. But why doesn't MSI provide funding for establishing intellectual property protection?

I've asked officials at MSI this question and haven't yet heard a satisfactory answer. The concern appears to be that the ministry shouldn't be seen to be using public money to help establish a private asset for a commercial entity - and filing a patent creates an asset.

However, MSI is already helping private companies to create assets by funding R&D. The creation of knowledge for a company already confers private benefits on that company. The point of the funding is to help the company succeed, which presumably generates public benefits for the New Zealand economy by creating jobs and taxable revenue.

I have no problem with this funding - in fact I'd like us to do more of it. But we're missing a crucial piece of the puzzle, which is encouraging the funding recipient to protect the R&D created. 

In the private world, funders like angels and venture capitalists require that their investments in technology companies are protected as best possible. If patents do not already exist in the company - and it is possible to patent the technology - then the angel or VC will almost always commit funds for that specific purpose. It's a no brainer - they don't want their investment eroded by competitors copying the technology.

The same principle should apply to MSI 'investments'.  MSI is investing, on behalf of all New Zealand, in a company to ensure it creates innovation that gets to market. MSI should also contribute funding to ensure this public investment cannot be eroded by foreign  competitors free riding on a company's R&D.  This may mean filing patents. Otherwise we risk New Zealand being a great source of free innovation for the rest of the world to benefit from.

I'm not suggesting MSI should provide funding from filing to patent grant, in all countries. All that is required is for MSI to provide matching funding for filing a New Zealand provisional patent application - then an international Patent Cooperation Treaty (PCT) application 12 months later, assuming the research and development remains promising and on track. 

As I have explained in previous columns,  the provisional application might cost around $5000 and the PCT application around $15,000.  Armed with this type of initial protection, a New Zealand company can feel more comfortable talking to third parties about commercialisation, will be more attractive to venture capital and has more flexibility and options for commercialisation strategies. This will only cost MSI $10,000 over and above the existing funding it provides the company.

Patent protection is particularly important where the company plans a licensing model as part of its commercialisation strategy. Without adequate patent protection, this simply won't be an option.

You might argue, as perhaps MSI would, that the company should fund its own patent protection. The problem is most companies in New Zealand have a poor or misguided view of the role and importance of patents in international commercial dealings. I've attacked the naïve notion that patents are only worthwhile if you can afford to enforce them in earlier columns. My point is that MSI can play a positive role in encouraging patent protection by offering matching funding for at least the initial step. By not offering funding for patent protection, MSI makes an implicit statement that patents aren't worth funding. 

Until New Zealand business is sophisticated enough to truly understand and value patents as a strategic tool, then I think MSI should provide matching funding for patents. It makes a far more compelling case for a cash-strapped New Zealand startup to patent their new technology if they only have to pay for half of the patent. Without this incentive I'm afraid too many companies will make the wrong decision, placing their technology and our investment through MSI in jeopardy.

This article first appeared in Unlimited Magazine and was written by Simon Rowell. To contact  Simon please email him on simonr@jaws.co.nz or phone 09 914 6740

So what are the major changes that have occurred since the first edition was published and why should you buy the second edition?

Top 5 developments in intellectual property in NZ since 2007

1. New Zealand's accession to the Madrid System for the International Registration of Trade Marks;
2. The Copyright (Infringing File Sharing) Amendment Act 2011 (the so called "Skynet law");
3. The decision in The Muir Electrical Company Pty Limited v The Good Guys Group Limited and its effect on extension applications in trade mark proceedings;
4. The Patents Bill 2008, its lack of progress and why; and
5. The future of the patent attorney profession in New Zealand - proposed joint regulation with Australia.

1. New Zealand's accession to the Madrid System for the International Registration of Trade Marks

Three years after the bill was first introduced into Parliament on 8 September 2008, the Trade Marks (International Treaties and Enforcement) Amendment Bill passed into law on 16 September 2011 paving the way for New Zealand's accession to the Madrid System for the International Registration of Trade Marks (the Madrid Protocol).

The Madrid Protocol marks a significant change in New Zealand trade mark law and will align our regime closer to Australia (which has implemented the Protocol some years ago). 

Once the necessary mechanics have been implemented by the Intellectual Property Office of New Zealand (IPONZ), the days of owners having to file separate applications in New Zealand and in overseas jurisdictions to register their marks will be over.  Instead, owners will only need to file one application in their national or regional trade mark office which will be distributed to the local intellectual property offices in the foreign jurisdictions designated by the owners.

The Madrid Protocol will also simplify post-registration management of trade marks, as subsequent changes to registrations such as assignments and registration renewals can be achieved through a single procedural step.

For the trade mark profession in New Zealand, accession to the Protocol is likely to see a change in focus from filing applications to more contentious work such as oppositions, revocations and litigation - areas in which James and Wells Intellectual Property has considerable strength and expertise.

At the time of going to print, IPONZ had not confirmed the implementation date.

2.   Copyright (Infringing File Sharing) Amendment Act 2011

On 1 September 2011, the Copyright (Infringing File Sharing) Amendment Act 2011 came into force.  The Act repealed section 92A of the Copyright Act (enacted by section 53 of the Copyright (New Technologies and Performers Rights) Amendment Act 2008 but never in force).

The Act prescribes a "three strikes" notice and take down regime which Internet Service Providers (ISPs), or Internet protocol address providers (IPAPs), are obliged to follow.  Under the regime copyright owners are able to send evidence of breaches to ISPs who then, depending on the timing of the infringement, may issue, with increasing severity, one of three kinds of infringement notices to internet account holders.

If an account holder ignores the infringement notices and/or repeatedly infringes, copyright owners can claim damages of up to $15,000 against the account holder. The Act also contains provisions which will enable the District Court to order the suspension of the account holder's account for up to 6 months if it deems suspension is justified and appropriate in the circumstances - however those provisions have yet to come into force.

The Act generated significant controversy with fears that rights holders would utilise it to wage widescale war on the New Zealand internet community.  To date those fears appear to have been unfounded - with the number of notices being issued very small, probably in no small part due to the cost of each notice which has been regulated at $25.00.

The provisions of the Act are scheduled to be reviewed early this year and further tweaks are possible once all stake holders have been consulted.

3.   The Muir Electrical Company Pty Limited v The Good Guys Group Limited

In February 2010, the Hearings Office of the Intellectual Property Office of New Zealand adopted a new practice in relation to the time for filing a notice of opposition to the registration of a trade mark as a result of the High Court's decision in The Muir Electrical Company Pty Limited v The Good Guys Group Limited 18/12/09, Lang J, HC Auckland CIV-2009-404-4965.

In Muir Electrical, his Honour Justice Lang stated that regulation 75(3) of the Trade Mark Regulations 2003 does not empower the Commissioner to grant an extension of time to file a notice of opposition to registration of a trade mark after the deadline to do so has expired - even where the extension of time application was received by the Commissioner before the deadline. His Honour held that an application to extend time must be received (including the other party's consent when required) and granted by the Commissioner of Trade Marks before the expiry of the deadline. 

Trade mark attorneys frequently receive clients' instructions to file notices of opposition to trade mark applications close to or on the applicable deadline. Until Muir Electrical, the Commissioner usually granted an extension of time to oppose as long as the application was filed on or before the applicable deadline. Even if an application was made after the applicable deadline, the Commissioner would still occasionally grant the extension by exercising his perceived discretion to do so under regulation 32.

The Court's decision has consequently had a significant impact in practice, particularly where attorneys receive late instructions from their clients.

The same decision has also affected applications for extensions of time generally, with his Honour holding that, for an application to be validly granted, the circumstances leading to the need for the extension must be both genuine and exceptional.  While genuineness has proven relatively easy to establish, the High Court (and correspondingly, IPONZ) have set the bar high as regards what will constitute exceptional circumstances for an extension.  This has, and will continue, to cause applicants difficulties and has already resulted in a loss of rights in many cases.

4.   Patents Bill 2008

Introduced into Parliament in July 2008, the Patents Bill 2008 is intended to replace the Patents Act 1953 - which was based on the long since repealed United Kingdom Patents Act 1949. 

There are two significant/controversial aspects to the Patents Bill: the first concerns the test for patentability, and the second being a proposed exclusion from patentability of computer programmes.

In New Zealand, patent applications are currently only examined for adequacy of description and novelty. There is no examination for 'inventive step' or usefulness, although third parties can oppose the grant of a patent on the basis of lack of inventive step or usefulness. Many other countries examine for both novelty and inventive step. The Bill brings New Zealand's tests for patentability into line with many of the country's trading partners. 

It also changes the prior art base which may be taken into account when determining the validity of a patent application.  Currently we apply a local novelty standard - which means only disclosures available in New Zealand may be taken into account.  Under the Bill we will be moving to the more common absolute novelty standard which takes into account disclosures anywhere in the world.

Under the Bill, computer programmes will no longer be considered patentable subject matter, although inventions which contain embedded software will be permitted. The exclusion of computer programmes was not originally included in the Bill when it was first contemplated in 2004, and was only added in March 2010 as a result of a Commerce Select Committee recommendation made following submissions from anti-patent lobbying groups. Despite protest from some significant quarters of the IT community in New Zealand, the exclusion was confirmed by the Minister of Commerce in July 2010.

From the authors' perspective there is no rational basis for excluding computer software from the subject matter capable of protection via a granted patent.  Provided the end result meets the statutory test for inventive step, it should make no difference if the end result is achieved via, for example, a mechanical machine or a computer programmed to act in a certain way.

At the time of going to press, the Bill is awaiting its second reading in Parliament but may be held up by developments regarding regulation of the New Zealand and Australian patents professions discussed below.

5.   Patent attorney profession in New Zealand - proposed joint regulation with Australia

In March 2011, the Ministry of Economic Development (MED) in conjunction with IP Australia released a Discussion Paper proposing the establishment of a single trans-Tasman regulatory framework for patent attorneys. The proposed reform is part of the outcomes for a Single Economic Market (SEM) between New Zealand and Australia.

The proposals in the Discussion Paper are far-reaching.  They include the establishment of a single governance body responsible for Patent Attorney education, discipline and regulation, a single registration process and Register of patent attorneys, and a single code of conduct for patent attorneys in New Zealand and Australia. The writers of the report argued that the net trans-Tasman benefits from the proposed framework "would result from economies of scale, reduced transaction costs, enhanced consistency and quality of the trans-Tasman profession and increased confidence in the profession by users" although, at the time this conclusion was reached, MED appears not to have conducted any form of economic analysis which could support the conclusion.

The Discussion Paper received a number of submissions from both New Zealand and Australia, including the two jurisdictions' professional bodies. While the Institute of Patent and Trade Mark Attorneys Australia was "broadly supportive" of the reform proposals, the New Zealand Institute of Patent Attorneys took a contrary view arguing that joint regulation would not achieve the Discussion Paper's stated objectives and instead would have a very negative impact on the profession in New Zealand.

In November 2011 Cabinet agreed in principle the key features of the regime which are largely based on those in the Discussion Paper. Work is now underway on what bilateral arrangement should be in place to implement a single trans-Tasman patent attorney registration process and Register, and what legislative changes are required in both New Zealand and Australia to effect the final bilateral arrangement.

The changes are part of a broader focus on aligning the Australasian IP professions, application process and, potentially, laws in each jurisdiction pursuant to a 23 June 2010 Memorandum of Understanding which establishes medium term (ie by the end of 2014) goals to:

• Have a single trans-Tasman trade mark regime;
• Have a single trans-Tasman plant variety right regime; and
• Have a single application process for patents in both jurisdictions.

It seems inevitable that there will also be an alignment of IP laws in the future and this may be one of the reasons why the Patents Bill has stalled.

To find out more about the second edition of James and Wells Intellectual Property in New Zealand please contact the authors Ian Finch Tel 09 914 6748  ianf@jaws.co.nz or Ben Cain 09 914 6796 benc@jaws.co.nz