NZ’s new Patents Act 2013 – a ban on software patents “as such” and an expansion of the novelty requirement

On 28 August 2013, New Zealand’s new patents legislation was passed by a clear majority of the House of Representatives. Arguably, the most significant changes in the Patents Act 2013 are an effective ban on software patents and the expansion of the “local novelty” requirement. Although the changes will not take effect for at least a year, it is highly recommended that patent applicants review their portfolios to determine whether early action may be needed to circumvent/accommodate the new laws.

 

Highlights of the new legislation are noted below.

After nearly a decade’s gestation, New Zealand’s new patents legislation was passed by a clear majority (117-4) of the House of Representatives. The Patents Act 2013 will replace the current 1953 Act, which is itself based upon the long-since-repealed United Kingdom Patents Act 1949.

Given that the current legislation contains many antiquated provisions such as “local novelty”, many are of the view that a new Act was well overdue.   Assuming Royal assent is given (this generally follows within a few days), the new legislation is likely to enter into force on the first anniversary of such assent; the accompanying Patents Regulations will need to be drafted within this period. Accordingly, the exact date of commencement remains to be confirmed.

The new Act brings most of New Zealand’s patentability standards into line with those of its major trading partners. The economic rationale for wanting/needing to do this is that, as a net importer of technology, New Zealand required legislation that encourages foreign investment and trade. Overly-broad patents granted under the relatively relaxed criteria of the 1953 Act, it was argued, may have restricted New Zealand’s economic progress.

The most controversial aspect of the new Act (which was in large part responsible for four years of the delay in enacting the new legislation) relates to the patentability of computer software. New Zealand’s position under the new Act will be essentially the same as that of the European Patent Convention insofar as it relates to software patents: computer programs “as such” will be excluded from patentability. Consequently, a computer program characterised by conventional programming steps is unlikely to be patentable. On the other hand, a program that tangibly affects the way in which a product works may be eligible for patent protection. The New Zealand Government zigged and zagged several times in reaching this end.

Some stakeholders will no doubt argue that the New Zealand Government has ignored their obligations under the Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS). Proponents of open-source software, who lobbied the Government long and hard over several years, will doubtless claim victory.   Whereas software has been the undoubted star during the passage of the new Act, there are several other salient features of the new legislation. The provisions that appear most significant – either on the basis that they are different to New Zealand’s current position, or that they are at odds with the position adopted by many of New Zealand’s major trading partners, are:

  • Examination criteria will be extended to include absolute novelty and inventive step (currently, the criteria include local novelty and no inventive step – although inventive step is a ground for opposition/revocation!).
  • No extension of term for pharmaceuticals.
  • Methods of medical treatment of the human body are statutorily excluded.
  • An Experimental Use Exception to patent infringement: “It is not an infringement to do an act for experimental purposes relating to the subject matter of an invention (which includes determining how the invention works, its scope, or the validity of the claims, or seeking an improvement of the invention) if that act does not unreasonably conflict with normal exploitation of the invention”.
  • Patent applications can be refused if they are deemed “contrary to morality”. Interestingly, a recently-proposed amendment to Australia’s patents legislation follows suit.

There are, of course, many other notable inclusions and absences; these will form the basis of a later, more detailed article.   While the new Act is long overdue, its timing is somewhat curious. New Zealand, along with Australia, the United States and several other Pacific Rim countries, is currently in the midst of negotiating the Trans-Pacific Partnership (TPP) Free Trade Agreement. It is well known that the draft Agreement includes some relatively strict IP-related obligations upon TPP signatories. The absence of an extension of term for pharmaceuticals, the exclusion of methods of medical treatment and heavy restrictions on software patents in the new Patents Act 2013 may not be acceptable to other parties. In the near future, therefore, the New Zealand Government may need to choose: abide by the content of the new Act and risk foregoing the TPP (and with it, access to the lucrative US dairy industry); or alter many of the provisions of their new legislation in order to accommodate the TPP.

According to the transitional provisions, any complete application filed in New Zealand (for example, as a PCT national phase entry) prior to commencement of the new legislation will be examined under the old Act provisions and will be subject to the provisions of that Act throughout its lifecycle. Conversely, a patent application filed in New Zealand after commencement of the new Act will be subject to the provisions of the Patents Act 2013. Therefore, those with patent applications in the pipeline may wish to consider bringing forward their New Zealand filings within the next year.

It may be reassuring to know that unpublished PCT applications can enter New Zealand national phase early and will not be published until after publication of the PCT application. As such, aside from precipitating an early (potentially unwanted) examination report and bringing costs forward by a few months, we are not aware of any negative consequences of filing early in New Zealand to take advantage of the current legislation.

In conclusion, the passing of the new Act can be viewed as something of a double-edged sword. On the one hand, it provides a measure of certainty regarding the exclusion of experimental work from infringement and the (long-anticipated) introduction of the “absolute novelty” test – which are both likely to remain in place in the long term. On the other hand, software patentees may not be able to obtain the protection they would otherwise have had in New Zealand unless the TPP negotiations do, indeed, have an impact in that regard.