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Patents bill passes its 3rd reading 05 Oct 2014

After many years in the making, the Patents Bill will now become law after passing its 3rd and final reading in Parliament on 28 August 2013. The bill overhauls the archaic Patents Act 1953, for the most part aligning New Zealand more closely with overseas practice and our major trading partners.

RAISING THE BAR FOR NEW ZEALAND PATENTS

There are a number of key changes under the new Act aimed at raising the quality of patents granted.

Threshold for Patentability

The new Act raises the threshold for the granting of patents by the Intellectual Property Office of New Zealand. Previously, there was a “presumption of patentability”, namely the patentee had the benefit when deciding whether to grant a patent. However, the under the new Act examiners must be satisfied “on the balance of probabilities” that application complies with the Act.

New Novelty standard

The new Act brings in a new standard for novelty, namely “absolute novelty”. Novelty will be therefore destroyed or undone by all matter (publications, invention or descriptions) “whether in New Zealand or elsewhere”. Practically, this will involve more research by examiners as to whether an application is novel worldwide. Under the old Act the standard of novelty was “local novelty”, namely the patent only needed to be novel by reference to New Zealand.

Invented Step

Examiners may now refuse an application on the grounds that there is no “inventive step”. The patent application must purport to involve some “inventive step … not obvious to a person skilled in the art”. A lack of inventiveness was ground for opposition under the old Act, but was not assessed by examiners.

Usefulness

The new Act also requires an assessment for usefulness. Examiners must now assess the invention for “specific, credible, and substantial utility”. In practice most invention will clear this hurdle without difficulty. The provision brings New Zealand more closely into alignment with Australia and the United States.

Conclusion - Better Patents but Longer Examinations

A number of the above changes involve extra work for patent examiners, particularly the higher threshold and the assessment for inventiveness and utility. As result, there is likely to be a longer examination process. There will also be a period of uncertainty as examiners get to grips with the new legislation and their new responsibilities under the new Act. The net effect of the more rigorous processes should be a better grade of patents being granted with closer alignment with practices abroad.

COMPUTER SOFTWARE EXCLUDED “AS SUCH”?

A significant factor for the bill’s lengthy passage through Parliament was the hotly debated issue of whether computer software should be a patentable invention. Anti-software patent lobbyists argued software patents unduly stifle innovation owning to the grant of software patents for existing or trivial techniques and the ever-looming fear of litigation. This argument had to be balanced against New Zealand’s international obligations and that the exclusion of software would represent a divergence from some of our major trading partners, including Australia and the United States.

Under the new Act, a computer program is not an invention for the purposes of patentability. However, the new Act qualifies this by adopting the European approach by including the words “as such”. Thus, software will be patentable where the invention or contribution lies outside the computer program. The new Act gives as an example an application for a better washing machine where the only change is software, but the software controls the washing machine. The words “as such” insert a degree of uncertainty into the new law. As seen in Europe, this uncertainty will likely prove a fruitful ground for future litigation.

It is worth noting that previously granted software patents remain valid.
The provision has widely been hailed as a victory for the anti-software patent community. However, with so much scope to interpret “as such” and the on-going validity of current software patents the situation remains a lot less clear than initially anticipated.

CONCLUSION

On the whole, the Patents Bill represents a brave new world for the IP scene in New Zealand. We can expect to see a few teething problems as examiners deal with their new-found responsibilities. However, we can also expect to see a higher quality in the patents being granted and greater alignment with practice overseas. This will please innovators and investors looking to overseas markets.

We have, undoubtedly, not heard the last of the software patents debate “as such”. Parliament has, rather indecisively, opted for the litigiously bountiful middle ground and the new Act leaves the door well and truly open for further court-based discussion on this contentious topic.

 

Daniel Nicholson