The Ministry of Business, Employment and Innovation (MBIE) is responsible for patent law in New Zealand. The stated main goal of MBIE is to play a central role in shaping and delivering a strong New Zealand economy. MBIE says it will do this by delivering policy, services, advice and regulation to support business growth and the prosperity of New Zealanders. Is MBIE is meeting its goals?

The Intellectual Property Office of New Zealand (IPONZ), part of MBIE, is responsible for the examination of patent applications that are filed in New Zealand. A relatively small patent office, IPONZ has around 30 patent examiners. In 2014, IPONZ received 7,605 patent applications. This is in stark contrast to larger Patent Offices such as the USPTO which has around 9,000 patent examiners, and in 2014 received nearly 620,000 patent applications.

New Zealand presently has two different standards under which a patent application can be examined. Applications that were filed before 13 September 2014 are examined under the Patents Act 1953 (the old Act), while applications filed on or after 13 September 2014 are examined under the Patents Act 2013 (the new Act). There are very few applications still being examined under the old Act. Those applications are generally divisional applications that were filed after the new Act came into force, but have been given an effective filing date of before 13 September 2014. Divisional application procedure under the old Act was fairly straight forward and flexible. As long as the parent application had not been accepted, or had not been abandoned, it was permissible to file a divisional application. Over the years, prior to the new Act coming into force, IPONZ tried to restrict divisional practice a number of times.

In June 1999, IPONZ proposed that the time for placing a divisional application in order for acceptance would be the same as the time for placing the parent application in order for acceptance. For example, if a divisional application was filed with only one month left to place the parent application in order for acceptance, the divisional application too would only have one month to be accepted. After criticism from the Patent Attorney profession, this proposal was not adopted. The exact same procedure was proposed again in March 2003. Once again, it was not adopted. It is probably fair to say that there has been an aversion to divisional applications from IPONZ. What is less clear is why.

When the policy changes mentioned above were proposed, IPONZ in the first instance stated:

   “The purpose of dividing out is to allow an application lacking in unity to be resolved without loss of priority dates for any part of the application. It is not meant as a way to maintain secrecy of an invention whilst maintaining a priority date, extending examination time or achieving objectives such as trying to take advantage of possible future changes to legislation.”

The second time the changes were proposed IPONZ stated:

   “IPONZ is concerned with the increasing number of “whole contents” divisional applications filed on or close to the final deadline imposed under section 19 for the parent application. In effect, this practice allows the applicant to extend the time allowed for placing an application in order for acceptance for another 18 months, or, even longer when “daisy-chaining” occurs. In one case, seven “whole contents” divisional applications have been filed. IPONZ considers this to be contrary to the intention of section 19 and to create uncertainty for third parties.”

New Patents Act introduces changes to divisional practice

Under the new Act and Regulations divisional practice has become much stricter.

When the new Act was being drafted, it first appeared that there would be no change to divisional practice. A Patents Bill was published and the procedure for divisional applications looked very much the same as under the old Act:

  • Section 33 Divisional applications (Patents Bill)

(1) If a patent application has been made (but has not become void or been abandoned), the applicant may, before the acceptance of the complete specification and in the prescribed manner, make a fresh patent application for any part of the subject matter of the original application.

After the new Act was signed into law, and very shortly before it was due to come into force, the accompanying Patent Regulations were published. Rather unfortunately, due to time restrictions from the very late publication of the draft Regulations by MBIE, no submissions on the new Regulations were allowed. At that very late stage it was noted that it would effectively not be possible to file a divisional application in New Zealand after 5 years from the filing date of the earliest parent application, because it would not be possible to request examination of such an application:

  • Regulation 71 Manner of making request for examination of patent application (Patent Regulations 2014)

A request under section 64(1) of the Act for an examination of a patent application and the complete specification relating to the application must be made as follows:

(a) for a divisional application, within 5 years of the date that the complete specification for the divisional application is filed or treated as having been filed, whichever is the earlier.

MBIE has given no rationale for this restrictive policy, but it is possible that the reasons given back in 1999 and 2003 for restricting divisional practice are still considered relevant. Back in 1999 IPONZ was concerned with divisional applications being filed to maintain secrecy of an invention, or to extend examination time, or taking advantage of future changes in legislation. In 2003, IPONZ repeated its concern about applicants extending the time to have an application accepted. None of these reasons stand close scrutiny:

Maintain secrecy of an invention

Under the new Act all applications are published 18 months from the earliest priority date, as are examination reports. The IPONZ database will also indicate if a divisional application has been filed and provide the application number of the divisional application. In short, it is not possible to maintain secrecy of an invention.

Extending examination time

Divisional applications can be filed to obtain more time to place an application in order for acceptance. However there are always valid reasons for doing so. For example the applicant may be waiting for examination in other jurisdictions before deciding on how to proceed in New Zealand. This is often the case as New Zealand generally examines applications well before other jurisdictions.

Future changes in legislation

Legislative changes are very rarely retrospective, so would be unlikely to apply to a pending application with a filing date prior to the change in legislation.

Most of the reasons given by IPONZ seem more geared to combatting “sub‑marine patents”, something that has never been a particular problem in New Zealand. The patent term in New Zealand runs from the filing date of a patent application, and not the date of grant. Since divisional applications have the same filing date as the parent application, patent term will not be extended. This is an issue for a patent applicant to be concerned about, not MBIE.

In an even more concerning move, in some cases IPONZ are now preventing the filing of divisional applications while the parent application is still pending. Under the new Act, applicants have 12 months from the date of first examination to have an application accepted. The new Act also allows IPONZ to set shorter internal deadlines within that 12 month timeframe where the applicant must file a substantive response to an examination report. Even though an application may still be pending, IPONZ are not allowing divisional applications to be filed if the applicant has not filed a substantive response on the parent application.

It is worth noting that Australia and Europe tried and failed to change divisional practice. In 2011 Australia implemented a policy of allowing only 2 months from the initial examination report to have a divisional application accepted. From April 2010 to March 2014 The European Patent Office introduced a time limit of 2 years from the first examination report on a parent application to file a divisional application. Both policies were soon abandoned.

For a country that prides itself on innovation, it is surprising that the New Zealand Government appears to want to restrict the ability of innovators to gain patent protection. This clearly seems to be in direct conflict with the stated goals of MBIE. It may be time that MBIE reviews and changes New Zealand’s divisional practice to be in line with that of other jurisdictions, and enables patent applicants to better manage their patent portfolios.