The patent system is intended to provide net economic benefit. A fundamental proposition underpinning the system is that patent rights are granted for inventions which are both new and inventive. New alone is not enough. Economic rationale is that patents which do not meet these criteria are bad. They may provide a drag on, rather than support, business growth.
For decades now, New Zealand has been one of a small minority of countries in which the Patent Office does not consider inventiveness before granting a patent. Until recently, and absent a third party objection before grant, patents are granted by the IP Office without consideration of whether the patent is inventive or non-obvious. NZ’s 1953 patent legislation has not permitted IPONZ to do this.
This is changed by the Patents Act 2013, which is New Zealand’s first new substantive patent law for 60 years. This now requires IPONZ Office to examine all patent applications for inventive step. And IPONZ has been doing so for patent applications filed under the new Act, since September 2014.
However remaining patent applications filed under the old Act are still filtering through the system. They are examined under the old Act not new criteria. A Ministry of Business Innovation & Employment consultation paper issued recently indicates that as at mid-July this year there were 3,054 patent applications at IPONZ filed under the old Act, and which IPONZ will therefore not examine for inventive step before grant.
Many will be processed by IPONZ and can be expected to be cleared within the next year or less. However MBIE report that over half namely 1,693, are ‘divisional patent applications’ ie a second (or third, or subsequent) generation applications split from an earlier originating patent application. And more future divisional applications can be filed from these existing patent applications, which will not be examined for inventive step before grant. Dividing a patent application from a patent application which has itself been divided from an earlier patent application, is referred to in the trade as ‘daisy chaining’. The MBIE consultation paper indicates that
‘It is likely that there will be further fourth generation divisional patent applications divided out of third generation applications.’
There is no legal limit on the extent to which this can occur. It is therefore possible that new divisional patent applications could be filed under the old Patents Act 10 or more years after the new Act has come into force. This may seem an extreme suggestion, but one patent application currently in dispute at IPONZ between commercial parties (involved in a patent opposition) is a divisional patent application filed in 2014, from an originating patent application first filed in 2003.
The recent consultation paper issued by MBIE acknowledges that with the transition between the 1953 Act and the 2013 Act as it is, patents which have not been examined for inventive step may still be granted by IPONZ for many years to come. It asks whether this is a problem, and proposes two alternative options that might address this:
1. Setting a cut off date for filing new divisional applications under the 1953 Act.
2. No cut off date, but beginning to also examine old Act divisional applications under the new Act criteria ie in future also examining these old Act divisional patent applications for inventive step.
MBIE states that the second above is their preferred option. It would not limit the right of applicants in patent applications in the system, filed under the 1953 Act, to file further 1953 Act divisional applications ie ‘daisy chaining’ could continue. But it would mean that those divisional applications, like all new Act patent applications filed from September 2014, would also be examined by IPONZ for inventive step before grant.
In a submission to Parliament’s Commerce Select Committee on a patents related bill in March this year, Fisher & Paykel Healthcare Ltd said
‘This proposal is of paramount importance to New Zealand-based manufacturers as it will set a time limit for the application of the 1953 Act, after which the 2013 Act will apply and applications will be subject to a more vigorous examination.’
If the MBIE proposal is implemented, it can be expected that within a much shorter time than another 10 years or more, New Zealand would stop granting patents which have not been subjected to any examination by IPONZ for inventive step.
MBIE seeks written submissions on its proposal by Friday 14 October 2016.