The Trans-Pacific Partnership Agreement (“TPPA”) is one step closer to being implemented in New Zealand, following the first reading of the TPPA Amendment Bill in Parliament on 12 May 2016. This week, Baldwins will be publishing a summary of the changes proposed to New Zealand’s intellectual property laws by the TPPA Amendment Bill, and consider the practical implications of these changes for New Zealand businesses.
The final text of the TPPA was signed on 4 February 2016. However, in order for the TPPA to have any legal force, the countries involved now need to align their domestic laws with the agreement. That is the purpose of the New Zealand TPPA Amendment Bill (the “Bill”).
The changes proposed in the Bill will affect New Zealand intellectual property laws by amending existing copyright, patents, trade marks, and border control laws. In this article, we examine the proposed amendments to the Patents Act 2013 and the Agricultural Compounds and Veterinary Medicines Act 1997 (the ACVM Act).
PATENT ACT AMENDMENTS
12-month grace period
Under the Patents Act 2013, grace periods only apply to disclosures made in very limited circumstances, including:[i]
- those made in breach of confidence;
- those made to a government department or to any person authorised by a government department to investigate the invention on its merits;
- those made with the consent of the inventor at a specified exhibition; or
- those made for the purposes of reasonable trial.
The Bill proposes to establish a grace period of 12 months for all public disclosures which occur within one year before the filing of a complete specification.[ii] In other words, innovators who make their inventions public will not immediately lose the ability to be granted a New Zealand patent, provided that they file an application within 12 months of making the disclosure.
This is a welcome and significant change for many innovators. No longer will inadvertent disclosures affect the validity of a subsequent New Zealand application. This change will also harmonise New Zealand’s grace periods with that of other major territories, including Australia, the United States, Japan and Canada. However, grace periods do not apply in many other major territories including most European countries. Therefore, inadvertent disclosures may still prevent the obtaining of patent protection in other overseas jurisdictions.
Patent term extension to compensate for unreasonable delays
Following the 1994 Trade-Related Aspects of Intellectual Property Rights (TRIPS) Agreement, New Zealand increased the maximum term of a patent from 16 years to 20 years and removed any provision for patent term extensions. Until this time, there was provision for the term of a patent relating to a pharmaceutical product to be extended by a maximum of 10 years.
Patent term extensions are now proposed to be reintroduced by the Bill to compensate a patent holder for unreasonable delays.[iii] Only certain types of delay are proposed to be covered:
- unreasonable delays in the grant of a patent; or
- unreasonable delays in the safety and efficacy approval process run by Medsafe in respect of a biologic or a pharmaceutical substance per se.
Delays on the part of applicants or third parties will not contribute to an assessment of whether the delay is unreasonable.
Delays in the grant of a patent
A patent will only become eligible for a patent term extension if it was not granted within five years of its effective filing date, or within three years from the date examination was requested by the applicant(s). No further guidance is given as to what might be considered “unreasonable delays”.
At present, all New Zealand patent applications are examined by the Intellectual Property Office of New Zealand (IPONZ). Given the efficiency of patent grant in New Zealand, it is hard to imagine a realistic situation in which either of these time limits would be exceeded by IPONZ. At present, there is a limit of five years from a patent’s effective filing date in which to request examination. Given that IPONZ has a relatively light backlog of unexamined patents, directions to request examination typically issue well within this five year time frame. The light backlog also means it is unlikely a three year delay on the part of IPONZ in the actual examination process will ever occur. Furthermore, once examined, applicants only have a (non-extendable) 12 month period from the date of the first examination report in which to place the application in order for acceptance.
However, it is proposed that the Intellectual Property Office of Australia (IP Australia) will be able to examine New Zealand patent applications and IPONZ will be able to examine Australian patent applications.
Grant of a patent typically takes longer through IP Australia than through IPONZ. There is therefore an increased likelihood of the five and three year time limits mentioned above being triggered by IP Australia. This may mean that delays on the part of IP Australia in the examination of a New Zealand patent could allow a patent term extension to be requested. If granted, the patent will be extended at the most valuable end of its life. If applicants are given the option of choosing which patent office examines their application, it is not unreasonable to expect that large pharmaceutical companies, for example, will elect IP Australia as the examining body for their New Zealand patent applications.
Delays on the part of Medsafe
The Bill proposes a patent term extension of three years for small molecule pharmaceuticals and five years for biologics where it is deemed that as a result of the marketing approval process, there has been an unreasonable curtailment of the effective patent term.[iv] The Bill uses wording similar to that in the Australian Patents Act 1990; for example, the intention is that the term “pharmaceutical substance per se” is to have the same meaning as under Australian law.
As with IPONZ, Medsafe runs a very efficient regulatory approval process. Very few unreasonable delays on the part of Medsafe are therefore expected. In addition, Medsafe is only responsible for pre-marketing approval of products. The funding of medicines is the responsibility of the Pharmaceutical Management Agency of New Zealand (Pharmac), not Medsafe. Therefore, any delay in obtaining a listing on the Pharmaceutical schedule of funded medicines is unlikely to be considered when assessing whether a patent term extension is warranted.
ACVM ACT AMENDMENTS
Extension of Data Protection Period
Under the ACVM, registration of an agricultural compound is required before a compound may be sold, used, manufactured or imported. To obtain registration, the manufacturer must provide trial data in support of their application for registration. This trial data often includes confidential information on a new active ingredient. In addition, the costs incurred in producing the trial data will often be significant. Therefore, the manufacturer will not want such information being immediately made publically available to competitors before it has had a chance to recoup the costs incurred.
Data protection, or data exclusivity, is the term given to the period in which trial data generated by a product originator to satisfy regulatory requirements cannot be used by a generic manufacturer to obtain approval of their own generic product. Therefore, when data protection is in place, the generic manufacturer must either wait until the protection period lapses to rely on the data or they must undertake their own trials to generate their own data.
The Bill proposes to increase the data protection period from five to 10 years for safety and efficacy data relating to innovative agricultural compounds.[v] The 10 year period will run from the date of registration of the innovative agricultural compound.
The Bill also proposes an amendment to the definition of “innovative agricultural compound” to exclude compounds that have been referred to in any other application for registration under the ACVM Act, irrespective of whether the other application has been granted.[vi]
The Bill does not propose any changes to the five year data protection period[vii] provided for new pharmaceuticals in New Zealand. This is one area in which New Zealand stood its ground during TPP negotiations.
Impact for New Zealand Businesses
Regulatory requirements for registration of an agricultural compound are not as onerous as those for a pharmaceutical. Accordingly, where the agricultural compound is also the subject of patent protection, the 20 year patent term is likely to remain in force at the time the 10 year data protection period expires. Therefore, the impact on availability or cost of patented agricultural compounds is likely to be minimal.
However, for unpatented agricultural compounds the longer data protection period could result in a delay in the entry of generic products onto the market. Generic products provide for increased competition resulting in lower prices. If generic manufacturers are unwilling to incur the costs of generating their own trial data, a longer period of higher prices to end users could result. The rationale for the extended 10 year period was however to encourage research and release of new products to maintain the competitiveness of New Zealand’s agricultural sector.
Finally, although there was some debate over whether the extended data protection period should be extended to cover innovative formulations comprising known agricultural compounds, such formulations have not been covered by the Bill. Arguably, this prevents stimulation of the release of innovative formulations into New Zealand.
The Trans-Pacific Partnership Agreement (‘TPPA’) Amendment Bill
The TPPA is a free trade agreement reached between 12 countries in the Pacific: New Zealand, Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, Peru, Singapore, the United States and Vietnam.
It is one of the most ambitious free trade agreements, aiming to harmonise and liberalise trade and investment, thereby bringing future economic growth for the countries involved. Trade Minister Todd McLay has said that the TPPA will, “support New Zealand’s global connectedness, maximise opportunities for exporters, and in turn grow the prosperity of the economy for the benefit of New Zealanders”.
Following the first reading in Parliament, the TPPA Amendment Bill has now been referred to the Foreign Affairs, Defence and Trade Committee for its review. The Committee will hear submissions from the public and report back to Parliament in November 2016.
From here, the bill goes into a second reading, a further committee, and then a third reading before it goes to the Governor-General for Royal Assent. Omnibus bills such as this one, where various bills are consolidated into one piece of legislation, are often split up during the committee stages into several bills which would each require a separate parliamentary vote. A general timeline of the legislative process can be found here.
Further afield, support for ratification of the TPPA has stalled in the US, threatening the viability of the agreement as a whole. The TPPA provisions cannot enter into force unless at least the US and Japan ratify the agreement. It is thought that a ratification vote may be sought in the US in the “lame duck” period after the US election in November and before the new President is appointed to office.