2. Reform of the Patents Act 1953
Is Reform Necessary?
19. As discussed in section 1, if the patent system is to benefit New Zealand, it must ensure that patents are only granted when the benefits to society of a patent exceed the costs that it imposes on society. This will occur if patents are only granted for inventions that are genuine innovations. The criteria for granting a patent, as provided in the patents legislation, must be sufficiently strict to maximise the likelihood that patents are only granted for real innovations. Are the criteria for granting a patent contained in the New Zealand Patents Act 1953 sufficiently strict to ensure that this object is met?
20. The two main criteria for grant of a patent in New Zealand are that the invention be:
- new, and that
- it be a "manner of manufacture."
21. Under the Patents Act 1953, an invention is considered to be new if a description of the invention has not been published in New Zealand before the filing date of the application. No notice is taken of information published outside New Zealand but not publicly available within New Zealand. That is, an invention would be considered "new" even though details of it were well known outside New Zealand, just as long as these details were not publicly available in New Zealand.
22. The term "manner of manufacture" has been interpreted by the Courts to exclude such things as "products of nature", mathematical operations, bare principles, mathematical algorithms, schemes or plans, and methods of medical treatment of humans.
23. There is no requirement in the Patents Act 1953 that inventions must involve an inventive step, or be useful, in order to be granted a patent. Lack of inventive step and lack of usefulness are however, reasons for revoking a patent after it has been granted but will not normally prevent a patent being granted in the first place. Third parties may oppose the grant of a patent on grounds that include clear lack of inventive step. The costs and uncertainty involved in revoking a patent, or opposing its grant, mean that relatively few patents are revoked or refused grant on these grounds.
24. The Courts, in decisions relating to the United Kingdom Patents Act 1949, and the Australian Patents Act 1952 have ruled that the Commissioner of Patents may only refuse to grant a patent if it was "practically certain" that if a patent was granted it would be held to be invalid. If there is any dispute, the applicant is to be given the benefit of any doubt.
25. These Acts are very similar to the New Zealand Patents Act 1953, and the New Zealand Courts have followed decisions relating to them. As a result, the Commissioner of Patents may be required to grant patents for inventions that might not meet all of the requirements for patentability set out in the Patents Act. The United Kingdom and Australian patent legislation has since been amended to so that the Commissioner of Patents is no longer required to give applicants the benefit of the doubt.
26. It can be seen then, that the criteria for granting a patent in New Zealand are such that patents can be granted for things that are not genuinely new, that do not involve an inventive step, and that may not be useful. As a result, it is possible that some patents are being granted for things that are not genuine innovations. As described in Section 1, the grant of such patents will provide no benefits to New Zealand, and may in fact cause a loss.
27. The criteria for granting a patent in New Zealand are less strict than those applied in most other countries, including New Zealand's major trading partners. In these countries a patent can only be granted for an invention if the invention is new, involves an inventive step, and is useful. These countries would refuse to grant a patent on inventions that would be granted a patent in New Zealand. This means that it is easier for applicants from other countries to obtain a New Zealand patent than it is for New Zealand applicants to obtain a patent in those other countries. This situation does not provide any benefits for New Zealand.
28. It is also possible that the requirement in the Patents Act 1953 that an invention be a "manner of manufacture" may not be flexible enough to take account of new technologies. This means that patent protection may be being denied to some inventions that are genuine innovations.
29. Since the Patents Act 1953 was passed other issues have arisen that the Act does not adequately address. The moral and cultural issues involved in some technologies, such as genetic engineering or genetic modification, are not dealt with explicitly.
30. Calls have been made to limit the patenting of life form inventions on ethical grounds, including animal welfare and the risk of reduced respect for human and animal life. Many people, including Māori, have questioned the morality of granting ownership rights such as patents over living things. Māori also consider that it is immoral to interfere with the integrity of plant and animal species. There are concerns that the possibility of obtaining a patent on life form inventions may encourage investment, research and development in ethically dubious areas.
31. On the other hand, however, it might be considered to be unethical not to grant patents for some inventions. Refusing to grant a patent might mean that morally positive outcomes such as the development of new drugs or vaccines would be impeded, as the lack of patent protection could discourage research. The refusal to grant a patent for such things could be considered unethical, on the grounds that failure to encourage these developments would show disrespect for human life.
32. In response to concerns expressed about the possible social and environmental effects of genetic modification, a Royal Commission on Genetic Modification was established in May 2000. The Commission's brief, as stated in its Warrant was to:
receive representations upon, inquire into, investigate, and report upon the following matters:
(i) the strategic options available to enable New Zealand to address, now and in the future, genetic modification, genetically modified organisms, and products; and
(ii) any changes considered desirable to the current legislative, regulatory, policy, or institutional arrangements for addressing, in New Zealand, genetic modification, genetically modified organisms, and products.
33. After extensive public consultation, the Commission presented its report3 to the Governor General on 27 July 2001. Chapter 10 of the Commission's Report deals with intellectual property issues. Two of these recommendations are directly relevant to the current review of the Patents Act 1953. These are:
That the Patents Act 1953 be amended by adding a specific exclusion of the patentability of human beings and the biological processes for their generation, in line with s18 of the Patents Act 1990 (Commonwealth).
That a Māori consultative committee be established by the Intellectual Property Office of New Zealand to develop procedures for assessing applications, and to facilitate consultation with the Māori community where appropriate.
34. These recommendations will be discussed later in this document. See also the government's response to the recommendations in Chapter 10 of the Commission's report.
35. The Act also does not address the issue of the protection of the cultural property and traditional knowledge of Māori. There is currently a claim before the Waitangi Tribunal ("Wai 262") which alleges that the Crown has breached its obligation under the Treaty of Waitangi to provide such protection. The patenting of inventions using indigenous flora and fauna or of inventions based on traditional knowledge is a concern for Māori and for other indigenous peoples around the world.
36. It is important to note however, that modifications to the patent system to restrict the patentability of certain types of inventions will not prevent the development and use of such inventions. Conversely, the fact that a patent has been granted for an invention does not mean that the invention can be commercially exploited. The grant of a patent does not over-ride any other legislation that might regulate the use of the invention. For example, a new pharmaceutical cannot be marketed until the Minister of Health has given approval, even though the pharmaceutical has been patented.
37. It can be seen then, that the criteria for granting a patent as laid down in the Patents Act 1953 are not strict enough to ensure that patents are only granted for real innovations, and are out of step with the criteria applied internationally. The Patents Act 1953 also does not address the moral or Treaty issues that have arisen since the Act was passed. Reform of the Patents Act is considered necessary to ensure that New Zealand's patent legislation:
- ensures that patents are only granted for things that are genuine innovations;
- makes a positive contribution to New Zealand's economic development and contributes to the government's objectives of developing a "knowledge economy" by providing adequate incentives for New Zealand businesses to innovate;
- provide adequate incentives for overseas innovators to transfer their technology to New Zealand;
- deals appropriately with the concerns expressed by Māori regarding the patenting of inventions involving traditional knowledge and indigenous plants and animals;
- takes account of moral and cultural concerns relating to the patenting of living organisms, and genetic material, and takes into account the recommendations of the Royal Commission on Genetic Modification.
38. In putting forward the innovation strategy, the Prime Minister has stressed the need to enhance the innovation system. As the Prime Minister noted, an important element of this is improving New Zealand's intellectual property framework. This review of the Patents Act 1953 will contribute towards the government's goal of growing an innovative New Zealand and help to ensure that New Zealand is able to gain full value from its innovations.
History of Reform
39. In 1989 the then Ministry of Commerce commenced a review of the Patents Act, as part of a general review of New Zealand's intellectual property legislation. The review of the Patents Act culminated in the release of a discussion paper in 19924 ("the 1992 paper").
40. Submissions received in response to the 1992 paper indicated general agreement with its recommendations. Some sections of the community, however, including a number of Māori commentators, expressed concerns about the proposed reforms. There were two main concerns:
- that the proposed reforms did not address the issue of the patentability of biotechnological or "life-form" inventions, and
- that they did not address the issue of the protection of traditional remedies and the patenting of inventions based on traditional knowledge.
As a result, the proposed overhaul of the Patents Act was postponed while further consultations with Māori and other stakeholders took place. As part of the consultation process, the Ministry convened a Māori focus group to consider and report on the issues relating to the patenting of life forms, and a series of hui was held in 1999 which discussed the focus group's report and an accompanying Ministry publication, Patenting of Biotechnological Inventions.5
41. Since the release of the 1992 paper the only changes to the Patents Act 1953 were made in 1992 and 1994, to take account of New Zealand's accession to the Patents Co-operation Treaty, and the TRIPS agreement, respectively.
42. In August 2000, the Government decided to re-start the reform process, and agreed to a three-stage review of the Act. In Stages 1 and 2, Cabinet has agreed to a number of operational amendments to the Act which were based largely on the recommendations in the 1992 paper. The focus of these amendments is to update and improve the Act with the aim of providing greater certainty that when a patent is granted there will be a net social benefit to New Zealand.
43. To achieve this, the amendments proposed in Stage 1 and 2 included a change to the novelty requirements, so that an invention would be only considered "new" if no description of the invention has been published anywhere in the world before the date of filing of a patent application. Also included is a proposal to require that an invention must be shown to involve an inventive step before a patent can be granted. A new Patents Bill incorporating the changes proposed in Stage 1 and 2 is currently being drafted.
44. These proposals did not seek to address the moral, cultural and Treaty issues identified earlier. The question of the definition of invention was not addressed either. These issues have been the subject of considerable public debate, both in New Zealand and overseas. The Government has therefore decided to seek public input before making any final decision on these matters.
45. This discussion paper is being released as part of Stage Three of the review. In addition to the issues identified above, this discussion paper will also deal with the following issues:
- the interface between the Patents Act and the Plant Variety Rights Act 1987.
- the patentability of business methods and computer software related inventions;
- the patentability of methods of medical treatment of humans;
- the stringency of the tests used to determine whether a patent should be granted.
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