Hon CHRISTOPHER FINLAYSON (Attorney-General) on behalf of the Minister of Commerce: I move, That the Patents Bill be now read a first time. At the appropriate time I intend to move that the bill be referred to the Commerce Committee for consideration. I suppose the first issue to be confronted is the pronunciation of the word “patent”. Some people say “pay-tent” while others say “pat-ent”. Indeed, I am reminded of the story of three leading barristers who were called to the inner Bar many years ago. Mr Turner advised the court that he had in his hand letters “pay-tent”; Mr Leicester advised the court that he had letters “pat-ent”, and Mr Leary advised the court that he had in his hand a document essentially similar to the other two! This bill reforms a very important aspect of New Zealand’s intellectual property regime. The Patents Act 1953 is overdue for reform. It is modelled on the Patents Act 1949 of the United Kingdom, and that legislation had its roots in the Statute of Monopolies 1623, which was enacted following the famous case of monopolies that struck down a royal monopoly on the manufacture of playing cards. As was observed in a 2005 decision of our Court of Appeal called Pfizer Inc v The Commissioner of Patents, the 1953 Act is a curious amalgam arising out of very old and peculiar circumstances, which arose out of the long history of the royal grants of privilege in the United Kingdom. It then evolved through various statutory provisions, and the law has been supplemented over the years by the leading decisions of senior appellate courts, which set out case law landmarks against which the law of patents had to be viewed. I agree with the observation of Justice Hammond at paragraph 110 of that case that given the already intrinsically challenging subject matter of patents, this background has not made the law readily accessible or easy to understand. It was the deplorably obscure state of the law that led Charles Dickens to write A Poor Man’s Tale of a Patent.

What are patents? They are an intellectual property right granted for inventions providing the patent owner with the sole right to capitalise commercially on the invention for the term of the patent. They therefore provide an incentive for innovation. However, patents can also impose costs on society as they are, effectively, a form of monopoly right. This is a particular issue for New Zealand as most patents granted are to foreign applicants.

In New Zealand patents are granted after an examination process by the Intellectual Property Office of New Zealand under the authority of the Commissioner of Patents. The standard of patent examination required by the 1953 Act is less strict than that required for most countries. This means that patent rights granted in New Zealand may be broader in scope than rights granted for the same invention in other countries. Another consequence is that patents may be granted for inventions that already exist or where they are obvious variations on existing technology. This has the potential to disadvantage New Zealand businesses and consumers as technology that is freely available elsewhere could be covered by a patent in New Zealand. Since innovation is often incremental, building on what already exists, local innovators may also be disadvantaged.

To be granted a patent under this bill, an invention must be a manner of manufacture, novel, involve an inventive step, and be useful. These criteria are stricter than those in the current Act, and are more closely aligned to the criteria applied in most other countries. Applying the stricter criteria will substantially reduce the potential disadvantages to local firms and consumers arising from criteria applied under the current Act. Inventive steps and usefulness are not part of the examination process under the Patents Act 1953, although lack of an inventive step or usefulness are grounds upon which third parties can challenge the grant of a patent.

Novelty and an inventive step will be determined on the basis of all information that has been made publicly available anywhere in the world before the filing date of a patent application. Under the current Act, these criteria are determined with respect to what is known or used in New Zealand only. No notice is taken of information published outside New Zealand. The courts have also interpreted the 1953 Act to require the Commissioner of Patents to give applicants the benefit of the doubt when deciding whether to grant a patent. The effect of this is that the commissioner may have to grant patents that a court is likely to find invalid. The bill removes this requirement, requiring that the decision to grant or not to grant a patent be based on a balance of probabilities approach.

The bill excludes some inventions from patent protection, even though they might otherwise meet the requirements for a patent, if there is no benefit to the nation in allowing these inventions to be patented. Methods of treatment of human beings by surgery or therapy, and methods of diagnosis practised on human beings will not be able to be patented under the bill. The courts have decided that such methods are not patentable under the Patents Act 1953, but there is no specific exclusion in the 1953 Act. To remove any doubt as to whether such methods are able to be patented in New Zealand, the bill introduces a specific exclusion. In line with the recommendations of the Royal Commission on Genetic Modification, human beings and biological processes for their generation have been excluded from patent protection. Perhaps an exception could be made for the chief Opposition whip, but it would be defeated, I think, by the usefulness test I referred to earlier. Also excluded are inventions whose commercial exploitation would be contrary to morality or public policy. It is likely that few patent applications would be refused on this ground. This provision is intended to be used only in relation to inventions where commercial exploitation is likely to be offensive to a significant section of the community, including Māori.

No matter how thorough the patent examination process is, some patents may be granted that should have not been granted. Such bad patents have the potential to impose unnecessary costs on the Crown, for example, in the health budget, and also impose costs on consumers and businesses. The bill, therefore, introduces simplified procedures that will reduce the cost and complexity involved in challenging bad patents. The bill also provides for the establishment of a Māori advisory committee to advise the Commissioner of Patents in relation to applications for inventions involving traditional knowledge or indigenous plants and animals. The establishment of a Māori advisory committee was recommended by the Royal Commission on Genetic Modification.

The bill also contains a number of procedural and administrative matters associated with the application for a patent so as to minimise costs and delays. It also updates the regulatory regime for patent attorneys who provide technical and legal advice on intellectual property matters.

The bill is consistent with New Zealand’s international obligations in this area, including the World Trade Organization’s Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS agreement). The TRIPS agreement has been amended with regard to the granting of compulsory licences for the production of patented pharmaceuticals for export to countries that require such pharmaceuticals to deal with public health problems, but have insufficient or no capacity to produce them themselves. The Government proposes to accept this amendment to the TRIPS agreement, and appropriate amendments to the bill will be proposed during the select committee consideration. I commend this bill to the House.

Hon DAVID PARKER (Labour) : First, I say that I agree with everything the Attorney-General said. The bill, of course, is one that the National Government has taken over from the outgoing Labour Government. It is a matter of public policy that seeks to balance two interests. First is the interest of New Zealand to stimulate the creation of new inventions in New Zealand and to ensure that we readily have access to inventions that have been developed overseas. We do that by giving inventors who have developed something novel a right to exploit for commercial purpose that novel invention for a period of time, and during that period of time they have monopoly rights. Those monopoly rights confer the right to extract monopoly rents. We all know that monopolists have a reputation for extracting monopoly rents, and left uncontrolled they impose an inappropriate cost upon a society. This is the second public policy interest.

Patent legislation tries to give an appropriate period of exclusivity to the patent holder to exploit his or her invention for commercial gain. This gives the person or the company that owns those rights the incentive to develop the invention in the first place for the betterment of society. But the quid pro quo of the granting of those rights is the societal right to limit the period over which the person or company can exploit those monopoly rights. Under the current patent legislation, and as will be the case if this bill passes into law, that period is 20 years from the date when the application for the patent is made. So through that time-limited grant of monopoly rights, we attempt to strike a balance.

I endorse some of the Attorney-General’s comments about the imperfections in the current patent law. It is now clear that New Zealand’s patent law is too generous to those people seeking patents. It confers patents and, therefore, monopoly rights on, mainly, corporations. In New Zealand’s case it is mainly multinational corporations outside of New Zealand that can gain patent rights to inventions in New Zealand that they would not be able to gain patent protection for overseas. As the New Zealand regime is more lenient than overseas regimes, we are effectively allowing those patent holders in New Zealand to extract monopoly rents at the cost of the New Zealand economy and at the cost of New Zealand society in circumstances that would not be allowed in overseas jurisdictions. To remedy that ill—because it is wrong that the current law in New Zealand is more lax than overseas rules relating to granted patents—this bill tightens up the criteria upon which the Patent Office can grant a patent. Those criteria apply if the patent is novel and has its first patent application as a consequence of a New Zealand - based invention. But they also apply to inventions that come from overseas and are patented in New Zealand, because when that happens the New Zealand economy is faced with that monopoly rent being extracted for the benefit of the overseas patent holder. There needs to be proper control on those overseas patents coming into New Zealand. They should not be given out too freely.

How does the standard change? It changes in a number of ways. For a start—and I think this is a very important change—there are changes to the standard of proof that is required of the applicant for the patent. Previously where there was a doubt as to whether an invention was patentable, or where there was a doubt as to whether the invention was novel, as was claimed, those doubts were resolved by the benefit of the doubt being given to the applicant. That meant that people were getting patents in New Zealand because they could say that there was a doubt as to whether it should be granted. New Zealand had to give the benefit of the doubt to the applicants. Hence they got their patents.

That standard of proof is being changed. Now the patent applicant will have to show to the Patent Office that on the balance of probabilities the prerequisite tests for the grant of a patent are met. So rather than the benefit of the doubt being given to the applicant, the applicant has to prove his or her claims on the balance of probabilities.

The other main change is that now there are requirements that novelty, an inventive step, and usefulness must be proven. The standard of examination in New Zealand was relatively low on this issue, compared with other countries. Until now there has not been an examination for an inventive step or usefulness as a prerequisite to the granting of the patent.

Todd McClay: A bit like Labour Party selection.

Hon DAVID PARKER: That was an irrelevant comment from Mr McClay.

As a consequence, New Zealand was granting patent rights that would not have been granted in overseas jurisdictions, and again this was an abuse, from a public policy sense, of the monopoly rights that are given to patent holders.

Another matter being made clear in New Zealand, as well as in most overseas jurisdictions—but not in all overseas jurisdictions—is that it is not permissible to patent medical treatment or methods of medical treatment. In my opinion, that is a very proper limitation on the right to grant patents. One should not be able to patent methods of medical treatment on humans. That is an area that has long been excluded in New Zealand and in similar jurisdictions. It is permissible in some other jurisdictions, and, indeed, some fine points have been drawn in New Zealand patent jurisdictions. If my memory serves me correctly—it is a little while since I have looked at this area of law—I think “Swiss claims” is the professional jargon used to describe some of the close-to-prohibited methods of treatment of human ailments that are able to be patented. This legislation makes it clear for the first time in statute law, as opposed to judge-made law, that treatment methods of human disease, etc., are not eligible for patent.

One of the other major changes here, which I think is important, is that instead of the Patent Office looking only for prior instances of that which is claimed to be invented in New Zealand, it is now looking internationally. The Patent Office will have to be satisfied that the applicant for the patent can show that it is novel and inventive. The Patent Office will not be looking just at what is called “prior art” in New Zealand, but will be looking at what is prior art internationally. If, for example, the thing for which patent protection is sought in New Zealand has previously happened in the United States of America, then that fact will be taken into account. If there was an identical discovery that had been published previously in America, that would prevent a patent from being granted in New Zealand, because it would not be novel. Again, that is an appropriate change to the legislation and, again, this will benefit New Zealand economically because the monopoly rents will not be extracted by a patent holder for a patent that might have been granted otherwise, when it should not have been.

There is one other change that I think is worthy of note. That change relates to the instance where a disclosure has been made by someone who should not have made that disclosure, and, therefore, the invention is no longer secret. When someone goes to the Patent Office and tries to establish that something is novel, that person has to show that it has not been effectively published—that it is not out there, known to other people already. The reason is that that person is meant to be patenting something that is novel. If it is already known, then obviously it is not novel, and that person should not get a patent for it and the monopoly protection and advantage that come with it.

But if the disclosure was made by someone who had received that information confidentially, and if that person had a duty not to disclose it, but then did the dirty on the inventor by disclosing information that he or she had a duty to keep secret and should not have made public, then it seems unfair that the inventor cannot claim patent protection for that. This situation can arise for inventors. For example, they might be seeking capital funding for the invention they are trying to develop, there is a confidentiality agreement, and then the financier breaches the confidentiality agreement. Until now that vitiated the ability of the patent applicant to get the patent. This bill makes an exception and gives them a year to follow up and apply for a patent. I think that is a good change. Thank you.

PESETA SAM LOTU-IIGA (National—Maungakiekie) : I rise to speak on the Patents Bill, and may I first acknowledge the first two speakers, the Hon Chris Finlayson, the Attorney-General, as well as the Hon David Parker, for their contributions tonight. I think they have both made valuable contributions to our discussion and debate tonight. I also acknowledge the previous Associate Minister of Commerce, the Hon Judith Tizard—who is, of course, the next person on the Labour list—for introducing this bill on 9 July 2008.

We have already heard tonight that the purpose of the Patents Bill is to update the Patents Act 1953. This update is well overdue, as both previous speakers have explicitly intimated in their representations. Our Act is based on the United Kingdom’s Patents Act 1949. But, of course, a number of amendments to the UK Act have been made subsequently—not only the Patents Act 1977 but also the Patents Act 2004, which made a number of legislative developments to UK statutes.

Intellectual property, of which patents are only a part, has been touted as the foundation for New Zealand’s economic development into the future. As we have already discussed tonight, the current statute, which is 56 years old, is largely outdated, and most other countries examine for both novelty and inventive step. Many countries examine for usefulness, as well. When we consider both those concepts, we find that nearly all developed countries that have such legislation consider that information should be made available anywhere in the world. Applicants are generally given the benefit of the doubt in any dispute.

Novelty is currently determined on the basis of what is known or used in New Zealand. Sadly, information available overseas but not in New Zealand is not considered when determining novelty. As previous speakers have suggested, the consequence of this is that patent rights granted in New Zealand are often broader than the patent rights granted in other countries for the same invention.

If we look to the Australian experience, we see that Australia’s current law is being reformed. The first of the two pertinent areas that the Australians are looking at is patentable subject matter. The main legal test in Australia in terms of whether an invention is patentable subject matter involves the manner of manufacture. The three main tests are its breadth, whether its patents are allowed in subject matters, and whether the granting of patents hinders innovation, investment, and public access to new technologies.

The second area of concern to the Australian legislature that is being reviewed is the post-grant patent enforcement strategies, for which there is also a current consultation process in place. In the United States, congressman John Conyers introduced the Patent Reform Bill in March of this year. It overhauls the US patent system in order to harmonise US laws with international best practice and to award patent coverage to entities that first file a patent application. The US patent law currently operates under a first-to-invent system.

We have heard various definitions of patents tonight. However, the expression “use of patents” could be understood in different ways. For example, a business might use someone else’s patent to develop an improvement, and then apply to patent that improvement. This is at the heart of our patent system. In exchange for making inventions publicly known, the inventor is given sole rights to profit from the invention for a limited period of time. Using patents could also be understood to refer to applying for patents to protect one’s own inventions. Many thousands of patents are applied for each year in New Zealand, but the majority are applied on behalf of overseas companies. Although patents must be granted in New Zealand to have validity here, most New Zealand patents are of foreign origin and protect the inventions of foreign applicants. Patents are classified in New Zealand under the International Patent Classification system, or the IPC. This system is quite different from that of the United States, which has subject class numbers shown on the patent record.

The main purpose of this bill is to ensure that the patent is granted for inventions in appropriate circumstances only, by establishing appropriate criteria and providing procedures that allow for the validity of that patent to be tested. In terms of the reforms being proposed in this country, it is unique that we will be addressing Māori concerns relating to the granting of patents for inventions derived from indigenous plants and animals or traditional Māori knowledge. Of particular importance will be the establishment of a Māori advisory committee to advise the Commissioner of Patents in this area. The relationship that our Government is forming with the Māori Party is really important, as are the number of initiatives that we are putting in place to address the needs of tangata whenua. This is just another example of our positive work with the Māori Party.

The bill is also designed to improve and promote the quality, expertise, and integrity in the profession of patent attorneys. I have talked about some of the international developments, and this new regime will take some of those into account.

I will say a quick word about some of the exclusions under this bill. An invention is not patentable if the commercial exploitation of that invention is contrary to public order or morality. We have also heard that human beings and biological processes for their generation cannot be patented, as well as inventions of methods of treatment of human beings by surgery or therapy. Of course, some of these changes and proposed clauses will be subject to select committee consideration, and we look forward to healthy discussion on this at the Commerce Committee when we go through the various clauses.

Clause 21(1), “Who may be granted patent”, states: “A patent for an invention may only be granted to a person who—(a) is the inventor; or (b) derives title to the invention from the inventor; or (c) is the personal representative of a deceased person mentioned in paragraph (a) or (b).”

I sum up by saying that I support this bill. There is much discussion to be had at the select committee around some of its clauses, but overall these amendments are long overdue. They bring us up to scratch with international best practice, and I support this bill. Thank you.

CHARLES CHAUVEL (Labour) : Law students know that in general terms a patent is a set of exclusive rights granted by a nation State to an inventor or his or her assignee for a limited period of time in exchange for public disclosure of the fact of the invention.

Internationally, there are widespread differences between the practice of nation States as far as the requirements that are placed on patentees and the extent of the exclusive rights conferred are concerned. These vary widely between countries according to national laws and international agreements. Typically, a patent application must include one or more claims that define the invention, which must be new, inventive and useful or industrially applicable. In many countries, certain subject areas are excluded from patents, such as business methods and mental acts. The exclusive right granted to a patentee in most countries is the right to prevent others from making, using, selling, or distributing the patented invention without permission.

In England, the Crown issued letters patent, which provided any person with a monopoly to provide or produce particular goods or services. The first such letter was granted by Henry VI in 1449 to a Flemish man for a 20-year monopoly for his invention, a manufacture process for stained glass destined for Eton College. This was the start of a long tradition by the Crown of granting letters patent that granted monopolies to favoured persons or people who were prepared to pay for them. The famous legal scholar Blackstone explained how letters patent or, in Latin, literae patentes—literally, “letters that lie open” —were so called because the seal hung from the foot of the document. They were addressed “To all whom these presents shall come” and could be read by anyone without breaking the seal, as opposed to letters closed, which were addressed to a particular person, who had to break the seal to read them.

The power to grant monopolies began to be abused as a revenue-raising technique for the Crown. As an alternative to calling Parliaments together to seek appropriations, the Crown began to grant patents in respect of all sorts of common goods—salt was a notorious example—so the courts began to limit the circumstances in which they could be issued. After a public outcry over the abuse of patents, James I of England was forced to revoke all existing monopolies and declare that they were thenceforth to be used only for projects of new invention. This declaration was incorporated into the Statute of Monopolies, which Parliament used to explicitly restrict the Crown’s power so that the king could issue letters patent only to the inventors or introducers of original inventions for a fixed number of years. In the reign of Queen Anne—1702-14—English lawyers developed the requirement that a written description of the invention must be submitted along with the patent application. These developments, which were in place during the colonial period before the independence of the United States, were the foundation for patent law in the US, New Zealand, Canada, Australia, and the other English-speaking jurisdictions.

Interestingly—and the previous speaker, Peseta Sam Lotu-Iiga, touched on this development—in the United Kingdom the Patents Act 1977 and its successor in 2004 harmonised UK patent law with the European Patent Convention. As a result of this, although New Zealand law remains based on the old English Statute of Monopolies, UK patent law is now an amalgam of UK and European practices. International law has also had a bearing on the development of contemporary patent law and practice. Under the World Trade Organization Agreement on Trade-Related Aspects of International Property Rights, patents should, in general, be available in World Trade Organisation member States for any inventions, in all fields of technology, and the term of protection available should be a minimum of 20 years—harking back to the old Henry VI first patent for the production process of stained glass for Eton College.

New Zealand patent law has not been updated for over half a century. Given the history that I have just recounted, and the fact that the relevant UK law is now largely a reflection of European treaty provisions and developments in international law, it was clearly timely for the previous Labour Government to introduce the present bill. I pay tribute to Judith Tizard, the Minister responsible for this area in the last Government, for having done so.

As the Labour Party’s associate spokesperson on commerce, I am very pleased to say that—

Paul Quinn: Why is she not here now?

CHARLES CHAUVEL: —as this is a reintroduction of our own measure, I say to Mr Quinn, we will obviously support it. Members opposite will be interested to remember that New Zealand has a small economy, we are remote from our markets, Kiwis like to travel and live abroad, and our high level of education and mobility means that we are free to do so in significant numbers. With some notable exceptions, we remain reliant on innovation in the primary production and services sectors. We are innovative people.

So what are the virtues that a reformed patent law system should embody, and what are the evils that it should seek to regulate? There are six virtues that I think the system should promote. First, and above all, we should have a system that incentivises invention in the first place. Secondly, there should be incentives to disclose the invention once made, so that the general science in the applicable area can advance. Thirdly, it should be attractive to invest the sums of money necessary to improve the invention and to produce and market it. Fourthly, it should be relatively easy to design around, and improve upon, earlier patents—again, to build innovation into the system on a continuous basis. Fifthly, a patent scheme should promote any unique cultural and other advantages that New Zealand possesses. Finally, it should interact consistently and robustly with the international legal rules surrounding the protection and promotion of innovation.

The major evil that a patent regime should avoid, given that, as I said earlier, it confers a negative right upon a patent owner, is unduly excluding competitors from using or exploiting the invention, even if the competitor subsequently develops the same invention independently. As I have tried to show, the history of patent law is too full of examples of abuse of the right that it confers because of just how sweeping it is, so too rigid a system will stifle innovation. That must be avoided at all costs, particularly for those of us who care about building a robust economy in New Zealand, which certainly includes all the members on this side of the House.

Labour members look forward to measuring the Patents Bill against the tests that I have mentioned. We look forward to hearing submissions in the select committee from affected parties. Above all, we look forward to contributing to modernising the New Zealand patent system in a way that balances respect for the rule of law with promoting a vibrant culture of innovation in this country.

KEVIN HAGUE (Green) : Clearly this area of law was long overdue for review. As such, the Patents Bill contains quite a number of helpful developments that we are pleased to support. For example, we support the tougher absolute novelty test and some of the specific exclusions from patent protection. Many of those exclusions have already been listed: human beings, biological processes for human generation, methods of medical treatment of humans, plant varieties, and inventions whose commercial exploitation would be contrary to public order or morality. The Green Party also supports the establishment of a Māori advisory committee to provide advice on patent applications involving indigenous flora and fauna. We further support the various process improvements to the ways in which patents are granted and how their validity may subsequently be challenged.

However, given that the review has been so wide ranging and was so overdue, it is a great shame that the Government has not seen fit to unpick the fundamental ideas underpinning patent law. I liked the Hon David Parker’s use of the word “monopoly”. A patent essentially provides an absolute monopoly on the use of a particular idea. Proponents of patents argue that they are necessary to encourage innovation and, thus, the development of knowledge. Their assumption is that innovation will not occur unless there is a financial return, and that a patent is the best way of providing such a return. Time does not permit a detailed analysis of that assumption, but I want to focus on some areas where the use of patents is clearly counter-productive and poorly addressed—or not addressed at all—by the Patents Bill.

I will begin by looking briefly at software. The bill proposes that software should be patentable; the opposite direction to that being pursued by the European Union. This is a very bad idea. The foremost theorist in this area is Richard Stallman. Stallman eloquently argues that the use of software patents stifles creativity, massively reduces efficiency, and can lead to whole areas of software usefulness remaining unexplored. Software patents are a substantial cause of software incompatibility, for example. He draws an analogy with the composition of a symphony. Suppose someone had patented particular chord progressions, sequences of notes, or combinations of instruments playing at the same time. What sort of problem would Beethoven have had? We regard him as a brilliant and innovative composer, but he wrote symphonies using a musical vocabulary comprised of very many musical ideas developed by multiple composers. Stallman argues that even a genius software programmer must draw on a standard vocabulary of programming ideas. If software patents are permitted, then the programmer cannot draw on such ideas without infringing patents. The consequences are that whole areas of software development are avoided lest software developers breach patents, and in other areas inefficient or otherwise unsatisfactory programmes remain in use because it is not technically feasible to develop better options because of this restriction. In this area patents are clearly a brake and a hindrance on innovation.

Stallman also makes some other points. He points out that the 20-year duration of patent coverage may be reasonable for a new mousetrap, but is effectively for ever for a software idea—think back to the software that we were using in 1989. He also notes that it is effectively impossible for somebody developing a new program to be aware of all the patents that may apply to her or his area of work. In the United States there are over 100,000 software patents—possibly as many as 200,000. It is hard to count because they keep growing and growing at a faster and faster rate. It is not possible to be aware of all the patents that may apply, and, in general, it is not feasible to research the matter.

I do not intend to again rehearse the arguments over genetic modification. This bill will enable the patenting of genetically modified organisms. This ability is not required for scientific inquiry or for the development of knowledge—in fact, it will inhibit these—but rather for the commercial exploitation of genetically modified organisms. This is absolutely opposed by the Green Party and by most New Zealanders. Professor Jonathon King, for example, told the Royal Commission on Genetic Modification that the “undermining and reversal of the biomedical culture of open communication and exchange is one of the most destructive impacts of life patents.”

We know that this issue is also a concern for Māori, whose interest is often the protection of collective and traditional knowledge, rather than its commercial exploitation. The assumptions implicit in patent law are at odds with the promotion of knowledge and ideas for non-commercial purposes. Professor King also raised with the commission the enormous public disquiet over what he called “the transformation of biological entities into private property through the use of intellectual property rights.” Although it is good to see some protection against patenting of indigenous flora and fauna, there is no such protection in respect of micro-organisms. I cannot see any argument or basis for this distinction. This whole area of the relationship between biological entities and traditional knowledge and so-called intellectual property rights, is one that we know is of particular concern to Māori. As far as I can tell, consultation with Māori on this issue, including this bill, has been minimal, at least since the 1990s.

Another area in which the existing patent approach is counter-productive to progress is that of international development. As George Monbiot points out, “Because capitalism is built upon the lending of money at interest, capitalist economies are driven by the need to repay debt, which is why survival in this system is contingent upon endless growth.” Monbiot points out that endless growth is physically impossible, but the rich world attempts to achieve this by bleeding the poor world of natural resources and human capital. One of the methods for doing so is through the insistence that poor countries open their borders to free trade and capital flow, while conveniently ignoring the fact that the rich countries became rich largely while operating protectionist policies themselves.

Another mechanism is through patents. Of all patents in the world, 97 percent belong to corporations in the rich world. This means that in order for poor countries and their economies to gain access to new technologies, they are forced to permit these corporations to operate from their soil. These corporations usually repatriate the profits, so the economic benefit to the poor economy is slight, and the cost of being able to access new technology in this way is usually environmental degradation and exploitation of labour. In Monbiot’s words: “Corporations wishing to invest abroad seek the cheapest of all possible conditions: low wages; no obligation to pay for pensions, health insurance or other benefits; low health and safety and environmental standards; low tax; and few regulations to prevent them from extracting as much money from the nation as they can, while leaving behind whatever mess they choose to make”. Patent laws and requirements through the World Trade Organization’s Agreement on Trade-Related Aspects of Intellectual Property Rights are used by big corporations from the rich world to maintain privilege by exploiting the poor world.

The fact is that we have only one world. We are all in this together. It is evident that the global economy needs fixing, that our international institutions need reform, and that wherever we live in the world, we are the victims of environmental degradation wherever it occurs. We need a global Green New Deal. These times demand not tinkering but a fundamental rethink of many of the constructs that have been used to facilitate business as usual. Patent law is one of these. What we need instead—or, at least, in addition—is the development of some non-antiquated ideas for how knowledge and new ideas can be encouraged for the benefit of us all. It is not as if there is a dearth of such ideas. In fact, there are plenty, such as open-source software, Creative Commons, and the flexible application of intellectual property rights to facilitate development in the poor world.

The Green Party would be very happy to work with the Government and with other parties to develop positive ways of encouraging innovation without stifling some of the most important reasons for doing so. The bill is not fit for this purpose, and the Green Party will oppose it.

RAHUI KATENE (Māori Party—Te Tai Tonga) : There is a comment made by the late Professor Sir Hugh Kāwharu that I want to share at the very first reading of this Patents Bill to ensure that the context for our position on patents is firmly established. At the Waitangi Tribunal hearing in May 2002, Professor Kāwharu referred to the significance of the Wai 262 claim, saying: “In my opinion, the present claim has had no equal in terms of significance to Maori since the Te Reo Maori claim in 1985. Such a statement is not made lightly.… The Wai 262 claim takes another step forward from that auspicious claim in 1985. It focuses on that simple phrase in the second article of the Māori version of Te Tiriti o Waitangi—Te tino rangatiratanga o o ratou taonga katoa. It talks of a way of life, a world view, a culture, an identity. Denial by the Crown partner of these matters is the cause of historical and contemporary Treaty breaches.” What more is there to say? The protection of our cultural and natural resources and the preservation of our traditional knowledge are imperative for our future. It was because of this significance that Wai 262 was initiated, to make evident the guarantee of tino rangatiratanga over all taonga that was promised in article 2 of Te Tiriti o Waitangi.

Now, here is the challenge. While Wai 262 is still before the Waitangi Tribunal, it simply makes no sense—indeed, it is nonsense—to be considering legislative proposals that cut to the very heart of that claim. This bill contains provisions that, supposedly, are to address Māori concerns about the granting of patents for inventions derived from indigenous plants and animals, or from Māori traditional knowledge. It establishes a Māori advisory committee to advise the Commissioner of the Patent Office on whether an invention claimed in a patent application is derived from Māori traditional knowledge or from indigenous plants or animals. Having done so, the Commissioner must consider the committee’s advice on whether the commercial exploitation of that invention is likely to be contrary to Māori values. I want to make it quite clear that the fact that some Māori may choose to use patents in the pursuit of their research or commercial endeavours does not mean that the patents system is a tool of any great protection for our taonga. Patents, by their very nature, are monopolistic. They exclude others from use, and they are expensive to obtain. When applied to physical natural life forms, traditional food crops, medicines, and knowledge, patents can suddenly accord individuals legal rights as inventors and owners, while the indigenous world view is ignored.

In the closing submissions to Wai 262 from Ngati Puri, Te Arawa, and Ngāti Wai, the claimants of Te Tai Tokerau were unanimous in their view that patenting is not an appropriate mechanism to protect our mātauranga, specifically in relation to the biological and genetic resources of taonga species. What was even more revealing from the submissions was the outright commercial corporate greed that has been associated with the misuse of patents. They described the fact that patents derived from traditional knowledge of plants and medicines generated tens of billions of dollars in revenue for major international pharmaceutical and agrichemical companies. Companies like Monsanto and GlaxoSmithKline reap tens of billions of dollars from the traditional knowledge and resources of indigenous peoples. In 1990, it was estimated that the sum of US$45 billion was derived directly from traditional knowledge. If I think back to around that time, when I was a tutor in this subject, the figure that I pull out coming back to indigenous peoples to pay for that knowledge was about 0.001 percent of that total amount.

This is big business, big bucks, and big risks. This is complex stuff, and it is not helping our people. The issues that tangata whenua have with patenting are the very issues that drove Saana Murray from Ngāti Kurī, Dell Wīhongi from Te Rarawa, Te Witi McMath from Ngāti Wai, Tama Poata from Ngāti Porou, Katarina Rīmene from Ngāti Kahungunu, and my father, John Hippolite, from Ngāti Kōata to the Waitangi Tribunal in the first place. It will certainly not be the Māori Party that sells them short on the visions and aspirations they took on our behalf for the recognition and protection of our cultural and intellectual property rights in relation to indigenous flora and fauna.

It is expected that the Waitangi Tribunal will recommend the implementation of what are known as sui generis systems in order to protect Māori knowledge and indigenous flora and fauna. “Sui generis” literally means “of its own kind”—unique. It conveys a new way of doing things. In the case of patents it would be about providing adequate protection for traditional knowledge, because the current frameworks are woefully inadequate. We all know that new measures are needed. Patents have been widely used to exploit indigenous knowledge and our peoples. They are a tool of commerce—a means of establishing exclusive property rights. But we want to get it right. There is no point rushing something through for the sake of this bill when waiting in the wings is a robust opportunity for the development of new mechanisms to enable ongoing protection of our knowledge and indigenous resources.

This bill puts forward the Māori advisory committee as a sui generis measure. There is obviously something about National and Māori advisory committees—first Auckland, now patents. Well, the jury is out as to whether the concept of a Māori advisory committee is the best means by which to protect the exercise of tino rangatiratanga and kaitiakitanga over our taonga. The crux of the matter is that all the best evidence tells us that the tribunal hearing of the Wai 262 claim will recommend the development of new mechanisms, intrinsically different from the patent regime, which will enable ongoing protection, and could possibly mean new legislation. A more innovative response is needed for the problem of patents. With all the developments out of Wai 262, and at global levels with the World Intellectual Property Organization, we should be coming up with more proactive solutions than this bill.

The Mātaatua Declaration on Cultural and Intellectual Property Rights of Indigenous Peoples has made it very clear that indigenous peoples are willing to share their knowledge, as long as their fundamental rights to define and control their knowledge are respected. Indigenous peoples are not anti-science or anti-development. All we are calling for is that the integrity of life and cultural knowledge is respected. Although we recognise that traditional knowledge and use—including, of course, the medicinal use of indigenous flora—can bring about economic benefit for indigenous peoples, the fact is that patenting, as a process, is seen by our people as just another means of stealing the ownership away from the original peoples. Patenting is aligned with private economic rights, whereas our rights, as recognised in Wai 262, are collectively based and in line with our obligations and respect for natural resources.

This Patents Bill, even with its Māori advisory committee, is, at best, only a partial answer dealing with the complex implications of the recognition of traditional rights and mātauranga Māori. There are new ways and approaches that we could look to. The Trade Marks Act 2002 is an interesting case in point. Alongside the measures of trademark law there is a new sui generis measure that enables the Commissioner of Trade Marks to refuse to register a trademark if it is offensive to Māori. So it can be done.

We are influenced by the expert advice of those who paved the way to remind the nation that the Crown has an obligation to protect Māori knowledge and indigenous flora and fauna. We defer to their wisdom, and we therefore recommend in the strongest terms that this bill should be deferred until the response to Wai 262 is in front of us all. We do not support this bill.

JO GOODHEW (National—Rangitata) : I wish to begin my contribution on the Patents Bill’s first reading by acknowledging the contributions by members from Labour, the Green Party, and the Māori Party. There is every indication that the submissions on this bill will be very interesting, maybe even fascinating. I look forward, as a member of the Commerce Committee, to hearing those submissions, and to further debate on this bill.

This bill replaces the Patents Act 1953, and reforms and modernises New Zealand’s patent law. It would be fair to say that not only is the Patents Act a last-century Act, but it is significantly early in the last century. The fact that this bill was introduced is an indication that it is perhaps long overdue for review. This bill was introduced in July 2008—I acknowledge that—but it is now having its first reading under the sponsorship of the Minister of Commerce, the Hon Simon Power. In short, because a patent provides a form of monopoly right—and it has been covered by other members here this evening—the granting of patents can impose costs on society, particularly as most patents granted in New Zealand are granted to applicants from outside New Zealand. It is consistent with National’s philosophies that we should be looking at all ways to minimise costs; here it is to ensure that the patents system provides a net benefit to society. Patents should therefore be granted only for genuine innovations that are new, involve an inventive step, and are useful.

In speaking today on the first reading of the Patents Bill I believe that it would be useful to start with an outline of what I understand a patent to be. A patent is a right granted by the Commissioner of Patents, after an examination process by the Intellectual Property Office of New Zealand, to prevent others from using an invention for 20 years. That is a significant period of time. The right continues for that length of time, provided that renewal fees are paid by the end of the fourth, seventh, 10th , and 13th years after the grant. The patents regulatory system is established under the Act that I previously mentioned—the Patents Act 1953—and the Patents Regulations of the following year, 1954. That 1953 Act was based on the United Kingdom’s Patents Act of 1949. The statute was replaced in the United Kingdom by the Patents Act 1977, and the Act made significant changes to the United Kingdom’s patent laws. But New Zealand, as I have mentioned, has made no substantial changes since 1953.

The law in relation to patents in the United Kingdom and New Zealand has its origins in England in the early modern period. Patents giving monopolies for new inventions were first granted by Queen Elizabeth I to encourage the establishment of new industries within the realm. In 1623 Parliament passed the Statute of Monopolies, which restricted monopolies already granted, and prohibited the granting of new monopolies except to the true and first inventors of—and I quote—“a manner of new manufacture” that was not being used by others at the time of the grant. So this concept is one that goes back many hundreds of years.

A patent may be granted for an invention that is a manner of new manufacture, and entitles the grantee—that is, the patent owner—to a right to exclude others from making, using, or assigning the patented invention during the term of the patent. The patent owner must make public a complete description of the invention so that once the patent expires, other persons will be able to use it.

The purpose of this bill—and I intend to elaborate on the purpose—is to “ensure that a patent is granted for an invention only in appropriate circumstances by establishing appropriate criteria for the granting of a patent; and providing for procedures that allow the validity of a patent to be tested; and provide greater certainty for patent owners and the users of patented inventions that patents will be valid after they are granted; and address Māori concerns relating to the granting of patents for inventions derived from indigenous plants and animals or from Māori traditional knowledge; and promote quality, expertise, and integrity in the profession of patent attorneys; and ensure that New Zealand’s patent regime takes account of international developments.”

Members may well be thinking: “What is the need for this bill?”. Well, there are plenty of reasons why this bill is needed, and I would like to go through some of those reasons. It is to strengthen the criteria for granting a patent by introducing an absolute novelty standard—and maybe the novelty aspect might interest those opposite—examination for inventive step and usefulness, and a whole of contents approach to dealing with conflicting applications, and to provide that the current requirement for the commissioner to give applicants the benefit of the doubt when deciding whether to grant a patent be replaced by the balance of probabilities approach.

This bill retains the current definition of patentable subject matter as a manner of manufacture, but provides specific exclusions from patent protection for human beings and biological processes for their generation, methods of medical treatment of human beings, plant varieties, and inventions whose commercial exploitation would be contrary to public order or morality.

This bill seeks to establish a Māori advisory committee to provide advice to the commissioner in respect of patent applications for inventions involving indigenous plants and animals—and here I acknowledge the concerns of the member for the Māori Party in respect of that, and look forward to addressing in the select committee some of those concerns, as I am sure they will come through in submissions.

The bill seeks to introduce a specific experimental use exception into New Zealand’s patent legislation.

It is clear to me from reading the notes around the bill, and commentary, that this bill will significantly improve current legislation; it will significantly bring patent law into the realms of this century. It will provide for automatic publication of patent applications at 18 months from the earliest priority date, and provide that where an invention involves a micro-organism, the requirements for disclosure of the invention can be met by depositing a specimen of the micro-organism in a recognised depositary—and one may only wonder what would happen if in fact, instead of that, a complete description of that micro-organism were given.

The bill will provide that all examiners’ reports and communications relating to a patent application be open to public inspection once the application has been accepted, and provide that disclosures of an invention, up to 12 months prior to the filing of an application, will not destroy novelty if the disclosure was derived from the inventor and disclosed without the inventor’s consent.

As members present can tell, this bill is significant. One has only to look at the bill itself to see that there will be quite some interest in its various clauses, and I expect that we will be receiving a number of submissions from interested parties.

I want to cover again some of the exclusions from this bill, because I think it is important that we note these exclusions. An invention is not patentable if the commercial exploitation of the invention is contrary to public order or morality. It will be interesting to hear how those two terms are in fact determined. In addition, the following are not patentable: human beings and biological processes for their generation, inventions of methods of treatment of human beings by surgery or therapy, inventions of methods of diagnosis practised on human beings, and plant varieties.

The wording of this exclusion is intended to be consistent with the World Trade Organization Agreement on Trade-related Aspects of Intellectual Property Rights, and it is interesting, perhaps, for us to note here that this agreement states: “Patents shall be available for any inventions, whether products or processes, in all fields of technology, provided that they are new, involve an inventive step, and are capable of industrial application. … patents shall be available and patent rights enjoyable without discrimination as to the place of invention, the field of technology and whether products are imported or locally produced.”

In addition, under patent ownership, this bill provides that a patent for an invention may be granted only to a person who is the inventor, who derives title to the invention from the inventor, or who is the personal representative of a deceased person mentioned previously, and that patent ownership is particularly important.

This bill also deals with ways in which disputes can be dealt with.

CLARE CURRAN (Labour—Dunedin South) : I rise in support of the Patents Bill, which is designed to replace the Patents Act 1953 and was introduced by the previous Labour Government. This bill reforms and modernises New Zealand patent law, and it provides an appropriate balance between adequate incentives for innovation and technology transfer and ensuring that the interests of the public and Māori are protected.

As outlined, this bill was originally introduced by the former Labour Government, and therefore we will be supporting it. I cannot help but think, though, that here we are, talking about patents, while we are facing changing times ahead and are in the midst of a recession the like of which has not been seen since World War II. Where are the Government’s ideas? And will reforming patents save the countless people who have lost their jobs to unemployment from this recession?

Although this is an important bill, which indeed needs to be passed, I cannot help but worry about those who face redundancy. We have seen Governments around the world spending billions of dollars trying to stimulate their economies to prevent recession and keep people in work, yet in New Zealand right now we have a Government that is talking about a cycleway as a good idea, as one of the results of its Job Summit. Has work started on that cycleway yet? Well, our counterparts across the world have been busy—

Hon Member: This is a patent bill, not a Job Summit one.

CLARE CURRAN: I am getting there. In the US there has been investment of $150 billion in the development and deployment of green technologies, and a million dollars is being put into getting hybrid plug-in cars on the road by 2015. In Australia, billions of dollars are being invested in investment partnerships, the provision of liquidity support, and a nation-building package of $4.7 billion. In the UK there is a billion-pound housing package to contribute to building more council houses and to extending stamp duty holidays when buying houses.

Hon Christopher Finlayson: Get on with the bill. Mr Speaker—

Mr DEPUTY SPEAKER: I ask the member to get back to—

Hon Member: Talk about patents.

Mr DEPUTY SPEAKER: —patents. Yes, that is what the bill is about—patents.

CLARE CURRAN: A patent is a right granted by the Commissioner of Patents after careful examination by the Intellectual Property Office of New Zealand. Patents are very important to modern society, and they prevent others from using an invention for 20 years. This right continues for a length of time, provided that renewal fees are paid by the end of the fourth, seventh, tenth, and thirteenth year after the grant.

The origins of such laws came from England in the early modern period, as we have heard. Patents usually refer to the right granted to someone who invents or discovers a new or usable process or invention, or any new and useful improvement. Here in New Zealand, as mentioned earlier, that process is handled by the Patent Office, which keeps a register of patents. The patent owner must carefully make public a complete description of the invention, so that once the patent expires other persons will be able to use it.

This bill updates the criteria for granting a patent, and aligns those criteria with the criteria applied in most other countries. The bill defines a patentable invention in clause 13 as involving a “manner of manufacture within the meaning of section 6 of the Statute of Monopolies … involves an inventive step”—as we have heard—“and is useful;”. All of these criteria must be satisfied before a patent application can be accepted and granted. Current law does not include an inventive step and usefulness in its criteria, so, under this bill, the Commissioner of Patents must not accept a patent application for a grant unless satisfied, on the balance of probabilities, that the requirements for the grant are met. The courts have ruled, under the 1953 Act, that the commissioner must give the patent application the benefit of any doubt, and this bill aligns patent laws to match this important case law.

This bill examines the meaning of “prior art base” and modernises patent law. Novelty and the inventive step of an invention are determined by comparing the invention with the relevant prior art base. The prior art base is any information made available to the public in any way, anywhere in the world, before the filing date of a patent application. Under the 1953 Act it was confined to what was published or used in New Zealand, not in the world, unlike the provisions of this bill.

Exclusion of patentability is also modernised, and inclusions are inventions that would meet the criteria but are excluded for policy reasons—for example, methods of treatment for human beings by surgery or therapy, and things that clearly should be secret or not available too freely. This has been clearly ruled upon by the courts.

This bill also intends for the exclusion of patentability to be consistent with Article 21 of the World Trade Organization Agreement on Trade-related Aspects of Intellectual Property Rights. This bill will also introduce a simpler, less complicated procedure to reduce the cost of appealing and challenging the validity of granted patents. Procedures introduced allow third parties to make an application to the Commissioner of Patents rather than going through the courts, which reduces costs and the complications resulting from them.

The establishment of a Māori advisory committee to advise the Commissioner of Patents is convened under this bill. It is very important that Māori traditional knowledge and indigenous plants and animals are recognised in New Zealand, and we must keep this in mind when examining patents. The function of the committee will be to provide advice that can be used by the commissioner to determine whether patents are contrary to Māori values.

This bill replaces the current right to apply with a right to grant. It allows any person to make an application for a patent, but only the inventor or the assignees may be granted the patent. Importantly, patents applications will be published at 18 months from the earliest priority date. Under the current Act, this may take 2 to 4 years after the initial application has been published. Also, once an application has been accepted, all documents associated with such patents become available to the public. This practice brings New Zealand into line with most countries.

This bill is intended to reduce compliance costs and to increase certainty for applicants. It will set time limits for applicants to respond to examination reports issued by the commissioner, so it will reduce the number of false claims to patents that are received.

In closing I commend this bill. It is a good bill—a bill that was introduced by Labour—but I am still concerned that this National Government needs to come up with its own ideas that will keep hard-working New Zealanders in jobs. Patents are very important, as is the modernising of the 1953 Act, but we must not lose focus on the fact that we are facing challenging times and that people are struggling.

This bill intends to reduce compliance costs, which is a good thing in these times, and patents are a sensible idea and need to be modernised, so we will support this bill. But we need to have discussions about how to protect New Zealanders from the effects of the recession. Many people are feeling the pinch and are worried about their jobs and livelihoods. Will they be able to pay their mortgages, will they be able to continue to put food on their tables, and will they be able to pay their power bills during the winter? Unemployment in New Zealand rose to 4.6 percent in December, which is 105,000 people out of work. Six months ago the unemployment rate was 3.9 percent. It is expected that that number will rise to 5.3 percent by the time of the next announcement. Budget day is just around the corner, and many New Zealanders want to know what this Government will do.

Finally, this bill modernises the Patents Act 1953 and ensures that patents are more in line with modern technology. It recognises what is happening around the world in patent law. It is a Labour bill, therefore we are supporting it. It is a good bill. It is very important that we examine and modernise patents and the protection of property, so I commend this bill to the House.

KATRINA SHANKS (National) : It is my pleasure to stand today in support of the Patents Bill. The bill is to protect innovative, creative people and their “innovations that are new, involve an inventive step … and are useful.” It is only fair that the inventors and creators who have invested time and money on a product that will be useful and have a commercial value have modern patent legislation that will protect their investment.

Protection of patents will allow an environment that encourages inventors to take a risk. There will be some protections for their investment that will allow them to have a commercial return. This legislation is a good example of modernising legislation for our current times. New Zealand’s future growth will involve the commercialisation of our ideas and our intellectual property. New Zealanders have a number eight wire mentality: if we can see a better way of doing something or have a great idea, then we just get on and do it.

A number of companies in New Zealand have commercialised great ideas and are cutting edge. I will mention just two or three off the top of my head: Spidertracks does global positioning systems (GPSs) and is cutting edge in its field globally; Metalform has created the Ezi-Riser wheelchair, which is the first wheelchair in the world that can tilt; and Martin Jetpack is an innovation from the “jetpack man”—and the list goes on. It is important that we have good, strong patent law that is relevant to our environment.

I will talk about one of those businesses, which without good, strong patent legislation would never have got as far as it has. It is very important for businesses to know that if they have an idea—a good idea—and if they create something, nobody else will be able to copy it, at least for 20 years. Those businesses can have the benefits of investing their time in an idea. Once they have that idea and build it up, if it looks like a good goer then they can commercialise that idea. They can go the extra step, find some global markets, and find a manufacturer to produce the idea and get a commercial product for the good of growth in our economy. But without the ability for businesses to patent that idea, they would never take it so far. Why would they put tens of thousands—hundreds of thousands—of dollars into an idea if they could not protect that idea before they went to commercialise it? That is why this legislation is so important.

I will tell members why that is so with one little example: Spidertracks in Palmerston North. The company produces a GPS tracking system. Previously, if a tracking system was put on to an aeroplane, for example, there had to be two boxes in the aeroplane: one that sent out the signal, and one that received a signal to say where the aeroplane was. Both signals could not be sent at the same time; only one could be sent at a time. Spidertracks developed a box that has both the signal receiver and sender in the box. The boxes can send and receive signals at exactly the same time. This was the first time anybody has been able to create that technology in New Zealand—in fact, globally. The company managed to put the technology in that one box, which is the size of a cellphone. Before, there had to be two boxes. The product contains a sender and a receiver in a box the size of a cellphone. The company patented the product and took it overseas, and this one little cellphone-sized instrument that has the capability to receive and send signals at the same time is in something like 59 countries now.

Without patenting that idea, the company would have never taken it so far. That is why it is important that we have legislation that is very current for the environment we are in—especially when an invention is sold into countries where it is easy to copy and then be mass produced. Because we are such a small player, it is hard for us to enter some of these markets, and it is easier for other countries. That is why this legislation is so important for New Zealand and for New Zealand’s growth.

At the moment, the way the New Zealand patent system works is that a patent is a right granted by the Commissioner of Patents, after examination by the Intellectual Property Office of New Zealand, to stop others from using an invention for 20 years. The system was established under the Patents Act 1953, which was based on the UK Patents Act 1949. Britain replaced its statute in 1977, but New Zealand has made no substantial change to the legislation since 1953. For over 50 years we have had the same legislation around patents. As New Zealand has grown and we have become more global, it has become more and more important that we get this legislation up to date.

Patents giving monopolies for new inventions were first granted by Queen Elizabeth I to encourage the establishment of new industry. In 1623 Parliament passed the Statute of Monopolies, which restricted monopolies already granted, and prohibited the granting of new monopolies except for the true and first inventors of a manner of a new manufacture that was not being used by others.

So it is very important that this legislation is being modernised, and under the sponsorship of the Minister of Commerce, the Hon Simon Power, the bill is here today having its first reading. It will be interesting when the bill goes to a select committee and we can listen to the submissions on it. The bill will affect many, many entities, enterprises, and inventors out there, so it is important that we get it absolutely right.

Because a patent provides a form of monopoly right, it is really important that we get the bill right, because when there is a monopoly, costs can go up in order for the consumer to receive a product, because no one else in the field delivers exactly the same product. In order to minimise these costs and to ensure that the patent system provides a net benefit to society, patents should be granted only for genuine innovations—innovations that are new, involve an inventive step, and are useful. We do not want to ensure that anybody can get a patent for an idea that will not be useful and that is not totally inventive. That is not what this legislation is about, and it is not what a patent is about. A patent should be granted for something that will be inventive, is new, and will be useful for people.

In New Zealand a patent may be granted for an invention that involves a manner of new manufacture, and a patent entitles the patent owner the right to exclude others from making, using, or assigning the patented invention during the term of the patent. The patent owner must make public a complete description of the invention, so that once the patent expires others will be able to use it. It is interesting to know that someone cannot just keep a patent for 20 years. A fee must be paid in order to renew the patent after every 3, 4, 7, and 13 years, otherwise other people will be able to use it. So it is important that inventors keep current with the legislation and the changes to it, and know how often they will have to pay those fees in order to protect their investment.

We need this bill because intellectual property has been touted as the foundation for New Zealand’s future, but we have been hamstrung by old legislation—the Patents Act 1953. It is important that we protect our intellectual property, because if we are talking about the growth of New Zealand, our ability to bounce back after the horrible recession, and being globally competitive, it is very important that we protect our intellectual property. We are distant from our markets, and innovation is the one area in New Zealand where we can really get ahead in order to bounce back from the recession.

It is important that we get this legislation right and that anybody out there listening who has an interest in this area—an inventor or someone who commercialises ideas—looks at this bill when it goes before a select committee. I ask such people to please put in a submission and to please come and present it, because it is the New Zealanders who present to select committees who let us know what is happening in their environment and whether we have got the legislation right or wrong. Thank you, Mr Deputy Speaker. I commend this bill to the House.

RAYMOND HUO (Labour) : I rise to support the Patents Bill at its first reading, for a very simple reason—that is, this bill brings New Zealand’s patent law into line with many of our trading partners, and will reform and modernise New Zealand patent law. The bill is the culmination of the Labour-led Government’s review of patent legislation begun in August 2000. The bill will ultimately replace the current Patents Act 1953, which has long been considered to be outdated. It is hoped that the Patents Bill will provide a regime that ensures that an appropriate balance is maintained between providing adequate incentives for innovation, and protecting the interests of the public.

With the exception of a number of significant developments, the bill is essentially the same as an exposure draft bill released for consultation in late 2004. Although the bill introduces a wide variety of changes, some key features are summarised as follows. There is the introduction of an absolute novelty standard. The bill removes New Zealand’s current local novelty requirement for patentability, and replaces it with absolute novelty—meaning that an invention will not be considered novel if it has been disclosed or performed anywhere in the world. Under the current Act, novelty is determined in respect of what is known or used in New Zealand only. No notice is taken of information published outside New Zealand. This fundamental change recognises that innovation is a global matter. Under the bill, novelty will be determined on the basis of all information that has been made publicly available anywhere in the world before the filing date of a patent application. This change brings New Zealand into line with the great majority of countries, because, as some lawyers have rightly said, New Zealand cannot operate in a vacuum.

Patent applications will now be examined for an inventive step and usefulness. Again, this change will bring New Zealand into line with most other countries that generally examine not only for novelty and an inventive step but also for usefulness. For an invention to be considered useful, it must have a specific, credible, and substantial utility. The change is sensible because it ensures that patents will be granted only when the inventor identifies a real-world use for the invention. This will be of critical importance to claims involving genetic material, whereas in the past there have been instances of patents being granted for material when no specific use has been disclosed.

The term “manner of manufacture” is taken from the current Act. The courts have interpreted this to exclude such things as products of nature, mere discoveries, mathematical algorithms, mere schemes, plants, and methods of medical treatment of humans.

The bill provides for establishment of a Māori advisory committee to advise the Commissioner of Patents in relation to patent applications for inventions involving traditional knowledge, or indigenous plants and animals. Similar provisions are found in New Zealand’s plant variety rights and trademark legislation.

The bill will introduce a specific experimental-use exception into New Zealand’s patent legislation. It is not difficult to understand that the disclosure of an invention prior to filing a patent application will destroy the novelty of the invention and prevent the grant of a valid patent. The bill provides that in the event of unauthorised disclosure, a valid patent can still be obtained if a patent application is filed within 12 months of the disclosure.

The current pre-grant opposition procedure will be repealed, and replaced with new procedures for challenging the grant of a patent. It now appears that we have conflicting views on that point. Some say that the procedures introduced in this bill will be much simplified and will reduce the costs and complexity involved in challenging the validity of granted patents. This includes a re-examination procedure in clauses 88 to 92, and an expanded administration revocation procedure in clauses 104 to 106. Both procedures allow third parties to make an application to the Commissioner of Patents challenging the validity of a patent, as opposed to going through the courts. The current provision allowing the courts to revoke a patent will remain.

However, some believe that by removing pre-grant oppositions, this bill is “curiously out of step” with the more stringent examination requirements. Experts from A J Park say that pre-grant oppositions give competitors an opportunity to oppose the grant of the patent. Under the new system, the opponent will be vulnerable to an action for infringement because the patent is granted. An infringement action is not a risk under the current law until the opposition process is completed.

After its first reading the bill will, of course, be referred to the Commerce Committee, which will hear submissions on it. It will be interesting to hear what the submitters will say on these changes, or “controversial provisions”, according to those experts. I look forward to those submissions. I expect there to be vigorous debate, with the possibility of sensible and better changes being proposed, if necessary. Thank you.

AMY ADAMS (National—Selwyn) : I rise to take the final call on this first reading of the Patents Bill. Taking the final call late at night is always such a privilege and such a pleasure, and tonight more so than ever because, certainly, the intensity in the House around this bill is something to behold.

This is a bill that is long overdue, and it is a bill that has been welcomed not just by the majority of this House but the majority of the “pat-ent” industry, or, let me say, the “pay-tent” industry, because, having gone through law school, “pat-ents” are what they have in America and “pay-tents” are what we have here. They were always “pay-tents” where I went to school. So it is a bill that is being welcomed by the majority of the patent community, and that is amongst both patent attorneys and applicants and patent holders. Interestingly enough that is so, even though the bill will make the patents regime tougher; it will make patents harder to get. I think the reason that the industry is supporting it none the less is that it recognises that, despite those challenges, the bill will give us a far more appropriate patent regime.

What I would like to do tonight is just begin by taking somewhat of a helicopter view and just consider—

Hon Members: Oh, oh!

AMY ADAMS: Members opposite are awake! That worked; that was easy. I thought one had to say something really contentious to get them going, but that was really easy, like taking candy from a baby.

Let us consider some of the wider aspects of intellectual property, which patent law forms a part of. Broadly speaking, intellectual property is any output of the human mind—even those from Labour—but law has, over time, defined clear rules as to which parts of intellectual property can be capable of legal protection and ownership. Certainly, the best well-known of these are copyright, patents, registered designs, and trademarks. What has always, however, been outside intellectual property is the ability to protect ideas. Instead it is the tangible expression, or application, of ideas that the law protects. That is a slightly technical and legal distinction, but an important one.

It is often said that it is, and will be, the quality of the intellectual property of a nation, and what it possesses, that will determine its economic prosperity. Certainly that is a true statement, but I would add that the quality and usability of that country’s laws around protecting intellectual property are equally vital. If we do not get those laws right, then two things are likely to happen. Firstly, individuals and businesses will not be motivated to create intellectual property; it is a straight economic assessment. Secondly, we can be sure that if the rules are not right, the intellectual property that is created is likely to be lost by this country. It is likely to be lost by those who created it—quite possibly lost to overseas competitors, who will exploit it and ensure that the money to be made works for the benefit of their economies, rather than ours, as it should. So in this period when we are all, right across the House I would hope, so very aware of the need to protect, preserve, and grow our economic base, so aware that our ability as a country to provide all the wonderful services and support to our citizens that we would like to be able to provide depends on that economic base, and so conscious that if we are to raise the standard of living of the average New Zealander, we must lift productivity, surely now, more than ever, we can understand why we must have laws that ensure our protection of intellectual property is robust, sensible, and in line with other major overseas nations. If I can just come back to the points made by Ms Curran earlier, rather than saying it is unnecessary at this time, I would have thought that anyone who understands economic growth knows we have to get the underlying conditions right if we are going to have a strong economy. This bill goes towards doing that.

In New Zealand, particularly, we have a strong and proud heritage of ground-breaking, novel, often niche-technology solutions and inventions, as we use our world-famous No. 8 wire mentality to get things done, which Ms Shanks spoke about earlier. Consider for a moment Burt Munro’s modified Indian bike, which set unheard-of land-speed records on the salt flats of America. Think of Richard Pearse’s aeroplanes from 1906 and John Britten’s motorcycle from Christchurch, which destroyed competing bikes from all the major production companies in the world at Daytona. Think about the Anzacs’ self-firing guns, developed on the beaches of Gallipoli when the men were under the most fearsome of attacks—

Hon Kate Wilkinson: The Hamilton jet.

AMY ADAMS: That was the next one on my list. I thank the Minister! Think of the Hamilton jet and the work being done at Weta Workshop—the list goes on and on. In fact, it brings to mind the opening of the New Zealand ICT Innovation Institute at Canterbury University—the leading institution of its kind in this country. We opened it with the Prime Minister just recently. The opening highlighted much of the wonderful innovation and technology that this country can offer the world. If we do not get the conditions and the law right, such innovation will never take off. The business community will drive it, but our job is to get the law right, and we are going to get that done.

With this country’s heritage and with the skills we have amongst our small population, we have to get our intellectual property laws right. But I just point out for a moment—and it is a point worth making—that intellectual property is not just about the whiz-bang gadgets and it is not just about the high-tech world. Certainly patents, and quite successful patents, can relate to all sorts of simple inventions. I knew a client who was working on a patent for a revolutionary way to hang pictures. Now, it might not be world record breaking stuff—it did not involve technology, it was effectively the way he designed a little bit of metal—but let me tell members something: it did something that had never been done before. It provided a solution to a common problem, and that client created a huge potential industry. We also remember the wonderful days of the spork—the spoon-fork, which was, famously, patented, and made the inventors rather a lot of money. So innovation is not all about high-tech, whiz-bang gadgetry, but certainly that is a proud part of it.

We know that patents form valuable business assets and they can be traded like any other property right. In fact, a number of people are in the business of simply creating and registering the patents, and trading them, with no intention to actually commercialise the product themselves. That is perfectly valid. As we have heard on numerous occasions already this evening, these have been around since the time of Queen Elizabeth I. The English Statute of Monopolies 1623 gave the “true and first inventor” of a “manner of new manufactures” the right to use that invention to the exclusion of others. As we have heard rather often this evening, the New Zealand system was adopted from the English 1949 legislation and turned into our own Patents Act 1953, which remains largely unchanged to this day. That is the case, even though the English updated their 1949 Act in 1977. We have failed to do that in New Zealand. It is long overdue, and I am certainly pleased to see it happening now.

Patents, as we have heard, give protected monopolies for up to 20 years. The price that the inventor pays for that is that, in return for that period of undisturbed use, the inventor must fully disclose how the invention is made. That is a bargain that societies have been making for hundreds of years. In return for the monopoly with which to commercialise the invention, the applicant shares his or her new knowledge with the world, thereby growing the knowledge base of the entire population, so that after a period of monopoly everyone can benefit. The area that we are probably most familiar with is medicines, where we have all become familiar with seeing a generic brand of medicine coming on to the market when the name-brand product’s patent expires. The drug companies have had a period in which to make a fair return on their investment, but the net result is that, after they have done so, their knowledge is widely shared, and society gets cheaper medicine as a result.

This bill certainly keeps a number of the main structures that we have in our patent system—the examination by the Intellectual Property Office of New Zealand of prior art, the grant of patent rights by the Commissioner of Patents, the renewals at 4, 7, 10, and 13 years, and the ability to make one application under the Patent Cooperation Treaty that covers protection in a number of countries. But there are important changes that this bill will bring in, and I think the most important of those is that we are changing the current local novelty standard and replacing it with an absolute novelty standard. That means that if the application or the invention has been disclosed anywhere in the world, patent protection will not be available. I would have thought that that was a reasonably obvious thing. Most countries already have that standard. New Zealand was out of step, and this bill will certainly go towards addressing that matter. The grounds of inventiveness and utility are also going to be added, along with the novelty ground, once again bringing New Zealand back into line with most of our major trading partners.

We have heard how the bill specifically excludes diagnostic, therapeutic, and surgical methods from patent ability, as it does plant varieties, which, of course, have their own protective legislation. Other major changes involve the commissioner being able to refuse a patent on the grounds that the invention is obvious to persons skilled in the art. Previously, it was permitted for a private person only to object to the grant of a patent on this ground. Now the commissioner can do it of his own merit. This is a bill that needed to be introduced. I commend the Minister for bringing it to the House.