AJPark

New Zealand's IP legislation update

Update on NZ copyright law dealing with internet piracy
Simon Fogarty

New Zealand’s most recent proposal for dealing with alleged internet pirates is to have the Copyright Tribunal arbitrate on disputes between internet service providers (ISPs) and alleged pirates.

The government is currently considering the 113 submissions it received on this new version of section 92A of New Zealand’s Copyright Act. 

Section 92A aims to deal with internet piracy in New Zealand. In its original form (not in force), it required ISPs to terminate the accounts of users who repeatedly infringe copyright. However, objections to section 92A led the government to undertake a review of that section of the Act.

The review resulted in the Ministry of Economic Development (MED) creating a proposal document. In that document, MED set out the government’s proposal for a new section 92A. That proposal suggests that the Copyright Tribunal play the role of arbiter in disputes. Submissions on the new section 92A closed in early August.

A bill is expected to be introduced by the end of the year. The public will have a chance to comment on that bill at the select committee stage.

For a summary of the submissions, visit: http://www.med.govt.nz/templates/MultipageDocumentTOC____41847.aspx

Update on Patents Bill
Matt Adams

The Patents Bill is designed to replace the Patents Act 1953. The Bill aims to update the New Zealand patent regime to ensure an appropriate balance between adequate incentives for innovation and technology transfer on the one hand and protecting the interests of the public on the other.

Submissions on the Bill closed on 2 July. Written submissions were received from over 60 individuals, New Zealand companies, patent attorney firms and industry associations.  Over July and August, the Commerce Committee heard oral presentations from around half of the submitters.  In their oral presentations, submitters each focussed on diverse aspects of the Bill. 

Topics of interest included:

• Extension of patent term provisions.
• Pre-grant oppositions.
• The role of the Maori Advisory Committee.
• The patentability of computer software.

The Commerce Committee will now work through the various written submissions with officials and report back on any changes required to the Bill.  The Commerce Committee has until 5 November 2009 to report back.

Update on Trade Marks Amendment Bill
Damian Broadley

A report on the Trade Marks (International Treaties and Enforcement) Amendment Bill is expected on 7 October.

The foreign affairs and trade select committee is currently considering submissions on the bill.

The Trade Marks (International Treaties and Enforcement) Amendment Bill will amend the Trade Marks Act 2002 and the Copyright Act 1994. It will give effect to Government decisions relating to various international agreements, and will allow New Zealand to join the Madrid Protocol.  It will also support the enforcement of criminal offence provisions related to counterfeit goods and pirated works.

Recent consultation papers from IP Australia and the ACIP

IP Australia has issued six consultation papers in the past six months.  And, in August, the Advisory Committee on Intellectual Property (ACIP) made new recommendations for enforcement procedures in the Australian patent system. 

Here, Denis Tuffery and Scott Sonneman provide an overview of the recent developments.

What’s happening?

IP Australia has released the following consultation papers in the past six months:

• Getting the Balance Right (March 2009)
• Exemptions to Patent Infringement (March 2009)
• Resolving Divisional Applications Faster (June 2009)
• Resolving Patent Opposition Proceedings Faster (June 2009)
• Flexible Search and Examination (August 2009, submissions close 16 October 2009)
• Streamlining the Patent Process (August 2009, submissions close 16 October 2009).

The period for response was in each case limited to two months. The time for submissions is still open on the last two papers.

These papers, and the subsequent reports that are expected to issue shortly, are to form the basis of recommendations to Government on the way forward.  Possibly new legislation could result.

In our view, the thrust of the papers does favour competitors of innovative patented products rather than the innovative industry itself.  The Institute of Patent and Trade mark Attorneys of Australia (IPTA) has made lengthy submissions on a number of these papers.

Why this flood of consultation papers?

According to IP Australia, a better “balance between the patent system and competition” needs to be created.

IP Australia argues that to support innovation, the exclusive rights associated with the grant of a patent need to be balanced by:

• access to information about new inventions
• patent standards set at a level that does not discourage local innovators from conducting follow-on innovation
• certainty in the validity of granted patents.

What is the reason?

This is best summarised by the following extract from the first of these reports:

“At present Australia’s patentability standards are set at a level that is lower than the standards set in countries who are our major trading partners…They allow the grant of broader patents in Australia than elsewhere, and they allow the grant of patents that may disclose less information about the inventions that they claim than is disclosed elsewhere.  This reduces access to follow-on innovation for Australian innovators and the advantages that flow to Australian consumers from access to information about new technology and competition in the Australia marketplace. 

Currently, there are also differences between the grounds that the Commissioner can consider during examination, re-examination and opposition proceedings and the grounds that may lead to revocation in the Courts, and between the standards of proof against which patentability standards are assessed.  These differences reduce certainty in the validity of granted patents and compromise the balance required for effective operation of the patent system.”

ACIP report

Independent of the IP Australia consultation papers, a study of enforcement procedures in the patent system has been undertaken by the ACIP.  An issues paper titled, “Post-Grant Patent Enforcement Strategies” was released in November 2006. Following written submissions and consultations with interested parties in October 2007, an interim report was released just last month.

This 60 page report contains 11 proposals.  Submissions on the proposals are invited, but need to be made by 30 September.  The main proposals can be summarised, as follows:

• Establishment of an IP dispute resolution centre (IPDRC) in IP Australia
• IP Australia is to provide a validity and infringement opinion service
• The IPDRC is to provide:
• a register of experts to be available to assist in any dispute or non-binding assessment of patent issues
• a Patent Tribunal, with a more simplified procedure than the courts, to handle disputes.

The proposals also include:

• Border controls permitting customs to seize goods that infringe patents to be introduced
• Pre-grant opposition procedures be maintained, but their effectiveness is to be monitored.

Copies of the papers, submissions and report documents mentioned in this article are available on request.

Consultant Denis Tuffery has practiced as a patent attorney in both New Zealand and Australia.  He specialises in chemical and biotechnological intellectual property, particularly pharmaceuticals, agricultural chemicals and animal health technologies.  Email: denis.tuffery@ajpark.com

Australian-born Scott Sonneman has also practiced as a patent attorney in both countries.  He is now an associate in our mechanical and manufacturing team.  Email: scott.sonneman@ajpark.com

Australian decision emphasises need for good IP practices

Jonas Holland discusses a recent Australian decision which re-emphasises the need for Universities and other employers to make sure their employment agreements and policies deal with IP appropriately.
 
On 3 September, the Full Federal Court of Australia dismissed the appeal in the widely publicised University of Western Australia v Gray case.  The Court found the University did not have any claim over Dr Gray’s inventions even though the inventions were developed while Dr Gray was a University employee.  The Full Federal Court upheld Justice French’s decision that, at a University at least, a ‘duty to research’ does not imply a ‘duty to invent’ into an employment agreement. 

The Court also held that Dr Gray did not owe independent fiduciary obligations to the University in relation to the inventions and subsequent patents deriving from them.  What’s more, the Court agreed that the University’s failure to maintain the processes set out in its own IP regulations meant that those regulations could not then be relied on by the University.

The Court highlighted a number of characteristics of Universities that differentiate them from other employers.  However, the decision should remind all employers of the importance of appropriately dealing with employee inventions. It is crucial that employment agreements describe the breadth of an employee’s duties (including a duty to invent, if appropriate) and expressly assign all intellectual property rights created by employees.  In addition, employers must make sure any IP policies and regulations are appropriately worded, implemented and complied with, if they are to be relied on.

Jonas Holland is an associate in our commercial team.  Email: jonas.holland@ajpark.com

Global IP news

Patentability of business methods in the United States
Matt Adams

Towards the end of 2008, the United States Court of Appeals for the Federal Circuit issued its decision on the patentability of claims to a method of managing risk in the commodities market. The unsuccessful applicant in the en banc decision In re Bilski appealed the decision to the Supreme Court in January 2009. Briefing has now begun with oral arguments scheduled for November. 

There continues to be some uncertainty as to the patentability of business methods until the US Supreme Court issues its decision. This is likely to be some months away. 

In the meantime, the United States Patent & Trademark Office (USPTO) has issued interim instructions to its examiners. The instructions direct examiners how to examine claims for patent eligible subject matter. The instructions set out a two step approach.

The first step is to determine whether or not the claim is directed to one of the four patent eligible subject matter categories. These categories are process, machine, manufacture and composition of matter.  Inventions involving signal transmission, legal contractual agreements and game rules are unlikely to be patent eligible.

The second step is to determine whether or not the claim involves a recognised exception.  The US Courts have long ago excluded abstract ideas and mental processes.  However, the practical application of one of these recognised exceptions may well pass the patentability test.

Matt Adams is a partner in our engineering and information communication technology team.  Email: matt.adams@ajpark.com

Data protection in New Zealand

Confidential information on innovative agricultural compounds and human medicines lodged with regulatory authorities is protected from disclosure to
third parties. Kate McHaffie explains that while this protection is valuable, it does have limits.

Protection by regulatory authorities

Confidential information submitted to the New Zealand Food Safety Authority (NZFSA) with applications for approval of innovative agricultural compounds is protected from disclosure for five years. Information submitted to Medsafe with applications for approval of human medicines with innovative active ingredients has the same protection. ‘Innovative’ compounds and active ingredients are ones not previously referred to in any application made to NZFSA or Medsafe. 

During the data protection period, NZFSA or Medsafe must take reasonable steps to keep the information confidential, and must not use it to decide whether to approve any other product. For most compounds or active ingredients the five year data protection period runs from when the application is formally approved or refused. 

When the innovative agricultural compound or active ingredient is also a hazardous substance under the Hazardous Substances and New Organisms Act, it must be approved by the Environmental Risk Management Authority (ERMA).  ERMA must give the information submitted with any application for approval of an innovative compound or active ingredient the same protection as would NZFSA or Medsafe.

Value of data protection

An obvious benefit of data protection is that competitors cannot access commercially sensitive information about your products to develop their own. 

Data protection is also valuable where it translates into market exclusivity. 

Generic agricultural products or human medicines are almost always given regulatory approval based on equivalence with an approved innovative product. During the period of an innovative product’s data protection, a generic product cannot be approved because the regulator cannot refer to the innovator company’s safety and efficacy data. This gives the innovator company a period of market exclusivity that it may not enjoy if its product is not patented, or the patent has expired.

Limits on data protection

The data protection provisions don’t absolutely prohibit disclosure. The regulatory authority may disclose your confidential information if necessary to protect public health or safety, or to particular named organisations if satisfied that organisation will keep the information confidential.

Further, data protection is only given to innovative agricultural compounds and human medicines.  Confidential information submitted with a combination product, the parts of which have both previously been the subject of applications for regulatory approval in New Zealand, will not have a further period of data protection. Similarly, information submitted with an application for approval of a new use for an existing product will not be protected. 

Data protection review

NZFSA is reviewing the data exclusivity provisions for agricultural compounds.  See the following link to our alert about this review:

http://ajpark.com/news/2009/08/review_of_data_protection_for_agricultural_compounds.php

This may be an opportunity for pharmaceutical companies unsatisfied with the adequacy of data protection for human medicines to push for a similar review.  It is a topical issue - the United States is currently debating whether a five year data protection period is enough for biologic drugs (a substance made from a living organism or its products), given the huge development costs for these products.

If you would like more information about this, please contact senior associate Kate McHaffie at kate.mchaffie@ajpark.com

Changes to the ‘honest practices’ defence under the Trade Marks Act

The Trade Marks (International Treaties and Enforcement) Amendment Bill 2008 (“The bill”) will amend the so-called ‘honest practices’ defence under the current Trade Marks Act.  Tomoe Takahashi explains what this means for businesses that make reference to others’ trade marks in their packaging or advertising.

The amendment makes it clear businesses that, in accordance with honest practices, advertise their products by making reference to another business’s trade mark may not infringe that trade mark. However, businesses should be wary of relying on this defence as it may not apply to their particular packaging or advertisement.

Amendment 

The bill amends section 95 of the Trade Marks Act 2002.  Section 95 sets out certain uses, in accordance with honest practices that do not constitute infringement of a registered trade mark.

The bill aims to extend section 95 to “use of a trade mark to indicate the intended purpose of the goods (in particular as accessories or spare parts) or services”.  

Impact of the amendment

The amendment will not create a new defence. It is already a defence to use a trade mark, in accordance with honest practices, to indicate the intended purpose of the goods or services.

The amendment is a clarification of the “honest practice” defence so the Trade Marks Act is more aligned with the recent European decisions and Directives.

When can we rely on new section 95(d)?

The following example is from the European case of Gillette.

The Gillette Company sued LA Laboratories for the unauthorised use of their trade marks, GILLETTE and SENSOR. Both businesses sold razors consisting of a handle and a replaceable blade.

On the packaging of its replaceable blades, LA Laboratories stated "All Parason Flexor and Gillette Sensor handles are compatible with this blade." It seems LA Laboratories used the trade marks Gillette and Sensor merely to describe that their replaceable blades could be used as spare parts for Gillette Sensor razor handles. Should LA Laboratories be protected by the new section 95(d)?

The simple answer is, it depends. It depends on whether such practice is considered to be “in accordance with honest practices in industrial or commercial matters”.

Factors to consider

There are several factors you should consider to determine whether your packaging or advertisement infringes another business’s trade mark under section 95 (d). 

These include:

• Presentation of the others’ trade mark. Is it in small and standard lettering, or is it in a distinctive logo form?
• Position of the others’ trade mark.  Is it on the back or the front of the packaging?
• Does your packaging make a distinction between your trade mark and the other business’s trade mark, or does it give an impression that there is a connection between them?
• Is your product compatible with all other brands or just a few on the market?
• Also consider usual trade practices.  Is it common to refer to others’ trade marks to describe the goods or services in your industry?  Is there another way of informing consumers that your product is compatible with another business’s product?

Other considerations

Before going live with your packaging or advertisement in New Zealand you have to consider, not only trade mark infringement, but also things such as:

• whether your packaging tries to take advantage of the reputation of another business’s trade mark;
• whether your packaging is misleading or deceptive, or likely to mislead or deceive as to the connection (for example, approval or endorsement) between you and another business’s trade mark; and
• if you use another business’s trade mark in a logo form, whether you are in breach of their copyright in the logo.

Recommendation 

Bearing in mind the numbers of factors you have to consider to comply with law, we suggest you seek professional advice before you start to advertise compatibility of your goods or services using other businesses’ trade marks.  The new section 95 (d) will not be a blanket defence saving you from non-compliance.

Tomoe Takahashi is a barrister and solicitor in our Wellington trade marks team.  Email: tomoe.takahashi@ajpark.com.

Focus on those service levels in SaaS agreements

Traditionally, software is licensed to customers for their own use on their own hardware.  However, as Mark Hargreaves explains, this traditional model is being challenged by companies offering their software as an on-demand service. 

‘Software as a service’, ‘SaaS’ and ‘cloud computing’ are terms we are seeing more and more, and many larger companies are adopting these models.  For example, New Zealand Post’s postal services group recently agreed to roll out Google’s web-based Google Apps to its 2,100 staff.

The SaaS model can offer customers significant advantages.  For example, software upgrades can be handled by the supplier centrally and then made available to all customers online.  This reduces the resources needed by customers to manage their own upgrades and may also reduce downtime. 

There may also be cash flow advantages for customers as up-front licence fees are generally replaced by regular monthly or quarterly service fees.

SaaS agreements require a different focus

The change in focus, from licensing a product and providing related support to providing a solution as a service, also changes the focus of the agreement between supplier and customer.  Traditional software licence terms often provide products without much in the way of quality assurances and not accepting much in the way of liability. Support is usually offered on a best or reasonable efforts basis but no guarantees are given that the software will run error free or that problems will be fixed.  The relationship between supplier and customer can be relatively distant once the first sale is made.

However, when software is delivered as a service, the relationship between the customer and supplier will often be closer because the solution provided to the customer is more dynamic resulting in increased communication between the parties.  The focus of the agreement shifts from one which describes what the customer can do with the software and what the software will do for the customer, to one which describes the type and level of service the customer will receive.  As a result, service levels are a key aspect of SaaS arrangements. 

The importance of service levels depends largely on how critical the software is to the customer’s business.  If we are talking about a financials system it could be critical to profitability.  On the other hand, availability of an employee training product may be less critical.  Nonetheless, customers need to focus on availability, performance and support under SaaS agreements and try to ensure suppliers commit to minimum levels of service. 

By focusing on service levels, typical software licensing terms such as the scope of the licence, restrictions on copying or modification and warranties become less critical.  Because the customer is not handing over significant licence fees upfront, issues such as acceptance and rejection of software for non-performance are also less relevant.  In most SaaS arrangements, customers are not locked into fixed terms and can end their relationship by giving appropriate notice without losing their significant upfront investment in licence fees.

Business requirements are key when defining service levels

The key for customers is to focus on defining what levels of service are needed for their business and documenting those in the SaaS agreement. 

Greater emphasis is placed on business needs.  For example, insisting on availability of the service on a 99.99% basis over a month may sound impressive but if access is only required for the last few business days of the month, it may be better to insist on 100% availability for those days and a lesser standard for other days.

Depending on the importance of the software to the customer’s business, liquidated damages may be negotiated for failure to meet or exceed service levels. If the supplier is providing access to the solution to a broad customer base over a wide range of territories, it may be difficult to get agreement on liquidated damages given the exposure the supplier may be taking on. If the service is more focused and the application is mission critical, liquidated damages may be a more realistic option.

Understanding the supplier’s security and disaster recovery procedures is more important under SaaS arrangements than traditional software licences. 

The supplier may be hosting sensitive data for the customer. The customer will want assurances that the data is kept secure and that appropriate measures are in place to deal with disasters and ensure continuity of service as far as that is commercially reasonable.  Customers will also want assurances that they can transition their data to a different provider if and when the time comes to switch.

Experts predict that SaaS is a business model that will grow quickly in the years ahead. Businesses need to realise that not only does their method of accessing software change but so does the focus of their agreements with suppliers. Thought needs to be given to those agreements as the usual software licence and support terms will not work.

Mark Hargreaves is a partner in our commercial team. He advises clients on a wide range of commercial IT/IP matters.  Email: mark.hargreaves@ajpark.com.

Resene wins ‘What’s Your Problem New Zealand?’ competition

Last month, New Zealand-owned company Resene was named winner of the inaugural ‘What’s Your Problem New Zealand?’ competition, which was sponsored by A J Park.
 
Resene will receive NZ$1million in research and development (R&D) services over the next 18 months from Industrial Research Limited (IRL) for their sustainable waterborne paint product.

Resene took out the top prize from a field of over 100 entries, which was narrowed down to 10 finalists for the final round of judging.  The other finalists were:  Dynamic Controls, Fisher & Paykel Appliances, Gallagher Group, Glidepath, Group3 Technology, Mars Petcare NZ, Pacific Edge Biotechnology, PowerShield and Pultron Composites.

Resene’s project aims to develop a waterborne paint that is based on resins made of 80 per cent sustainable ingredients.  Currently, high-quality environmentally-friendly paints struggle to incorporate up to 30 per cent sustainable ingredients.  It is hoped that this project will lead to a world-first in sustainable paints that will become the standard in New Zealand.

Following their win, Resene’s technical manager Danusia Wypych told the New Zealand Herald that Resene had a clear idea of what they wanted to achieve.

“More than anything, we knew where the gap in the market was,” she said.

The $1m worth of R&D services will be used to find a sustainable alternative to the acrylic currently used as a resin in waterborne paints, which is based on oil and gas.  The possible replacement would be renewable, non-cropping (will not compete with food crops for space) and likely to come from existing industrial waste streams.

“We’d still be offering quality interior paint—it would now just happen to also be sustainable,” Wypych told the Herald.

Resene’s head office is based in the Lower Hutt suburb of Naenae.  The company was established in 1946 when founder Ted Nightingale, a builder, needed an alkali resistant paint to cover his concrete buildings.  With nothing available on the market at the time, Ted developed his own cement-based paint in his garage.  His product then became in demand from other builders, so Ted launched his product under the brand name Stipplecote. In 1951, Ted released his first waterborne paint in New Zealand under the name Resene.  Ted’s son Tony ran the business from 1972 to 1999.  Today, Resene is run by Tony’s son—Ted’s grandson—Nick Nightingale.

For more information, visit www.resene.co.nz

A J Park News

Partner Bryan Thompson to take up consultancy role

Managing partner Greg Arthur has announced that Bryan Thompson will retire from the partnership in early December.  He will take up a consultancy role with the firm in the new year.

Bryan joined A J Park in 1971 and was made partner in 1977.  His specialist areas are trade mark portfolio management and branding strategies, litigation in trade marks and other intellectual property, commercial licensing, copyright protection and the law relating to unfair competition.

Over the years, Bryan has been actively involved in advising the New Zealand government on trade mark law reform, geographical indications and anti-counterfeiting.

Bryan is a member of the Auckland District Law Society, the International Association for the Protection of Intellectual Property (AIPPI) (New Zealand Group), the Asian Patent Attorneys Association (APAA) (New Zealand Group) and the Licensing Executives Society of Australia and New Zealand (LESANZ). He is also a past President of the New Zealand Institute of Patent Attorneys.

“Bryan has made a huge contribution to A J Park over the years and, in particular, we thank him for his leadership of the Auckland office and chair of the partnership.  While we are sad to see him leave as a partner, we are delighted that he will continue his positive influence on the firm as a consultant,” Greg Arthur said.