Baldwins news articles

Launch of .co Extension

Wed, 28 Jul 2010 00:00:00 +1200

On 1 March 2010, the Colombian Domain Name Registry launched a new top level domain (TLD) extension – ‘.co’.

Given the saturation of the generic TLD ‘.com’ market, and that ‘co’ is a common abbreviation for company, the new domain name extension may be an attractive alternative. Not only is the ‘.co’ extension useful to businesses with a Colombian market or presence but also to businesses wanting to take advantage of the ‘company’ connection as well as those wanting to profit from web-traffic generated by mistyping the extension .com. The ‘company’ connection is particularly attractive to small and medium size businesses that already have country code TLD’s such as ‘.co.uk’, and ‘.co.nz’ as well as others, and who want to expand their web-presence.

As with most recent other TLD launches, the Colombian registry is running a phased launch process with owners of Colombian domain name registrations (with extensions such as ‘.com.co’ and ‘.net.co’) being given first priority, followed by holders of Colombian trade marks. Next in line are trade mark holders in other states after which the land rush period and general registration periods commence.

The Colombian Registry will be marketing the ‘.co’ extension to the global web community in an effort not to restrict the meaning of ‘.co’ to ‘Colombia’ or ‘company’. To further this aim, numerous rights protection mechanisms (RPMs) have been put into place to protect brand owners’ rights.

RPMs relating to the launch of ‘.co’ include the IP Clearinghouse, a ‘rapid suspension system’ for domain names that infringe trade mark rights and the implementation of the Uniform Domain-Name Dispute-Resolution Policy (UDRP) for the settlement of disputes relating to ‘.co’ domain names. Domain name registrants will also not be allowed to use a proxy service to hide their identity, which will be available through ‘WhoIs’ services.

The general registration period for .co domain names begins on 1 August 2010 subject to availability.

For advice in relation to domain names or any of the issues raised above, please contact Rosemary Wallis or Vineetha Veerakumar

Disputing Ownership of Copyright

Tue, 27 Jul 2010 00:00:00 +1200

Disputes over ownership of copyright often arise in situations where one party “commissions” someone else to create an original work.

The starting position for ownership of copyright is that the author of an original work owns copyright in it. One of the exceptions to this is the “commissioning rule”. Section 21(3) states that where a person commissions, and pays or agrees to pay for a work in which copyright can subsist, that person is the first owner of any copyright in the work. This applies only to certain types of copyright work, including artistic works, drawings and computer programs.

It is not always clear whether the work has been commissioned or whether the person who created it retains copyright in it, and has merely offered the products which are the embodiment of that work for sale to the other person.

In the recent Court of Appeal case of Oraka Technologies Ltd v Schwarz & Geostel Vision Ltd & Napier Tool and Die Co, the crux of the appeal centred around whether in fact the work was done on “commission”.

The Court of Appeal stated that the relevant requirements of a successful commission were set out in Pacific Software Technology Ltd v Perry Group Ltd [2004] 1 NZLR 164:

A request or order must be made.
The commissioning must be antecedent to the work.
Commissioning requires an express or implied agreement to pay (s21).
The payment is quid pro quo for the copyright; that is, the making of the copyright work, not the physical embodiment of the work.

Napier Tool contended that what had been offered was a “free design service” and that the dealings between the two parties did not constitute a commission. The critical issue for the Court was then whether there had been an ‘implied’ commission between Oraka Technologies and Napier Tool to design and build the cup assembly in question (which was part of an asparagus grader), which would give copyright in the design to Oraka Technologies.

The factual progression of this case can be broken down into three significant events. First, Mr Schwarz (one of the appellants) came to Napier Tool and requested them to make an assembly cup. This request was accompanied with some drawings and an original prototype by Mr Schwarz. Secondly, provisional drawings were prepared by Napier Tool free of charge. Thirdly, the drawings were approved by Mr Schwarz and final industrially design drawings were then made and used to produce the assembly cup. The evidence showed that the plaintiffs made a payment of $26,000 for the work done in order to complete the cup assembly.

The Court of Appeal and the High Court differed only in how the second event affected requirements 3 and 4. Allan J in the High Court ruled that the fact that the drawings made by Napier Tools were ‘free of charge’ meant that there was never an implied agreement to pay for the copyright. On top of this, the final payment did not account for the copyright itself. The $26,000 covered the payment of making the assembly cup, and that was all.

The Court of Appeal focussed on the commercial reality of the dealings. The Court of Appeal ruled that creating two transactions between producing the drawings and making the product was an artificial separation that did not reflect the true nature of the relationship. The commercial reality test used by the Court showed that in ordinary practice a party would not make two separate payments for a transaction of this kind. The Court said that it was “everyday commercial sense” that what had transpired was one seamless transaction.

The Court further ruled that the fact scenario could be seen as a ‘conditional’ agreement of an implied obligation to pay. There was an implied obligation that the Oraka would pay the money if satisfactory drawings led to the manufacturing work. That conditional implied obligation arose before the work was undertaken.

The Court of Appeal therefore overturned the decision of the High Court and ruled that all the requirements of a commission were complete.

For many New Zealand SMEs, the issue of protecting their intellectual property is not at the forefront of contractual negotiations. However, what businesses must keep in mind is that not specifically deciding which party owns copyright prior to completion of a transaction can lead to problems, particularly if they do not want their competitors to have access to designs for any products they have specially developed for their own product portfolio.

Setting it out clearly in an agreement between the parties ensures that each party knows their rights and obligations at the time of creation of copyright works.

If you have any queries over ownership of copyright and wish to discuss further please contact Vineetha, or speak to your Baldwins contact.

Case Note: Oraka Technologies Ltd v Schwarz & Geostel Vision Ltd & Napier Tool and Die Co [2010] NZCA 232

FIFA 2010 – What Can We Learn From an Ambush Marketing Perspective?

Tue, 27 Jul 2010 00:00:00 +1200

With the wrap up of the FIFA World Cup 2010 in South Africa, Paul the Octopus can go back to his grotto and contemplate his newfound psychic abilities and those of us with an interest in intellectual property can look at lessons learned in relation to ambush marketing incidents which occurred during the tournament. These lessons are particularly valuable given that New Zealand’s Major Event Management Act 2007 (MEMA) is currently untested in the courts. Any cases which are brought under MEMA will no doubt look to other jurisdictions with similar ambush marketing legislation, such as the South African Trade Practices Act (no. 76 of 1976) and the Merchandise Marks Act (No 17 of 1941), for preliminary guidance.

The Tavern Case – Federation Internationale de Football Association (FIFA) v Eastwood Tavern (GNP) (unreported case no. 52309/07, 12-15-2009)

FIFA’s fight against ambush marketing kicked-off with this case involving a restaurant in Pretoria, located across the road from the Loftus Stadium where FIFA World Cup matches were to be played, which erected signs containing WORLD CUP 2010, the national flags of competing nations in the FIFA tournament, TWENTY TEN SOUTH AFRICA and SOUTH AFRICA 2010 alongside its own branding.

FIFA brought an action against the Eastwood Tavern in relation to both trade mark infringement, passing off under the common law and unlawful competition under section 15A of the Merchandise Marks Act and section 9(d) of the Trade Practices Act.

The parties settled the matter before it proceeded to Court but the High Court of South Africa issued an order which prohibited Eastwood Tavern from, inter alia, obtaining special promotional benefit from, or associating its business with, the 2010 FIA World Cup.

The Lollipop Case - Federation Internationale de Football Association (FIFA) v Metcash Trading Africa (Pty) Limited (unreported case no. 53304/07, 1-10-2009)

The second ball through FIFA’s ambush marketing goal was the Metcash Lollipop case. Metcash, a major distributor in South Africa, was selling “Astor 2010 Pops” – lollipops which were packaged in wrappers depicting the “2010” written with soccer balls depicted as the 0’s, the South African flag and soccer balls.

FIFA brought an action against Metcash which alleged trade mark infringement in relation to the use of the soccer ball 2010 which was a registered FIFA trade mark. In addition, FIFA brought actions in passing off and unlawful competition (once again under section 15A of the Merchandise Marks Act and section 9(d) of the Trade Practices Act) alleging that the use of the 2010, soccer ball and South African flag elements together called to mind the 2010 FIFA World Cup. The High Court of South Africa found in favour of FIFA and restrained Metcash from competing unlawfully with FIFA by deriving special promotional benefit from the tournament without FIFA’s approval. Costs were also awarded against Metcash.

The Keyring Case - Federation Internationale de Football Association (FIFA) v Executive Trading Cc and the Registrar of Designs (Case No 52308/07)

FIFA has also issued proceedings against both Executive Trading and the Registrar of Designs in relation to the use and registration of a design depicting a vuvuzela trumpet, with a football and 2010 written beside it. Executive Trading intend to use the design in relation to a key holder. The Registrar of Designs registered the design.

FIFA is trying to prevent the use of the design by Executive Trading on ambush marketing grounds. In addition, FIFA is applying for an order against the Registrar of Designs to cancel the registration of the design. The case is yet to be heard by the Courts.

Close Calls

Bavaria Brewery
The Bavaria Brewery had perhaps the most successful counter attack against FIFA and South Africa’s ambush marketing laws in terms of gaining international exposure for a very successful ambush marketing event. Bavaria organised for 36 young, blonde females to attend the World Cup match between the Netherlands and Denmark dressed in bright orange mini-dresses (the national colour of the Netherlands and Bavaria beer). The dresses had small Bavaria emblems on them. All of the women were immediately removed from the stadium and FIFA decided to lay charges against two of the women. After several days the charges were dropped after FIFA reached a settlement with Bavaria. However, by this time the damage had been done.

Budweiser Beer was the official beer sponsor of the 2010 FIFA World Cup and, as such Bavaria scored a direct ambush marketing hit against a major sponsor, which essentially went unpunished – in fact quite the opposite – it has been reported in media that the Bavaria website was the fifth most visited beer website in the United Kingdom the week after the stunt, which also caused international headlines for several days as the world watched and waited for the outcome of the case.

Kulula.com
South African budget airline kulula.com tried some creative thinking to get around South Africa’s ambush marketing legislation. They first ran an advertisement with the heading “Unofficial National Carrier of the “You-Know-What”” and which featured soccer balls, the date 2010, vuvuzelas and other items associated with soccer. It did not however contain any direct reference to the tournament. FIFA served a cease and desist letter to kulula.com alleging that the sum of the elements contained in the advertisement brought to mind the 2010 FIFA World Cup. Kulula.com duly complied with the letter but brought out a second advertisement headed “Not Next Year, Not Last Year, But Somewhere In Between.” which replaced the soccer related elements with other items in a tongue-in-cheek way. FIFA did not object to the second advertisement. Once again the attention which Kulula received from this campaign, on a global level, was substantial.

While the cases taken so far by FIFA discussed in the first part of this article have proved to be successful and have no doubt acted as a deterrent to some regarding ambush marketing, the problem remains that those organisations which “take their chances” and run ambush marketing campaigns often reap the collateral publicity rewards associated with their illegal activities. The cases and situations discussed may assist not only event organisers and the Ministry of Economic Development in relation to possible prosecutions under MEMA, but may also help individuals and business owners and operators to begin to delineate some of the limits to ambush marketing activities.

If you have any queries on ambush marketing or MEMA contact us.

Government maintains its hard line on software patents

Fri, 23 Jul 2010 00:00:00 +1200

Recent rumours that there could be a re-wording of the exclusion of computer programs from patentability have been quashed by Commerce Minister Simon Power. Consequently, the blanket ban of computer programs from patentability remains and it is unlikely there will now be any change to this. However, the Minister repeated that inventions involving "embedded" computer programs "should be able to obtain patent protection" and has tasked the Intellectual Property Office of New Zealand (IPONZ) with the somewhat daunting task of drafting guidelines as to the types of inventions that will be allowed. Whether such a hotly debated matter should be left to IPONZ as opposed to those elected to define New Zealand's policies remains to be answered.

Despite concerns having been raised by various parties, it appears that the scope of the exclusion is still not fully appreciated and it is unclear what effect any guidelines will have with the proposed statutory exclusion clause overriding them. The change creates a high level of uncertainty in that any patents granted according to the IPONZ guidelines will be open to challenge based on the wording of the statute (when enacted). This is contradictory to the Commerce Comittee's desire for a clear and simple approach. Surely any limitations of the scope of the exclusion would be best defined in the legislation, with IPONZ providing guidelines around those, particularly in view of the Committee having accepted that there is no agreed definition of "embedded software" or offering much in the way of explanation as to which inventions should or should not be patentable.

The definition provided in the Committee's report is that "embedded software" is "computer software which plays an integral role in the electronics it is supplied with (e.g. cars, pacemakers, telephones and washing machines)". On first reflection, this may seem helpful, essentially distinguishing between software that is used with PCs and that used to provide functionality within a piece of equipment, but it is quickly possible to see problems with it. Consider, for example, an operating system. It would be hard to argue that an operating system does not play an integral role in the computer in which it is installed, it essentially transforms a useless box of electronic components into a useful tool. However, it is unlikely that the Committee would have intended such software to be patentable. The proponents of open source software certainly would not have. This is further complicated by the ever increasing intelligence given to devices along with the ability for users to interact with them, blurring the lines between what is a computer and other electronic-controlled devices. Smart phones, for example, will clearly not fit neatly into either of these categories.

Reasoning given for the exclusion includes the argument that patents in the software field stifle innovation. One assumes that this is not considered to be the case in other fields as no similar exclusions are proposed for other technologies. Why software should be treated different from other technologies is difficult to fathom, particularly in view of the Ministry of Economic Development's more considered review which concluded that there was no reason to treat software differently. Only time will tell whether removal of a barrier to imitation will actually promote innovation and the investment required to bring innovations to market, or whether the temptation of using another's creations will be too hard to resist.

Without any evidence or analysis backing the exclusion, it is difficult to assess what the effects will be. Further, these will not be felt in the short to medium term because any pending applications or granted patents in New Zealand that cover software inventions will remain pending or in force (patents have a 20 year term). Only applications filed after the new law comes into force will be assessed under the new exclusion clause. Even after expiry of the existing patents, the exclusion is only likely to have a significant impact for those Kiwi developers that market their products solely in New Zealand. The potential risk from damages overseas (particularly the US) typically dwarves that in New Zealand to negligible levels and exporters will be required to continue to assess freedom to operate in much the same way as they have always done. With the government pushing for the development of medium to large enterprises with a bias towards exporting, it is difficult to see how this fits into their overall strategy or the wider goal of trans-Tasman harmonisation (Australia allowing patents for software). Further, it is difficult to see how the targeting of these smaller developers will provide any significant benefit for New Zealand as a whole although it is possible that the exclusion will enable more enterprises to stay afloat or even develop beyond the startup phase. Without any indication as to the numbers of enterprises that have been adversely affected by patents, this is difficult to evaluate.

While the focus on the exclusion has been on the freedom of Kiwi developers to fearlessly introduce their developments, this is a very blinkered view. The increasing competence of programmers in developing countries such as India and China should not be forgotten. Copyright provides protection against direct copying but does not provide any bar to others copying the concepts behind a computer program. Without the additional protection provided by patents, Kiwi developers will be more open to overseas-originating competing products, at potentially much reduced prices.

There is also the possibility that the proposed exclusion will impact on trade negotiations with other countries such as the US. While not likely to be the most significant issue in any negotiations, it is possible the exclusion could cause distraction, making it more difficult for the government push through other initiatives.

It is difficult to estimate when the Bill will be enacted because there are no hard timelines for its progress through Parliament. However, it is anticipated it will come into force before the end of 2012. Those on both sides of the debate will be keenly awaiting the release of the IPONZ guidelines.

If you would like to discuss further contact Chris at chris.way@baldwins.com or t 09 373 3137. Alternatively, discuss with your dedicated Baldwins contact.

EU dispute with India and Brazil ups stakes in generics saga

Wed, 21 Jul 2010 00:00:00 +1200

This article was published in the January issue of CiNZ, the professional journal of the New Zealand Institute of Chemistry.

In January 2008, a generic version of Cozaar™ (an antihypertensive drug) en route from India to Brazil was seized under EU customs regulations while in transit in the Netherlands. The seizure, carried out at the behest of the patent owners Merck and DuPont, has reignited the debate over the extent of intellectual property (IP) rights and the availability of patented medicines to developing countries.

Despite the absence of a patent in Brazil or India, Dutch officials deemed the “storage” of the patented drug on Dutch soil to be infringement of the Dutch patent. Although the seizure was later released and flown back to India by the generics producer (in this case Dr Reddy’s Laboratories), the fallout from this and more recent EU seizures has led India and Brazil to beat a path to the door of World Trade Organisation (WTO) to file a complaint. If high-level diplomatic talks between the EU and India/Brazil fail to reach a settlement, it seems likely that the WTO will be left to decide on the extent of protection afforded by IP laws to goods in transit. The international interest (and in some quarters, outrage) in this case highlights the deeper rifts in respective attitudes towards IP between the so-called developed and developing countries.

Protecting your investment
Multinational pharmaceutical companies (collectively “Pharma”) argue that a robust IP enforcement strategy is essential to protect their investment in research and the extraordinary costs and time (on average USD802 million and 7.5 years) to take a drug to market¹ . They might ask why it is that generics companies are able to steal the fruits of their labour and sell them on as cut-price and, in some cases, sub-standard pharmaceuticals. It is argued that the practice exposes patients to potentially harmful counterfeit pharmaceuticals, and that cut-price generics deprive Pharma of revenue to develop new and improved medicines to treat future generations. Enforcing IP laws is therefore said to be an essential part of Pharma’s strategy to ensure survival in a competitive global marketplace.

Protecting the poor
In the other corner of the ring are the generics manufacturers who argue that seizures such as those seen in the EU constitute anti-competitive practice on the part of “Big Pharma”; solely designed to sustain the market status quo and deny opportunities to companies from growing economies. Such practices are also argued to be to the detriment of millions of people in developing countries by denying them access to affordable medicines. The recent EU dispute drew protests from those in the Indian pharmaceutical industry who felt that the seizure was taking the scope of IP laws in Europe too far. Amar Lulla, the joint managing director of Cipla (one of India's largest pharmaceutical manufacturers), expressed his opposition to the seizure saying “The EU has to be resisted at every forum as this is an outrageous step to scuttle Indian exports. This is part of Big Pharma's multi-pronged strategy arising out of their desperate situation of scanty product pipelines”².

The Patent System
Patent protection is designed to stimulate and incentivise innovation by guaranteeing the inventor a limited period of monopoly in exchange for publicly disclosing how to produce or work the invention. However, the scope of the monopoly only extends to the countries in which a patent has been granted. A “global” patent does not exist. Potential patent owners must therefore determine where to invest in a patent; a choice dictated by both economics and whether patent rights can be obtained and effectively enforced. These decisions can restrict access to the product from both a supply and affordability perspective; a situation more likely to occur in less developed countries where healthcare funding is limited or non-existent.

In the countries where the patent has not been granted or has expired (usually after the twenty year term), generics manufacturers may legitimately take up the slack by manufacturing the drug and supplying it domestically and to other countries where a patent is not registered.

At the time the original Cozaar™ patent application was filed (1989), India did not allow patents on pharmaceutical compounds; only the manufacturing process could be protected. Reform came about as a result of a WTO deadline to adhere to the TRIPS agreement. From 2005, patent owners could obtain patents on the active compounds and could gain protection for novel compounds invented after 1995. Despite the reforms and significant improvements to the level of IP protection in India in recent years, India still lies second to bottom of the Global IP Index³ (China sits at the bottom). This index assesses and compares how 24 major IP jurisdictions fare on obtaining, exploiting, enforcing and attacking particular types of IP.

Brazil (which lies one place ahead of India in the Global IP Index) has also had issues with providing robust IP protection to patent holders. While not overtly refusing to grant patents on active compounds, Brazilian patent law (in common with Indian and New Zealand patent law) contains compulsory licensing provisions that can be invoked if favourable terms are not offered by the patent holder. Potential enforcement of these provisions has been used as a bargaining tool by the Brazilian government to force patent owners to reduce prices and indications are that this trend will continue. Despite this, only one compulsory licence has been issued to date (for the antiretroviral drug efavirenz).

The decision by governments on how to legislate and apply their own IP law to benefit their economy has to be finely balanced with honouring commitments to international trade treaties (such as the TRIPS agreement). Other countries and organisations try to influence these decisions by employing incentives and penalties such as trade agreements and import tariffs. The recent reform in India reflects the shifting of this balance as the Indian economy moves from manufacturer towards an R&D led knowledge economy supported by strong IP protection.

The Ideas Pipeline
The practice regarding enforcement of IP rights is in a constant state of flux and depends on interpretation as well as statute. This fact is illustrated by a recent decision in the UK which allowed the transit of counterfeit goods; the court found that trademark infringement does not occur unless the counterfeit goods were likely to be placed on the market in the transit country. The UK decision appears to be at odds with the Dutch practice although EU deliberations may lead to a more unified outlook.

The EU dispute is a minor piece in an immensely complex jigsaw to which this short article cannot do justice. The overwhelming reality is that many millions of people in developing countries lack access to even the most basic medicines and this is a situation that should not be overlooked by the more fortunate in developed countries. Generics manufacturers play an important role in providing competition in the global pharmaceutical economy. However, diluting the power that IP has to incentivise innovation in developed nations is not a sustainable solution. The developing world will only benefit from new medicines if the product pipeline from knowledge-based economies keeps flowing; patents and a return on investment are an essential part of that pipeline. The solution lies in government, Pharma and NGO backed initiatives and partnerships. These initiatives could include promotion of multi-tier pricing strategies by Pharma and the use of development funding to subsidise medicines and develop distribution infrastructure. The goal of providing affordable, high quality healthcare to the masses may then be a step closer.

[1] DiMasi, Hansen, Grabowski (2003) “The price of innovation: new estimates of drug development costs,” Journal of Health Economics; Vol 22, pp. 151-185.
[2] India Opposes Seizure Of Drugs By EU Even As Dr. Reddy’s Labs Brings Its Goods Back PharmAsia News 29 January 2009
[3] Taylor Wessing Global IP Index 2009 http://www.taylorwessing.com/ipindex/ (accessed 1 December 2009)

Patenting software in New Zealand – in or out?

Thu, 08 Jul 2010 00:00:00 +1200

As is the case in Australia, New Zealand's patent law is currently being revised, though the New Zealand reforms are much further through the parliamentary system. New Zealand law has, of course, much further to come to meet modern standards: New Zealand law is currently based on the 1949 United Kingdom Act, which was replaced in that country in 1977, and in the case of New Zealand's closest neighbour, Australia, in 1990.

The New Zealand Patents Bill 2008 has been to the Commerce Select Committee and was reported back in March this year. Under the bill, New Zealand will change from examining only for novelty to examining for novelty, obviousness and utility, and from local novelty to absolute novelty, the objective being to reduce the number of patents of dubious quality being granted. Under the first draft of the bill, oppositions were removed, but following select committee consideration are now back in, following widespread concern from a number of quarters.

However, by far the most controversial topic has been patentability of software. The original bill made no specific mention of it and it was widely assumed that computer programs would continue to be patentable as they are currently, provided they meet the standard tests for patentability.¹

At the select committee stage, a well organised lobby of proponents of open source software managed to get the attention of a number of the select committee members, and to some extent caught many of those larger software developers in favour of patenting software napping. Given previous consultations on the exposure draft of the bill, and the wording of the bill itself, they had not unreasonably assumed that software patents would stay. Few made submissions to the select committee in support of patenting software.

It therefore came as a complete surprise when the select committee reported the bill back with a specific exclusion of computer programs from patentability. ²

The select committee's alarmingly limited understanding of how patents work is illustrated by this statement:

"A number of submitters argued that there is ‘no inventive step’ in software development, as ’new’ software invariably builds on existing software. They felt that computer software should be excluded from patent protection as software patents can stifle innovation and competition, and can be granted for trivial or existing techniques. In general we accept that position."

The select committee considered allowing embedded software only, but concluded that would be too difficult to manage and shut out computer programs altogether, on the basis of their "understanding" that this would be unlikely to prevent the granting of patents for inventions involving computer software.

Apart from the observations that patents cannot in any event be granted for "trivial or existing techniques", that many, indeed most, inventions build on something that already exists, and that the Bill's substantive changes considerably raise the bar for patentability in New Zealand, the select committee's change would put New Zealand out of step with its trading partners around the world. New Zealand companies would still be liable for infringement of software patents in their overseas markets.

At the time of writing the Patents Bill is sitting well down the list of bills on the parliamentary order paper, but is likely to be dealt with before the end of the year. If changes are to be considered, the bill could be referred back to the select committee, or changes made by way of supplementary order paper during the passage of the bill. In the meantime, there is a great deal more lobbying underway, on both sides of the debate.

If you have any legal issues you would like to discuss contact Rosemary Wallis.

¹ Over 1000 software patents have been granted in New Zealand since 1995, and about 20 percent of them are held by New Zealanders.
² Clause 15(3A): “A computer program is not a patentable invention.”

Patents back in business, at least in the US

Wed, 30 Jun 2010 00:00:00 +1200

The US Supreme Court has issued its long awaited decision on the patentability of business methods. The Supreme Court decided that while the particular invention in question was not eligible for patent protection (it covered an abstract idea or scheme), business methods in general were not excluded from patentability. Further, business method inventions were distinguished from computer-implemented or software inventions. The Supreme Court considered computer-implemented inventions were more eligible for patent protection since they inherently include or relate to a computer and are therefore likely to at least have some technical considerations.

There were concerns that this decision would close the door on business method patents in the US, and to a lesser extent, software patents. However, these have been put to rest by the Supreme Court. The Supreme Court indicated that it will not impose limits on what types of invention are eligible for patent protection, other than those set out in the US Patent Act.

This follows a recent decision of the highest decision-making body of the European Patent Office not to change its practice in dealing with computer-related inventions. So, such inventions are eligible for patent protection in Europe as long as they provide a technical solution to a technical problem, rather than providing an advance in an abstract, non-technical field.

These two decisions, with the wide eligibility of patent protection for computer-related and business method inventions in Australia, will put added pressure on the legislators in New Zealand not to impose a blanket exclusion on the patentability of software. Such an exclusion was recently proposed for the draft Patents Bill. This is despite this being inconsistent with the apparent intentions of the Select Committee reviewing the Bill to allow patents for some software inventions ("embedded software"). However, the Government has noticed this inconsistency and the latest indications are that New Zealand will adopt an approach similar to that in Europe.

New Zealand's Major Events Management Act

Tue, 29 Jun 2010 00:00:00 +1200

With the excitement in New Zealand growing as the Rugby World Cup 2011 and World Rowing Championships 2010 draw near, businesses and individuals are finding themselves grappling with the practicalities of the Major Events Management Act 2007 (“the Act”). This legislation was passed to protect major event organisers from illegitimate profiteering by parties not associated with the major event. How does the Act work? What does it protect? And how successful will it be?

WHAT ACTIVITIES DOES THE ACT COVER?

The Act attempts to protect major event organisers against ambush marketing through both association protections and intrusion protections. The Act also covers ticket scalping and pitch invasion.

WHAT IS A MAJOR EVENT?

A major event is any event which has been declared such by an order pursuant to the Act. At this stage the following have been declared major events:

FIFA U17 Women’s World Cup 2008;
FIBA U19 World Championship 2009;
U19 Cricket World Cup 2010;
World Rowing Championships 2010; and
Rugby World Cup 2011.

An order is made by the Governor General, on the recommendation of the Economic Development Minister after consulting with both the Sports Minister and the Commerce Minister.

Once an order is made declaring an event to be a “major event”, all protections under the Act will apply to that event. Often protected emblems and protected words are declared in the same order in which the major event is declared, although the Rugby World Cup 2011 has a separate order governing these issues.

PROTECTIONS AGAINST AMBUSH MARKETING

Recent ambush marketing experiences at the Beijing Olympics, Winter Olympics, and the FIFA World Cup in South Africa have emphasised the growing propensity for organisations to “jump on the pseudo-sponsorship bandwagon” and gain unofficial exposure for their goods and services with worldwide audiences. The Act attempts to prevent this type of behaviour through regulation of both association protections and intrusion protections.

Association Protections

It is prohibited under the Act to imply an association between a major event and goods or services, a brand of goods or services or a person who provides goods and services. The definition of “association” pursuant to the Act is “a relationship or connection, whether direct or implied, such as an approval, authorisation, sponsorship, or commercial arrangement and includes offering, giving away, or selling a ticket to a major event activity in connection with the promotion of goods or services.”

Such a definition is expected to have far-reaching consequences in relation to the field of corporate hospitality, where sporting events have historically been used for client entertainment purposes. Under the Act such hospitality will be forbidden unless carried out by those official corporate hospitality providers appointed by the major event organiser.

A further implication of the “association” definition will be that businesses will not be able to give away tickets to the major events in relation to competitions or promotions.

The question remains as to whether the corporate hospitality and ticket giveaway provisions are in fact overly protective, and as such disadvantageous to the major event organiser. Over regulation may negatively impact business for the major event organiser.

The Act also provides for the declaration of major event emblems and words which are protected for a specified “protection period”. The emblems, words and duration of the protection period are usually declared in the order designating the event as a major event.

Courts are able to presume that a representation has been made which breaches the Act where the representation includes a major event emblem, word or words, or emblems or words which are confusingly similar to the protected emblems or words.

Not only the person who commissions the representation is liable under the association protection provisions, but also the person who has paid for the placement or location of the representation. This is an important consideration for businesses dealing in various forms of media and selling advertising as part of their revenue stream.

Breach of the provisions is not overcome by using the words “unauthorised” or “unofficial”.

Associations are allowed in some situations such as:

where written permission of the event organiser has been given to either the representation or the association;
where the representation is made by a natural person as an opinion and there is to be no commercial gain;
in limited industrial or commercial circumstances such as where such a representation is necessary to show the intended purpose of goods or services;
an existing organisation is carrying out its ordinary activities;
reporting news and information, or
where not used in contravention of the Act in relation to a word or emblem that is all or part of a place in New Zealand, a legal or trade name, or an existing trade mark.

A breach of the association protection provisions of the Act can result in fines of up to NZ$150,000.

Intrusion Protections and “Clean Zones”

In addition to the association protections created under the Act, intrusion protections have also been put in place. These provisions allow the Economic Development Minister to declare “clean zones”, being

the venue of a major event activity;
the area directly proximate to it;
any other area necessary to allow the major event activity to happen, and
“clean transport routes” which are motorways, state highways or train lines (or areas directly proximate to these) which are 5 km or less from the clean zone and likely to be used by a “substantial” number of people to travel to and from the clean zones. (What constitutes a “substantial” amount of people remains to be seen).

Clean zones and clean transport routes are operational during a declared “clean period” only. They do not include “excluded land or buildings” being private land and private buildings in the clean zone (except for billboards, the actual major event activity venue or land which is generally open to the public).

Various restrictions apply to the clean zones and the clean transport routes during the clean period. No street trading or advertising is allowed within the clean zone which does not have the authorisation of the major event organiser. Further, advertising is not allowed which is clearly visible from within the clean zone – including aerial advertising. Advertising is also prohibited within the clean transport route unless authorised by the major event organiser.

Both the person who commissions and pays for the advertisement and the person who is paid for carrying out the advertising will be in breach of the Act.

Exceptions to these restrictions exist including where

certain honest practices are involved;
where the advertising is on shoes, clothes and personal items of members of the public (as long as there is no intention to advertise at the major event) or volunteers and participants in the major event activity;
or advertising on trains, boats or vehicles carrying out ordinary activities in their usual manner.

It is also permitted to have advertising on newspapers or magazines or televisions, radios or electronic devices where these are being used in a personal capacity and not for the purpose of intrusion advertising. An exception also exists in relation to emergency aircraft.

TICKET SCALPING

People planning to make a profit by buying bulk tickets to Rugby World Cup games and selling them at a profit to fans, will be disappointed - under the Act there are now laws in place to stop what is commonly known as “ticket scalping”.

The Act does allow a person to on-sell tickets to major events to other people. However, it is prohibited to knowingly sell or trade tickets to major events for more than the original sale price for which they have been purchased.

While it is not prohibited to make group bookings for family and friends and be reimbursed for the tickets, people will be prevented from selling tickets on eBay or equivalent websites to the highest bidder (unless the highest bid is less than or equal to the price which was paid for the ticket).

The original sale price is defined in the Act and includes “charges necessary to effect the sale or trade of a ticket”. So courier costs could be passed on as part of the original sale price.

Under the Act “sell or trade” means any transaction “regardless of its form” where the sale or trade of the ticket for more than its original purchase price is the substantial purpose of the transaction.

Tickets may be sold or traded for more than the original price of the ticket if the authorisation of the major event organiser has been given.

Anyone who is convicted of the offence of knowingly selling or trading a ticket to a major event for more than the original price of the ticket under the Act is liable to a fine not exceeding NZ$5000.

PITCH INVASION

Provisions prohibiting pitch invasion have also been included in the Act. The prohibition includes both a person entering onto a playing surface at a major sporting event, and a person intentionally propelling any object onto a playing surface at such an event.

People in breach of this section of the Act are liable to up to 3 months in prison and a maximum fine of $5000.

PERMANENTLY PROTECTED WORDS AND SYMBOLS

There are also provisions which allow for the permanent protection of certain marks - namely, Olympic Games and Commonwealth Games emblems and words - on a permanent basis. Certain exceptions are also applicable to the use of these permanently protected words and symbols.

ENFORCEMENT

New Zealand legislators have attempted, to give the Act “teeth” and allow enforcement agencies effective tools to properly police breaches of the Act. Measures which have been allowed, have met with some criticism with many concerned that the level of policing required by government agencies will be untenable.

There has been a noticeable campaign of press releases “warning” the public about the provisions of the Act – in particular the advertising limitation and ticket scalping issues. A manual has also been released by the Ministry of Economic Development to assist businesses and individuals in keeping within the provisions of the Act. Despite this, confusion as to the exact limits of the Act remains high for both the public and practitioners wishing to advise their clients.

While this confusion is part of new and almost entirely untested law, it may well be in the event organisers’ interests to recognise that the costs and inconvenience of policing and dealing with infringement incidents may be avoided by the event organisers and relevant governmental bodies providing advice and clarity to organisations attempting to stay within the limits of the Act from the beginning.

The Ministry of Economic Development laid the first charges under the Act on 22 April 2010. Terry Lung Chang, director of CL NZ Trading Company Limited, is facing criminal charges after a shipment of over 1000 t-shirts bearing one of the International Rugby Board logos was intercepted by New Zealand Customs. The case has been adjourned until 29 June 2010. The Ministry of Economic Development will no doubt be hoping that these charges have a deterrent effect on would-be counterfeiters.

The Act provides for the appointment of enforcement officers, who are able to seize or cover things which are in breach of the Act, and issue formal warnings. Courts are able to grant injunctions, damages and account of profits under the Act, as well as orders for erasure allowing for unauthorised material to be removed, obliterated or covered. Courts are able to make directions for corrective advertising, order delivery up of goods, materials or objects or order the forfeiture, destruction or retention of goods. Criminal charges can be laid under the Act.

CONCLUSION

The practical application of the Major Events Management Act will be a challenge not only to businesses and individuals trying to abide by its provisions, but also to people charged with the enforcement of those provisions. At this stage, due to the relatively new and untested status of the Act there appear to be many grey areas, in particular the association and intrusion protection provisions. Practitioners and the public will watch with interest over the coming months to see how issues are dealt with as they arise.

This article was published in MIP Online, June 2010.

"HEARING CARE" succeeds

Thu, 10 Jun 2010 00:00:00 +1200

The New Zealand High Court recently awarded an interim injunction preventing National Hearing Care (New Zealand) Limited (“National Hearing”) from using a stylised version of “national hearingcare” in certain regions of New Zealand - Hearing Care Manawatu Ltd v National Hearing Care (New Zealand) Ltd (unreported, CIV-2009-404-8506, High Court Auckland, 31 March 2010, Heath J).

The plaintiffs, Hearing Care Manawatu Limited and Hearing Care Wellington Limited (“Hearing Care”), had been using a trade mark incorporating the words HEARING CARE since 2005. National Hearing began to use the name “Hearing Care New Zealand” or “HearingCare New Zealand” in about July 2008.

Hearing Care raised the issue of National Hearing’s use of “Hearing Care” in March 2009 but took no formal steps to prevent it until November 2009. As a result, National Hearing said that the delay was too long and fatal to the interim injunction application.

National Hearing also claimed that Hearing Care, having chosen a descriptive name, could not prevent others from using the same name. The judge chose deliberately not to deal with the merits of the competing claims and so this issue was not explored further.

A decisive factor in granting the interim injunction, despite the delay and alleged descriptiveness, may have been the fact that Hearing Care was able to point to examples of confusion and deception that had taken place. These included invoices that had been directed to the wrong entity, a Government entity who had changed Hearing Care’s vendor numbers to National Hearing, as well as confusion amongst patients.

Despite the stylisation being different, there were said to be distinctive aspects of the trade marks that give rise to a potential for confusion, which appeared to be borne out by the evidence of confusion and deception. The judge said that if National Hearing had focussed on the words NATIONAL HEARING as opposed to HEARING CARE there would have been less room for confusion.

The judge concluded that there is a real risk of confusion in certain areas of New Zealand but not in others where Hearing Care did not have patients. On balance, the judge ruled that an interim injunction was justified but only to ensure the minimum amount of protection was granted.

The judge indicated that the matter should be brought on for substantive hearing as soon as practicable.

This article was published in World Trademark Review, May 2010.

Software to be excluded from Patentability in New Zealand

Fri, 04 Jun 2010 00:00:00 +1200

Progress towards an updated Patents Act in New Zealand took another step forward late last month with the issuing of the Commerce Select Committee's report on the draft Patents Bill (reported recently in MIP). The report signalled a potentially significant change in the patentability of computer-implemented inventions in New Zealand, with the Select Committee making the surprise recommendation that computer programs be excluded from patentability.

Based upon the United Kingdom's Patents Act 1949, New Zealand's Patents Act 1953 incorporates a definition of an 'invention'(i) derived from the United Kingdom's Statute of Monopolies 1623, and states that invention means "any manner of new manufacture". The interpretation of this definition has been successively broadened in a series of decisions by the Courts and the Commissioner of Patents over the years, culminating in a 1994 decision of the Commissioner(ii) which resulted in allowance of claims directed towards computer-controlled methods of air traffic control. Following that decision, computer-implemented inventions have been patentable provided only that the claimed invention produces a commercially useful effect.

As an initial step towards updating New Zealand's patent laws, first mooted in 1990, a three-stage review of the Act was undertaken by the Ministry of Economic Development. The third stage of that review considered the Act's definition of an invention and the issues relating to its application to modern technology. Particular consideration was also given to the patentability of software. A few submissions were received arguing for the exclusion of software, but otherwise submissions were generally in favour of the patentability of software in at least some form(iii). The Associate Minister of Commerce at the time, Judith Tizzard, thus concluded that "There are, then, no strong arguments for specifically excluding business methods and software from patent protection"(iv).

New Draft Patents Bill

A completely new draft Patents Bill to replace the Patents Act 1953 was released for public consultation in late 2004, and was finally introduced to the House of Representatives for its first reading in mid-2008. The Bill retained the existing definition of an invention but introduced several important changes which were generally well-received. Among those changes, the Bill introduced a number of new measures expected to minimise the number of patents for inventions of dubious novelty or inventiveness, a criticism commonly levelled at so-called "software patents". In particular, the Bill introduced a change from a "local" to an "absolute" novelty requirement, and added obviousness as a ground for objection during examination.

The Patents Bill was subsequently sent to a Commerce Select Committee for review, and public submissions on the issue of software patentability were received from 67 interested parties, with 36 submissions being heard. Not all of those parties were necessarily well-informed, however, with the non-profit organisation InternetNZ, for example, incorrectly noting in its submission that "it is not currently possible to obtain a patent in New Zealand for software"(v) and unintentionally arguing that since "the review process which led to the current Bill did not include extensive or thorough consideration of the benefits or costs of allowing for the patentability of software... the status quo... should be reinforced in the absence of any apparent reasons to change it."

Open Source Opposition Gains Ground

Most outspoken among the parties making submissions to the Select Committee were a number of impassioned proponents of the free and open source software models, whose arguments appear to have been given great weight by the Committee to the possible detriment of the developers of novel and inventive software.

The free and open source models of software development and distribution generally include liberal licences allowing users access to source code to modify, copy, and/or redistribute the software as they see fit, without risk of infringing any copyright or patent rights held by contributors to the software provided that the terms of the licence are adhered to. A significant proportion of free and open source software is developed collaboratively by volunteers contributing their time and skills to a project. This collaborative development creates many opportunities for contributors to introduce copyright- or patent-infringing source code or functions to a project, making warranties of non-infringement in licenses problematic and/or inappropriate. The risk of infringing third-party intellectual property rights is therefore seen as a threat to the free and open access upon which these models are based.

While the term "free" in free and open source software refers to the freedom of access and modification rather than the cost of licensing or using such software, it is common for free and open-source software to be provided without cost to the consumer. As a result, few open source software projects are in a position to determine whether their software is likely to infringe any patents, pay royalties to patentees, and/or seek revocation of invalid patents.

Advocates of free and open source software are generally united in their opposition to software patents. The most common argument made in support of this position is that software patents represent a barrier to innovation, whereas the justification for the 20-year monopoly granted by a patent is to encourage and reward innovation and the public disclosure of inventions. It is also often argued that software, being a written expression of an algorithm, is akin to literary or musical works which are not patentable, and that there is no reason why software should be the only field entitled to "dual protection" under copyright and patent laws. However, such arguments conveniently overlook both the fact that software is functional, and that certain inventions in other fields are often entitled to copyright, registered design, and patent protection.

The strong opposition to software patents from the free and open source community is a viewpoint not necessarily shared by commercial developers of the more traditional "closed-source" or proprietary software. Without software patents, developers risk seeing their own inventive products reproduced by other companies and/or open source groups having the resources to create their own implementation of an inventive idea, thereby avoiding infringement of the inadequate protection provided by copyright law. Such companies are therefore faced with being unable to recoup their development costs in the face of competition from companies with much larger or more effective marketing campaigns, and open source software groups having unlimited programming resources with minimal or non-existent overheads. Proponents of software patents therefore often argue that patents do encourage innovation and provide an incentive for the significant investment made in the development of new inventions involving software.

The Select Committee issued its report on 30 March 2010, surprising even the opponents of software patents with their recommendation for exclusion. Even more surprising, however, was the justification provided for this recommendation, with the Committee agreeing with submissions arguing that "'new' software invariably builds on existing software". The suggestion that software is somehow unique in this regard is staggering, and the Committee members are clearly unfamiliar with Sir Isaac Newton's famous comment that "If I have seen a little further it is by standing on the shoulders of giants." The Committee in its report went on to accept that software patents "can be granted for trivial or existing techniques"; this would seem to demonstrate a clear ignorance or misunderstanding of the basic requirements for patentability (namely novelty and inventive step), or at best a lack of faith in the ability of the Patent Office and Courts to consistently apply those requirements.

The Select Committee did recognise that there are likely to be inventions involving the use of software which might be patentable, in particular referring to "embedded software", but avoided the difficult task of attempting to precisely define what may and may not be patented. Instead, the Committee suggested that the Intellectual Property Office of New Zealand be given the unenviable task of developing guidelines on the issue.

Commerce Minister Simon Power has indicated that the Government will back the proposed exclusion of computer programs. Members of opposition parties have also expressed their support for the Committee's recommendation. A press release from the opposition New Zealand Labour party quoted their Commerce spokesperson and Chairman of the Select Committee, Lianne Dalziel, as saying,

“Copyright is the appropriate form of intellectual property protection. We believe that this change to the Bill isn’t a big change from previous law at all. Patents are not used to protect books or music."

The Labour party's Communications and IT spokesperson Clare Curran, also a member of the Select Committee, adopted similar reasoning in her support of the recommendation. “Imagine if a piece of music was patented and you could therefore not use the notes in that piece of music.”

Passage of the Bill

The Patents Bill will receive a second reading to provide Members of Parliament with the opportunity to debate the principles of the Bill and the changes proposed by the Select Committee. It is expected that the Patents Bill will pass the second reading rather than being defeated, since it is widely recognised that the Patents Act 1953 is long overdue for an update. The Bill will then proceed to a Committee of the whole House to allow Members to debate and vote on the Bill clause-by-clause, and then will be given a third and final reading. Bills at that stage are rarely rejected, and once passed will require only Royal assent from the Governor-General before becoming law. It is expected that the Patents Bill will come into force as the Patents Act 2008 some time in 2011.

If computer programs are indeed excluded from patentability as recommended by the Select Committee, there is likely to be significant uncertainty regarding the boundaries of patentability for computer-implemented inventions for some time. In the past, questions of patentability have been raised with the Commissioner and/or Courts relatively infrequently due to the relatively small size of the market in New Zealand. It could be some time before there is a body of case law to provide guidance on the issue. Until then, it is the guidelines to be developed by the Intellectual Property Office of New Zealand which will initially determine the boundaries of patentability if the Bill is enacted in its present form.

File Software Patent Applications Now

To avoid the software exclusion, applicants may wish to consider filing patent applications in New Zealand before commencement of the Patents Act 2008. Transitional provisions in the Patents Bill state that applications made under the Patents Act 1953 "generally continue to be dealt with under that Act"(vi).

In the case of national phase applications entering New Zealand from a Patent Cooperation Treaty (PCT) application, applications will continue to be dealt with under the present Act if the applicant fulfils their obligations under Article 22(1) or 39(1)(a) of the Patent Cooperation Treaty prior to commencement of the new Act(vii).

Any divisional applications filed from applications made under the Patents Act 1953 will also proceed under that Act(viii) regardless of when the divisional application is filed, provided only that they are antedated to the filing date of the parent application (i.e. do not add any new subject matter).

This article was published in MIP Week, May 2010.

(i) Patents Act 1953, Section 2
(ii) Hughes Aircraft Co.’s Application, Commissioner’s Decision No P03/1995, Commr Popplewell, 3 May 1995
(iii) Summary of Submissions on Exposure Draft of Patents Bill, Ministry of Economic Development, 2002
(iv) Review of the Patents Act 1953 Stage 3: Part 1, Hon Judith Tizard, 2003
(v) Submission to the Commerce Committee on the Patents Bill (235-1), Internet New Zealand Inc, 2 July 2009
(vi) Patents Bill 2008, Section 299(1)(b)
(vii) Patents Bill 2008, Section 305
(viii) Patents Bill 2008, Section 304

Registered Designs in New Zealand: Changes allowing restoration and publication

Mon, 31 May 2010 00:00:00 +1200

New Zealand has amended the Designs Act 1953 (the Designs Act) to allow:

restoration of lapsed registered designs;
restoration of lapsed registered design applications; and
publication of registered design application details.

The amendment gives the Commissioner of Designs the discretion to restore; the lapse must have been unintentional by the owner and the application for restoration made without undue delay. Before the amendment, the Designs Act omitted inclusion of restoration of a lapsed design application or a lapsed design registration.

The Design Amendment Act 2010 (the Amendment Act) received its royal assent on 19 April 2010 and comes into force on 19 April 2011 (or an earlier date if appointed by the Governor-General).

So far there is no guidance on how the Commissioner will treat designs that lapse between now and the amendment coming into force, and there are no relevant transitional rules or guidance on this in the Amendment Act.

1. RESTORATION – HOW?

The owner must provide evidence satisfying the Commissioner the lapse was unintentional and, once the owner detected the lapse, the owner applied for restoration without undue delay. The Commissioner will then exercise his or her discretion, and if for the owner, the Commissioner will then publish the application for restoration. Any person may oppose the application for restoration within the set time limit, but only because the lapse was not unintentional and there was undue delay.

2. RESTORATION – A TWOFOLD REASON FOR ITS IMPORTANCE

Lapsing of a registered design in New Zealand has a twofold impact. When the registered design lapses it also effectively destroys the protection given to three-dimensional shapes under New Zealand’s Copyright Act 1994.
The Copyright Act 1994 (“Copyright Act”) protects original drawings and prototypes from which three-dimensional products are made or derived. This is often referred to as “design copyright”. Under New Zealand law, a third-party infringes copyright in the original drawings and prototypes if they copy without permission from either the,

a) original drawings or prototypes; or

b) three-dimensional products made or derived from those original drawings or prototypes.

Therefore, copyright law in New Zealand protects the three-dimensional products themselves. This is a unique feature of New Zealand intellectual property law. In many other jurisdictions (for example, Australia), copyright protection is ‘lost’ once the relevant work is ‘industrially applied’ (which usually means applied to 50 or more articles).

Under New Zealand law the double protection of the Copyright Act and Designs Act effectively crumbles when design registration lapses.

This is because section 74 of the Copyright Act provides a defence to copyright infringement if the copying was from a lapsed patent or registered design. Therefore, third parties can avoid copyright infringement, provided they copied from the lapsed registered design.

Therefore, the ability to restore registered designs and registered design applications in New Zealand is an important one.

3. RESTORATION – THE BEGINNING AND ITS CODIFICATION

A recent hearing by the Commissioner corrected what the position under the Designs Act should have been all along. At the hearing, the Commissioner allowed restoration of a lapsed design registration, where the owner did not pay the renewal fee within required time frame, including the six-month extension of time.

Owners of a registered design in New Zealand have a six-month extension of time available to pay the renewal fees on the registered design. Historically, once this extension expired, the registration irrevocably lapsed. This occurred even if the failure to pay the renewal fee was unintentional.

The amendment to the Designs Act codifies the approach taken at the hearing by the Commissioner. In the Tweco Products Inc.(i) hearing the owner asked the Commissioner to reconsider whether a design registration could be restored on application by the owner for a correction of a mistake in the register. Specifically, the owner filed an earlier application asking for:

“…correction of a mistake under section 29(3) of the Designs Act 1953. We wish to correct the status of the design register of New Zealand design 29157 showing the status as ‘Registration Expired’. The expiry of the design arose from an error or omission on behalf of the proprietor or another person(s) concerned which led to the non-payment of the renewal fee normally ... Hence, the mistake in the register .”(ii)

The Commissioner rejected this application because the register was correct – the registration lapsed through failure to pay the renewal fee by the final deadline. The owner then requested a hearing in which the Commissioner held:

“…in a case such as this, when comprehensive evidence has been adduced to show that the owner of a registered design intended the design to be extended for a further five year period and, because of a mistake in any proceedings in connection with the design, caused by an error or omission on the part of the proprietor or applicant or any other person, the extension was not applied for within the time allowed by section 12(3), the mistake may be corrected under the provisions of section 29(3), and the register amended accordingly. I am satisfied that, in this case, the owners of the design have adequately established that they intended to extend the period of copyright, that an error or omission has occurred, and that, once the mistake was discovered, they acted diligently in pursuing the request for correction .”(iii)

As a result the Commissioner allowed the application for correction of the error, despite the fact the Designs Act did not provide for restoration at the time.

4. RESTORATION - AMENDMENT TO THE COPYRIGHT ACT 1994

The Amendment Act also amends section 74 of the Copyright Act by adding subsection (4). The added subsection bars action against a third-party who works the design during the period it is lapsed.

5. PUBLICATION - REGISTERED DESIGN APPLICATION DETAILS

The amendment to the Designs Act also clears up the confusion over publication of the details of registered design applications. For a period before the amendment, the Commissioner would not publish the details of applications until registered.

Publication is important at least from the prospect of identifying potential infringement.

(i) Tweco Products Inc [2009] NZIPODES 1 (2 February 2009)
(ii) Tweco Products Inc [2009] NZIPODES 1 (2 February 2009) at para 2
(iii) Tweco Products Inc [2009] NZIPODES 1 (2 February 2009) at para 59

This article was published in MIP Online, 27 May 2010.

Beware the “Patent Marking Troll”

Fri, 28 May 2010 00:00:00 +1200

Recent court decisions have identified a previously little used way of making money from the US patent system – suing on behalf of the US government…

You may have heard of a “patent troll”, also known in polite circles as a “non-practising entity”. These are individuals or companies which own one or more patents, but don’t make any products. Instead, the patent troll waits for others to commit to developing products which fall within the scope of their patent portfolio, and then demands a licence fee.

US company NTP Inc are sometimes held up as the quintessential patent troll after they successfully used their patent rights to negotiate a US$ 612 million settlement with Research in Motion Ltd (RIM), makers of the popular Blackberry handsets. NTP did not make a handset, and had no plans to do so.

A recent spate of court decisions have brought to light a new breed of litigant, dubbed the “patent marking troll” by many US commentators, who can ply their trade without even owning a patent.

In the USA, any member of the public can bring an action against a person who falsely represents a product as being covered by a patent, even if they have not suffered any loss as a result. This type of action is called a writ of qui tam. A notable feature is that the person bringing the action gets to keep half of any fine handed down by the court.

The relevant part of the statute states that the person making the false statement shall be fined not more than $500 “for every such offence”. In the recent case Forest Group v The Bon Tool Company the US Court of Appeals held that the statutory fine of up to $500 per “offence” meant that the patentee could be fined up to $500 for each and every item sold which was falsely marked. The court went on to decide that in this case the appropriate penalty was the entire sale price of the item in question, rather than simply the profit on the item, or some smaller amount indicative of the extra profit attributable to having falsely claimed that the product was protected by a patent.

The products at issue in the Forest Group case were industrial stilts, and only 38 sales were found to be in breach, meaning that the total fine was less than $7,000. However, it is not hard to imagine cases involving far greater quantities of goods which could result in a large windfall for the party bringing the action. No doubt the patent marking claims of various prominent companies in industries such as computer hardware, software, telephonics and pharmaceuticals are now being scrutinized by a number of opportunistic individuals (or rival companies), each looking for the high value, high volume, falsely marked product which could be their path to riches.

It is important to note that the false marking provisions only apply where there is an intention to deceive the public, and so not every case of a product being advertised as patented where it actually isn’t will result in a successful prosecution. In the Forest Group case a previous attempt by Forest Group to sue Bon Tools for infringement over their copied product had failed, thereby conclusively demonstrating to Forest Group that its own stilts were not covered by its patent. Only the sales of falsely marked stilts subsequent to this court decision were penalised.

The US patent legislation is currently under review, and there are proposals to remove the ability of third parties to bring false marking suits where they have not suffered any consequential loss. Nevertheless, this case serves as a reminder that care must always be taken to avoid any kind of false or misleading claim in your advertising, and in particular, any false suggestion that a product is covered by a patent.

For futher information on 'patent trolls' please contact Richard Clement.

Case Commentary: Wyeth vs Ancare and ERMA

Fri, 21 May 2010 00:00:00 +1200

The Supreme Court in a recent decision clarified the basis on which ERMA could withhold information from the public in relation to hazardous substances.

Wyeth (NZ) Limited v Ancare New Zealand Limited and The Environmental Risk Management Authority [2010] NZSC 46 (see here)

Under the Hazardous Substances and New Organisms Act 1996, parties wishing to manufacture or import into New Zealand hazardous substances must first obtain the approval of ERMA. Applications to ERMA are publicly notified and interested parties have the opportunity to file submissions with respect to applications, and be heard on these at a public hearing.

This appeal concerned one such application by Ancare New Zealand Limited to manufacture and import a drench. Ancare used the codeword MEP600 for its application, and withheld all technical information regarding its ingredients from the public. Wyeth, wishing to make a submission on Ancare's application, sought information regarding the ingredients of the drench. Ancare contended this information was confidential and would unduly prejudice its commercial position and ERMA refused to disclose the information to Wyeth. The Ombudsman, upon appeal by Wyeth, upheld ERMA's decision. Wyeth appealed to the High Court, which found that ERMA had not complied with the requirements of the Act and directed it to rehear the matter. Ancare successfully appealed to the Court of Appeal, and Wyeth in turn appealed to the Supreme Court . The hearing before the Supreme Court focussed upon what the Act required ERMA to disclose to the public, and specifically whether a codename alone would suffice (as opposed to the active ingredient(s) for example) .

The Supreme Court held that the statutory regime under the Act did not require ERMA to reveal confidential information to the public, and that a codename could suffice. When an application is made ERMA (privvy to the confidential information about the ingredients) is in possession of all the information it requires to make a decision and has the authority to request the applicant for any further information it requires. The Act further incorporates the principles of the Official Information Act in relation to confidential information and stipulates that where there is a request for the release of confidential information, the proprietor of that information has the opportunity to say why it should be withheld. With respect to the register of Hazardous Substances administered by ERMA, the Court found that although the Act stipulates that ERMA maintain such a register, it was not intended to be a comprehensive record of all hazardous substances in New Zealand and the statutory requirements were met where codenames were used by applicants and informaton regarding the identity of the ingredients withheld.

The Court also found that while Wyeth may not have known the active ingredient or composition of the drench, it has sufficient information by way of the classification of those substances provided by Ancare and approved by ERMA to make any submissions.

The Court dismissed the appeal without order for costs.

Recent amendments to the Hazardous Substances and New Organisms Act have now changed the language of provisions dealing with ERMA's public notification duties such that notification of new applications to release hazardous substances is no longer mandatory, but is now a matter for ERMA's discretion.

Baldwins acted for its client Wyeth throughout this litigation.

For litigation and commercial matter please contact Gus Hazel or Vineetha Veerakumar.

Personal Property Securities

Fri, 21 May 2010 00:00:00 +1200

In the same way real estate is frequently mortgaged as security to raise loans, it is also common practice for lenders or creditors in commercial transactions to require securities be given over business assets other than land, in order for businesses to acquire funds or goods more quickly at a favourable rate. This is where businesses need to be aware of the common pitfalls and legal issues involved in security over business assets, especially where intellectual property is involved.

All kinds of moveable chattels, goods, assets or negotiable instruments that are not land or fixtures on land (e.g. buildings) are considered “personal property” capable of being used as collateral in commercial transactions under the New Zealand Personal Property Securities Act 1999, and the similar Australian Personal Property Securities Act 2009 (“the PPSA”). Unbeknown to some, this also includes intangible goods such as intellectual property rights in patents and trade marks, or valuable commercial licences that exploit intellectual property rights.

As a result, many businesses have value and leverage intellectual property as security in commercial transactions, not only to raise funds from banks or other lenders, but also to ensure compliance in distribution or supply agreements, as a hedge against failure in licensing/franchising arrangements, and as assets to increase value in sale and purchase of businesses. Such security interests entitle the security holder to claim possession of the secured intellectual property rights, and sell them to realise financial value in order to offset money owed.

However, as intellectual property rights cannot be physically “possessed” or “held” as security by the party requiring payment, the only way to ensure your security interest takes priority over other possible competing claims is to register them on the Personal Property Securities Register (“the PPSR”), which came into being in New Zealand in 2002. The Australian equivalent comes into effect in May 2011.

A first-come-first-served system, the PPSR establishes a single nationwide online system for the registration of security interests in all personal property assets, which provides adequate security to registered creditors by giving them priority over subsequent or unregistered security interests granted by the same debtor over the same asset. While it has no bearing on the actual validity of a security interest, having your security interest registered on the PPSR is vital in protecting your interests by obtaining priority over other interested parties.

The PPSR not only provides a nationwide system to register your rights, but also provides a public platform for ascertaining whether a business you are dealing with in fact has rights to trade/secure the intellectual property rights it claims to own. Searching the PPSR is essential if you wish to extend credit to a supplier or distributor, assign certain rights and license to third parties, or invest in any entity that claims to own significant intellectual property.

The risk of failing to perfect your security interest on the PPSR is evident in the case of Viacom Global (Netherlands) B.V. v Scene One Entertainment Limited (In Receivership) CA 600/09 [2009] NZCA 457. Viacom Global, a subsidiary of Paramount Pictures, licensed Scene One to distribute Paramount Pictures DVDs in New Zealand. While the licence gave Viacom full title and intellectual property rights in the DVDs, Viacom did not register its interests under the PPSR. Meanwhile, Scene One also independently granted ASB Bank a blanket General Security Agreement over all of its assets (including the DVD stock) as is often required by banks. The bank promptly registered its interests on the PPSR and when Scene One went into receivership, the receiver was allowed to sell the DVDs to a retailer chain in order to pay back the bank, despite Viacom’s rights under the contract to the DVDs and its copyright. The registration of ASB Bank’s security interest was crucial in the court’s eventual decision, where ASB Bank’s first-in-line registration and validly executed security to the DVDs gave it unassailable rights and priority to the DVDs over Viacom, despite Viacom’s rights under its contract with Scene One.

This case serves as a reminder to businesses which trade and exploit intellectual property rights, to ensure that not only a comprehensive contract is executed in commercial dealings, but also that key intellectual property rights, such as patents, designs, or trade marks, as well as licences and products that rely on these rights, are protected under the PPSA either by registering your interests or excluding them from other registered creditors’ interests.

With the imminent introduction of the Australian PPSA regime, it is important for businesses to understand how to protect assets and interests under the PPSA in both New Zealand and Australia. Given the potential risks involved in non-compliance you should take legal advice before proceeding.

Comvita: An international success story

Thu, 20 May 2010 00:00:00 +1200

Starting out in the basement of founder Claude Stratford’s New Zealand home, Comvita has gone on to become a world leader in the natural products industry.

Applying science and innovation to natural health, Comvita has changed the public’s perception of the natural products industry. Utilising acknowledged health giving properties of natural products such as honey combined with leading-edge technology, Comvita products cover the spectrum from beauty, everyday wellness and medical products with brands such as HUNI, COMVITA WOUNDCARE and MEDIHONEY.

At 63 founder Claude Stratford, instead of entering retirement, established Comvita in Paengaroa, Bay of Plenty, New Zealand, his vision “to care for the community, producing natural products that work and acting in a way which preserves the environment for generations to come”.

While Comvita’s head office remains in Paengaroa, Comvita has grown into a substantial brand and a successful international company through its vision, innovation and scientific foundation.

Baldwins Intellectual Property has been pleased to partner with Comvita to provide the company with comprehensive intellectual property services from strategic advice to enforcement by litigation.

www.comvita.com

Case Commentary: Health World vs Shin-Sun Australia

Wed, 19 May 2010 00:00:00 +1200

This recent decision of the High Court of Australia addresses the meaning of "aggrieved" or "person aggrieved" i.e. standing to bring cancellation or removal proceedings against a registered trade mark.

The appellant, Health World Ltd and the respondent, Shin-Sun Australia Pty Ltd, applied to register INNER HEALTH PLUS and HEALTHPLUS respectively as trade marks in class 5 (pharmaceutical products) within months of each other in 2001. In December 2001, Health World failed in opposition proceedings brought against Shin-Sun's trade mark application. In 2003, Shin-Sun filed an opposition against Health World's application but later withdrew the proceedings. Both trade marks were registered within days of each other in February 2005. Health World had been marketing probiotic capsules under the brand INNER HEALTH PLUS since 2000 and in 2001, Shin-Sun began preparing to manufacture and sell natural health supplements under the brand HEALTHPLUS. In August 2004, before either trade mark was registered, a range of products using the HEALTHPLUS brand was launched, however the products did not bear the company name Shin-Sun Australia, but rather an associated company's name, Nature's Hive Pty Ltd.

First proceeding

In February 2006, Health World began proceedings against Shin-Sun as an "aggrieved" person, seeking cancellation of the HEALTHPLUS registration under s88 of the Australian Trade Marks Act 1995 on the basis that Shin-Sun did not intend to use the mark in Australia. The judge found in favour of Health World, holding that Shin-Sun did not intend to use or authorise the use of the mark in Australia and that Shin-Sun had allowed "HEALTHPLUS" to become deceptive or to cause confusion because the mark was used to identify goods of Nature's Hive, not those of Shin-Sun. However, the judge held that Health World was not an "aggrieved" person under s88 of the Act and therefore dismissed the proceeding.

Second proceeding

In July 2006, Health World began a second set of proceedings against Shin-Sun as an "aggrieved" person, seeking removal of the HEALTHPLUS registration from the Register under s92 of the Trade Marks Act 1995 on the basis that when Shin-Sun filed its application for registration, it had no intention in good faith to use the mark in Australia and that the mark had not been used (pursuant to s42(b)) by the registered owner within 3 years of the date of registration. The judge found that Nature's Hive (and not Shin-Sun) had used the trade mark within the prescribed 3 year period however dismissed the proceeding on the basis that Health World was not an "aggrieved" person under s92 of the Act.

Third proceeding

In September 2006, Shin-Sun commenced proceedings against Health World seeking removal of INNER HEALTH PLUS under s92 of the Trade Marks Act 1995 on the basis that it was registered in respect of goods other than those it was in fact used upon. Once again, while the judge found that the ground had been made out, the proceeding was dismissed on the basis that Shin-Sun was not an "aggrieved" person under s92 of the Act.

The above decisions were all upheld by an appeal court following appeals on each.

The current proceeding

The High Court found that the appeal court and trial judge had erred in accepting the test set out in Ritz Hotel Ltd v Charles of the Ritz Ltd as an exhaustive test on the issue of standing. That test required a person claiming to be "aggrieved" to show at least a reasonable possibility of being 'appreciably disadvantaged in a legal or practical sense' by the trade mark remaining on the Register." The primary judge had found that there was no evidence before him to show any intention of Health World to use the "HEALTHPLUS" mark other than as part of its existing "INNER HEALTH PLUS" mark, and therefore Health World was not an "aggrieved" person.

The High Court considered that the correct interpretation of "aggrieved" was that of Lord Pearce in "Daiquiri Rum" Trade Mark [1969] RPC 600, that there was no requirement that the applicant desired or intended or "could use" the mark. It was sufficient that the parties were rivals in relation to the goods to which the mark applied and no consideration needed to be given to whether or not the party claiming to be "aggrieved" intended to use the mark on those goods.

The High Court applied Lord Pearce's test and found that Health World and Shin-Sun were rivals in selling health products and both traded in the class of goods in respect of which the marks were registered. The High Court therefore allowed the appeal and remitted the proceeding to the Full Court of the Federal Court for determination of the remaining issues.

For more information on this case see here. If you wish to discuss litigation and commercial matters, please contact Gus Hazel or Vineetha Veerakumar.

Budget 2010 - Support for Investment in Business R&D

Fri, 14 May 2010 00:00:00 +1200

The New Zealand Government released its plans for investment in research, science and technology in Budget 2010 on May 11. Prime Minister John Key announced $321 million over four years in investment in new initiatives, with the centrepiece being a $234 million increase over four years in support for business research and development (R&D). The support for business research and development (R&D) includes incentives to encourage firms to access research services and expertise from accredited research organisations.

These plans are in response to a recognition that business R&D is a key driver of innovation, business success and economic growth. By OECD standards New Zealand has very low business investment in R&D and therefore the Government has a role to play in encouraging businesses to increase their R&D investment. Encouraging more business R&D will also mean that more of New Zealand’s R&D is market-driven (i.e. in response to market opportunities).

There are two main limbs to the Government's plan:

1. Technology development grants.

These are intended to support firms that already have a good track record in R&D and which spend a significant proportion of their revenue on research – firms with high R&D intensity. The grant will be equal to 20 percent of eligible expenditure of their R&D programme, up to $2.4 million a year. To qualify, firms must have R&D intensity (the ratio of R&D expenditure to revenue) of five percent or more, over a period of three years, and must have revenues of at least $3 million a year. They must also have programmes of R&D that are likely to generate significant benefits for the wider economy via high-value products and services. Successful applicants for the grants will receive funding for a period of three years. This time period is to provide them with certainty around the level of support for their R&D investments. The launch of the grants is planned for October 2010.

2. Technology transfer vouchers.

These vouchers will provide 50 percent funding to enable firms to access research services and expertise from accredited research organisations. The voucher will be available to firms that lack the in-house research capability to answer their R&D questions, and will benefit from the R&D expertise and services of a research organisation. Technology transfer vouchers are intended to increase the technology and knowledge transfer from research organisations into firms. The launch of the vouchers is planned for November 2010.

The grant and the voucher are intended to fill gaps in New Zealand's current business R&D support and to stimulate innovation and technology transfer from publicly funded institutions into the private sector.

Commercialisation of innovation also receives support with the intention to set up a national network of commercialisation centres. These networks will collaborate with and support the existing CRI and University commercialisation offices to deliver better results by encouraging greater networking. The network is expected to be set up by mid- 2012. The objectives of the network are to:

build scale and expertise by increasing coordination between the individual commercialisation centres
encourage the employment of specialist commercialisation staff, and the development of their skills
provide a focal point for interactions with venture capitalists, angel investors, intellectual property lawyers and other suppliers of commercialisation services
enable better interactions with inventive researchers
lead to the creation of a set of specialist investment committees, with expertise in particular areas of technology.

Further information is available here.

Stopped at the door

Wed, 12 May 2010 00:00:00 +1200

A single publication in a catalogue imported by a New Zealand company has been enough to stop a patent being granted to a Christchurch company for a doorstop. In 2007 Resolutionz 101 Limited applied for a patent for a doorstop which limited travel of hinged doors. The application was opposed by an Invercargill company, Windsor Brass Limited.

Under New Zealand law, a patent cannot be granted if there was a publication in New Zealand of the invention claimed in the patent before the patent is applied for, and that published material is available to the public.

In this case, Windsor Brass Limited had requested a copy of a catalogue from a Chinese company based in Guangdong, China in 2005. One of the items in the catalogue was a particular type of doorstop which was the same as that claimed in some of the claims of the patent application.

This single publication was sufficient to stop the patent being granted for those claims. The Assistant Commissioner said that the requirement for prior publication is that the relevant document is sent to one person in New Zealand without fetter, and he found that there was no evidence of any confidentiality being sought or imposed by either party. There was no attempt by either the Chinese company or the New Zealand recipient of the catalogue to keep the catalogue secret. The Chinese company was interested in selling its product, and the New Zealand company was interested in buying it. The fact that Windsor Brass neither disseminated the catalogue any further nor ultimately bought the doorstops from that particular company was irrelevant - one publication was enough.

The remaining claims, which were not identical to the doorstop in the catalogue, also failed on the related ground of obviousness. A patent cannot be granted for an invention which is clearly obvious. The illustration in the catalogue, together with evidence from those in the trade of what was common general knowledge at the time the patent was applied for, was sufficient to prevent the remaining claims from passing the threshold of inventiveness necessary for the grant of a patent.

The case acts as a reminder for New Zealand companies, such as those supplying the building trade, to retain any catalogues and trade publications they receive as evidence of what was available at a particular date, in order to prevent the grant of or later enforcement of patents of doubtful validity.

When proposed changes to New Zealand patent law come into force next year or the year after, the position will change. New Zealand companies will be able to rely on publications anywhere in the world in order to successfully challenge patent applications or granted patents on the grounds of prior publication, prior use and obviousness. New Zealand is one of a tiny number of countries which still require proof of prior publication of the claimed invention in New Zealand.

New 2LDs for Australia

Wed, 28 Apr 2010 00:00:00 +1200

In New Zealand, it is not possible to register a domain name directly with a country code Top Level Domain (ccTLD) i.e. ‘.nz’. A second level domain name (2LD) must be used. For example, it is not possible to register baldwins.nz, rather it must be baldwins.co.nz.

This is mirrored in Australia, with open 2LDs like ‘.com.au’ and ‘.net.au’, which are available to the general public and closed 2LDs like ‘.edu.au’ and ‘.gov.au’ which are only available to entities within a defined sector.

In December 2009, the Australian Domain Name Administrator auDA set up a 2LD Advisory Panel to evaluate proposals for the creation of new 2LDs in the .au domain space and provide recommendations to the board of the auDA. The auDA has now released a Discussion Paper inviting public submissions and proposals for new 2LDs in the .au domain space, and comments on the reactivation of the current but inactive 2LDs, ‘.conf.au’ and ‘.info.au’.

The Paper sets out principles that will apply to the submission and evaluation of new 2LD proposals, including among others –

Creation must be in the public interest;
Any proprietary rights in the proposal must be waived; and
All proposals will be open to public consultation.

The proposed 2LDs must also meet the selection criteria of being able to serve the needs of users that are not being served by existing 2LDs, clearly supported by users and in particular the users it is intended to serve, generally relevant and consistent with the .au hierarchy and auDA policies.

The closing date for submissions is 23 May 2010. All submissions will be posted on the auDA website unless marked confidential.

For further information and advice on submitting proposals or other domain name matter, please contact us.

First Charges Laid Under the Major Events Management Act 2007

Mon, 26 Apr 2010 00:00:00 +1200

The first charges have been laid under the Major Events Management Act 2007 (“the Act”) after the New Zealand Customs Service intercepted a shipment of 1000 t-shirts bearing one of the International Rugby Board logos protected under the Act.

Customs had seized the products in January and handed over the investigation to the Ministry of Economic Development. Criminal charges were laid against CL NZ Trading Company Limited and the company’s director Terry Lung Chan on 22 April 2010. His court hearing has been set down for 6 May 2010.

These charges may go some way to quietening sceptics who believed that enforcement of the provisions of the Act would not be a priority for the Ministry. The Ministry will no doubt be hoping that by setting a precedent with the charges, there will be an ongoing deterrent effect on would be intellectual property infringers.

Protection of Emblems and Words Under the Act

Under the Act declarations can be made which protect specified emblems, words and combinations of words for events which have been declared “major events” under the Act.

Declarations are made after a consultative process between the Economic Development Minister, the Commerce Minister, the relevant major event organiser and anyone else who the Economic Development Minister feels may be affected by a recommendation. The Economic Development Minister then takes the recommendation to the Governor General who may make the declaration by an Order in Council. Orders which have been made under the Act relating to major event emblems and words are:

Major Event Emblems and Words (Rugby World Cup 2011) Order 2008
Major Events Management (World Rowing Championships 2010) Order 2009
Major Events Management (U19 Cricket World Cup) Order 2009
Major Events Management (FIBA U19 World Championship 2009) Order 2008

These Orders contain representations of the protected emblems and list the word, words, or words in combination which are protected.

The protection for the emblems and words is for a certain period of time known as the “protection period”. The Rugby World Cup 2011 protection period relating to the event’s emblems and words commenced on 11 September 2008 and will end on 21 November 2011. The World Rowing Championships has a protection period which runs from 18 January 2010 through to 30 November 2010.

Under section 10 of the Act no person may make a representation that their goods or services, brand of goods or services, or a person who provides goods or services is associated with a major event.

The Act goes on to add that there is a presumption that a person is making such a representation if they use a major event emblem, word or words (or something which is so similar to a major event emblem, word or words that a reasonable person would be deceived). It is important to note that this is the case even where “unauthorised” or “unofficial” is used with a major event emblem, word or words.

Any person who is convicted of knowingly breaching section 10 of the Act is liable to a fine of up to $150,000.

Several exceptions apply to these provisions. Obviously where a person has the permission of the major event organiser to use the emblem or words they will not be in breach of the Act. There are also cases of honest practices in both industry and commercial matters which will not breach the Act.

Update
Further to our article above, Rugby New Zealand 2011 Limited has announced that they are considering putting in place an on-line system through which RWC ticket holders will be able to on-sell their unwanted tickets to matches without breaching the Major Events Management Act 2007. Ticket holders will not be able to sell their tickets for more than the original sale price of the ticket in keeping with the provisions of the Act (discussed above).

Rugby New Zealand 2011 Limited will announce further details relating to this initiative later in the year.

If you would like further information relating to major events emblems and words, or any other issues arising under the Major Events Management Act 2007 please contact Sue Ironside.

Celebrating World Intellectual Property Day: Monday 26 April

Mon, 26 Apr 2010 00:00:00 +1200

On April 26, 2010, the World Intellectual Property Office (WIPO) and member firms across the world celebrate both the 10th anniversary of World Intellectual Property Day and the 40th anniversary of the entry into force of the Convention establishing WIPO. The theme of World Intellectual Property Day in this celebratory year is “Innovation – Linking the World”.

Why celebrate World Intellectual Property Day?

The theme of ‘innovation’ is synonymous with New Zealand firms such as Glidepath, Lanzatech and Navman as well as individuals such as Sir Stephen Tindall, Kevin Roberts and Sir Kenneth Stevens. It is with the business community that intellectual property is most associated with.

However, one of the purposes of World Intellectual Property Day is to increase public awareness of what IP really means, and to demonstrate how the IP system fosters not only music, arts and entertainments, but also all the products and technological innovations that help to shape our world. IP simply surrounds us each and every one of us each and every day of our lives.

The name Baldwins, as Patent Attorneys, has been synonymous with Intellectual Property for 11 4 years. Baldwins has led World Intellectual Property Day celebrations in New Zealand since its inception 10 years ago and has recognised this occasion with special activities and events. We are delighted to be doing so once again.

Join with us and take a minute to look around and observe how much IP surrounds you!

Beyond advertising - keeping your sales promotion within the law

Fri, 23 Apr 2010 00:00:00 +1200

Promoting a product by running a competition with exclusive prizes is a common way of promoting a new product or of boosting sales for an existing one.

However, unless the competition stays inside a particular set of rules for a type of competition known as a “sales promotion”, the competition could amount to illegal gambling.

Sales Promotion Scheme

A “sales promotion” is defined by the Act as a form of gambling that does not involve a gaming machine and is used by the creator/distributor/vendor of the goods and services, to promote the sales of the same goods and services. A sales promotion must have the following components:

A participant enters in the draw by purchasing goods or services promoted at its usual retail price, and no other direct/indirect payment or value are required from the participant to enter;
The outcome of the sales promotion is determined either:
Randomly or wholly by chance; or
Partly by chance and partly by the application of some knowledge or skill from the participant (it doesn’t matter whether chance plays a greater or lesser part); and
The date/period for the sales promotion and how the outcome for the promotion will be decided are all clearly communicated to the participant at the time and place of sale.

A critical element is that there must be no extra payment to enter - that means simply buying the product or service is enough. If a competition or promotion does not fit within these criteria, it is likely to be considered as either an illegal gambling activity, or another form of gambling where a licence may be required.

Restrictions on Sales Promotion

Retailers need to be aware of the following restrictions on sale promotions:

(1) They cannot charge the participants any price other than the usual retail value of the product/services
Aside from the usual retail price for the goods/services being promoted, they are not allowed to charge any additional fees for the public to take part (whether payable to them or to others), or for the participants to incur any indirect costs for things such as postage, toll calls or text messages. While standard communication costs are unlikely to disqualify the scheme from a sales promotion, it would be prudent to provide would-be participants with toll free number, prepaid envelops or just entry boxes at the point/place of sale to avoid intervention by the Department of Internal Affairs (which is responsible for administering the Act).

(2) The sales promotion scheme must run within a specified period
When the sales promotion is advertised, a time limit must be specified on any promotional material delivered to the public, and the date on or period over which the outcome of the draw/lottery will be decided must be clear to any participant who purchases the product or service.

(3) The prize being offered must not be prohibited under the Act
It is illegal to offer the following as prizes for a sales promotion:

Firearms or explosives;
Restricted weapons or airguns;
Any form of liquor and alcohol;
Tobacco products;
Commercial sexual services; and
Any object more than 50 years old that related to Maori culture, history or society, and was brought into New Zealand by the Maori people

Any vouchers or entitlement to any of these products or services are also banned under the Act. For example, if winning the sales promotion entitles the winner to award points, coupons or vouchers which can be used to acquire a list of products that includes any of the above items, the scheme will not come within a lawful sales promotion scheme and may be illegal.

(4) The sales promotion must not be conducted from overseas or through remote interactive devices
Under the Act, an overseas-based gambling activity (which includes a sales promotion) cannot be advertised or promoted in New Zealand. This means that any overseas businesses wanting to advertise its sales promotion need to ensure the actual activity (e.g. prize draw) takes place in New Zealand, and is carried out by a New Zealand-based operator.

The Act prevents any sales promotion scheme from being conducted via the internet, phone or text messaging unless it takes the form of a lottery, or is approved by the Lotteries Commission and the Racing Board. This does not prevent individuals from participating in sales promotion conducted overseas. Foreign companies wanting to extend their sales promotion scheme in New Zealand through viral channels should ensure their website or phone numbers are based outside New Zealand, and refrain from advertising their activities through local media channels within New Zealand.

As some exceptions exist to these restrictions, it is advisable to obtain legal advice.

Other law and regulations to consider

Where advertising is concerned, there are also other relevant regulations which need to be considered regarding the content and methods of an advertisement.

Fair Trading Act 1986
The New Zealand Fair Trading Act 1986 prohibits communications, trade activities or advertising that mislead or deceive or are likely to mislead or deceive the public as to the nature, process, characteristics, suitability or quantity of products/services, as well as any general deceptive conducts in business. Promoters should review their materials to ensure any special terms, restrictions and conditions are highlighted, and not unilaterally alter any key terms and conditions without communicating it to the participants first. It is also an offence under the Act to offer a prize for which there is no intention to deliver (section 17).

Advertising Standards Authority Code of Practice
The ASA Codes of Practice are a set of voluntary, self-regulatory codes which all advertisers agree to comply with. Advertisements should:

Comply with the restriction on the sale of various gaming products and particularly age restrictions. The laws of New Zealand have various age restrictions for different gambling activities;
Observe a high standard of social responsibility;
Not be directed at minors (persons under 18 years of age), have strong or evident appeal to minors, nor portray minors participating in activities in which they are under the legal age. Advertisers should note that despite the restrictions above, it may be permitted for minors to appear in situations in which they would be naturally found (e.g. a family meal), provided there is no direct or implied suggestion in the advertisement that they will participate in such sales promotion. Note: Retailers should keep in mind that under New Zealand law most contracts entered into with a minor are unenforceable. For that reason it may be appropriate for age to be verified before a member of the public can be allowed to participate;
Not promote reliance on gaming and prize draws as means of relieving a person's financial or personal difficulties, nor to encourage consumers to participate excessively or beyond their means;
Not state or imply that a player's skill can influence the outcome of a game unless that is correct;
Not exaggerate the connection between the gaming activity and the use to which the profits may be put;
Not mislead or deceive consumers, abuse the trust of or exploit the lack of knowledge of consumers, exploit the superstitious or without justifiable reason play on fear. This means that winning claims should be factual and able to be proven, and the chances of winning or the size of the prize should not be exaggerated;
Respect the principles of free and fair competition between businesses;

Contract
Standard contract law also applies to the terms and conditions of the competition, and these should be carefully scrutinised before the competition is launched.

Conclusion

While sales promotions and various forms of marketing strategies complement retailers’ advertising campaigns, it is important to remember that these great marketing ideas also have legal consequences. Sales promotions should be vetted before implementation. The potential costs for non-compliance can be high, so it is important to consult a legal advisor before proceeding.

Facebook update

Thu, 22 Apr 2010 00:00:00 +1200

In June 2009, Facebook announced that it would allow users to use personalised usernames, instead of the randomly assigned letters and numbers that correspond with each user's page. This was cause for concern for trade mark owners whose brands would also be up for grabs, especially given that it was a first come first served system. To address this issue, Facebook allowed trade mark holders to pre-emptively register their trade marks with Facebook.

This service however was only available for a short period of time after the launch of Facebook's initiative to allow users to register specific usernames.

Now Facebook allows a trade mark holder to lodge a complaint if a member's username is infringing that trade mark holder's rights. Further information is available here. The complaint form can be found here. Facebook requires the trade mark holder to identify its trade mark registration number, as well as the country of registration. The trade mark holder is also asked to provide a description of how the reported username infringes its rights.

Copyright owners who believe their copyright is being infringed may also lodge a complaint with Facebook using this form.

Facebook will only accept and consider complaints lodged by the IP owner only (or its authorised representative). Those who believe that content on Facebook violates another party's IP rights are encouraged to contact the IP owner directly.

For further advice on these matters please contact us.

Designs Act amended: restorations now possible

Wed, 21 Apr 2010 00:00:00 +1200

The Designs Act 1953 (the Designs Act) has been amended by the Design Amendment Act 2010 (the Amendment Act). The Amendment Act received its royal assent on 19 April 2010 and comes into force on 19 April 2011 or an earlier date appointed by the Governor General in Council.

Present situation
Prior to amendment, the Designs Act had no provision for the restoration of a lapsed design application or a lapsed design registration. For registered designs, there is a six month extension of time for late payment of renewal fees, but once this extension has expired, the registration irrevocably lapses. This occurs even if the failure to pay the renewal fee was unintentional.

This is a concern, because when the design registration lapses, not only does the design owner lose its rights under the Designs Act, but the owner also effectively loses the copyright that exists in the drawings of the design.

Copyright is an automatic right for original artistic works that have been industrially applied, for example, a product design or working model. Copyright in such a work may be infringed under the Copyright Act 1994 when a third party copies the three-dimensional article to which the copyright work has been applied.

However, by virtue of section 74 of the Copyright Act, once a design registration lapses, it is not copyright infringement to make a three-dimensional object from the drawings that form part of lapsed design registration. Although copyright protection is still enforceable if a third party copies the three-dimensional article itself, if the article is copied from the design registration drawings, there is no recourse under the Copyright Act.

The changes in the Amendment Act
The amended Designs Act now provides for the restoration of lapsed applications and lapsed design registrations. For both a lapsed application and a lapsed registered design, the lapse must be unintentional and the application for restoration must be made without undue delay.

Essentially, if the design owner applies within the prescribed period and can provide satisfactory evidence that the lapse was unintentional and the application was made without undue delay, the application for restoration will be published and the design restored after an opposition period.

There is also provision to protect third parties who begin to use the design of the lapsed registration before it is restored.

The Amendment Act is a significant improvement to the Designs Act.

.nz domain names with macron to be publicly available

Tue, 20 Apr 2010 00:00:00 +1200

As part of the internationalisation of domain names, the New Zealand Domain Name Commission will accept registrations of .nz domain names which include macrons from 26 July 2010, coinciding with Maori language week 2010 (26 July - 01 August). Macrons, commonly seen in the Maori language, are the small accents usually placed above English vowels to indicate that the vowel is 'long'. Registrations will be publicy available on a first-come, first-served basis.

There will however be a "Sunrise period" which opens on 6 April 2010 and ends on 6 July 2010, during which only registrants of current .nz domain names may apply for variations of their domain names with macrons. Once the Sunrise period has ended, domain name registrations with macrons will be publicly available.

For more advice on domain names with macrons, other internationalised domain names or the domain name registration process, contact us.

Company names and their limits

Mon, 19 Apr 2010 00:00:00 +1200

Last year a prominent business writer, when writing about failed finance company Provincial Finance Company Limited, confused that company with another company of the same name, but which had been struck off in 1996.

This highlighted one of the problems in New Zealand about the limitations of company names as a means of identifying a particular business, and the fact that there is no business name registration system in New Zealand.

In New Zealand, registering a company under a particular name merely means that no other company can be registered with that exact name while the first company is registered. Once that company is struck off or its name changed to something else, the name becomes available aqain. The Companies Office will also register other unrelated companies with very similar names, provided the names are not identical.

Also, as there is no business name registration system, such as that which applies in Australia, it is not possible to search and find on a register any business which is not registered as a company, such as a partnership or a sole trader, or a company which is using a different name in the marketplace to that under which it is registered.

Company names therefore have very limited usefulness as the means of securing to a business the exclusive use of a particular name.

In order to protect the name under which a business trades, the most effective method is to register a trade mark under the Trade Marks Act 2002 for the most significant features of that name, provided the name meets the requirements for registrablity (principally that it is distinctive and not the same as or confusingly similar to an existing registered trade mark in the same field), or to register a logo incorporating the company name if the name is not registrable as a trade mark on its own.

When choosing a business or company name, it is important to check not only the Companies Register for names identical or almost identical to the proposed name, but also the Intellectual Property Office register of trade marks.

It’s also advisable to do some marketplace and internet based searching, to ensure no-one else has already started using the name that has been chosen.

Failure to do so could mean wasted investment in that name and a forced name change at a later stage.

Interestingly, the United Kingdom has recently introduced a system similar to that which used to apply in New Zealand, before companies law was reformed in 1993. Under the English system it is possible for an existing company to object to registration of a name which is too similar to its own.

Personal Liability of Directors for Patent Infringement

Fri, 16 Apr 2010 00:00:00 +1200

A recent decision of the Federal Court of Australia has sent a clear warning to directors of companies that are found to infringe patents - they may be personally liable for damages.

While this decision may be more expected where there is wilful infringement (i.e., the director had knowledge of a patent and chose to ignore the patent despite it being likely that the company would infringe), in the present case, personal liability was found without there being any evidence that the director had knowledge of any patents.

A fundamental premise of the patent system is that it is not necessary for an alleged infringer to have knowledge of a patent for there to be infringement. The Court was of the view that there was no reason why this should not extend to directors, at least where the director played an active role in the operation and running of the company and where there was knowledge of competing products (but not patents). Essentially, the Court decided that the director's actions reflected indifference to the risk of infringement because no efforts were made to establish whether there were any patents covering at least the competing products.

The decision highlights the importance of conducting patent searching before launching a new product so as to better ensure that there is freedom to market that product. While additional costs and efforts during the development and launching of a product are never welcome, the potential risks should not be ignored.

For a full copy of the decision please see here.

Controversy over gene patents

Wed, 14 Apr 2010 00:00:00 +1200

A controversial decision on the patentability of human genes has been issued in the United States of America, which could have a significant impact on the biotechnology and pharmaceutical industries.

On 29 March 2010, a New York District Court held in the case of Association for Molecular Pathology v United States Patent and Trademark Office, that several claims relating to the BRCA1 and BRCA2 genes were invalid as they claimed non-patentable subject matter pursuant to US statute.

The decision concerns several patents owned by the defendant, Myriad Genetics, containing claims relating to the BRCA1 and BRCA2 genes associated with breast and ovarian cancer. Mutations in these genes correlate to an increased risk of developing these forms of cancer. The patents include claims to isolated DNA sequences encoding all or part of the BRCA1 and BRCA2 genes, as well as methods to detect the presence of mutations in the genes by comparing a patient’s DNA sequence to that of a normal gene. The tests are aimed at detecting a patient’s predisposition to these forms of cancer.

The patents effectively give Myriad a monopoly over testing for mutations in the BRCA1 and BRCA2 genes. According to the plaintiffs, a patient seeking screening of the BRCA1 and BRCA2 genes had no option other than testing through Myriad. Tests are provided to the general public at a cost of approximately US$3,000. The plaintiffs argued that this cost is unaffordable for many women, and Myriad’s monopoly over testing precludes the ability for patients to seek a second opinion on results. In Canada, where claims of this nature are not patentable, these tests are provided at a third of the cost charged by Myriad.

The plaintiffs brought this case to challenge the validity of Myriad’s patents, and determine whether isolated human genes and sequence comparisons are patentable subject matter.

Are the claims valid?

The Judge held that claims for isolated DNA which have the exact sequence as occurs naturally in the human genome, are “products of nature” and therefore non-patentable subject matter.

The isolated DNA also failed to satisfy the standard of being “markedly different” from a product in nature to be patentable subject matter. Despite the fact that there are chemical differences between isolated DNA and that of the human genome, the Judge held that the information-bearing characteristic of DNA is unique and does not differ between DNA in a isolated form and that which occurs naturally. On this basis the two forms of DNA could not be considered “markedly different”.

The essence of this decision is that DNA sequences that occur naturally in the human genome are non-patentable, even if they are “isolated” as there are no fundamental differences either to the information encoded or the way it exists in the human body.

The Judge also held that the claims to “comparisons” and “analysis” of a patient’s DNA and native DNA are “abstract mental processes” and therefore “constitute unpatentable subject matter”.

Prior to this decision, the USPTO practice had been to grant patents for DNA sequences provided they are in an “isolated” form.

This decision will undoubtedly be appealed to the Federal Circuit, and possibly again to the Supreme Court. While the future of the patentability of human genes is being determined, it is likely that the biotechnological and medical industries will be looking at the most advantageous strategies to protect their intellectual property in the wake of this recent decision.

Online keywords and trade mark infringement - developments in Australia and Europe

Tue, 13 Apr 2010 00:00:00 +1200

The New Zealand position on use of another’s trade marks as online keywords remains uncertain. Whilst local judicial guidance on the issue is limited, it remains a hot issue in the market. Overseas decisions are keenly watched as they may foreshadow and influence the development of the law in New Zealand, and we discuss recent Australian and European decisions here.

A decision by the European Court of Justice (“ECJ”) on 23 March 2010 in three joint cases against Google (Louis Vuitton Malletier SA v Google France SARL (Case C-236/08), Viatecum SA v Google France SARL (Case C-237/08) and CNRRH v Google France SARL (Case C-238/08) found that the sale of brand names as keywords by Google Inc did not constitute trade mark infringement. This case is one of many which deal with allegations of trade mark infringement by sale of trade marks as keywords to third parties.

‘AdWords’ is the paid-search service provided by Google which allows third parties to purchase keywords from Google which, when entered into a search engine, generates sponsored links to those third parties’ websites. Many companies purchase their competitors’ brands as keywords in order to boost their own advertising. This also creates an avenue for dealers in counterfeit products to profit by selling counterfeit goods on the internet.

In 2004, Louis Vuitton (LV) started action in France against Google on the grounds that Google’s sale of LV’s trade marks as keywords, infringed LV’s intellectual property rights. While Google was found in the first instance to have infringed trade mark rights (and to have promoted misleading advertising and unfair competition), the ECJ has now held that Google was free to sell trade marks as keywords provided that the sale was ‘technical, passive and with lack of knowledge’. If it takes a more ‘active’ role, it will be potentially liable for trade mark infringement.

The ECJ also held that advertisers who purchase trade marks as keywords would not infringe those trade marks provided consumers were not mislead by the advertisements into believing that there was some connection between the advertiser and the trade mark owner. For example, if the trade mark itself appears in the search result and the advertiser does not own that trade mark, it may well be liable for trade mark infringement. The court also indicated that whether or not confusion arose was likely to be a matter for consideration by the Court on a case by case basis. Where a brand owner alleges confusion has occurred, action must be brought against the advertiser, and not Google (unless Google has played some ‘active’ role).

The ruling means that brand owners will need to take a more active role in policing their brands. Brand owners can lodge complaints with Google where they find misuse of keywords. Google says that it does investigate complaints brought and may take steps to remove ads that promote counterfeit goods. If Google fails to act on these complaints, it might be held liable.

In Australia, the slightly later decision (Mantra Group Pty Ltd v Tailly Pty Ltd, Federal Court of Australia, 26 March 2010), which does not refer to the ECJ’s decision, resulted in a permanent injunction against Tailly, preventing it from using Mantra Group’s trade marks in advertising or as Google keywords. Tailly was subletting apartments in an apartment complex called ‘Circle on Cavill’, owned by Mantra Group. Tailly used trade marks owned by Mantra Group, as well as variations of those trade marks in the websites, in meta tags and in keyword advertising. The judge rejected Tailly’s argument that ‘Circle on Cavill’ was used in good faith to indicate geographical origin and ordered that Tailly was permanently restrained from using Mantra’s trade marks or marks that are substantially identical with or deceptively similar to them as keywords, finding such advertising infringement.

While these decisions are not determinative of the New Zealand position, they do provide useful guidance on likely directions of legal development.

Select Committee reports on new Patents Bill in New Zealand

Wed, 31 Mar 2010 00:00:00 +1300

The Commerce Select Committee has finally made their report and recommendations on the current Patents Bill in New Zealand. The new Bill proposes to "align the criteria for granting a patent with international practice" and replace the existing Patents Act of 1953. The Bill is an important step to introducing a new patents act in New Zealand.

The Committee recommends keeping many features of the Bill and many changes to the Bill. The brief highlights are:

•   excluding the ability to patent computer programs
•   confirms non-protection of methods of treatment of human beings
•   confirms introducing request for examination
•   absolute novelty standard
•   examination for inventive step and usefulness as well as novelty
•   increase in existing fees and introduction of new ones
•   re-examination of accepted patents
•   retention of pregrant opposition
•   revocation before the Commissioner and the Court

Exclusions to what is patentable
Perhaps the most controversial amendment to the Bill is the exclusion of computer programs from the protection of patents. Submissions from the open source software movement strongly influenced the Committee and the report specifically comments that patent protection of software is inconsistent with the open source model. In particular, the Report states:

[Many] ‘…submitters argue that there is no “inventive step” in software development as “new” software invariably builds on existing software. [The Committee] felt that computer software should be excluded from patent protection as software patents can stifle innovation and competition, and can be granted for trivial or existing techniques. In general, [the Committee] accept this position.”

It is not clear why the Committee gave the open source Community submissions such weight. To argue that software is unpatentable because it builds on existing software seems unusual given nearly every invention builds on what others did before. As many innovators realise, one object of the patent system is to promote publishing of inventions.   Then others have the opportunity to learn and develop from those inventions and improve our standard of living.

The fact the Patent Office previously granted patents for non-meritorious inventions is not surprising. Historically examiners have only been able to rely on publications in New Zealand for novelty of the application. The Patent Office did not consider the ground of inventive step in examination. However, this is the case for all forms of technology in New Zealand, not just software, under the existing Act.

The previous version of the Bill addressed these failings by introducing absolute novelty, examination for inventive step and no longer giving applicants the benefit of the doubt. It is not clear why the Committee put in an exclusion of software or why the Committee treated software differently to other forms of technology. This is in clear conflict with the review performed earlier in 2005.

The Committee went on to favour patents directed to “embedded software”, but have, unsurprisingly, declined to provide a distinction between embedded and other types of software.   This is despite, as pointed out by the Committee, such a distinction has not worked in the past in other jurisdictions and has led to decisions based on contrived reasoning.

Consider for example software for controlling fuel injection in a car that increases performance and efficiency. While providing an improved car, the only real distinction over earlier arrangements is the software. Under the proposed changes the software may only be protectable when installed into a car but possibly not.

While this may not seem significant, consider the possibility of the software being communicated wirelessly and automatically installed as an upgrade to a car. Will the innovator that initially developed the software, have to try to recoup their development costs from private car owners since only they will infringe any patent? What if the copy is sent from overseas? It is difficult to see how this would benefit a New Zealand inventor.

Unfortunately, without having an insight into how Government will interpret the recommendation it is difficult to know whether the proposed exclusion will have a significant effect. Will the Patent Office just exclude claims specifically to software or will examiners dig deeper and exclude inventions that could possibly use or embody software?

In the short-term the Government may see this exclusion as helpful to our economy. However, New Zealand is a net importer of technology. Therefore we should not ignore the impact of this exclusion on trade negotiations and wider relations with our major trading partners, such as USA, Europe, Japan and Australia.

The Committee also based exclusions on what is patentable on Part 6 of European Biotechnology Directive. The Bill keeps the exclusion on methods of medical treatment.

Examination, re-examination, pregrant opposition and revocation
The report proposes that applicants must now ask for examination of a patent. It is unlikely the Patent Office will miss the chance to charge a fee when the applicant asks for examination. The reasoning behind making the applicant start examination is to reduce the load on examiners of patents where there is no intent of the applicant to continue. The examination level increases under the Bill to include usefulness and inventive step and novelty, which is now absolute also.

The Bill if passed as the new act will also set up a Maori Advisory Committee (“MAC”) to advise on whether inventions come from indigenous knowledge and whether exploitation is contrary to Maori values. The MAC report does not bind the Commissioner, but it is unclear what the effects will be if the Commissioner decides to follow a recommendation against the patentability of an invention.   A MAC is not new, as the Trade Marks Act 2002 provides for one also.

Because of increased use of on-line filing, the Bill removes strict compliance with use of exact forms, especially as there may not be an exact online replica of the paper form.

The Bill keeps pregrant opposition before the Commissioner in an adjusted form and introduces re-examination to New Zealand patent law for accepted patents. Also introduced is revocation before the Commissioner during the life of the patent. Previously this was the sole jurisdiction of the Court.

The Commissioner will now be able to refuse a request for revocation or re-examination if the applicant raises substantially the same grounds as they raised earlier before the Commissioner or Court. For example if the applicant raised the same grounds from the pregrant opposition, re-examination or revocation proceedings. However, this is unlikely to prevent the Court from hearing an application for revocation.

The Bill also recommends incentives for parties who successfully quash a patent. The exact form of this is still under consideration.

The Bill makes the grounds for pregrant opposition, re-examination and revocation all consistent with one another.

Fees and costs
One focus of the Bill is to allow the Patent Office to meet the cost of increasing standards, with as little financial support as possible from the Government. Given this, and the increased examination level, it is fair to assume the Patent Office will introduce new fees and increase existing ones. For example, the Bill recommends introducing maintenance fees during the application stage.

Miscellaneous
The Bill changes the criteria for fair basis for the claims to one that requires support for the claims from the detailed description. This is similar to the United Kingdom Patents Act 1977.

The Bill incorporates the Protocol Amending the TRIPS Agreement, to carry out the Doha Declaration on the TRIPS Agreement and Public Health. This provides a compulsory licence of a patent, if necessary, to control diseases of public health importance in developing countries.

Also the Committee removed patent attorney registration from the Bill and that is now the subject of a separate Bill.

Select Committee Report
The Commerce Select Committee tabled their report on 30 March 2010.   The Government first introduced the Bill on 9 July 2008. The report released by the Committee recommends the Government pass the Patents Bill with these and other suggested amendments.

The next stage
The Bill is not necessarily the final form that Government will pass as law. There is still room to change the Bill as there are a further two readings and another Committee stage before the Governor-General can give assent to pass the Bill as law. If passed into law the Patents Bill will replace the existing Patents Act of 1953 in New Zealand.

Deadlines in proceedings before the Intellectual Property Office of New Zealand

Fri, 26 Mar 2010 00:00:00 +1300

Following the High Court decision in The Muir Electrical Company Pty Limited v The Good Guys Group Limited (CIV-2009-404-4965, High Court Wellington, 18 December 2009, Lang J), the Intellectual Property Office of New Zealand has issued new guidelines for extensions of time for filing a notice of opposition.

In The Muir Electrical Company Pty Limited v The Good Guys Group Limited, The Good Guys filed several extension of time applications for filing evidence in a trade mark revocation action. The Good Guys Group then inadvertently missed its deadline and belatedly applied for an extension of time. Regulation 98 of the Trade Marks Regulations 2003 provides that an applicant for revocation must either file evidence, notify the Commissioner that it does not intend to file evidence or notify the Commissioner that it withdraws the application or the application is discontinued.

The High Court ruled that at the expiry of the extension of time, The Good Guys Group’s applications for revocation had been discontinued and it was not possible to “turn back the clock” and grant a retrospective extension of time. Neither The Good Guys Group nor the Commissioner could take any further step to revive the applications.

Even though the High Court was not required to do so, because it was asked to consider an extension of time for filing a notice of opposition in a revocation action, it considered the provision governing the filing of a notice of opposition. The High Court noted that the Commissioner has no power to extend the date for filing a notice of opposition unless the extension is both requested and granted before the expiry of the opposition deadline.

The Intellectual Property Office of New Zealand has adopted this statement. What this means for parties involved in an opposition is that extensions of time must be applied for early in order to give the Intellectual Property Office of New Zealand time to consider and grant the extension before the expiry of the deadline. It also means that once a deadline is missed, it is likely to result in the loss of that parties’ position.

Court of Appeal overturns ban on GE applications

Wed, 24 Mar 2010 00:00:00 +1300

The Court of Appeal yesterday overturned a High Court decision banning the Environmental Risk Management Agency (ERMA) from considering 4 applications made last year by AgResearch Limited. The applications dealt with laboratory testing of human and monkey cell lines and smaller species of GE laboratory animals, as well as the development of other GE animals.

Clifford J at the High Court found that AgResearch’s applications did not comply with the requirements of section 40 of the Hazardous Substances and New Organisms Act (HSNO) and were too generic to enable ERMA to undertake the risk assessment that it is required to undertake under the HSNO Act. ERMA was directed to take no further steps towards hearing and assessing AgResearch’s applications.

The High Court proceedings were brought by GE Free NZ Limited, requesting a judicial review on the basis that the lack of specificity in AgResearch’s application meant that ERMA could only comment on genetic engineering generally, rather than on the risks and benefits of genetic modification of particular organisms by particular techniques.

AgResearch challenged the High Court decision at the Court of Appeal, which resulted in the High Court decision being overruled and ERMA being allowed to continue its process of assessment of AgResearch’s applications.

At the Court of Appeal, both AgResearch and ERMA argued that ERMA’s acceptance of the applications did not amount to a “decision” and as such there was no statutory power of decision to which a judicial review, as requested by GE Free NZ Limited at the High Court, could apply.

AgResearch and ERMA further argued that the power to impose controls granted to ERMA by section 45(2) of the HSNO Act meant that the wide scope of generic applications (such as AgResearch’s) were not a matter of concern: the controls imposed by ERMA would limit the scope of those applications and the activities authorised by it.

The Court of Appeal determined that ERMA’s process of assessment was “essentially mechanical” and its acceptance of genetic engineering applications did not involve any kind of “seal of approval”. While the Court accepted that generic applications raised challenges for ERMA, it declined to prescribe guidance on the process generally.

The Court of Appeal also stated that in the absence of any specific provisions prescribing what ERMA is to do when it receives an application which may not comply with the specific requirements of section 40 it would have to satisfy itself that the applications are the type to which approval can be given under section 45. On this basis, a generic application could still ultimately be dismissed because it did not allow ERMA to conduct an assessment of the risks and benefits to its satisfaction.

The parties have until 20 April 2010 to seek leave to appeal to the Supreme Court.

For advice in relation to regulatory issues please contact Gus Hazel or Vineetha Veerakumar.

Medical Technology: EPO Enlarged Board of Appeal Decision G1/07

Tue, 23 Mar 2010 00:00:00 +1300

If you are looking to patent medical technology in Europe, this decision will be of interest to you. In this decision the Enlarged Board of Appeal of the European Patent Office considers surgical treatments and sets out a new approach to determining the allowability of patent applications directed to methods of surgery including physical interventions on the body.

Under European law, methods for the treatment of the human or animal body by surgery or therapy, and diagnostic methods practised on the human or animal body, are excluded from patentability.

The Enlarged Board of Appeal was asked in this case to consider whether the inclusion of any physical intervention in a claimed method led to that method being excluded from patentability, regardless of whether the step was not per se aimed at maintaining life and health.

The Board said that methods for treatment by surgery should be defined by their nature (surgical or non-surgical) rather than their purpose (therapeutic or non-therapeutic). The Board went on to state that “treatment by surgery is not to be interpreted as being confined to surgical methods pursuing a therapeutic purpose”. Accordingly, the exclusion from patentability is not limited to surgical methods having a therapeutic purpose or effect and non-therapeutic surgical methods, such as cosmetic surgery and organ donation, may also be excluded from patentability.

The Board defined “treatment by surgery” as “physical interventions on the body which require professional medical skills to be carried out and which involve health risks even when carried out with the required medical professional care and expertise”.

A method will therefore be excluded from patentability as a surgical method if it comprises or encompasses an invasive step representing a substantial physical intervention on the human or animal body which requires professional medical expertise to be carried out and which entails a substantial health risk even when carried out with the required professional care and expertise. It appears that minor procedures, not involving substantial health risks, fall outside the exclusion. The Enlarged Board mentioned in particular techniques such as tattooing, piercing, hair removal by optical radiation and micro-abrasion in this regard. It is likely that minor procedures such as injections through the skin will not be excluded from patentability, but the Enlarged Board considered that injection directly into the heart was an example of a potentially risky surgical intervention that would fall within the exclusion.

Further, the Board confirmed that any method claim embracing a single unallowable surgical step of this nature defines an invention excluded from patentability before the European Patent Office.

Finally, any methods concerning only the operation of a device, without any functional link to the effects produced by the device on the body, are not excluded.

It was stressed by the Board that the conclusions reached were limited to the facts of the particular case. However, the decision strongly suggests that any surgical method will be excluded from patentability, regardless of whether it is aimed at maintaining life and health.

Pharma & Biotech: EPO Enlarged Board of Appeal Decision G2/08

Tue, 23 Mar 2010 00:00:00 +1300

The decision confirms the patentability of novel and inventive dosage regimes and also clarifies the style of claims allowed in Europe where a known medicament has been found to be useful for a new therapeutic treatment. If you have a pending application directed to a new therapeutic use of a known medicament you may wish to consider amending your application in light of the decision.

Dosage regime claims are allowable
Under European law it is allowable to claim a new specific medical use of a known medicament in the form of a “product for use” claim, i.e. ‘Compound X for use in the treatment of disease Y’.

The Enlarged Board of Appeal was asked in this case to consider whether the “new use” is patentable if it is known to treat the disease Y with the compound X, but the treatment is new due to a new dosage regime.

The Board found that claims to novel dosage regimes are allowable under European practice.

The dosage regime will need to be defined in the claim to provide a technical effect (usually an advantageous one) over the prior art, in order to meet the novelty and inventive step requirements.

An example of the appropriate claim structure is:

“Compound X for use in the treatment of disease Y, wherein the compound is administered according to a particular regime (define amounts and/or frequency of administration of the medicament).”

Swiss-type claims no longer allowed
Swiss-type claims have previously been allowed in Europe in addition to claims in the format referred to above as a “product for use” claim. Swiss-type claims have the following structure:

“The use of compound X in the manufacture of a medicament for the treatment of disease Y.”

The Enlarged Board also decided that since there is no longer a cause for Swiss-type claims (as a result of the EPC 2000 changes which allow the “product for use” claim for a new specific medical use of a known medicament), Swiss-type claims are no longer allowable.

Accordingly, where the novelty resides in a new therapeutic use, claims shall no longer have Swiss-type format and should be in the format: ‘Compound X for use in the treatment of disease Y’.

The Enlarged Board has also stated that its decision “shall…have no retroactive effect”, and will apply only to future applications whose filing date or, if priority is claimed, priority date is at least three months after publication of G 2/08 in the Official Journal of the EPO (publication has not yet occurred).

However, for pending applications, other than exceptional cases where the invention may lie in the manner of preparation, it is likely that the best approach would be to convert the Swiss-type claims to “product for use” claims if possible. It is important that the amendment be made while the application is pending as it is unlikely to be possible to change to the new medical use format after the patent is granted.

Major Events Management Act 2007 - part 1

Wed, 17 Mar 2010 00:00:00 +1300

With the Rugby World Cup 2011 hype starting to build and various other events being deemed as 'major events' it is important that local businesses and individuals are aware of their rights and limitations under the Major Event Management Act 2007 (“the Act”).

We will be presenting a series of articles setting out issues which may be of concern to both our local and international clients – whether business owners, residents or event attendees.

In our first article we discuss what is considered to be a major event under the Act and look at the area of ticket scalping.

What is a Major Event?
A major event is any event which has been declared such by an Order pursuant to the Act. So far the following have been declared major events:
•    FIFA U17 Women’s World Cup 2008
•    FIBA U19 World Championship 2009
•    U19 Cricket World Cup 2010
•    World Rowing Championships 2010
•    Rugby World Cup 2011

Any Order is made by the Governor General on the recommendation of the Economic Development Minister after consulting with both the Sports Minister and the Commerce Minister.

Ticket Scalping
People planning to make a profit by buying bulk tickets to Rugby World Cup games and selling them on at a profit to desperate (but ticket-less) fans, will have to cancel their luxury world cruises - under the Major Event Management Orders there are now laws in place to stop what is commonly known as “ticket scalping”.

Under the Act you are able to on-sell your tickets to major events to other people. However, it is prohibited to knowingly sell or trade tickets to major events for more than the original sale price for which they have been purchased.

So, while you won’t be prevented from making group bookings for family and friends and being reimbursed for the tickets, you will be prevented from selling tickets on TradeMe to the highest bidder (unless the highest bid is less than or equal to the price which you paid for the ticket).

The original sale price is defined in the Act and includes “charges necessary to effect the sale or trade of a ticket”. So, for example, if courier costs had been incurred in buying the tickets these costs could be passed on as part of the original sale price.

Under the Act “sell or trade” means any transaction “regardless of its form” where the sale or trade of the ticket for more than its original purchase price is the substantial purpose of the transaction.

Tickets may be sold or traded for more than the original price of the ticket if you have the authorisation of the major event organiser.

Anyone who is convicted of the offence of knowingly selling or trading a ticket to a major event for more than the original price of the ticket under the Act is liable to a fine not exceeding NZ$5000.

Case commentary: Lucas v Peterson

Wed, 10 Mar 2010 00:00:00 +1300

For over 11 years, Lucas and Peterson have been locked in a patent dispute over a portable saw mill. Lucas, an Australian company, was involved in the design and manufacture of outdoor machinery. Lucas’ principal product was a “grabber”, a device for picking up logs. Peterson was a New Zealand company and its principal product was a portable saw mill which it sold mostly in Australia, New Zealand and the Pacific Islands.

Lucas was the owner of a patent and sued Peterson. Peterson counter-claimed for invalidity. Lucas obtained an interim injunction in 2001. Then in 2003 Lucas was successful in the High Court in proving that Peterson infringed claim 7 of the patent at issue. Peterson appealed to the Court of Appeal and lost. Peterson appealed again to the Supreme Court, New Zealand’s highest court, and was successful in proving that claim 7 was invalid n 2006. The Supreme Court remitted the proceeding back to the High Court for determination of the remainder of the claims.

Then in 2009 Lucas applied to the High Court to amend the claims of the patent. The High Court declined to deal with the amendment issue and ruled that it was more appropriately dealt with at the substantive hearing for infringement and invalidity.

In July 2009 Lucas withdrew its claim for infringement. By this time Peterson had been in liquidation for some time. Following the Supreme Court ruling, Mr Peterson had been representing himself, being unable to afford counsel. Peterson said he was forced to place all his resources behind the defence and invalidity claim and went without salary or wages for two years, was forced into significant debt and spent considerable amounts of time on the defence and invalidity claim.

After Lucas withdrew, Peterson claimed costs. As a lay litigant, Peterson was entitled to reasonable disbursements only. Although the Attorney General has the ability to appear in patent proceedings, despite Peterson’s repeated requests, he declined to do so. Peterson therefore claimed that in the absence of an appearance by the Attorney General, he was forced to defend the allegations and claim for invalidity in the public interest and he was entitled to costs for that reason. While the High Court acknowledged that Peterson’s victory in the Supreme Court had turned to ashes and his financial losses were significant, because he had represented himself during the latter stages of the litigation, he was not entitled to costs during that period.

Peterson also sought damages for unjustified threats of infringement by Lucas. Lucas sought to strike out that claim. The High Court ruled that it would be straining the interpretation and purpose of the unjustified threats provision to hold that the provision provides an avenue whereby an ultimately successful litigant can achieve compensation for the consequential losses of the litigation. The claim for unjustified threats was found to be untenable and struck out.

So while Peterson was ultimately vindicated by the withdrawal of the infringement claim, it came at considerable cost to his business and personal life.

This article was first published in Managing Intellectual Property, March 2010.

Case commentary: Muir Electrical v Good Guys

Mon, 08 Mar 2010 00:00:00 +1300

The High Court has overturned the Assistant Commissioner of Trade Marks, holding that it is not possible to grant an extension of time where the time for taking a step has expired.

In The Muir Electrical Company Pty Limited v The Good Guys Group Limited (CIV-2009-404-4965, High Court Wellington, 18 December 2009, Lang J) Muir Electrical was the owner of 12 registered trade marks for word and logo versions of THE GOOD GUYS. The Good Guys Group applied to revoke the trade marks on the basis of non-use. Muir Electrical filed its counterstatement and evidence of use in time and The Good Guys Group applied for several extensions of time for filing its evidence. The Good Guys Group then inadvertently missed its deadline. Regulation 98 of the Trade Marks Regulations 2003 provides that an applicant for revocation must either file evidence, notify the Commissioner that it does not intend to file evidence or notify the Commissioner that it withdraws the application or the application is discontinued.

The Commissioner deemed The Good Guys Group’s applications for revocation discontinued. The Good Guys Group then applied for and were granted a retrospective extension of time under regulation 32 which provides that the Commissioner can extend time under the regulations “except where these regulations stipulate that time must not be extended”. Muir Electrical opposed the granting of an extension of time and a hearing was held. The hearings officer allowed the retrospective extension of time. Muir Electrical then appealed to the High Court.

Certain regulations specifically state that the Commissioner cannot extend the deadline after the deadline has passed. Regulation 75 which sets out the circumstances when the Commissioner can extend time for filing a notice of opposition is one such regulation. It provides that the “Commissioner must not extend the deadline after the deadline has passed”. Regulation 98 which sets out the requirements for an applicant filing evidence in a non-use proceeding, contains no such prohibition on extending time after a deadline has passed. Despite this, the High Court ruled that at the expiry of the extension of time, the Good Guys Group’s applications for revocation had been discontinued and it was not possible to “turn back the clock” and grant a retrospective extension of time. Neither The Good Guys Group nor the Commissioner could take any further step to revive the applications.

Even though it was not necessary, because it already ruled there was no jurisdiction to extend time, the High Court went on to consider whether the retrospective extension was justified. Regulation 32 provides that the Commissioner can extend time where there are “genuine and exceptional circumstances”.

Muir Electrical submitted that as The Good Guys Group had not submitted an affidavit or declaration setting out the genuine and exceptional circumstances, the Commissioner should not rely on “unsworn and unsubstantiated assertions”. The High Court agreed holding that in a contested case, it will generally be necessary for applicant to place assertions of fact before the Commissioner by way of affidavit or declaration. This was not considered fatal because the facts were within the knowledge of The Good Guys Group’s counsel and there was nothing to suggest the information provided by counsel was false or misleading in any way and the circumstances were considered to be genuine. However, in respect of “exceptional”, an oversight by counsel was not considered to be unusual or out of the ordinary. The result of the oversight, namely the discontinuance of the applications for revocation, was not considered to be an exceptional circumstance, but instead one that is provided for by the statute itself.

The decision in The Muir Electrical Company Pty Limited v The Good Guys Group Limited demonstrates the harsh consequences that can follow if a deadline is inadvertently missed.

This article was first published in World Tradmark Review, January 2010.

Federal Court of Australia - recent decision

Fri, 05 Mar 2010 00:00:00 +1300

Nutrientwater Pty Ltd v Baco Pty Ltd [2010] FCA 2 - The case involved two competitors in the enhanced water products industry. Both parties compete in manufacturing, promoting and selling their respective ranges of enhanced water beverages in Australia ('Nutrient Water' and 'Grassroots').

The case deals with the similarity between the appearance of not only the packaging of the products, but the products themselves, being brightly coloured beverages. While the colours and the labelling of the two product ranges were similar, the judge accepted that the white banding on the labels, along with the bright labels that matched the colour of the beverage itself (visible through the clear plastic bottles) had become indicative of an enhanced water product in general, rather than any particular brand or source by the time the respondent's product had reached the market. The judge also found that there was no actual consumer confusion between the two product ranges, nor was there any evidence that the respondent had misrepresented its products as that of the applicant.

In concluding, the judge found that the applicant had failed to establish that it had a specific reputation in the features that the respondent allegedly copied on its own products and that there were sufficient differences between the packaging and branding of the two products to differentiate the two products. As such, the claims of passing off and breaches of the Trade Practices Act failed.

This case illustrates the need for specific evidence regarding confusion (or likelihood of confusion) within a discrete market sector. Strong similarities (products and packaging) may tend to encourage would-be plaintiffs who are 'first in time' to pursue an aggressive approach, however those facts must be placed squarely in context by evidence. More broadly the case may be seen as an example of rapid market segment development whereby the marketing 'commons' (get up etc) available for use by all producers is quickly established through rapid entry and use by several players. From a marketing strategy perspective (particularly for FMCGs) this requires similarly rapid decisions about the extent and timing of release of products involving significant 'common elements'.

The Montana World of WearableArt Awards

Wed, 03 Mar 2010 00:00:00 +1300

The Montana World of WearableArt™ Awards show began its life as a promotion for a rural art gallery in Nelson in 1987. Since these humble beginnings, WOW has grown into a substantial brand and successful company though vision, belief and commitment.

The awards have become an iconic event in the New Zealand arts calendar, the show’s fame has spread and entrants now come from all over the world to showcase their creations. Audience numbers have also grown from the hundreds to tens of thousands.

Baldwins Intellectual Property has proudly supported the awards each year, whilst providing WOW with the experience and skills to protect its intellectual property assets. When an initial idea grows into an original work, such as the Montana World of WearableArt™ Awards, it is crucial to put in place the right forms of intellectual property protection and to enforce these rights in order to maintain the originality of your product.

Gabrielle Hervey, CEO of WOW says:
“The show is a truly unique event and we have gone to lengths to ensure it has been protected by registering our trademarks in a number of different countries. Baldwins have worked along side WOW and we’ve appreciated, and respected their advice over a great many years.”

Sue Ironside, Partner and Chair person of Baldwins comments:
"Right from the very early beginnings of WOW there was an understanding of how important it was to identify what intellectual property rights they had in such an amazing and truly unique event. Working with the WOW team on strategies around how to protect and enforce these rights is a stimulating, creative and intellectual challenge we simply enjoy doing."

Tickets are on sale now and for further information on the show and ticket options click here.

Winner of the Supreme Montana WOW Award & Winner Tourism NZ Avant Garde Section 2009

Copyright Amendment Bill - the new Section 92A

Fri, 26 Feb 2010 00:00:00 +1300

The government’s plans for fixing up the much debated section 92A of the Copyright Act have now been confirmed by the introduction into Parliament on 23 February 2010 by Commerce Minister Simon Power of a bill to implement the change

The Copyright (Infringing File Sharing) Amendment Bill repeals the controversial section and replaces it with a three-notice system administered by the Copyright Tribunal which the government foreshadowed last year.

Under the new bill, alleged infringers will receive 3 warnings; first a detection notice, followed by a warning notice and finally an enforcement notice. The bill also requires a minumum period of three weeks in between which subsequent infringement notices cannot be sent, thereby giving the alleged infringers to address the illegal activity.

A detection notice informs account holders that their activities on the internet are infringing copyright and will outline the enforcement action that may be taken against them should such activity continue. The warning notice and the enforcement notice will contain a list of the alleged infringements for that account since the detection notice was sent.

Copyright owners are to be notified by an ISP once 3 notices have been sent to any account holder and the copyright owner will be able to seek suspension of an internet account through the District Court for up to 6 months. Penalties for third time infringers include orders from the Copyright Tribunal for a monetary fine up to $15,000 or an order from the District Court requiring the ISP to disconnect the internet account for up to 6 months.

The bill also allows alleged infringers who feel that they have been wrongly accused to apply to have their case heard by the Copyright Tribunal at no cost.

The bill also introduces a new definition of Internet Service Provider (ISP). Public submissions on the earlier definition raised a concern that some organisations that are not traditional ISPs, including businesses, libraries and universities could be required to send notices to infringers. The new definition places only traditional ISPs in the position of having to monitor activity and send infringement notices. ISPs are also allowed to charge copyright owners for the monitoring and notice work they are obliged to perform under the new bill.

The bill will be referred to Select Committee, and the public will have an opportunity to make submissions on the proposed legislation. The legislation is expected to become law later in the year.

Commercialisation Australia to include IP Costs

Mon, 15 Feb 2010 00:00:00 +1300

The Australian government has launched a new initiative entitled 'Commercialisation Australia' which has been established to assist organisations convert ideas into commercial reality.

Applicants can apply for a grant of up to $50,000 to access specialist advice and skilled services, including intellectual property management. For example the grant can be used to:
commission an intellectual property landscape report;
develop an intellectual property protection strategy; and
develop or review intellectual property licence agreements .

For further details, eligibility criteria and grant information visit Commercialisation Australia.

US Patent update – Changes to system to make obtaining patents faster, more certain

Fri, 22 Jan 2010 00:00:00 +1300

Protecting an invention in the USA can be difficult and expensive. In the past the US Patent and Trade Mark Office has been accused of being slow moving and frustrating to deal with. Making matters worse is the US patent legislation, which takes an idiosyncratic approach to ownership of an invention. Recent proposed changes look to address some of these criticisms, and may make protecting innovation in the USA less problematic.

Last year saw former IBM Vice President David Kappos sworn in as Director of the US Patent and Trademark Office (USPTO).

Things were always going to be different under Director Kappos. Before his swearing in, some feared that his appointment could lead to a weakening of the US patent system through legal reforms which made it easier to challenge the validity of granted patents, and reduced damages payable to successful patent litigants. These changes are still in the wind, but other reforms have been proposed which have been more favourably received.

One of the new director’s first initiatives is aimed at reducing the time taken for patent applications to be examined and granted. In the US, as with most other countries, the backlog of unexamined patent applications has been steadily rising, and along with it the delay between the filing of a patent application and its eventual grant. According to a recent USPTO report, the average time to grant is around 34 months, with patents in some areas of technology taking significantly longer.

Many commentators believe that one of the reasons for this backlog is the ‘PTO’s internal performance measurement system, which encourages patent examiners to repeatedly reject patent applications, forcing applicants to either refile their applications or go through an expensive “Request for Continued Examination” procedure. Director Kappos seems to agree, as a proposal has been put forward to change the system to place more emphasis on the first examination report addressing all the relevant issues, and reducing the incentive for examiners to reexamine the same application over and over. Examiners are now encouraged to engage with patent applicants by telephone at an early stage in order to discuss what aspects of the application might be patentable. The ‘PTO is hopeful that this new system will dramatically reduce pendency times, and has set a target of 20 months from application to grant. If achieved, this would make the US one of the faster countries in the world in which a patent can be obtained.

Another idea being floated is a move from the current “first to invent” system, to a “first inventor to file” system. At present the US is unique in that an ownership dispute between two inventors who have independently developed the same invention is determined on the basis of which inventor “reduced to practice” first, in essence, the one who first considered the invention in sufficient detail to make a working example. Almost all other countries decide such a conflict in favour of the party which was the first to file a patent application.

While the “first to invent” system appeals, at least at on a superficial level, as being the fairest, its effect in practice is to add another level of uncertainty to the patent process.

Independent inventor groups in the US have been up in arms about the proposed changes. In the view of many small entities, the current system works to the benefit of those who cannot afford to file patent applications for every new aspect of their development. However, the truth is that the “interference” proceedings which are held to decide inventorship disputes can be prohibitively expensive for individuals, and can be just as easily used by large corporations to deny the “little guy” the right to their patent as they can be used by the true first inventor to assert their rights.
In practice the vast majority of such disputes are decided in favour of the side which was first to file a patent application anyway.

A change to a “first inventor to file” system would harmonise US patent law with the rest of the world, and would mean one less potential headache for innovators wishing to enter the US market.

In recent times many patent applicants have found the US patent system to be slow, expensive and frustrating. With luck, things may be about to get a little easier.

Baldwins Chemistry Prize 2009

Fri, 15 Jan 2010 00:00:00 +1300

On 8 December 2009, at the Chemistry Faculty’s end of year celebration held at the Department of Chemistry, Baldwins awarded a prize to the top achiever in the Issues in Drug Design and Development (CHEM 392) paper. The prize was presented to Margot Mulcahy. The aim of this prize is to reward excellence, promote intellectual property and encourage graduates to consider future employment in this area.

For the last 7 years, Baldwins Intellectual Property has been involved in the ‘Issues in Drug Design and Development’ (CHEM 392) course at The University of Auckland. This paper covers intellectual property and patent law in the pharmaceutical industry, an overview of the legal and regulatory framework for drug design and development, along with the clinical trials process, codes of practice, health and safety issues and case studies. Baldwins have provided lecturers each year to cover the intellectual property component of this paper. Baldwins lecturers for 2009 were Harriet Wilson, Patent Attorney and Sophie Thoreau, Solicitor.

Congratulations Margot!

Encouraging signs for improved enforceability of intellectual property in China

Fri, 08 Jan 2010 00:00:00 +1300

As international trade barriers have fallen, China has come under increasing pressure from the US and EU to provide stronger, more enforceable IP protection to ensure all countries are competing on a more level playing field. Recent decisions show that progress has been made across various forms of IP.

At the beginning of the year, a German bus maker was awarded US$3million after a Chinese company was found to have copied the design of their Starliner bus. Images of the Starliner and the strikingly similar Zonda copy are provided here.

This was followed by a successful action by Microsoft against a software piracy syndicate which ran on the tomatolei.com website. The website offered free downloads of illegal software, a problem which is rife since the majority of operating systems in China are illegal copies. While the decision has made some impact, there were still bootlegged copies of Windows 7 available ahead of the official release.

Not all decisions have been in favour of non-Chinese companies and it is clear that Chinese companies are adapting to operating in a more openly commercial environment. Recently, Microsoft was found to have breached a licensing agreement with a Chinese company, Zhongyi Electronic, covering Chinese character fonts. Zhongyi Electronic successfully argued that the licence was limited to use of the add-on with Windows 95 and that inclusion of the fonts in later versions of Windows was not covered by the agreement.

China still has a way to go, but the signals are positive that IP is being taken seriously. This is only likely to continue as China moves from being a technology importer to a more innovation-based economy.

PCT Billing Scam Ends

Thu, 24 Dec 2009 00:00:00 +1300

A Florida based company has been issuing invoices to patent and trade mark applicants for services that have no value.

See WIPO press release.

Patent Box - patent income to be taxed at only 10 percent in the UK

Tue, 22 Dec 2009 00:00:00 +1300

Using the tax system to drive innovation is one of the key features of a pre-Budget report just released by the United Kingdom government. The report says a corporation tax rate of 10% will be applied from April 2013 to income from patents (a so-called "Patent Box"). That compares with the current UK company tax rate of 28 percent.

The report recognises that innovation is a key driver of productivity, and that an innovative economy will help keep the UK competitive in the global upturn. It says that research in the UK is increasingly being translated into commercial products and economic benefit, patent applications in the UK have doubled since 2000, and that 31 university spinout companies were launched between 2003 and 2007.

The Patent Box is intended to strengthen the incentives to invest in innovative industries and ensure the UK remains an attractive location for innovation. The UK Government says that it will consult with business on the detailed design of the Patent Box, which will apply to patents granted after the legislation is passed.

The Patent Box type approach is not new. Belgium, for example, introduced a maximum effective tax rate of 6.8% on patent income from the 2008 tax year.

The New Zealand Institute Discussion Paper 2009 "Standing on the shoulders of science" (1 December 2009) referred to the OECD observation that "...there is a risk of R&D tax competition among countries…". Strictly speaking, the Patent Box initiative may not be an R&D tax incentive, but it will undoubtedly incentivise R&D and encourage retention of ownership of patent protected intellectual property in the UK.

The New Zealand Government has recently removed R&D tax incentives for New Zealand companies. It may be time for that stance to be revisited and options such as the UK's proposed Patent Box approach introduced. The risk for New Zealand is that revenues from overseas licensing of New Zealand generated innovations will be transferred to other countries and that the incentive to conduct the research in New Zealand will be reduced.

On the presumption that the Patent Box initiative remains in place following the upcoming general election in the UK, New Zealand patent applicants should look at the option of basing IP ownership in the UK. This could be achieved by setting up an IP holding company in the UK, or those companies with UK subsidiaries could transfer ownership of their patent applications to that subsidiary. This, coupled with a strategy to delay grant of international patents until after the Patent Box legislation is passed, may allow them to take advantage of the 10% corporate tax rate. Setting up an IP Holding company based in Belgium may also be an alternative worth considering. The additional revenue retained could then be put into developing UK or European markets. While this would represent a loss for New Zealand, it may be a sensible business decision in the absence of an attractive New Zealand alternative.

Three Notice Regime For P2P - Section 92A Copyright Act

Thu, 17 Dec 2009 00:00:00 +1300

New legislation is to be introduced into the New Zealand parliament in early 2010 to implement a new three notice regime to combat copyright infringement from peer to peer (P2P) file sharing over the internet. The government wants the legislation enacted by July 2010 and in force by the beginning of 2011.

The previous version of section 92A of the Copyright Act, enacted in late 2008, was put on hold, due to the objections of many, particularly internet service providers (“ISPs”).

Commerce Minister, Simon Power, released a Cabinet paper yesterday which outlines the government’s proposed new regime. The paper followed a consultation process earlier this year on a proposal for a revamped Copyright Tribunal with considerably expanded powers of enforcement.

What has emerged is a modified proposal which is a step back from that, with a “three strikes and you’re out” notice regime, the Copyright Tribunal to have power to impose fines of up to $15,000, and the requirement for right holders to have recourse to the courts rather than the Copyright Tribunal for termination of internet access in the case of serious offending.

The Government has also listened to concerns about the definition of the term “internet service provider” which was sufficiently broad as to capture many ordinary New Zealand businesses and organisations such as universities. This is to be narrowed in the new bill so that s92A applies only to those ISPs which have the ability to identify internet protocol (“IP”) addresses.

The regime will work this way:

Right holders can request ISPs to give notice to infringers to stop infringing activity. The notices are to be based on reasonable evidence of a P2P infringement.
The first notice will inform the infringer that infringement has occurred (”an education notice”), and can be followed by two further notices, a “cease and desist notice” and an advisory notice if the infringement continues.
Following three notices, the right holder can apply to the Copyright Tribunal for the imposition of a fine of up to $15,000.
If serious and repeat infringement occurs, right holders can ask the court for a range of remedies, including the suspension of internet accounts for up to six months.
Account holders accused of infringement can issue counter notices and seek a hearing if they consider they should not be penalised.

The Copyright Tribunal will only hold hearings where the alleged infringer defends the allegations in person: otherwise the decisions will be made on the papers filed by the parties.

An additional remedy will be given to judges enabling them to terminate internet access, following proof in court of serious infringement.

Dealing with copyright infringement on the internet involves balancing conflicting interests and concerns, and the proposals are most unlikely to please everyone. ISPs have been concerned at the costs and burdens of enforcing a notice regime. Only the ISPs have the internet addresses of the alleged infringers but users do not want their details handed over to right holders. Right holders are suffering serious economic loss due from technology which replicates and distributes widely in seconds. Delay and the high cost of extracting the details of individual infringers mean court proceedings are not practical except in extreme cases or individual cases brought purely as deterrents, “pour encourager les autres”. Finally, there is a widespread public perception by internet users that what comes to them over the internet is and should be free: unless or until there is a shift in that paradigm, losses from copyright infringement will be part of the cost of doing business.

The Cabinet paper acknowledges that the proposed regime will not be effective against infringement taking place at internet cafes, hotels or where internet protocol addresses are routed through other countries.

ISPs will most probably dislike the requirement to retain data on infringement for 12 months so that they can determine whether repeated infringement will occur. Nor will they like the Government rejection of their proposal that counter-notices from alleged infringers travel via the Copyright Tribunal to right holders instead of directly.

The cost of the proposals is likely to be high: the paper suggests there will be 15,000 notices issued in the first month and taper off to about 1000 each month. There is to be a fee for each notice, as yet unspecified, but otherwise ISPs are required to meet the costs of collecting, maintaining and processing data.

There are reasonably tight time frames for the sending of notices: the first must be sent within 20 working days of the alleged infringement, the second at least 10 days after the first, and the third at least 10 days after the second. Any Copyright Tribunal claim must be filed within 9 months of the first notice.

The Copyright Tribunal is to get three new members to help with the workload. However the Tribunal is to be a lawyer free zone when it deals with P2P infringement, as is the case in the Disputes Tribunal, where lawyers are also excluded. Although copyright is one of the more complex areas of the law, this is presumably balanced by the low level of financial penalty which can be imposed, the same as that in the Disputes Tribunal.

Like most compromises, the proposal will most likely meet with considerable criticism. Whether the proposal represents the right balance of conflicting interests remains to be seen.

Baldwins Law and IT Prize

Mon, 07 Dec 2009 00:00:00 +1300

For nine years Baldwins has awarded a $500 prize to the top achiever in the Law and Information Technology paper at the University of Auckland. This prize rewards excellence for an understanding of the impact of, and the way in which the law deals with new information technologies. This is pertinent to the area of Intellectual Property, which deals with innovation protection and strategic development - commonly involved in the industry of information technologies. The main purpose of the award is to promote the area of Intellectual Property as a potential career path for law students. The 2009 winner of the prize is Raymond Scott (pictured below). Raymond and Judge Harvey, the lecturer of the Law and IT paper, attended a function at Baldwins to celebrate Raymond’s success. Congratulations Raymond.

Rosemary Wallis (Partner), Raymond, and Judge David Harvey (Lecturer for the paper).

Pharmaceutical battle in New Zealand

Mon, 07 Dec 2009 00:00:00 +1300

New Zealand is a country with a small GDP, as of 2009, only US$100 billion, one-eighteenth the size of California’s, and a small population of only 4.3 million, just one- ninth the size of California’s.

To maintain the health of New Zealanders, the New Zealand government must therefore ensure that its limited funding available for pharmaceuticals is spent very carefully.

To facilitate this, the government in 1993 set up the Pharmaceutical Management Agency of New Zealand (Pharmac).¹ According to the Pharmac website, it has four main roles:

managing the Pharmaceutical Schedule of over 2,000 government-subsidised community medicines (those medicines that your doctor prescribes)
promoting the best possible (or optimal) use of medicines
managing the subsidy of some medicines and products for public hospitals
managing Exceptional Circumstance schemes (medicines funding for people with rare conditions) and other special access programs.

In performing these roles, Pharmac is required to negotiate with the major pharmaceutical suppliers. Inevitably, conflicts are going to arise and some of these will result in court proceedings. Sometimes, as happened recently, Pharmac becomes a party to the proceedings.²

Other times, Pharmac, as in the proceedings that are the subject of this commentary, is a very interested third party.³

The Case

Sanofi-Aventis Deutschland GmbH (Sanofi), (formerly Hoechst AG), was the proprietor of a New Zealand patent for leflunomide. The patent expired in 1999. However, Sanofi obtained a subsequent patent, New Zealand patent 331933, (see WO 97/34600), for a compound of leflunomide together with a metabolite of leflunomide, teriflunomide. This compound was sold under the trade mark ARAVA, principally for the treatment of rheumatoid arthritis. In April 2002, Pharmac agreed to fully fund ARAVA for five years, provided that it was prescribed only by rheumatologists and to a specified group of patients. During that five-year period the effective list price for 10 mg packets of ARAVA was NZ$101⁴ and, for 20 mg packets, NZ$142.

The agreement between the parties was then extended in April 2007 with a further two-year contract but with the patient restriction removed and with the price reduced to NZ$79.27 for 10 mg packets and NZ$108.60 for 20 mg packets. Since 2007, however, the New Zealand pharmaceutical company AFT Pharmaceuticals Limited (AFT) had been importing from Canada, and marketing in New Zealand, a leflunomide product, under the trade mark AFTleflunomide. AFT knew that the Sanofi patent for leflunomide had expired but did not consider that it would be infringing the later patent for the combination of teriflunomide with leflunomide.

The intention of AFT to enter the New Zealand market with leflunomide had become public on 6 July 2006 and subsequently Sanofi received official notification in the form of the data sheet for AFT-leflunomide. In April 2007, Pharmac and AFT entered into a provisional agreement relating to the supply of AFTleflunomide and, in May 2007, all interested parties, including Sanofi, were notified of this and invited to respond. Similar to the terms of the provisional agreement, AFT would receive NZ$76 for a packet of 20 mg tablets and NZ$55 for a packet of 10 mg tablets, both substantially less than the payments being received by Sanofi. In response to this invitation, Sanofi merely pointed out that AFT was not supplying the 100 mg tablets that were required for the initial loading dose. Also, that AFT was not required to monitor foetal damage after treatment had ceased, which Sanofi was doing free of charge and Sanofi questioned whether AFT would be doing the same. Sanofi did not raise any issue regarding possible infringement of its New Zealand patent. AFT’s commercial launch was in July 2007 and by June 2009 it had 16.4% of the New Zealand market share.

Testing conducted by Sanofi in 2008 discovered that AFT-leflunomide included in excess of 0.3% teriflunomide. Sanofi’s patent attorneys wrote to AFT regarding the Sanofi patent in February 2009. Proceedings were issued on 27 March 2009. Of relevance to this timing was the expiry in April 2009 of both the two-year contracts that Sanofi and AFT had with Pharmac. Prior to that expiry date, in December 2008, Pharmac had invited tenders for the sole supply of leflunomide. A further development was the potential entry into the New Zealand market of Novartis and its product Leflunomide Sandoz and Apotex NZ Limited and its product Apo-leflunomide.

In these proceedings, Sanofi was seeking an interim injunction to restrain AFT from manufacturing, importing or marketing AFT-leflunomide or any other leflunomide product. AFT, although not conceding infringement, did not contest that there was an arguable question as to whether AFT- leflunomide did infringe, in that its product contained in excess of 0.3% teriflunomide. However, its position was that this was not the result of the manufacturing process but the emergence of teriflunomide fractionally during the shelf life of the tablet. AFT also challenged the validity of Sanofi’s patent on the grounds of lack of novelty, obviousness, inutility and fair basis.

One day before the hearing, Pharmac undertook that, until the proceedings were resolved either by judgment or settlement, it would not reference price ARAVA to AFT-leflunomide, or award sole supply to AFT and also confirmed that Pharmac would not subsidise Apotex’s product. On the day of the hearing, Pharmac gave a further undertaking. This would extend for 12 months but was capable of being extended, provided Sanofi undertook to meet Pharmac’s lost savings after 12 months, if these proceedings were still in train. This undertaking was on the following terms: “[Pharmac] would not use any of its mechanisms to remove the subsidy of ARAVA solely as a result of the presence of AFT-leflunomide on the Pharmaceutical Schedule until the present litigation has been resolved”

Subsequent to the hearing, further undertakings were given by Pharmac that:

“To avoid any doubt, we confirm that the reference…to any of the mechanisms available to Pharmac covers all mechanisms available to Pharmac to adjust or remove the subsidy for ARAVA, solely as a result of the presence of AFT leflumonide on the Pharmaceutical Schedule, including, but not limited to, reference pricing, parity pricing and delisting.”

Also, as far as Apotex and Novartis were concerned:

“For the avoidance of doubt…these brands are unrelated to these proceedings and thus, Pharmac’s undertaking…does not extend to mechanisms available to Pharmac to adjust or remove the subsidy for ARAVA in the event that one or other of those other brands is listed on the Pharmaceutical Schedule.”

Further, Pharmac’s solicitors stated in a letter on behalf of Pharmac:

“Pharmac does not consider the possible impact of AFT-leflunomide’s listing on the Pharmaceutical Schedule on the subsidy pricing offered by suppliers of other brands of leflunomide that are not currently listed, to be relevant to these proceedings.”

Also, the solicitors said in the same letter that:

“All Pharmac’s undertakings will be withdrawn immediately Sanofi is granted an interim injunction against AFT.”

In his decision, Keane, J. referred to the usual basis for interim relief being granted, namely that there is a serious question to be tried and that the balance of convenience lies in favour of granting relief. Reference was made by Keane, J. to Pharmac’s pivotal role and the distinction between the present case, and an earlier case⁵ where Pharmac was also involved, namely that in the present case AFT is already in the New Zealand market and Pharmac has made its position clear.

Regarding the patent, there was the concession by AFT that there was an arguable question of infringement. Also, as far as validity, in the judge’s view, the expert evidence on behalf of Sanofi was decisive at this stage on the obviousness question. However, in respect of fair basis, Sanofi had only tested in the range 1–11% of teriflunomide, whereas claim 1 was for 0.3–50% of teriflunomide. AFT alleged that the claim was therefore too wide and not fairly based. The conclusion of the judge was that the challenges that AFT had made to the validity of the patent:

“apart from that as to obviousness, seemed to me to be seriously arguable and indeed to set the issue as to validity in equipoise with that as to infringement, given the way in which the infringement is said to have arisen.”

As to the issue of the balance of convenience, the judge did not consider that Sanofi would suffer irreparable harm if AFT remained on the market and was also not convinced that AFT could be compensated in damages if interim relief was granted and it succeeded at trial. Additionally, Pharmac had made its position clear regarding the potential entry into the market by other generic suppliers, and, in respect of those suppliers, Sanofi had the option of asserting its rights in its patent in seeking interim injunction relief, which it had failed to do when AFT publicly notified its intention to enter the market in 2006.

For these reasons, Sanofi’s application for an interim injunction was declined. What is clear from this case is that, whether Pharmac is involved directly or indirectly, in New Zealand court proceedings, complex issues will arise. In circumstances such as these, however, where Pharmac has declared its position, this can make the decision of the court, especially in any interim injunction proceedings, much easier.

Notes

www.pharmac.govt.nz.
Astrazeneca Limited v Commerce Commission & Pharmaceutical Management Agency (SC) 26/8/2009; Elias, C J, Blanchard, Tipping, McGrath & Wilson J J, CA 91/2008 [2009] NZSC 92.
Sanofi-Aventis Deutschland GmbH & Anor v AFT Pharmaceuticals Limited (HC, 3/8/2009; Keane J, Auckland, CIV 2009-404-1795).
As at 29 October 2009 – NZ$1 = US$.72.
Novartis New Zealand Limited v Aktiebolaget Hassle [2004] 2 NZLR 721 CA.

Baldwins and the patent attorney profession

Fri, 04 Dec 2009 00:00:00 +1300

In our commitment to the development of the intellectual property system and patent attorney profession, Baldwins' practitioners are actively involved in professional bodies both in New Zealand and overseas.

The New Zealand Institute of Patent Attorneys (NZIPA) held its AGM last Friday, 27 November 2009 in Wellington. At this meeting the Council of eight Fellow members was elected, with Tim Jackson to President for a two-year term. Penny Catley and Greg Lynch will remain Council members, Penny on her fourth term, and Greg on his second. The Council and the Institute will be working through the many changes facing the patent attorney profession.

At this occasion, student members and new Fellows were also acknowledged. Of our staff, Ben Halberg and Jonathan Lucas were admitted as Fellows and were awarded a joint prize for the Interpretation and Criticism examination (paper E) in the series of examinations for patent attorney registration. As well, Simon Tuohy received the prize for the Patents and Designs examinations (papers A1 and A2), and Maria Sun received the prize for the Trade Marks examination (paper B). These prizes are awarded by the NZIPA for the highest mark achieved by a member for each of the examinations.

Tremendous effort goes into both the work of the Institute and to qualifying as a patent attorney, which the Partners of the firm wholly support, encourage and appreciate. Our standards of service reflect the calibre of our practitioners and this is generated by their superior performance and commitment to excellence.

Kiwi in $15M CAN-SPAM Act Judgement

Tue, 01 Dec 2009 00:00:00 +1300

In our recent article, “Spamalittleless”, we reported on the $100,000 fine imposed in the New Zealand courts on Shane Atkinson for his part in a massive international spamming campaign involving various pharmaceutical products. His brother Lance Atkinson had been fined the same amount in a New Zealand court a year earlier.

Now a United States Federal District Court judge in Iilinois has granted a default judgment against Lance Atkinson and his company, for the massive sum of US15.15, and the further sum of $US3.77 million agains his US associate Jody Smith and his three companies. The judgment is for breaches of the Federal Trade Commission Act (“FTC Act”) and of the Controlling the Assualt of Non-Solicited Pornography and Marketing Act of 2003 (known as the “CAN-SPAM” Act), in relation to billions of email messages directing consumers to websites selling products such as male-enhancement pills, prescription drugs and weight-loss pills.

By using false header information to hide the origin of the messages, and by failing to provide an opt-out link or list a physical postal address, the spammers violated the CAN-SPAM Act. They also made false claims in breach of the FTC Act that medicines came from a US licensed pharmacy dispensing FDA approved generic pharmaceuticals, and the security of transacting on the sites.

There were three million complaints by spam victims to the FTC.

Lance Atkinson, a New Zealander, now lives in Australia, so any judgment will need to be enforced against him there or in New Zealand, should he return here. US judgments do not fall within the statutory registration scheme in either country, and may therefore only be enforced at common law. Enforcement may be refused if there has been a denial of natural justice, the judgment is tainted by misleading conduct or fraud or if there are issues as to jurisdiction.

Natural product producer gets serious

Fri, 27 Nov 2009 00:00:00 +1300

Nutraceutical producers and other natural products based companies in the health area, have only begun taking advantage of the international patent system relatively recently. They have been looking to protect their investment in development of products and to generate monopoly returns much as the more traditional pharmaceutical companies have done over the years.

The inevitable result of this approach is that, at some point, action needs to be taken to enforce the patent rights obtained. Pharmaceutical companies have, of course, been willing to take enforcement action to defend a patent position, including court action. Natural products based companies have been somewhat more reticent to go that far.

However, this is starting to change as the filing of a patent infringement action in the U.S. District Court for the District of Massachusetts indicates.

Neptune Technologies & Bioressources has taken action against three companies, Aker Biomarine, Jedwards International and Virgin Antarctic, for infringement of U.S. Patent No. 6,800,299 which covers a method of extracting oils, omega-3 phospholipids, from krill.

Neptune's President and CEO, Henri Harland has said:
"We have confidence in the patent and will continue to take all appropriate actions needed to protect our intellectual property rights in the United States and elsewhere as required".

Omega-3 phospholipids are primarily used in food supplements as they are an easily-digested form of the omega-3 fatty acid. It has been reported that phospholipid omega-3 fatty acids have greater bioavailability for cell growth and functioning in comparison to omega-3 triglycerides, ordinarily sourced from fish oil.

The Neptune US patent covers a method for extracting total lipid fractions from marine and aquatic animal material, such as krill, by acetone extraction. Neptune is seeking an injunction to stop the three companies from producing or importing the allegedly infringing products into the United States. Aker Biomarine SA sells its product, a 100 per cent pure krill oil ingredient for dietary supplements, under its SUPERBA brand. Both Jedwards International and Virgin Antarctic distribute this product.

Neptune has filed for patent protection for its extraction method in a number of countries, including various European countries, Australia, Canada, China, and South Africa, to name a few. Interestingly, Neptune has not filed for patent protection in New Zealand. Infringement here is therefore not an issue.

Software patents questioned

Fri, 27 Nov 2009 00:00:00 +1300

Sectors of the software industry have voiced their concerns over the patent-eligibility of software as part of the review process of the Patents Bill, claiming that patents for software stifle rather than promote innovation. This was previously reviewed back in 2005 and the conclusion then was that there was no reason to treat software differently to other technologies. However, it now appears that there will be some review and possible restriction on the patent-eligibility of software, although nothing has been officially released as yet.

New Zealand (and Australia) has a very broad definition of what constitutes an invention and this generally covers software applications and business methods, provided they are more than a mental process (i.e. they are embodied on a computing device). Unlike many other jurisdictions, there is no definition of invention using negative limitations as to what is not an invention, although this is introduced to some extent in the Bill. The New Zealand approach is accommodating to new technologies and those within the profession question the need for change when case law already provides a reasonable degree of certainty.

There are questions over whether restriction of patent-eligible subject matter is required in view of other changes in the Bill, namely a move to absolute novelty, examination for inventive step (not just novelty), and no longer giving applicants the benefit of doubt. These will all make obtaining patents more difficult, including those for software.

Perhaps a better way of approaching the issue would be to better train examiners and place greater emphasis on searching non-patent literature, at least while the software patent base grows.

Irrespective of the outcome, this is likely to further delay passage of the Bill, which is being reviewed by the Commerce Committee. Under the existing transitional provisions, any change in patent-eligible subject-matter will not be retrospectively active and applicants may wish to consider establishing an early New Zealand filing date for software or business method inventions. One worry is that the legislators will over compensate so that even software inventions including technical advancements will be excluded, although TRIPs may provide some safeguard against this.

India: Review of Policy on Foreign Technology Collaborations

Thu, 26 Nov 2009 00:00:00 +1300

The Indian Government has recently reviewed the monetary limits imposed on royalties for technology transferred or licensed. Following that review it is now proposed to only have reporting of royalties post-repatriation so that the Indian Government can monitor the level of royalties being repatriated by Indian entities. However, no formal notification of the new rules has been issued by the Government as yet.

At the moment a non-resident can derive a lumpsum fee of up to USD 2 million and royalties of 5% for domestic sales and 8% for exports in respect of the technology transferred or licensed to an Indian entity. For trademark licensing, the royalty levels are 1% for domestic sales and 2% for exports. No prior approval of the Government is required (the "automatic" route). However, if the trademark licensor is providing technology as well, then the trade mark royalties are included within the royalty limits of 5% and/or 8% for technology transfer.

The Indian Government also proposes to remove the limit placed on the duration of royalty payments. This will remove the restriction of 7 years on the ability to remit royalty payments, unless the Indian Government granted an extension to that period.

Brand Protection in China

Wed, 25 Nov 2009 00:00:00 +1300

In China, good brand protection is vital for business protection. If you use your brand in China without registering it as a trade mark somebody else might use your brand with relative impunity. Worse, they could register it and potentially prevent you continuing to use your own brand. They could export product under the brand which may harm your own markets and cause you a need for expensive remedies, if you have rights in those markets, or those other traders may be seen to be stealing those rights from you if you do not have registration of your home brands in your home market.

What is a brand?
A brand is any sign used by a business to identify its products and services and distinguish them from the products and services of others. It could be a word, a phrase, a symbol, a design, a combination of colours, a group of letters or numbers or a combination of any of these. The primary purpose of a brand is to ensure consumers are aware of the source or origin of your product or service.

How are brands protected in China?
Your New Zealand patent attorney should register your brands with the China Trade Mark Office. China's system for protecting brands is based on a "first to file" principle. This is very difficult to understand for New Zealand, Australia, the United Kingdom and other traditional markets. Simply using a brand does not give you any enforceable rights. It is the first organisation to file an application to register the brand that will have the right. If this happens to you, often the only response is to establish another brand, a costly, unwanted and unrewarding step. To establish legal right and prevent others using your brand, it is necessary to register the brand in China. Brands are registered in relation to particular goods or services. There are 45 different classes of goods and services and the owner must apply separately for registration in each class for which protection is sought. You should also select, use and register a Chinese language version of your brand. You will control the use of your brand in the Chinese market. Otherwise, the market will select its own Chinese language version and it may not convey the brand message you wish to convey. The selection of the Chinese version of your brand is a specialist job for your patent attorney.

How long does registration take?
It generally takes 18 months from the date of the application for the China Trade Marks Office to accept an application. After the brand is accepted for registration, the acceptance is advertised. A three month opposition period follows during which the public has the right to challenge the application. If no opposition is made, the China Trade Mark Office will issue a certificate of registration. The registration will last for an initial period of ten years and is renewable thereafter indefinitely.

Is my brand registrable?
The China Trade Mark Office does not register all brands. In particular, it will not register brands which are:

identical with or similar to prior registered brands for the same or similar goods or services; or
purely descriptive of characteristics, quality, place of origin of the goods or services.

Can I license my brand?
It is possible to license a brand. A brand's licence must be recorded within three months of establishment of the licensed contract.

What should I do if my brand is already in use in China but is not registered?
Have your patent attorney register your brand as soon as possible! China's "first to file" system means you will not have any claim to your brand, even if it is well known in China, for a specific product or service until you file an application for registration in China. A search can be conducted by your Patent Attorney prior to filing to ensure that a competitor has not already registered the same or similar brand. If so, alternative steps are strongly recommended.

What are the costs?
The cost of registering a brand in China for a specific product or service is around NZ $3,500 assuming there are no significant problems. Approximately NZ $1,700 to NZ $2,000 of this will be incurred at the outset as filing fees. However, the costs can vary depending on your circumstances and need for brand protection and your patent attorney can provide accurate cost estimates once your requirements have been assessed. It is self evident that especially in China the cost of protection is a mere fraction of the enforcement costs should you not have a registered brand. Trade mark registrations in China, as elsewhere, are strong deterrents to unauthorised use and reduce the need for costly and protracted defence of your own position, including where infringement or counterfeiting is found.

Where registered trade marks exist and are identified, in most cases, our experience is that copiers stay clear and copy your competitor's less well protected products. Should enforcement against an infringer be needed, showing that brands are registered usually leads to a more economical exercise compared to a situation where the rights are not registered.

Registered trade marks in China are as much a defensive deterrent as an offensive tool. You should at least talk to your patent attorney and together look at the options before exposing your brand to the vibrant but dangerous market in China.

Recommendations

Develop and register a Chinese language version. If you do not create a Chinese brand, the market will create a Chinese "nickname" for your product. You may not like the nickname or alternatively someone else in China may register it in their own name, forcing you to choose another brand.
Register your brands in neighbouring countries such as Hong Kong and Macau both for potential expansion and to prevent others registering marks to use on products consumers may confuse with yours.

SPAMALITTLELESS*

Mon, 23 Nov 2009 00:00:00 +1300

Those of us who arrive at work on Monday morning to find our computers have been besieged over the weekend with advertisements for implants for certain parts of anatomy which we don't possess, or for offers for vastly increasing our performance in non work related matters, may take some satisfaction, albeit small, over recent fines imposed by the New Zealand courts on three spammers.

In total, fines of $250,000 have been imposed on three convicted spammers. Lance Atkinson was fined $100,000 in December 2008 for his part in the scheme. Following later guilty pleas in October 2009 his brother Shane Atkinson has been fined the same amount, and an associate, Roland Smits, who had a lesser part in the scheme, $50,000.

The spamming came from a marketing scheme by a company based in Mauritius, Genbucks, which used affiliates to market various products including pharmaceutical products and adult sex toys. Lance Atkinson's job was to recruit affiliates to conduct internet sales and marketing. Commission was paid on the sales he made and on the sales of the affiliates he recruited. His brother Shane co-managed the programme and Mr Smits provided administrative support. With overseas assistance, the spamming was tracked to New Zealand.

In delivering the latest sentence in the High Court in Christchurch, French J said the predominant marketing method was to send unsolicited electronic messages using email address lists, or spamming.

Two million emails were sent during the period of 5 September to 31 December 2007. The judge described the spamming operation as one of the largest in the history of the internet.

The messages breached the Unsolicited Electronic Messages Act 2007 because they were:
•    unsolicited
•    did not include accurate sender information; and
•    did not include a functional unsubscribe facility.
All the defendants signed cooperation agreements, the precise contents of which are to remain confidential by court order. However, as well as payment of the fines, the defendants have undertaken not to repeat the offences.

As the maximum fines payable by an individual under the Act are $250,000, the fines, which are the first to be imposed under legislation, are reasonably substantial. While they are unlikely however to have much impact on our daily diet of spam, the fines are a reminder that unsolicited marketing emails without a functional unsubscribe facility and accurate sender information breach the Act.

* With apologies to Eric Idle and the Monty Python team.

Faster and cheaper intellectual property litigation

Wed, 11 Nov 2009 00:00:00 +1300

There are several changes underway that are likely to simplify court proceedings and should reduce costs for those involved in intellectual property disputes.

The first is a new fast track procedure available in the Auckland, Wellington and Christchurch High Courts, where most intellectual property proceedings are initially filed. It is designed for proceedings without multiple parties which don't need extensive interlocutory applications, are likely to be of short duration (five days or less) and have clearly defined issues. The procedure aims to have the trial within two to six months of transfer to the fast track list. The parties can agree to the procedure or a direction may be made by a Judge or Associate Judge. It is intended that a decision will be handed down promptly following trial.

The procedure is suitable for resolution of many intellectual property disputes, particularly copyright, trade mark and Fair Trading Act/passing off disputes. Simple patent infringement cases, where validity is not at issue or is confined to a few issues, may also be suitable.

In order to effectively use the procedure, it will be in the interests of the parties to ensure that their case is properly defined and the issues established before the pleadings are filed.

The fast track procedure provides a good alternative to an application for an interim injunction, which has the disadvantage of requiring the plaintiff to provide an undertaking as to damages (that may be suffered by the defendant if an interim injunction is granted but the plaintiff loses at trial), and which does not finally resolve the dispute until trial, unless the case is settled in the meantime.

The second change is to court proceedings in the District Court. This court has jurisdiction over disputes up to $200,000 and can try cases involving copyright, passing off, and breach of the Fair Trading Act. It does not have jurisdiction over patent or trade mark cases.

Many potential litigants do not bring court proceedings because of the cost. Once a proceeding is filed, the new procedures require swift exchange of initial simplified documents between the parties, which may resolve the issues, failing which the documents are filed in the court and an early settlement conference is required before a judge. The aim is to settle as many disputes as possible at this early conference.

This option is a good one for disputes which do not carry a high monetary value but are nonetheless important to the parties. It means an aggrieved party may be able to go ahead where otherwise the costs might outweigh the potential reward, and a defendant need not necessarily concede on the basis of cost alone.

Finally, there are moves afoot to reform the rules on discovery and briefs of evidence in the High Court. Both these components of court procedures increase costs to the parties. New Zealand still has "general discovery" which is broader than in many common law jurisdictions (other than the United States) where reforms have already been made. Proposals include limiting discovery to adverse documents only or to have the option of particular or general discovery depending upon the particular case.

Review of New Zealand Liquor Laws

Thu, 22 Oct 2009 00:00:00 +1300

The Law Commission is currently undertaking a review of New Zealand’s laws relating to the sale and supply of alcohol. The Law Commission is inviting submissions from the public, both on individual and an organisational levels. The review has come about through increasing concern as to the way in which New Zealanders are drinking, and the effects, including criminal and health issues, which stem from this. The Law Commission has made several recommendations as follows:

The need for a new Sale of Liquor Act

The Commission has a firm view that the Act should be completely redrafted to make it as clear and accessible as possible for non-legal professionals who need to comply with or who are affected by the Act.

Supply Control

Licensing Regimes:
- Strengthen the Liquor Licensing Authority – by increasing powers and functions and enabling it to enforce the law.
- Remove exemptions – current exemptions for licences, such as police canteens, Parliament and defence premises should be removed so that the law applies equally to all premises.
- Upgrade District Licensing Agencies – at present the operation of District Licensing Agencies around the country are extremely variable. The Commission suggests that the powers and structures of the Agencies are restructured and enhanced.
- Set social licensing fees – the Commission believes that a good option may be for local authorities to set up their own licensing fees, or impose annual “supervision” fees on licensed premises, rather than continue with the national licence fee system.
Restrictions on Retail Outlets, Days or Hours of Trading:
- Restrict trading hours - the Commission has suggested that all off-licences are closed between the hours of 10pm to 8am. They have also suggested that on-licences should be restricted from selling liquor after 2am, except for those on-licence premises which operate a “one-way-door” policy after 2am, who can sell alcohol up until 4am. This would serve two purposes – keeping people off the streets and encouraging a staggered departure from on-licences.
- Restrict range of liquor products and outlet – the Commission has noted that during its inquiry into this matter many people have advocated stricter controls in relation to Ready To Drink beverages and spirits-based drinks.
Minimum Age for Purchase of Alcohol:
- Split the purchase age – the Commission favours a split in purchase age which allows people 18 years or over to purchase alcohol from on-licences, but which restricts the purchase of alcohol from off-licence premises to persons 20 years or older.
- Require greater parental responsibility – the Commission believes that stricter measures should be put in place relating to obligations on parents and also favour making it an offence for an adult to supply a person under the legal drinking age with liquor unless at a private event and with the consent of the young person’s parent or guardian.

Demand Reduction

Pricing Policies
- Increase excise tax – the Commission favours increasing excise tax but would like submissions from the public in relation to the amount by which the tax is increased.
- Reduce tax on low alcohol products – the Commission also believes that a reduction in the tax on low alcohol products will increase their consumption over those high alcohol products.
- Introduce minimum pricing – this would mean that a minimum price would be set for products and retailers would not be able to sell the products below these set prices.

Marketing/Advertising Policies
- Maintain self-regulation approach – the Commission is of the view that the existing system of self-regulation, as administered by the Advertising Standards Authority works well. The Commission notes that the Authority’s jurisdiction will soon include promotions. The Commission also believes that there should be a statutory regulation-making power which can be used in the event that self-regulation fails.
- Restrict price promotions – any irresponsible price promotions by licensed premises could be grounds for the suspension or revocation of a licence.

Problem Limitation

Enforcement
- Encourage enforcement – the Commission has suggested the following: allowing senior police officers’ the power to close on-licences, increasing penalties in the event of serious breaches of the law, ability to issue infringement notices for minor/technical breaches, introducing a statute based process of recognising alcohol accords, and bringing back drunkenness in a public place as an offence.
Restrictions on Public Drinking
- Alcohol and Public Places – as an alternative to liquor bans, which are difficult to enforce, the Commission has suggested an alternative may be to make drinking in any public place an infringement offence.
Serving Sizes
- Introduce standard measures – the Commission suggests that it may be appropriate to introduce standard measures to allow consumers to understand the amount of alcohol they are consuming.
Health Sector Interventions
- Fund more treatment – the Commission has noted the lack of policies, facilities and programmes for the assessment and treatment of those with alcohol problems and advocates an increase in funding across affected sectors.
Drink Driving and Transport Policies
- Reduce legal drink driving blood alcohol limits – the Commission has suggested a change in the blood alcohol limit of drivers from 0.08mg of alcohol per millilitre to 0.05mg of alcohol per millilitre, with a zero tolerance for drivers under 20 years old.
- Consider ignition locks for drink drivers – the Commission believes that consideration should be given to the installation of alcohol ignition locking devices for convicted drink drivers.

Public submissions close at 5pm Friday 30 October 2009. Submissions can be made in writing (Liquor Project Commissioner, Law Commission, P.O. Box 2590, Wellington) or online at www.talklaw.co.nz.

Foster’s Fails to Prevent Registration of FIJI BEER Trade Marks

Thu, 15 Oct 2009 00:00:00 +1300

In 2007 Flour Mills of Fiji Limited filed two trade mark applications for logos containing the words FIJI BEER:

Foster’s Group Pacific Limited (“Fosters”) a well known Australian beer producer opposed on the basis of two trade mark registrations for logos containing the words FIJI BEER:

Fosters is the largest producer of beer in the South Pacific and the producer of the well known beer, sold under the trade mark FIJI BEER.

In addition to its registered trade marks, Fosters sought to show that its trade marks for beer were well known in New Zealand, despite its beer not being sold in New Zealand. Many New Zealanders travel to Fiji for holidays, where the opponent’s beer is widely sold and advertised. The assistant commissioner accepted that the opponent’s beer was known in New Zealand despite not being available for sale here. She also accepted that the goods are the same and the relevant markets and the trade channels were likely to be the same. The general idea of the marks was also said to be the same, namely beer from Fiji. However, the trade marks themselves were found to be visually, aurally and conceptually different, particularly the stylisation. The inclusion of the letters “fmf” in the applicant’s logo marks were said to strongly suggest that the beer is produced by the applicant and make it “immediately clear” that the applicant’s marks are not the opponent’s.

The opponent requested a disclaimer over the word FIJI. Section 71 of the Trade Marks Act 2002 gives the Commissioner discretion to allow a disclaimer where there are public interest reasons for doing so.

The opponent requested a disclaimer of the word FIJI on the basis of its strong reputation in the word FIJI for beer. Despite the Court of Appeal recently ordering a disclaimer over the words FAMILY SEARCH as part of a device, which as a whole was found to be distinctive (Intellectual Reserve Inc. v Robert Sintes [2009] NZCA 305), the assistant commissioner declined to order one.

A disclaimer was said to create misapprehension within the market because the market might think that the applicant’s monopoly in its marks does not include the word/device “FIJI”, especially if that word/device has been singled out for a disclaimer and the word/device “BEER” has not. It was also thought that the market may consider that the word/device “FIJI” (if it is ever used by itself by the applicant) may never acquire a distinctive character if there were a disclaimer.

It is difficult to reconcile the findings of the Court of Appeal with the findings of the assistant commissioner. In Intellectual Reserve Inc. v Robert Sintes both the applicant’s and the opponent’s marks were stylised, both included the words FAMILY SEARCH and both were considered distinctive, despite the presence of descriptive words.

While there is provision for disclaimers in the Trade Marks Act 2002, the Intellectual Property Office of New Zealand dropped the practice of requiring disclaimers some years ago. It is possible that the assistant commissioner was reluctant to revive the practice of disclaimers, despite the Court of Appeal’s recent decision in Intellectual Reserve Inc. v Robert Sintes allowing a disclaimer.

Kate Duckworth
Published in World Trademark Review Daily on 15 October 2009

AstraZeneca wins against Pharmac

Thu, 15 Oct 2009 00:00:00 +1300

The Pharmaceutical Management Agency (Pharmac) is responsible for managing the pharmaceutical budget for New Zealand’s public health system. In particular, Pharmac decides which medicines will be subsidised. This has caused strained relations with research-based pharmaceutical companies wishing to supply the New Zealand market. In recent years, Pharmac seems to have had the upper hand, but a Supreme Court decision released in August and an agreement between AstraZeneca and Pharmac for the supply of two drugs, may indicate that the tide is turning.

In early 2007, patent protection for AstraZeneca’s Betaloc CR (controlled release) was nearing expiry, thus exposing AstraZeneca to potential competition from generics. AstraZeneca entered into negotiations with Pharmac for continued listing of Betaloc CR during which AstraZeneca indicated that if negotiations were unsuccessful, it would be “forced to also review the commercial viability of Betaloc IV”. Supply of Betaloc IV to hospitals around New Zealand was considered uneconomic by AstraZeneca.

Pharmac issued a press release accusing AstraZeneca of “pursuing tactics to avoid or delay competition”. The resulting media attention led the Commerce Commission to investigate AstraZeneca and to issue it a notice requiring the disclosure of sensitive commercial information under the Restrictive Trade Practices provisions of the Commerce Act.

AstraZeneca challenged the Commission’s ability to issue the notice because a statutory exception in the legislation establishing Pharmac excludes certain activities from the scope of this part of the Commerce Act. The High Court and the Court of Appeal held that the Commission could issue the notice and that the information had to be disclosed.

AstraZeneca appealed to the Supreme Court, which considered that the actions taken by AstraZeneca, including the alleged anti-competitive tie of Betaloc IV to Betaloc CR, were done “for the purposes of obtaining an agreement with Pharmac” as allowed by the statutory exception. The Court held that this exception applied to both Pharmac and the pharmaceutical company and broad interpretation of the section was necessary to ensure that Pharmac’s statutory purpose is achieved. The Commission should have appreciated that no unlawful activity was being undertaken by AstraZeneca and therefore there was no proper basis for issuing the notice.

The outcome is a positive development for AstraZeneca, and for research-based pharmaceutical companies in New Zealand.

This article was first published in Managing Intellectual Property, Ocotber 2009.

The Montana World of Wearable Arts Awards - Innovation at its heart

Mon, 05 Oct 2009 00:00:00 +1300

Congratulations this year goes to David Walker from Alaska, USA for ‘Lady of the Wood’ – the 2009 Winner Supreme Montana WOW Award & Winner Tourism NZ Avant Garde Section. See all the winners.

The Montana World of WearableArt™ Awards show began its life as a promotion for a rural art gallery in Nelson in 1987. Since these humble beginnings, WOW has grown into a substantial brand and successful company though vision, belief and commitment.

The awards have become an iconic event in the New Zealand arts calendar, the show’s fame has spread and entrants now come from all over the world to showcase their creations. Audience numbers have also grown from the hundreds to tens of thousands.

Baldwins Intellectual Property has proudly supported the awards each year, whilst providing WOW with the experience and skills to protect its intellectual property assets. When an initial idea grows into an original work, such as the Montana World of WearableArt™ Awards, it is crucial to put in place the right forms of intellectual property protection and to enforce these rights in order to maintain the originality of your product.

Gabrielle Hervey, CEO of WOW says:
“The show is a truly unique event and we have gone to lengths to ensure it has been protected by registering our trademarks in a number of different countries. Baldwins have worked along side WOW and we’ve appreciated, and respected their advice over a great many years.”

Sue Ironside, Partner and Chair person of Baldwins comments:
"Right from the very early beginnings of WOW there was an understanding of how important it was to identify what intellectual property rights they had in such an amazing and truly unique event. Working with the WOW team on strategies around how to protect and enforce these rights is a stimulating, creative and intellectual challenge we simply enjoy doing."

Congratulations to the entire WOW team, designers and all those involved in delivering such a high value event.

"An incredibly memorable experience for ourselves and our guests" adds Sue Ironside.

Winner Supreme Montana WOW Award & Winner Tourism NZ Avant Garde Section

Plant material of protected varieties to be made available upon request

Tue, 29 Sep 2009 00:00:00 +1300

The Plant Variety Rights (PVR) Office reminded holders of granted PVRs that the holder is under an obligation to provide plant material of protected varieties to the PVR Office upon request for testing of other varieties. Section 16 of the PVR Act provides for the possible cancellation of a grant of a PVR if representative plants of a protected variety are not available.

The PVR Office recognises that the availability and sourcing of plant material continues to be problematic and requests that the availability of plants for PVR testing or other PVR Office purposes be taken into consideration by the rights holder when developing variety management plans or strategies.

News release

Australia - Fast Tracking Patents for Green Technology Solutions

Fri, 25 Sep 2009 00:00:00 +1200

World Intellectual Property Office Director-General Francis Gurry recently reported that private equity and venture capital investment in green technology had risen to $32 billion in 2008 from $1.3 billion in 2003, and this was likely to be reflected in future patent activity. Globablly, however, there has been an estimated fall in patent filings of roughly 5% this year. It seems that green technology is attracting significant investment in a market where funding is not as freely available as it might have once been.

Continuing interest in green technology has prompted the Intellectual Property Office of Australia to implement a new initiative to fast-track patent examination. Under the new initiative, any patent application that relates to "green technology" can take advantage of fast-tracked examination .

This new initiative has been championed by Richard Marles (Parliamentary Secretary for Innovation and Industry). Mr Marles states that this initiative offers environmentally-beneficial inventions a way to reach consumers quickly, especially as "climate change and its global impact is one of the biggest challenges of the 21st century and we know that technology and innovation play a key role in our ability to manage it effectively".

For further information contact Tim Jackson.

Software Debate Continues

Thu, 24 Sep 2009 00:00:00 +1200

There has been much debate and controversy in recent month's surrounding the proposed changes to New Zealand copyright law, particularly s92A which initially required ISPs to disconnect customers after 3 allegations of copyright infringement, with little or no consideration as to whether the allegations had any basis. This low-cost but simplistic solution was clearly open to abuse and the revised proposal provides an independent tribunal to assess allegations, rather than placing the burden on ISPs.

Proposed changes to the New Zealand Patents Act have received less prominence in the media. The changes aim to modernise the law and will make it more difficult for patents to be granted. The key changes are that, to obtain a patent, the same invention must not have been previously disclosed anywhere in the world (rather than just in New Zealand); an invention must be non-obvious with regard to prior solutions (not simply novel); and issues open to debate during examination will be decided on a balance of probabilities approach (as opposed to giving applicants the benefit of doubt).

As reported in the National Business Review on 14 August, one sector that has been vocal on these changes is the software industry, particularly those in favour of open source software. Open source arrangements essentially enable software developments to be made available for free, provided that those who make use of that software agree to distribute any developments on a similar basis. Many advocates of open source software are calling for the government to use the current re-drafting of the legislation to exclude software from patent protection. Some of the arguments for this are that patents stifle rather than promote innovation, that software merely constitutes an algorithm, and that, outside of open source distribution arrangements, copyright provides adequate protection for software.

The question of whether patents in general promote innovation (by forcing inventors to disclose their inventions) is also a thorny issue but why should computer-related inventions be handled differently from other inventions? Due to the significant impact on our everyday lives, it is even arguable that they should be given stronger protection.

There are widespread misconceptions with regards both patenting of software and what protection copyright provides. For example, even under the present regime, a mere algorithm is not generally protectable as it is just a mental process and it is at least usually necessary to limit to a computer implementation of the algorithm.

By making it harder to obtain granted patents, the changes to patent law will result in fewer software patents and help to ensure that those granted are restricted more specifically to inventive aspects. Also, since Patent Office examiners tend to focus on prior patent publications when challenging the patentability of an invention, it should become more difficult for inherently "bad" patents to be granted as more applications are filed and the "library" of earlier publications available to examiners grows.

If the New Zealand software industry is to continue to grow and establish more medium to large size companies, it is vital that informed decisions are made based on a good understanding of the options available. Open source distribution arrangements or reliance on copyright may provide the most appropriate and commercially successful solution in some instances, but this is not always the case, due largely on the developer's business model and the type of software. Other considerations may include a need for a return on investment or adequate protection may be required to give outside investors the confidence to provide capital. Patents can assist in achieving these goals. However, patents are also not appropriate or the best solution for all circumstances (e.g. developments likely to have a short life) and it is important that a considered strategy is drawn up at an early stage.

For more information see guide for Software and Computer-Related Inventions.

Encouraging News for US Patent Applicants

Wed, 16 Sep 2009 00:00:00 +1200

New Zealand innovators filing patent applications in the US may well find the process of obtaining a US patent quicker and cheaper in the future. The Barack Obama administration has precipitated a change in leadership at the United States Patent and Trademark Office (USPTO) that promises to result in improvements to the patent system in a key overseas market for New Zealand technology companies.

The US is a crucial market for any New Zealand company looking to expand its commercial activities beyond Australasia. The patent system provides the ability to keep rival products or services out of the market. Therefore, for technology companies, a US patent portfolio and filing strategy is normally an essential part of a market entry strategy or the maintenance of a market share. Over 100 US patents are granted to New Zealand applicants each year, although in recent years this number has marginally declined. This trend may be connected with the fact that many New Zealand companies and inventors filing patent applications in the US have found, along with everyone else using the system, that obtaining US patent protection can be a more lengthy, expensive and frustrating process than in many other countries.

In August of this year, David Kappos was sworn in as the new Director of the USPTO. In very little time, the rumblings of change are already being heard, and this can only mean good news to patent applicants, as Kappos seems set on reducing examination time and increasing the effectiveness of examination. Patent examiners have been told that "patent quality does not equal rejection". Rather, it means working with applicants "to get to the real issues efficiently" and "to find the patentable subject matter and get it clearly expressed in claims that can be allowed". To back up these remarks, Kappos has hinted at a change to the 'count' system, the system used to measure examiners' performance. This currently creates problems because US examiners are incentivised to initially reject applications. The suggestion of a re-engineered system to better encourage compact processing of patent applications is welcome news to applicants.

Other suggestions mentioned by Kappos include initial examiner interviews to help bring the focus of examination to the important issues and mechanisms to accelerate important applications while quickly abandoning hopeless cases. Some particular technology areas may also be a focus for quicker processing. Another idea is to create a "nationwide workforce" of patent examiners, possibly an extension of the Peer-to-Patent Pilot Program currently in place for data processing inventions, in which the public can assist during examination by submitting relevant prior art.

The comments all seem to be geared towards encouraging examiners to expeditiously allow those applications that meet all requirements, and this may lead to a resulting reduction in the time and costs to prosecute a US patent application. For New Zealand applicants, for whom the US patent system is often a particularly expensive undertaking, the signs are positive.

A culture does not change overnight, however, so it is likely to take a while for applicants to notice the effects of Kappos' new direction. Furthermore, applicants may find that US attorney costs for responding to an individual examiner's report may increase because of the time required for the US attorney to discuss the relevant issues with the examiner. However, the savings in costs from avoiding repeated responses and rejections will more than make up for any such increases.

The ability to protect inventions and technology in the US is very important for New Zealand innovators, and the signs are this process will become quicker and cheaper in the future.

Ambush marketing law passes first test

Fri, 04 Sep 2009 00:00:00 +1200

The Major Events Management Act came into force in 2007, to provide greater protection to sponsors of important events from Ambush Marketing. The legislation provides protection for Major Events and protection for emblems and words relating to the Olympic Games and Commonwealth Games.

As part of New Zealand’s successful bids to host the 2011 Rugby World Cup and the 2015 ICC Cricket World Cup a commitment was given to ensure adequate provisions were in place to protect sponsors. However the scope of the legislation is wider and applies to any event that is declared to be a Major Event under the legislation. It is not restricted to sports events.

For an event to be declared a Major Event it has to be established that the event will attract an international profile and be of sporting, cultural, social and economic benefit to New Zealand. The organiser must apply to the Minster of Economic Development for protection.

There are only three major events that have been declared so far. They are the Rugby World Cup 2011, the FIFA U-17 Women’s World Cup and the FIBA U-19 World Championship.

In each instance Regulations associated with the Act have been passed. They are the Major Events Management (Rugby World Cup 2011), Major Event Emblems and Words (Rugby World Cup 2011), Major Events Management (FIFA U-17 Women’s World Cup 2008), Major Events Emblems and Words (FIFA U-17 Women’s World Cup 2008) and Major Events Management (FIBA U-19 World Championship 2009).

The first Major Event to be held in New Zealand under the Major Events Management Act was the FIFA U-17 Women’s World Cup held in October to November 2008. The event was followed by fans and media but there was careful attention being paid by lawyers, marketers and event organisers.

With more than 200,000 attendees and an estimated global television audience of 100-200 million this was a large event and a good test case for the legislation.

The second Major Event was the FIBA U-19 World Championship 2009 held in July 2009. 16 teams competed for global supremacy, with an international audience estimated at more than 100 million viewers.

Close collaboration between the event organiser and the Ministry of Economic Development ensured that words and emblems protected were not overly broad.

Clean zones were identified and interestingly for the FIFA U-17 Women’s World Cup, they were identified as QEII Stadium in Christchurch and North Harbour Stadium in Auckland and surrounding areas, for the semi-finals and finals.

For the FIBA U-19 World Championship the North Shore Events Centre and ASB Stadium and surrounding areas were identified as Clean Zones for the semi-finals and final.

No clean transport routes were considered necessary for either event.

For both major events both FIFA and FIBA respectively, along with local organisers in New Zealand, acted as Enforcement Officers to deal with activities that breached the Act. Breaches were identified quickly and dealt with effectively under the Act.

Both events were run successfully.

The Major Events Management Act 2007 was proven in both instances to be useful and user friendly. However it appears that this was largely due to pragmatic decisions by FIBA, FIFA and local event organisers which resulted in not overly broad or onerously restrictive protection being sought.

This article was published in Managing Intellectual Property, September 2009.

Mc’Donald’s fails to prevent registration of “arch” trade mark

Tue, 01 Sep 2009 00:00:00 +1200

In June 2008 the case of Intellectual Property Development Corporation Pty Limited v Primary Distributors New Zealand Limited (CIV-2006-404-4695, Auckland High Court, 24 April 2008, Asher J) in the High Court was reported. In that case Primary Distributors accepted it had infringed

IPDC’s HEFTY trade mark but the parties disagreed about an account of profits.

One of the key facts was that in January 2006 Primary Distributors sent an email to IPDC. An exchange of emails included this from Primary Distributor: “The Hefty brand will now continue in New Zealand”. IPDC did not complain until a cease and desist letter was sent in July 2006.

Primary Distributors claimed IPDC was not entitled to an account of profits for the period in which it knew Primary Distributors was infringing but did nothing about it.

Primary Distributors claimed IPDC had lost its rights through its inaction or alternatively its conduct amounted to waiver or acquiescence on or laches.

The High Court ruled that a plaintiff cannot stand by permit a defendant to make profits and then expect to claim those profits. An account of profits was not available for the period between January and July 2006 when IPDC was aware of Primary Distributor’s actions but did nothing.

Intellectual Property Development Corporation (IPDC) appealed to the Court of Appeal against the decision of Asher J in the High Court.

Having already conceded before the High Court that a court was entitled to refuse an account of profits when a claimant has neglected to take proceedings after becoming aware of the infringement, IPDC claimed that this would only be where there had been an inordinate delay, and this was not such a case.

The Court of Appeal ruled that mere delay was not a bar to seeking a remedy, unless the delay is inordinate or something more is present. The Court of Appeal ordered an account of profits from the time infringement began until the time infringement ended.

IPDC also requested an account of profits against the directors of Primary Distributors personally. Primary Distributors claimed that the directors should only be jointly and severally liable for an account of profits against the company, not liable for any personal profits the directors made. The Court of Appeal remitted this matter back to the High Court for determination.

Asher J did not deal with passing off in his decision in the High Court, so the Court of Appeal also remitted this issue back as well.

Kate Duckworth
World Trademark Review Daily 1 September 2009

Australian Patent Term Extensions - Pharmaceutical Substance Combinations

Tue, 01 Sep 2009 00:00:00 +1200

Two recent cases before the Australian Patent Office highlight what can be a problem area when seeking to extend patent term under the Australian Patents Act 1990.

The issue in these cases was whether the products as disclosed and claimed in the patents in question were "pharmaceutical substances" within the meaning of the Australian Patents Act 1990. In particular, the issue was whether those products as claimed were "substances (including a mixture or compound of substances)" for therapeutic use as provided in the definition given in Schedule 1. In both cases, the substances claimed were combinations of a substance having a therapeutic effect together with other components.

Section 70 of the Act provides that the patentee of a standard patent may apply to the Commissioner for an extension of the term of the patent if the requirements set out in subsections (2), (3) and (4) are satisfied. Relevantly here, section 70(2)(a) provides that:

"one or more pharmaceutical substances per se must in substance be disclosed in the complete specification of the patent and in substance fall within the scope of the claim or claims of that specification"

“Pharmaceutical substance” is defined in Schedule 1 of the Act to mean:

"a substance (including a mixture or compound of substances) for therapeutic use whose application (or one of whose applications) involves:
(a) a chemical interaction, or physico-chemical interaction, with a human physiological system; or
(b) action on an infectious agent, or on a toxin or other poison, in a human body;
but does not include a substance that is solely for use in in vitro diagnosis or in vitro testing"

The meaning of the words "pharmaceutical substance per se" in s 70(2)(a) was interpreted by the Full Federal Court in Boehringer Ingelheim International GmbH v Commissioner of Patents [2001] FCA 647, as limiting applications for extension of patent term to patents disclosing and claiming a pharmaceutical substance "by or in itself, intrinsically, essentially" or "taken alone; essentially; without reference to anything else". Thus the words "per se" had a clear limiting effect. In Pharmacia Italia SpA v Mayne Pharma Pty Ltd [2006] FCA 305, the Federal Court considered the question of substances comprising a number of components. The Court found that it was not necessary that all chemical entities within that combination be therapeutically active. It is the substance as a whole that must meet the requirements for therapeutic action or interaction within the definition of a pharmaceutical substance.

A "pharmaceutical substance per se" can include a claim to a compound in combination with other elements if, as a whole, it can still be considered a “pharmaceutical substance”. However, a claim to a substance which combines a compound with a separate physical device, layer or structure may not be considered to be a “pharmaceutical substance”. Therefore, how the invention is disclosed and claimed in the patent in question can be critical in whether or not an extension of patent term can be obtained.

In the first case, N. V. Organon [2009] APO 8 (28 May 2009), the patentee applied for an extension of term of its Australian patent No. 726934 based on the inclusion of NUVARING® on the Australian Register of Therapeutic Goods. If allowed, the patent term would be extended from 8 April 2018 until 27 June 2021.

NUVARING® is a vaginal drug delivery system for the steroids etonogestrel and ethinyloestradiol. A key aspect of the invention was that the steroidal mixture in the delivery system was contained in a thermoplastic polymer core over which was laid a permeable thermoplastic skin.

Claim 1 of AU726934 read:

"A drug delivery system comprising at least one compartment which comprises a thermoplastic polymer core and a thermoplastic polymer skin covering the core, said core comprising a mixture of a steroidal progestogenic compound and a steroidal estrogenic compound in a ratio by weight that allows a direct release from the said polymer of both the said progestogenic compound and the said estrogenic compound in physiologically required amounts, said progestogenic compound being initially dissolved in the said polymer core material in a relatively low degree of supersaturation, said estrogenic compound being dissolved in the said polymer core material in a concentration lower than that of the said progestogenic compound, and said thermoplastic skin being permeable for the said progestogenic and estrogenic compounds"

The Deputy Commissioner of Patents held that:

(1) as the steroidal components are mixed with and necessarily diffuse through the thermoplastic materials in the core and skin regions; and
(2) as the product as a whole exhibits a level of integration or interaction between the component parts that was considered more characteristic of a pharmaceutical substance in itself rather than a substance combined with another element or thing;
(3) the combination met the requirements of a "pharmaceutical substance per se".

Consequently the application to extend the term of AU726934 was allowed.

In the second case, LTS Lohmann Therapie-Systeme AG and Schwarz Pharma Limited [2009] APO 16 (21 August 2009), the patentee applied for an extension of term of Australian patent No. 746856 based on the inclusion of NEUPRO® on the Australian Register of Therapeutic Goods. If allowed, the patent term would be extended from 18 March 2019 until 22 November 2022.

NEUPRO® is a transdermal therapeutic system (transdermal patch) for the known active ingredient (rotigotine). It includes an acrylate or silicone based non-aqueous polymer adhesive compound into which rotigotine free base is able to be dissolved to enable transdermal application. Transdermal administration of rotigotine via a patch is known, but the key to the invention lies in the matrix formulation which allows the transdermal administration of the active, free base form of rotigotine.

Claim 1 of AU746856 read:

"A pharmaceutical compound for the treatment of disease adapted to be transdermally administered to a patient in need of said treatment comprising:

an effective amount of a free base (-)-5,6,7,8,tetrahydro-6-[propyl[2-(2-thienyl)-ethyl]amino]-1-naphthol and an acrylate or silicone based non-aqueous polymer adhesive compound, wherein the solubility of the (-)-5,6,7,8,tetrahydro-6-[propyl[2-(2-thienyl)-ethyl]amino]-1-naphthol base is greater than or equal to 5% (per weight); and

a backing layer, which is inert to the (-)-5,6,7,8,tetrahydro-6-[propyl[2-(2-thienyl)-ethyl]amino]-1-naphthol base and the adhesive compound, having a protective layer, which is to be removed prior to administration of the pharmaceutical compound to the patient"

The Deputy Commissioner of Patents found that the pharmaceutical compound as claimed comprised three components - a polymer matrix containing rotigotine, an inert backing layer and a protective layer. As the protective layer needed to be removed before use, the Deputy Commissioner of Patents held that this protective layer constituted a separate integer, and consequently the claimed pharmaceutical compound, as a whole, was not a "pharmaceutical substance".

The application to extend the term of AU746856 was therefore not allowed.

The two cases highlight that when the invention is a combination of a substance having a therapeutic effect together with other components, the combination as a whole can still be considered a “pharmaceutical substance per se”. The drafting of the patent specification and claims in such cases is critical if there is an intention to apply for patent term extension and should not require the presence of an integer that is not integral with the requirements for therapeutic action of the pharmaceutical substance.

McDonald’s fails to prevent registration of an arch logo

Tue, 01 Sep 2009 00:00:00 +1200

The Assistant Commissioner of Trade Marks recently ruled that the following application in classes 16, 25, 29, 30, 32, 35 and 43 was not confusing similar to McDonald’s Golden Arches trade mark :

(“Anisha’s logo”)
The Assistant Commissioner noted that the Anisha’s logo was not limited to colour, which meant that it could be used in the same colours as the McDonald’s Golden Arches logo (red and gold). McDonald’s brought evidence that in Australia, the applicant had adopted the same corporate colours as McDonald’s. The Assistant Commissioner said that he agreed with McDonald’s that the Anisha’s logo and the McDonalds’ Golden Arches share the same type of stylised arch, which could be used in the same colouring and that the marks were similar to that extent. However, the marks when viewed as a whole were said to be different for the following reasons:

The McDonalds’ Golden Arches were said to make the letter M, whereas the Anisha’s logo was said to make the letter A.
The name “Anisha’s” reinforces the letter A as opposed to the letter M in the Golden Arches.
The Anisha’s logo would not be seen as part of the McDonald’s family of trade marks such as McChicken, McNuggets and McMuffin.

In relation to whether the purchasing public would assume a connection in the course of trade, the Assistant Commissioner arguably misdirected himself in two ways.

Firstly, the Assistant Commissioner said that the fame of the McDonald’s name and brand put beyond doubt that the Golden Arches mark is a McDonald’s trade mark. The Golden Arches were said to be so central to the McDonald’s brand that they would only ever be associated with McDonald’s. The question however, is not whether the opponent’s trade marks would be associated with itself, but whether the applicant’s trade mark would be associated with the opponent.

Secondly, the Assistant Commissioner phrased the test for confusion and deception in this way: “for a substantial number of the purchasing public to be caused to wonder if there were a connection in the course of trade between the applicant’s mark and the opponent, which of course there is not, I consider that the opponent or the applicant would need to educate the public about such a connection in trade”. The test is normally phrased by asking whether a substantial number of the purchasing public would be caused to wonder whether there is a connection in the course of trade between the applicant and the opponent, rather than asking whether the public would need to be educated that there was such a connection.

Given the finding that the trade marks at issue were not similar, nothing turns on the Assistant Commissioner’s arguable misdirection.

McDonald’s has until the end of July 2009 to file an appeal.

World Trademark Review Daily
1 September 2009

Congratulations to Resene Paints Ltd.

Mon, 24 Aug 2009 00:00:00 +1200

Resene Paints has been awarded a prize of a million dollars worth of R&D for winning IRL's "What's your problem New Zealand?" competition. The prize will be awarded in the form of research hours which will include access to IRL's expertise and facilities.

Along with a hundred other New Zealand businesses, Resene Paints took on the challenge of seeking science solutions to a business 'problem'. Over the next 18 months the Wellington-based company will work with IRL to develop high-performance paints using resins made of sustainable ingredients. The shift away from the use of gas and oil as the core composition of their product is a firm expression of Resene's commitment to sustainable developments.

Bringing science and business together can serve to improve productivity, to create wealth and to keep the benefits in New Zealand. The underlying message of the competition is that investing in R&D helps drive profitability.

Our sincere congratulations to Resene Paints for this win, and to all finalists for pushing the boundaries and demonstrating how innovative thinking translates into action.

Nine other finalists include:
Dynamic Controls
Fisher & Paykel Applicances
Glidepath *
Gallagher Group
Group 3 Technology
Mars Petcare NZ
Pacific Edge Biotechnology *
PowerShield
Pultron Composites
Resene *

* Baldwins client

Trade Mark bill disappoints

Thu, 06 Aug 2009 00:00:00 +1200

The Trade Marks (International Treaties and Enforcement) Amendment Bill is currently before Select Committee in New Zealand. The Bill deals with the proposed accession by New Zealand to the Madrid Protocol, the Nice Agreement and the Singapore Treaty among other things.

Of note are provisions in the Bill that seek to abolish the recordal of registered licences under a trade mark. Despite requesting feedback in 2006 as to whether New Zealand should align more closely with the Australian Trade Marks Act and its licensee recordal provisions, the majority of submissions made were ignored and the Bill now foreshadows a complete repeal of licensee registration. Furthermore, no mechanism exists in the Bill to advise existing licensee(s) of the cancellation of their licensed rights or to mandate that a historical record of such licensee recordals remain.

While the Bill provides for the alteration and removal of memoranda entered against a trade mark at the request of the owner, there is still no provision for secured parties to record security interests on the register. Nor does there appear to be any way a security rights holder can prevent an owner removing a memorandum that has been entered to that effect.

The Bill does, however, address a potential loophole where trade mark owners could seek to circumvent provisions permitting parallel importation and provides greater investigatory and prosecution powers to the National Enforcement Unit and Customs. Unfortunately, funding has not commensurately increased to reflect the number of suspected counterfeit products being detained by Customs, which has risen by over 400% since July 2000.

This article was published in Managing Intellectual Property, July-August 2009.

Copyright Act 1994 - revised proposal for section 92A

Thu, 30 Jul 2009 00:00:00 +1200

The Minster of Commerce, Simon Power, has issued a revised version of section 92A of the Copyright Act 1994 dealing with copyright infringement in the digital environment.

The revised proposal introduces a process similar to that for domain name disputes in New Zealand.

The first step of the proposal is where a copyright owner believes one or more of its copyright works has been infringed, it can send a first infringement notice to an internet service provider (ISP). The ISP must then send the notice on to its customer, the alleged infringer. The copyright owner can also send via the ISP a cease and desist notice. The alleged infringer can respond directly to the copyright owner and the copyright owner can then accept or reject the response. If the copyright holder believes there has been a further infringement of copyright, after a cease and desist notice has been sent, the copyright owner can apply to the Copyright Tribunal to obtain an order requiring the ISP to provide contact details of the alleged infringer.

The copyright owner can also lodge a complaint with the Copyright Tribunal. The alleged infringer will have an opportunity to respond and can choose to mediate. The Copyright Tribunal will be given the ability to award an injunction as well as damages or account of profits, as well as a fine and can order an ISP to terminate the alleged infringer’s account.

The proposal removes the previous requirement for ISPs to consider and make decisions on complaints from copyright owners.

The proposal does not provide a definition of an ISP. This was a serious issue under section 92A as it was so wide and included anybody who provided the transmission or providing of connections for online communications as well as anyone who hosts material on websites or other electronic retrieval systems.

The Ministry of Economic Development is seeking comments by 7 August 2009.

FACEBOOK - Alert for Trade Mark Owners

Fri, 12 Jun 2009 00:00:00 +1200

Facebook has announced that from 12.01am EDT Saturday 13 June in the United States, or 4pm Saturday 13 June in New Zealand, its users will be able to use personalised usernames, instead of randomly assigned numbers. While this will help users' friends and family to find them on the site, it will also enable them to choose names that belong to others.

These could include trade marks. It is a first come first served system. That means any individual could, for instance, register as "nike" or "hersheys". They could then proceed to use the name on the site in association with activities that brandowners may not appreciate.

Facebook has retained the right to remove any name for any reason, and also set up a system for the reporting of infringements. However, because the use may not constitute use in trade, or use as a trade mark, it may be difficult for trade mark owners who do not appreciate the use of their trade marks by users of Facebook, to stop that use if Facebook does not respond to requests to do so.

Trade mark owners who are concerned about this should consider registering their trade marks on Facebook to prevent undesirable use by others.

For further information visit the Facebook site or contact Rosemary Wallis.

Is it the distinctiveness of the essential feature that really matters?

Tue, 09 Jun 2009 00:00:00 +1200

Another decision of the Intellectual Property Office of New Zealand (IPONZ) further indicates that the essential feature test, as set out in De Cordova v Vick (1951) 68 RPC 103, is on its way out in relation to assessing the similarity of marks.

As discussed in an earlier article dated 7 November 2008, the decisions of the hearings officer of IPONZ relating to PUREBABY v BABY T19/2008 and ULTRA v ULTRA LAMP T10/2007 indicate that even if a mark is wholly contained within another mark, it may still be possible to argue that the marks are not confusingly similar, at least in cases before IPONZ.

In the recent decision of TIMARU BLUESTONE and a Stonehenge type device in class 19 in the name of Timaru Bluestone Industries Limited, IPONZ objected to registration on the basis that the mark was confusingly similar to the series word mark BLUE STONE; BLUESTONE also in class 19 and 37. IPONZ stated that the element of the applicant’s mark that predominated both visually and phonetically is the word “bluestone” and that this is the main idea behind the mark. Further, IPONZ contended that the Stonehenge device simply reinforces the concept of “blue stone” and the word “Timaru” simply refers to the origin of the goods (Timaru being a town in New Zealand).

The applicant sought a hearing and the hearings officer, in denying that TIMARU BLUESTONE device was similar to the word mark BLUE STONE; BLUESTONE, said that the marks looked and sounded different and as such conveyed an entirely different idea.

The hearings officer concluded that the Stonehenge device, was the dominant part of the applicant’s mark, that the presence of TIMARU ensured that the marks were phonetically different, and as such the idea conveyed was different.

Despite the cited series mark, BLUESTONE; BLUE STONE, being subsumed within the applicant’s mark, the hearings officer considered that IPONZ had not given an appropriate weighting to the descriptiveness of the words “bluestone” and “blue stone.” In reaching his decision, the hearings office placed significant weight on the fact that he considered the subsumed mark lacked inherent distinctiveness as the dictionary defines “blue stone” as inter alia, a bluish-grey stone used for building. There did not appear to be any evidence that blue stone was a common term in trade in New Zealand.

The lack of inherent distinctiveness of the subsumed mark was a point much laboured by the hearings officer. This argument is hard to reconcile with the fact that the subsumed mark was registered in the first instance, and a registered trade mark is prima facie evidence of the validity of the trade mark. While the hearings officer is entitled to consider whether the term is common to the trade, the hearings officer has in effect ruled the trade mark invalid, without being asked to determine its validity.

This developing body of case law suggests that owners of registered trade marks may be unable to prevent their competitors from registering a trade mark which wholly contains their registered trade mark.

World Trademark Review Daily
9 June 2009

Government to overhaul IP legislation

Mon, 08 Jun 2009 00:00:00 +1200

In November 2008 a new government was voted into Parliament in New Zealand. With the new government has come progress on some longawaited IP legislation.

The Government recently scrapped the Copyright (Commissioning Rule) Amendment Bill and the Copyright (Artists’ Resale Right) Amendment Bill both of which were introduced by the previous Government. The Copyright (Commissioning Rule) Amendment Bill aimed to change the current law, which provides that the person who commissions a work (excluding literary works) owns the copyright. The Copyright (Artists’ Resale Right) Amendment Bill provided artists with a mandatory resale right for artists when their artistic works are resold in New Zealand.

The Government has put on hold and agreed to review an amendment to the Copyright Act introduced by the previous Government, which meant that internet service providers had to adopt and reasonably implement a policy for termination of repeat infringers’ accounts.

The Trade Marks (International Treaties and Enforcement) Amendment Bill amends both the Trade Marks Act 2002 and the Copyright Act 1994. The Bill implements the Madrid Protocol and Singapore Treaty, moves primary responsibility for the enforcement of the criminal offence provisions on counterfeit and pirated works under the Trade Marks Act and the Copyright Act from the police to the Ministry of Economic Development, and abolishes registration of licences under the Trade Marks Act.

The Patents Bill is a serious overhaul of the outdated Patents Act 1953. Important amendments include a shift to absolute novelty, and 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 the commercial exploitation of which would be contrary to public order or morality. It introduces an experimental use exception and a reexamination process for third parties, but removes pre-grant opposition.

In designs, the Regulatory Improvement Bill amends the Designs Act 1953 by allowing for restoration of a registered design where the lapse was unintentional.

There has, however, been no progress on a review of the Plant Variety Rights Act or the Geographical Indications (Wine and Spirits) Registration Act 2006, both of which were begun by the previous government.

The new Bills have been referred to various select committees for consideration. They may take some time to come into force, but the recent flurry of activity
indicates that the government is committed to updating New Zealand’s IP legislation.

This article was published in Managing Intellectual Property, June 2009.

Swiss-type claims explained

Mon, 04 May 2009 00:00:00 +1200

The Intellectual Property Office of New Zealand has issued updated guidelines for the examination of Swiss-type (second medical use) claims. Several topics are covered in the guidelines, including novelty requirements, allowable subject matter and sufficiency requirements. The guidelines are available online at IPONZ's web site.

According to the guidelines, novelty of a Swiss-type claim is assessed using the General Tire test (The General Tire & Rubber Company v The Firestone Tyre and Rubber Company and Others [1972] RPC 457). This test states that a prior art document must provide clear and unmistakeable directions to perform the claimed invention in order to anticipate the later claims. Novelty may derive from treatment of a different condition, a new mode of administration or a novel dosage regime. If novelty resides in the mode of administration or dosage regime, the claimed subject matter must overcome a disadvantage or provide an advantage over the prior art.

A new mechanism of action may be allowed in a Swiss-type claim. However, the guidelines indicate that such claims must relate to a new use. That is, the claim must provide more than “mere information on the mechanistic pathways involved when a known compound is used to treat a disease.” The guidelines lack some clarity on this point and this is not assisted by the presence of two sections regarding new mechanisms of action.

New patient groups may provide the required novelty for a Swiss-type claim. The patient group should be clearly defined and there should not be any overlap with an existing group in the prior art. In order to determine whether the new group is distinct, the Office will consider whether there is a functional relationship between the physiological/pathological status of the patient group and the therapeutic/physiological effect achieved.

Swiss-type claims directed to the manufacture of a medicament for diagnosis of a disease or condition are allowable where the subject matter would otherwise be excluded as a method of treatment claim. In contrast, Swiss-type claims directed to the use of a medical apparatus will not be accepted.

To meet the sufficiency requirements of Section 10(3) of the Patents Act 1953, the description should do more than merely recite the use of the known compound in the manufacture of a medicament for the new use. Although there is no requirement that a claimed invention be exemplified across its entire scope, “the description should place the skilled person in a position of being capable of putting the invention into effect.”

In addition, a Swiss-type claim that recites a number of new uses “will generally not be viewed as being unified as there would not be common novel subject matter linking the new uses.” No further guidance on this point is provided.

This article was published in Managing Intellectual Property, May 2009.

New Zealand signs 12-country free trade agreement

Wed, 08 Apr 2009 00:00:00 +1200

New Zealand recently signed the Association of Southeast Asian Nations (“ASEAN”) Australia-New Zealand Free Trade agreement Free Trade Agreement (“ASEAN AANZFTA”), a 12-country free trade agreement. It is the latest free trade agreement that New Zealand has entered into following the China-New Zealand agreement in October 2008.

The ASEAN region is New Zealand's third largest export market for merchandise goods - worth NZ$4.6 billion in the year to June 2008. The ASEAN AANZFTA is therefore said to represent an important ‘building block' in New Zealand’s growing East Asia trade and economic architecture.

The AANZFTA is said to facilitate trade of goods, services and investments between the respective economies through the progressive elimination of barriers and the reduction of transaction costs. By 2020, all New Zealand tarrifs on ASEAN products will be phased to zero.

Chapter 13 of the agreement aims to develop co-operation and capacity building in intellectual property law in the ASEAN region over time. The AANZFTA aims to consistently protect intellectual property rights across the ASEAN signatories, and give investors and traders increased confidence in operating within the region.

Like the China free trade agreement, AANZFTA reaffirms the parties existing rights and obligations under the WTO Agreement on Trade Related-Aspects of Intellectual Property Rights (“TRIPS”). Each party is required to accord to nationals of other parties, treatment no less favourable than it accords to its own nationals with regards to the protection of intellectual property rights. AANZFTA also contains specific obligations on protection and enforcement of intellectual property rights, greater transparency of intellectual property laws and systems, an obligation on parties to endeavour to make available on internet databases all pending and registered trade mark rights in their respective jurisdictions and the establishment of a committee on intellectual property to monitor the implementation of the intellectual property provisions.

AANZFTA also provides for an Economic Cooperation Work Programme (“ECWP”). The ECWP covers eight areas including conformity assessment procedures for the protection of intellectual property rights, such as direct training for intellectual property examiners, intellectual property judges, patent attorneys, academia and the business community as well as study visits, policy discussions and seminaries.

AANZFTA may enter into force in New Zealand as early as July 2009 and, in any event, no later than 1 January 2010.

World Trademark Review Daily
8 April 2009

New Zealand: Legislative changes and recent decisions

Tue, 07 Apr 2009 00:00:00 +1200

In 1970, Justice Windeyer of the High Court of Australia referred to the typically tardy response of the law to new technology when he said: "Law [is] marching with medicine, but in the rear and limping a little". New Zealand copyright law sought to catch up last year.

The Copyright (New Technologies) Amendment Act was passed in April 2008 and came (mostly) into force in October. Amendments deal primarily with "digital" copyright issues - format neutral terminology, format and time shifting, fair dealing, technological protection measures, circumvention devices and the like.

Debate is on-going in relation to the obligations of Internet Service Providers (ISPs) to implement a reasonable and practical "take down notice" regime. Section 92A (not in force at the time of writing) would require ISPs to implement a policy for disconnection of services to "repeat infringers". This, triggered debate on a workable balance of practical, cost efficient enforcement and users' rights. Attention was also focused on who should carry the burden of proof.

Judicial guidance and development in this area is likely in 2009 and beyond. Further amendments are on the legislative agenda in relation to an artists' resale royalty and the default ownership position on commissioned works. It remains to be seen whether these Amendment Bills are prioritised given the recent change in government and focus on the economy.

Copyright law receives regular attention from New Zealand Courts. Of note from an enforcement perspective was the Court of Appeal's recent confirmation that additional damages could not be coupled with an account of profits (in Tiny Intelligence v Resport, following English and Australian lines of reasoning / authority). This important principle will be considered by the Supreme Court (the country's highest court) soon, with important implications for the way in which copyright claims should be framed and pursued.

The importance of copyright in New Zealand is enhanced by unusual, and some might say generous, protection provided for unregistered industrial designs. The position in Australia is different with no copyright (or unregistered design right) available for industrially applied designs, where these are eligible for registered protection. While failing to register a design in Australia can therefore be more serious, registration should still be considered in New Zealand due to the reduced evidential burden during infringement actions.

Sunlec International v Electropar was interesting for the Court's acceptance that copyright may subsist in some (but not all) slogans (in this case "Field Friendly - the best choice for fieldwork"), underscoring the potential for copyright claims in cases which may appear more trade mark / branding cases.

Registered Designs
Registered design practice has been simplified by a decision that only a single representation is required and not multiple views showing an entire article, if the single view shows what is stated as novel. While seemingly a minor issue, this caused concern for applications in New Zealand based on a foreign priority application where there was no requirement to provide all possible views. Previously, the only remedy was to provide the additional views, bringing into question the validity of the priority claim.

Trade Marks
The High Court confirmed in Neumann v Sons of the Desert that an application for registration by one co-owner without the knowledge of the other is deemed to have been made in bad faith.

In Austin Nichols v Stichting Lodestar (December 2007) the Supreme Court, in its first trade marks case, indicated that despite the practical importance of decisions by commissioners of trade marks a Court must form its own views on matters such as the similarity of two marks (over-ruling the Court of Appeal which had suggested greater deference to commissioner's decisions). Decisions from the High Court (Geneva v Johnson & Johnson) and the trade marks office (PURE / PUREBABY, ULTRA / ULTRALAMP) have left uncertainty over the application of the 'De Cordova' principles regarding confusing similarity where a mark is wholly contained within another mark.

Patents
New Zealand patent law takes a broad view as to what is patentable subject-matter.   As opposed to a negative definition of an “invention” involving a set of exclusions, it is merely necessary for inventions to constitute a “manner of new manufacture”. The approach is similar to that in Australia - essentially any artificially created state of affairs that provides some commercially useful effect is potentially patentable. Consequently, a greater range of inventions may be patented in New Zealand than in many jurisdictions, including:

•    business method or software-related inventions (provided they are not wholly abstract)
•    second therapeutic uses
•    new dosage forms / regimes
•    some aspects of stem cell research (see Morality and Patentability of Stem Cell Patents in New Zealand)
•    pharmaceuticals limited to particular patient groups where particular benefits are derived for those groups

Some exceptions to patentability remain. Methods of treatment and diagnosis may be rejected based on them being “inconvenient”, contrary to the Statute of Monopolies. However, these exclusions are interpreted narrowly and only apply to treatment of living humans and methods of diagnosis that involve a medical practitioner, particularly through surgery.

Baldwins has seen a growing trend of examiners rejecting claims on excluded subject-matter grounds, particularly on the basis that exploitation of an invention would be contrary to morality. Due to the current lack of statutory framework supporting and guiding examiners in this regard, there have been notable inconsistencies, including between examiners and commissioners, who in line with the Courts, have generally taken a very restricted view on exclusions. These conflicts are of particular concern since not all Patent Office decisions are published and there is no third party access to examination proceedings.

Baldwins has sought official clarification in a number of areas, some of which have been addressed by new Patent Office guidelines covering:

•    subject-matter considered to be contrary to morality (see New “Contrary to morality” Practice in New Zealand – Importance for Biotech Patents)
•    Swiss-type claims
•    Medical treatment of humans

Further review of these is required and the position should become more certain in the near future, with New Zealand’s historical position hopefully remaining largely unchanged.

The issue will become clearer when the new Patents Bill is enacted. It was introduced before Parliament in July 2008 and introduces some significant changes, including:

•    “Absolute novelty” (in place of local novelty).
•    Examination for inventive step and utility, not just novelty.
•    A move to issues of patentability being decided on the “balance of probabilities” rather than providing applicants with the benefit of the doubt.
•    A requirement to disclose the results of any official searches conducted on corresponding foreign applications.
•    Abolition of existing pre-grant oppositions and introduction of a re-examination procedure. Revocation before the Courts is still provided as an alternative.
•    A Maori Advisory Committee to advise on whether commercial exploitation of an invention may be contrary to Maori values, amongst other matters.
•    Express exclusion of methods of treatment of humans by surgery or therapy, and methods of diagnosis practised on human beings will be specifically excluded from patentability.

The proposed legislation is generally welcomed and we are hopeful that it will be passed in 2009.

In the High Court, a New Zealand company defeated claims that it infringed patent rights and copyright in the design of stabiliser legs for trucks / trailers incorporating cranes (Hammar Maskin AB v Steelbro New Zealand Limited, HC CHCH CIV 2006-409-000977, 8 October 2008). This decision saw the application of existing case law, particularly on the issue of claim interpretation, based on the approach taken in Lucas v Peterson Portable Sawing Systems Ltd [2006] 3 NZLR 721 (SC), the first patent decision of the Supreme Court (established in 2004). The current approach is based on a purposive construction of the claims with assistance in interpretation provided by the specification, where necessary. However, the description cannot be used to modify the scope of claims formulated too narrowly to capture an infringement, nor can it be used to read limitations into a claim to defend against invalidity - the claims must ultimately define the field to be protected. Despite adopting a purposive construction, the feature of an extension part being movably arranged in a bearing in a first support part was found lacking because the claim was not considered to cover one part bearing on another - the use of the indefinite article before “bearing” limited the claim to require a separate, bearing part. This highlights the need for serious consideration of each limitation added to a claim during drafting.

This article was published in the World IP Review Digital Digest (p. 72-73) in March 2009.

Copyright Amendment Act - Controversial Internet Provisions

Mon, 06 Apr 2009 00:00:00 +1200

Copyright protection in New Zealand is governed by the Copyright Act 1994. The New Zealand Government recently passed a number of controversial amendments to this Act in an effort to bring it up to speed with emerging advances in digital technology, and to deal with the massive problem of copyright infringement on the internet.

Of particular note are provisions which render ISPs responsible for enforcing copyright by requiring them to terminate customers' internet access where there has been "repeated " copyright infringement.

Another area of controversy relates to the definition of ISP.   Strictly speaking telecommunication carriers and businesses that "host material on websites or other electronic retrieval systems that can be accessed by the user"   including intranets, work networks, common sites or common servers, could fall within the definition of ISP .

Section 92A of the Copyright Act 1994, specifically requires ISPs (and arguably a number of businesses), to "adopt and implement a policy that provides for the termination, in appropriate circumstances, of the account (...) of a repeat infringer". This provision is mirrored on Section 116AH of the Australian Copyright Act 1968, which recently received media attention through the activities (or alleged inactivity) of iiNet.

Where copyright is being infringed, the copyright owner is required to issue a notice to the ISP. Upon receiving this notice, the ISP or organisation must delete the infringing material, prevent access to it and advise the employee or user committing the infringing conduct of the same.   If the ISP or organisation fails to act, it becomes liable under the Act for copyright infringement.

Where there is repeated infringement, the ISP and organisation must act in accordance with a policy that provides for the termination of internet accounts. The owner of the copyright work can however only issue a "notice" to a telecommunication carrier. The actual “user” of the internet is likely to be employees of a company and not the organisation. However the telecommunication carrier would attribute the infringing conduct to the organisation's internet account and not the individual employee.    To avoid termination, the organisation must have a policy that addresses infringing conduct by employees .   As a result, companies may need to institute policies relating to the use of the shared site (for example by limiting permission to download or upload material), the deletion of infringing material, the prevention of access to infringing material and the termination of internet access by employees who repeatedly infringe copyright.

Telecommunications companies have banded together to institute a voluntary code of practice to govern their obligations and responsibilities under the Act. At the time of writing however, one of New Zealand largest telecommunications companies TelstraClear is refusing to accept or work with the voluntary code . Successful implementation of the Act seems unlikely until a resolution can be found.

This article was published in Managing Intellectual Property, April 2009.

The end of the essential feature test?

Tue, 31 Mar 2009 00:00:00 +1300

Citation

Geneva Marketing (1998) Limited v Johnson & Johnson, Johnson & Johnson (New Zealand) Limited and Johnson & Johnson Pacific Pty Limited unreported, High Court Auckland, CIV-2007-404-2431, 2 October 2008, Harrison J.

Single sentence summary
Geneva, the owner of the trade mark SYLK, is unable to prevent rival Johnson & Johnson from using the word SILK for the same goods.

Legal context
Infringement of registered trade mark, passing off, misleading and deceptive conduct and invalidity and revocation of a registered trade mark.

Facts
Geneva Marketing (1998) Limited (Geneva) is the owner of the registered trade mark SYLK in New Zealand for, inter alia, personal lubricants. It had sold personal lubricants under the SYLK trade mark for some years in New Zealand as well as in other countries including Australia, the United States and the United Kingdom. Geneva had sold between 20,000 to 40,000 units per year with a retail value of approximately NZ$180,000.

Johnson & Johnson (J&J) is a leader in the personal lubricant market with products sold under the trade mark K-Y and sales of approximately NZ$1 million per year. J&J applied for the trade mark K-Y SENSUAL SILK in 2006 and gained registration in 2007. It commenced selling products under the name K-Y SENSUAL SILK in New Zealand in 2007.

Geneva did not become aware of J&J’s registration for K-Y SENSUAL SILK until well after it was registered and therefore missed the opportunity to oppose.

Geneva sued for registered trade mark infringement, passing off and breach of the Fair Trading Act which prohibits misleading and deceptive conduct in the course of trade. Geneva also sought to invalidate and revoke J&J’s registration for K-Y SENSUAL SILK.

Analysis
Under section 93 of the Trade Marks Act 2002, use of one registered trade mark cannot infringe any other registered trade mark. Geneva therefore had to clear J&J’s registration of K-Y SENSUAL SILK from the register before being able to progress its claim to trade mark infringement.

Invalidity
The first question for determination was whether J&J’s registration for K-Y SENSUAL SILK should be removed from the register on the ground that it should never have been registered in the first place because it was likely to confuse or deceive in light of Geneva’s registration for SYLK. That question required the judge to consider the situation at the date of application and on the basis of fair and notional use by J&J.

The market for personal lubricants was said to be characterised by a significant degree of consumer loyalty, care and discernment.

The judge, in finding there was no likelihood of confusion or deception, said that the addition of the words ‘sensual silk’ to the existing ‘K-Y’ trade mark would not be likely to materially affect existing brand loyalty for either brand. Purchasing decisions were said to be influenced much more by visual than aural impression and the phonetic similarities between one word among found would be of little importance to consumers.

Revocation
Under the revocation grounds the judge was required to consider whether, as a consequence of J&J’s use of K-Y SENSUAL SILK, the use was likely to confuse or deceive. Geneva submitted that J&J had given prominence to the word SILK. Rejecting this argument, and the revocation claim, the judge found that J&J were entitled to give prominence to any part of the K-Y SENSUAL SILK trade mark.

Infringement
Geneva claimed that J&J was not using its registered trade mark K-Y SENSUAL SILK but a different trade mark on its packaging because it used ‘K-Y ® BRAND MARQUE’ following ‘K-Y’ in a rectangle with the words ‘sensual Silk’ followed by a separate ‘™’. ‘Silk’ was over three times the size of ‘sensual’. The judge referred back to the definition of use in the Trade Marks Act 2002, which includes “use in a form differing in elements that do not alter the distinctive character of the trade mark”. Dismissing Geneva’s claim that the use altered the distinctive character of the trade mark, the judge held that the additions were minute and did not interrupt or affect the impression of a continuum created by its four constituent words. Section 93, use of a registered trade mark, was an absolute defence for J&J.

Despite finding that J&J had an absolute defence, the judge went onto consider the final question, did J&J’s use of K-Y SENSUAL SILK infringe Geneva’s SYLK registration?

The judge acknowledged that he must consider the essential feature or idea of each trade mark. Geneva claimed that J&J’s trade mark was dominated by the component ‘Silk’ and this element was emphasised in its marketing and promotion.

Geneva also called evidence to prove actual confusion. A Mr White, whose surgeon had recommended Geneva’s product to relieve discomfort from a catheter said that when he asked for the product at a pharmacy he was given J&J’s product but on further enquiry he was then directed to Geneva’s product. The judge found that this was not evidence of actual confusion or deception but quite the opposite, because Mr White was directed to Geneva’s product (eventually) and it showed that the market was discerning. This finding is at odds with two previous New Zealand decisions, where it has been held that confusion or deception at any point in the purchasing process is actionable, including post sale.

In Trust Bank Auckland Limited v ASB Bank [1989] 3 NZLR 385, 389 (CA) Cooke J, held that the Fair Trading Act, which prohibits misleading and deceptive conduct, protects the public from being led into business premises by being misled as to the ownership of the business. Once a prospective customer has entered, he or she will often be more likely to buy. In Levi Strauss & Co v Kimbyr Investments [1994] 1 NZLR 332, 382 (HC), Williams J held that even post-sale confusion might be actionable. The defendant claimed post-sale confusion was caught by the Fair Trading Act, for example, someone walking down the street wearing the defendant’s jeans and someone seeing those jeans believing that they were the jeans of the plaintiff, Levi Strauss, was not in the course of trade. Williams J, rejecting the defendant’s argument, held that such an argument would restrict the ambit of the Fair Trading Act to actual purchasers rather than potential purchasers.

The judge also made a curious finding that the goods were similar but not identical. While this finding does not materially alter the result, it is curious given that both are personal lubricants, and despite Geneva’s goods being made from natural ingredients, as opposed to synthetic as J&J’s were, and being of superior quality, they are for all intents and purposes the same type of goods.

When considering infringement, the judge largely repeated his findings under invalidity and revocation: visual similarities were said to predominate, SYLK is stand-alone but SILK is one in four words and the marks as a whole create significantly divergent impressions, even though the judge did not articulate what those impressions were.

Passing off and the Fair Trading Act
The claims under passing off and the Fair Trading Act were dismissed for largely the same reasons as invalidity, revocation and infringement.

Would a different result have been achieved if Geneva had opposed?
Similar considerations apply to an opposition as to invalidity, revocation, infringement, passing off and breach of the Fair Trading Act, namely, would any fair and proper use by J&J of K-Y SENSUAL SILK for the specified goods be likely to cause confusion and deception? However, having supplied the goods to the market for two or so years, J&J were, ignoring Mr White’s evidence, able to say that confusion and deception had not occurred and were arguably in a better position than it would have been at the opposition stage.

Essential feature test
Despite saying that he considered the essential feature of each trade mark, the judge made no reference to authority such as De Cordova v Vick (1951) 68 RPC 103. De Cordova v Vick has long been considered authority for the proposition that if a word forming part of a trade mark has come in trade to be used to identify the goods of the owner, it is an infringement to use that word as the trade mark or part of the trade mark of another trader. The use of “Silk” by J&J is not use of part of Geneva’s trade mark, it is use of the whole of Geneva’s trade mark. One would have thought that De Cordova v Vick would have been discussed by the judge.

Under section 25(1)(c) of the Trade Marks Act 2002, a trade mark cannot be registered if it, or an essential element of it, is identical or similar to a trade mark that is well known in New Zealand in respect of those goods or services or any similar goods or services if use of the trade mark would be taken as indicating a connection in the course of trade between those goods and services and the goods and services of the owner of the well known trade mark and the use would be likely to prejudice the interests of the owner of the well-known trade mark.

There was no consideration by the judge of section 25(1)(c). It is not known whether it was not pleaded by Geneva or whether the trade mark SYLK was not considered to be “well known”. If for arguments sake it was well known, and the SYLK product does, despite having a much smaller market share than J&J’s K-Y, seem to be well known for personal lubricants, then it would appear to be open to Geneva to argue that SILK was an essential element of K-Y SENSUAL SILK and registration was prohibited by section 25(1)(c).

There is very little New Zealand authority on section 25(1)(c). Commentary indicates that “indicating a connection in the course of trade” and “prejudices the interests of the owner” is a lower standard than “likely to confuse and deceive”. Even if the judge thought confusion and deception was unlikely, J&J might have been caught by section 25(1)(c).

Geneva is no doubt aggrieved by its inability to prevent a competitor using a virtually identical trade mark on identical goods. Trade mark owners would normally safely assume that such a registration would prevent their competitors from using their registered trade marks, in any manner.

Further, as recognised by the judge, J&J’s registration gives it the entitlement to use the trade mark in any fair and proper manner. J&J would therefore be entitled to emphasise the word SILK to any extent it liked and still use section 93 (use of one registered trade mark cannot infringe any other registered trade mark) as a defence. If the word SILK were emphasised even further by J&J then it could be accused of passing off and breaching the Fair Trading Act but Geneva could not use its registration of SYLK to prevent it.

Practical significance
Each case is decided on its facts, but it would appear that, following Geneva v J&J, traders are entitled to use their competitor’s trade marks, provided they use other words or elements as well, at least in relation to goods where the purchasers are discerning. It would also appear that the essential feature/element test will play less of a role when considering whether trade marks are similar and whether confusion and deception will occur.

Journal of Intellectual Property Law & Practice 2009

Symansis NZ Limited - Emerging Biotech Company of the Year

Tue, 24 Mar 2009 00:00:00 +1300

Baldwins client Symansis NZ Limited has won the Emerging Biotech Company of the Year award at the 2009 NZBIO Conference held in Auckland earlier this month. Judging committee chairman Doug Wilson said: "Symansis stood out because it had an advanced business case and had entered the international landscape. The company has demonstrated creativity and imagination, entering the international market with an extremely high-quality product."

Symansis chief executive Peter Foster says "Symansis is very pleased to receive this award particularly as it raises our profile at a time when we are growing and looking for new product and market opportunities. A strong IP position is very important with respect to both our own inventions and our freedom to operate and this is where Baldwins are playing an important role in our growth."

"We are fortunate to have had the opportunity to assist Symansis NZ Limited and this award is well deserved recognition for its innovation and successful business model." says Shelley Rowland, Senior Associate, Baldwins.

Congratulations to the team at Symansis! For more information on Symansis click here.

Harmonisation and net technology importers

Wed, 18 Mar 2009 00:00:00 +1300

How developing countries deal with patent protections on life-saving medecines in a global world.

There is increasing pressure, particularly from developed countries and multinational companies, for harmonisation of the patent system. The five biggest patent offices (those of the US, Japan, Europe, China and South Korea) met in South Korea recently to discuss, among other things, common examination standards and data sharing. The drivers for this are relatively clear. All patent offices are suffering from examination pressures and the cost of repeated examination is becoming an increasing burden for users of the system. This is particularly so where examination timing issues result in the need for continued review of related applications across multiple countries.

Programmes such as the Patent Prosecution Highway (PPH) have been discussed to alleviate this burden. The PPH provides for accelerated patent prosecution by sharing information between some patent offices. It is intended to reduce duplication by each office and thereby reduce backlogs while still maintaining higher patent quality. (1)

A further expansion of the PPH could see worldwide patenting become a simpler and less expensive process for applicants. But, would all countries benefit from this?

Justification

Patent law is generally justified on four grounds: a contract between the state and the inventor to disclose the invention for the public good; a reward for invention; a means of protecting inventor’s rights; and an incentive to invention and innovation.(2)

In a developed country that is a net exporter of technology, where the focus is industrial development, investment, research, commercialisation and exporting or licensing products, the justification for patents generally is reasonable. Harmonisation of the patent system and reducing the cost burden of obtaining patent protection worldwide will have benefit for such countries. However, as applicants from other countries will also find the cost of obtaining patent protection in those countries easier, it may result in more patents being applied for and obtained. This may not be too much of an issue for net exporting countries (or regions) as they tend to be the targets for most applications anyway and the reduction in administrative burden for both the patent offices concerned and applicants from those countries may far outweigh any downsides.

In a developed country that is a net importer of technology, the focus of the country can again be on industrial development, investment, research, commercialisation and exporting or licensing products. Again, the justification for patents is reasonable, and again, harmonisation of the patent system and reducing the cost burden of obtaining patent protection worldwide should benefit such countries. Simpler and cheaper access to patent protection worldwide will be of great benefit, particularly due to the inherent problem of having to fund the worldwide applications for protection from a relatively small local market base. As a net importer of technology, however, the benefit to the country as a whole can be impeded by the patent protection obtained by applicants from other countries, usually those from countries that are net exporters of technology.

One of the benefits of being a smaller country is that patent protection is not always applied for as part of a multi-country filing program. Often this is based on cost, as the expense of applying for and obtaining patent protection is not justified on the basis of the market size. That distributed knowledge then becomes available for general use. If that country is also a developed country then the industrial development, investment, research, and commercialisation infrastructure may also be present to allow that knowledge to be used to commercial advantage. From that perspective, simpler and cheaper access to patent protection in that smaller developed country may have downsides that outweigh the benefits of a reduced administrative burden.

In developing countries where the main concerns are food, health and education, the patent system may not necessarily be so easily justified.

“[Patents and] medicine are inextricably linter-linked. Patents are a monopoly. Drug companies possess separate monopolies over many life-saving and other drugs, including those that treat HIV-AIDS. As monopolists, these companies have no compunctions about fixing high prices for essential drugs. High prices create a clear divide between the rich who can afford the medicine and the poor who cannot”. (3)

The enforcement of patents in developing countries can sometimes be difficult to justify. It has been reported that eight thousand people die from AIDS in the developing world every day due to lack of access to essential medicines.(4) This lack of access to essential medicines can be affected by high drug prices. The price of medicines can in part be attributed to global patent rules, which can be used to restrict the availability of the patented medicine or of affordable generic versions. (5)

Top

Global approach

The current global approach to intellectual property rights, and in particular the patent system, is governed by the World Trade Organisation’s (WTO) Trade Related Aspects of Intellectual Property Law (TRIPS) Agreement. WTO member countries are required, under the TRIPS agreement, to enforce intellectual property rights, including patents. Thus the requirement to provide adequate intellectual property right protection is inextricably linked to trade issues. This is can easily be justified on the basis that development of inventions that have the ability to benefit the public (medicines being a prime example) are expensive to develop and easy to copy. If adequate return on the investment required to develop the product is not achieved then, eventually, the incentive to develop new products will decline. That decline in development would clearly be to the future detriment of all countries, including developing countries.

Under art 8 of the TRIPS agreement, however, member countries “may, in formulating or amending their laws and regulations, adopt measures necessary to protect public health and nutrition, and to promote the public interest in sectors of vital importance to their socio-economic and technological development”.(6) Further Article 31 (7) allows a country to override a patent by authorizing a compulsory license for production of a drug.(8) The compulsory license may be issued on public health grounds to authorise production of patented drugs without the consent of patent holders, subject to adequate compensation. Countries can also issue compulsory licenses in response to national health emergencies.

On this basis, the Thai government, for example, issued a number of compulsory licenses. The first of these was issued in 2006 for Efavairenz, which is a treatment for HIV/AIDS patented by Merck Sharp & Dohme. Since then, Thailand has extended its compulsory licensing to include anti-AIDS drugs, heart medication and anti-cancer drugs. The US has expressed its disapproval of these activities.(9)

Top

Tensions

There are clearly tensions that arise between the demands of those countries (or regions) that have the ability to invest in the development and production of medicines, and those who do not have the ability to meet the cost of accessing those medicines. This is particularly so for developing countries but it is also an issue for many developed countries where the cost of providing access to new medicines is an increasing burden. Compulsory licences and Bolar type exceptions to infringement, for example, are available in most countries and are designed to provide some balance to this. Imposition of restrictions on patent rights must also be balanced against the provision of incentives for foreign companies to invest in the country concerned, thus transferring knowledge and skills to the local community. On that basis, targeted extensions of monopoly periods for pharmaceuticals, such as Supplementary Protection Certificates, can be considered.

For countries that are net importers of technology, the ability to control the grant of monopoly rights within the local business and social environment, once a monopoly right, such as a patent right, has been applied for, is critical. Such countries may be those that are considered to be “developed” but also those considered to be “developing”. The key to addressing many of the concerns of these countries is the national patent office. It is the patent office that has the responsibility of administering the grant of most registered intellectual property rights, including patent rights. The national patent office is effectively the gateway through which a patent applicant, foreign or local, must pass if monopoly rights are to be obtained.

There is clearly a temptation to allow the administration of the patent offices to be run by the patent office of another, usually larger, country that may have greater resources. However, this approach may have the result that the smaller country will then be faced with increased applications for patent protection based not on the importance of the smaller country to the international business community but rather on the importance of the larger country. Inclusion in the PPH may also be a temptation as this could also lower the administrative burden. Again, however, this may result in increased applications for patent protection due to the inclusion of that country on the list of participating PPH countries. The effect may be a cumulative one for a smaller country if administration of the patent office is run by a larger country and that larger country is then included in the PPH. Regional patent offices, such as the EPO, may be very successful, but only following the creation of a regional trading block, in that case the EU, which it services.

The issue of increased numbers of monopoly rights hindering innovation has recently been recognised in a recent review of the Australian national innovation system that was commissioned by the Australian Minister for Innovation, Industry, Science and Research. This review noted in Chapter 7 at pages 83 and 84:

“The development of intellectual property is cumulative. In the words of Sir Isaac Newton, we stand on the shoulders of giants. Because new knowledge always builds on old knowledge, the property rights we have erected to encourage innovation can actually obstruct it.

This is particularly so where intellectual property rights are too easily granted, and where they are ambiguously defined, so that innovators are uncertain as to what innovations might be subject to the prior claims of patent holders. There have been some worrying trends in this regard in recent years. In the last three decades judges have overturned important ‘gatekeeping’ principles of the patent system that existed until the early 1980s. Thus it had been held that software and business methods could not be the subject of patents. But this has been overturned. Likewise the tests of non-obviousness and ‘analogous use’ have become much less stringent – as some have argued, to the point of vacuity.

There is mounting evidence that this is impeding rather than stimulating innovation” (10)

Top

TRIPS

The starting point for addressing some of these issues from an administrative perspective is the TRIPS agreement. The ability to trade without sanction is critical to most countries so meeting the basic requirements outlined in the TRIPS agreement is essential.

Article 27 of TRIPS allows the grant of patents 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”.(11) WTO countries that are signatory to the TRIPS agreement may also “exclude from patentability inventions, the prevention within their territory of the commercial exploitation of which is necessary to protect order public or morality, including to protect human, animal or plant life or health or to avoid serious prejudice to the environment, provided that such exclusion is not made merely because the exploitation is prohibited by their law”. Further, Article 27 allows for the exclusion from patentability of (a) diagnostic, therapeutic and surgical methods for the treatment of humans or animals; and (b) plants and animals other than micro-organisms, and essentially biological processes for the production of plants or animals other than non-biological and microbiological processes.(12)

Top

Role for national patent offices

From a monopoly restriction perspective, it is clearly better for an application for that monopoly not to be filed rather than its effect being restricted during processing through that country’s patent office. However, there is scope within the TRIPS agreement for countries to allow national patent offices to legitimately restrict the impact of monopolies applied for by having a strict approach to patentability. For instance, methods of medical treatment can be excluded, a high threshold of inventiveness can be required, strict approaches to software, business methods and microbiological patents can be taken.
From a practical perspective, the national patent system can also impose procedural requirements, such as requiring applicants to request examination, limiting time periods for responses, restricting amendment options, imposing maintenance fees, excess page and claim fees, and extension of time fees, to name a few possibilities. Patents also have an inherent public notice role. Therefore countries can require certified translations of the specification, or at least the claims, into the main business language(s) spoken in the country concerned.

These imposed conditions and fees will, of course, also affect the local patent applicants. This is always a balance of priorities. One must remember however, that it is a monopoly right that is being requested. There is no actual requirement for anyone to request a monopoly. While the imposition of fees and conditions will be a cost to local business, it is optional and the benefits of the monopoly obtained should readily justify that cost.

The grant of a monopoly such as a patent right can result in smaller businesses being encouraged to innovate and develop inventive products. As a result, growth of “knowledge based” business and the move toward an economy based on adding value to products and the resultant technology transfer can be stimulated. In addition, information about that invention will then be disseminated into the wider business community by publication through the patent system. There is an incentive therefore to encourage local businesses to obtain patent protection to provide the basis for growth. But if the barrier to obtain such a monopoly is set too low then the overall effect can be one of impedance rather than stimulation.

To address the impact on local applicants, a tiered fee schedule that is dependent on the size of the company concerned (eg small and large entities) can be used. Further, options such as the Australian innovation patent system, which requires only an innovative step but has a balancing 8 year term, can be available. Consideration of such options must also take into account that they will be available to foreign applicants as well. They could result in a plethora of short term monopoly rights having a narrow focus and whose validity may be difficult to attack.(13) The shorter term monopoly right could also be backed up by broader, longer term, rights available through the standard patent system.

The introduction of a fee component for various procedural steps would obviously have the capability to provide benefits to the national patent office beyond that of perhaps discouraging the filing of applications in the first place. The financial gains may be used to make the patent office self-sufficient, as opposed to relying on government funds. Further, this could allow for the employment of an increased number of examiners, and improved examiner training, resulting in a higher quality of examination. In countries that do not have a tradition of intellectual property rights, the financial gains could also be used by patent offices to run education programmes to increase awareness of intellectual property rights and the benefits that can be gained from educated use of such rights.

The intention of this article was to focus on countries that are net importers of technology and to explore issues and options that may be available within the current international patent system. It is clear that most of those countries will benefit from access to more efficient patent processing systems, such as may be provided by the PPH. It is also clear that globalisation and harmonisation of procedures have their dangers and how those countries use their national patent offices within that international environment will be critical to the ability to incentivise growth and innovation.

This article was published in Pharmaceutical law Insight, November 2008.

Top

1 - “Pilot Patent Prosecution Highway”, WIPO Magazine, June 2008
2 - “Balancing IP Rights with Public Policy”, Federation Internationale Des Conseils En Propriete Industrielle
3 - Dhavan, Rajeev, “The Patent Controversy”, The Hindu, Dec 10, 2004
4 - Anderson, Angela J., “Global Pharmaceutical Patent Law in Developing Countries- Amending TRIPS to Promote Access for All”, bepress Legal Series, Paper 1052, 2006
5 - See note 4
6 - TRIPS Agreement, Article. 8
7 - TRIPS Agreement, Article 31
8 - See note 4
9 - Noonan, Kevin E., “Thailand Continues Its Compulsory Licensing Practices”, Patent Docs, March 11, 2008
10 - Venturous Australia Report, Review of the National Innovation System, Panel headed by Terry Cutler (can be found at http://www.innovation.gov.au/innovationreview/Documents/NIS_review_Web3.pdf)
11 - TRIPS Agreement, Article 27
12 - See note 7
13 - Delnorth Pty Ltd v Dura-Post (Aust) Pty Ltd [2008] FCA 1225 (13 August 2008)

Court interprets non-use provisions

Tue, 17 Mar 2009 00:00:00 +1300

In Heinz Wattie’s Limited v Goodman Fielder Consumer Foods Pty Limited (CIV 2007-404-6946, High Court Auckland, 10 December 2008, Stevens J) the court was required to consider whether the applicant for revocation for non-use could add an additional ground following the emergence of new evidence.

In 2005 the applicant (Goodman Fielder) applied for revocation on the basis of section 66(1)(a), namely that a continuous period of three years or more has elapsed during which the trade mark was not put to genuine use. In 2007 the matter was heard before the Assistant Commissioner of Trade Marks and she ruled that there had been no use under section 66(1)(a) and ordered the trade mark to be revoked. The owner of the trade mark (Heinz Wattie’s) appealed in late 2007 and filed an interlocutory application to file further evidence demonstrating that Heinz Wattie’s had resumed use of the trade mark in mid 2006, which was after the date of the application for revocation. The evidence was relevant to section 66(1)(b) which provides that a registration can be revoked if use has been suspended for an uninterrupted period of three years. Heinz Wattie’s sought to rely on section 66(3) which provides that a trade mark must not be revoked if use is commenced or resumed after the expiry of the three year non-use period and before the application for revocation is made.

Goodman Fielder applied to amend the application for revocation to include section 66(1)(b). The application was opposed by Heinz Wattie’s, who considered that Goodman Fielder should apply to the Intellectual Property Office of New Zealand to amend the original application for revocation that was filed there. The Assistant Commissioner responded by stating that she was functus officio and declined to deal further with the issue.

The judge on appeal allowed the amendment to the application for revocation to include section 66(1)(b). It was said that at the time of applying for revocation for non-use the applicant is unlikely to know all of the facts relevant to use or otherwise. That knowledge was said to be in the mind of the owner of the trade mark. Such facts would only emerge during the evidence phase. The failure to particularise the statutory basis for seeking revocation did not make the application for revocation invalid or ineffective. There was said to be no good reason why it should not be open for an applicant who advanced only one ground to include a further ground if the evidence emerged to support it. The role of the court was said to be to put itself in a position to deal with the real controversy between the parties.

The judge also noted the public interest in ensuring that the trade marks register is kept free of trade marks which are not in use. Heinz Wattie’s submitted that it was entitled to take advantage of the fact Goodman Fielder had not initially sought revocation on the basis of section 66(1)(b), and sought to rely on section 66(3), namely that the use was commenced or resumed after the expiry of the three year non-use period and before the application for revocation is made and the trade mark could not therefore be revoked. The judge was critical of this approach and said that Heinz Wattie’s deliberately and cynically delayed filing evidence to show how the trade mark was used in order to defeat the application for revocation and maintain its mark on the register.

The judge allowed Goodman Fielder to include section 66(1)(b) as a ground for revocation and the substantive appeal proceeds on that basis.

World Trademark Review Daily
17 March 2009

Court awards impractical injunction

Fri, 13 Mar 2009 00:00:00 +1300

In Ace Tourist Rentals (NZ) Limited t/a Ace Rental Cars v Clouth & Giles Investments Limited t/a Hireace and Trailerace (CIV 2008-404-7743, High Court Auckland, 4 December 2008, Chisholm J), the High Court of New Zealand awarded an interim injunction to the plaintiff.

Ace Tourist Rentals (New Zealand) Limited (the plaintiff) traded as a rental car company and had been using its registered logo comprising of the word “Ace” with an arched arrow, both in yellow, on a blue background since 2000 (“Ace Logo”).

Clouth & Giles Investments Limited (the defendant) also owned a registered trade mark. The logo depicted the word “Hireace” in white with the “Ace” component in italics. The word “Ace” was surrounded by a yellow semi-circle and two stars with a blue background (“Hireace Logo”).

The defendant had previously been in the business of truck, ute and trailer hire but moved into the car hire market in 2008, following the acquisition of a car hire business. In March 2008, following its business expansion, the defendant moved into new premises and repainted the building blue with the Hireace Logo prominently on display.

The plaintiff alleged that the defendant’s change of livery and identical colour palette coupled with the use of the name “Ace” would cause confusion in the market and infringe its Ace Logo.

Had the defendant stayed within the truck, ute and trailer hire business, the judge said there would have been no confusion. The judge doubted that as a stand alone factor the word “Ace” is capable of causing confusion. Taking into account of the overall impact of both logos however, the judge was satisfied that the similarities would cause confusion in the market, describing damages to the plaintiff as “virtually inevitable”.

The defendant was ordered to refrain from use of the Hireace Logo in its advertising and promotional material in relation to the hire of cars but not truck, ute or trailer hire or commercial hire. The judge made an arguably impractical order in that if a car was being dropped off or picked up from the defendant’s premises, staff should not wear apparel bearing the Hireace Logo but if a truck, ute, truck or commercial hire vehicle was being dropped off or picked up, then staff were permitted to wear apparel wearing the Hireace Logo. The interim injunction orders stand until the parties resolve their differences or the substantive issues are determined by the court at a full hearing.

World Trademark Review Daily
13 March 2009

Patent filing system changed

Mon, 09 Mar 2009 00:00:00 +1300

The Intellectual Property Office of New Zealand is implementing some changes to patent practice in New Zealand that are worthy of mention.

The first is the Intellectual Property Office of New Zealand (IPONZ) now issues a request for English translations of international application shortly after entry into national phase in New Zealand. Previously, IPONZ did not request this information.

Under this new practice there is now a three-month deadline set 31 months from the earliest priority date in which to file a verified translation of any document which forms part of a PCT application for entry into national phase in New Zealand and which is not in the English language.

The three month deadline is extendible by two months. If an extension request is not filed or final deadline is not met then the application will be made void and the application will not be restorable.

Another change, which has not yet been implemented, is a proposal by IPONZ to dispose of “significant sections” of their collection of foreign patent documents. To practitioners in many jurisdictions, this may appear to be insignificant. However, New Zealand still has only a local novelty requirement. Therefore, the ability to obtain evidence of receipt of a particular publication with a proven date of public availability in New Zealand can be vital in oppositional or revocation proceedings. A further issue is the lack of clarity on the status of applications available via the internet, which the Court have not to our knowledge considered. The problems surrounding the New Zealand local novelty requirement should be resolved when proposed patent legislation which includes an absolute novelty requirement eventually comes in to force.

This article was published in Managing Intellectual Property, March 2009.

Change in President to bring change in attitude to Intellectual Property?

Tue, 17 Feb 2009 00:00:00 +1300

The changing of the guard at the White House may have brought with it a new Presidential attitude to intellectual property rights in the United States.

At the end of the Bush administration’s term a number of officials resigned from roles related to IP, leaving incoming President Barack Obama to select new appointees. One keenly anticipated appointment is that of the new Undersecretary of Commerce for Intellectual Property, who will also be the Director of the United States Patent and Trade Mark Office (USPTO). The USPTO is the organisation responsible for examining and granting patents and trade marks in the United States. The USPTO Director plays an influential role in overall IP policy, as well as overseeing rules on how the office deals with patents and patent applications.

IBM Vice President David Kappos is a contender for the job. However, many stakeholders, particularly those from the Biotechnology sector, fear that his appointment could lead to a weakening of the patent system. In the past Kappos has argued in favour of proposed legislation which would have made it easer to challenge the validity of granted patents, and reduced the damages payable by patent infringers. Biotech lobbyists argue that such a move would make it harder to protect new discoveries, which would in turn stifle investment in medical and pharmaceutical research.

Also raising eyebrows is the appointment of Sun Microsystems co-founder Scott McNealy to prepare a paper on the viability of government departments using “open source” rather than proprietary software. McNealy has long been an open source software advocate, and his role in the review has led some commentators to question the new administration’s position on Intellectual Property rights. With New Zealand’s drive towards a knowledge lead economy, the availability of robust intellectual property protection in key markets like the US is essential if we are to attract investment in our research based companies, and prevent our ideas from being stolen by huge overseas competitors with litigation budgets which exceed the total annual turnover of the average New Zealand company.

As with so many other issues, we can only wait and see what the next four years hold in store for participants in the US Intellectual Property system.

The copyright commissioning conundrum

Tue, 10 Feb 2009 00:00:00 +1300

All around the world, of all the members of the intellectual property family, copyright is showing the greatest signs of stress. New Zealand is no exception.

There have recently been piecemeal reforms of the local legislation in an attempt to deal with technological change, including some controversial requirements recently imposed on internet service providers. There are also a number of other reforms underway, ranging from an artist’s resale right, parody and satire and the commissioning rule in copyright.

Copyright law is rapidly becoming an incomprehensible mess. One local commentator has suggested that the new government should start again with a blank sheet of paper (Matt Sumpter [2008] NZIPJ 481).

The commissioning rule is one of the areas that is most confused. Currently section 21(3) of the Copyright Act 1994 is one of two exceptions to the default position that the author of an original work owns copyright in it (the other being that the employer owns the work of employees created in the course of their employment). It provides essentially that apart from dramatic and literary works (except computer programs) the commissioning party owns copyright in the work by default. Both the commissioning exception and the employment exception can be overridden by agreement.

This can create the situation where a commissioning party can own the artistic parts of work it has commissioned from an outside agency, but not the literary or written parts, unless that written part is a computer program. Confused? So are many New Zealanders.

The United Kingdom dropped the commissioning rule when it reformed its law in 1988. Although it based much of its 1994 legislation on the UK Act, New Zealand chose not to do the same. Many New Zealanders continue to stumble over the issue: many don’t even turn their minds to the issue at the time of creation.

In September 2008, the previous government introduced a bill to abolish the commissioning rule. The bill was reinstated by the new government before parliament went into recess for the summer vacation but is yet to be scrutinised by a select committee. The question is whether that approach is the correct one?

Shouldn’t the person who pays for creation of the work own it, no matter what type of work it is? Or is the act of creation of a copyright work so sacrosanct that only the creator should have any right to it unless he or she has agreed to give that right away?

The proposed change shifts control to the creator on the basis that a licence may be all the commissioner needs. Consistency would be good: whether this is the right way to achieve it is another issue.

This article appeared in the February 2009 edition of Managing Intellectual Property.

TICK TOCK not similar to TIC TAC says appeal court

Tue, 03 Feb 2009 00:00:00 +1300

In 2007 the Assistant Commissioner of Trade Marks issued a decision ruling TICK TOCK in class 30 covering tea was confusingly similar to TIC TAC covering confectionery (World Trademark Law Report 8 March 2007). Neither party requested to be heard or made submissions at the opposition hearing. In the absence of direction from the parties, the Assistant Commissioner appeared to lack understanding of how the pleadings, evidence and law tied together. The applicant for TICK TOCK, Wistbray Limited, filed an appeal to the Assistant Commissioner’s decision at the High Court. The owner of TIC TAC, Ferrero S.p.A. did not oppose the appeal.

At the appeal hearing, counsel for Wistbray criticised two recent decisions of the High Court, which drew their authority from the Supreme Court (the final appellate court in New Zealand), for the proposition that whilst differences may be significant, it is the similarities that matter. The Judge would not agree that that was a wrong statement of law. This is not surprising given that one of the impugned decisions was his own. He said that in particular circumstances differences may be more telling but in other cases similarities may carry the day.

The Judge found that the differences between the words are relatively subtle, and if the trade marks were to be used for similar goods, then the differences between the trade marks may not be enough to avoid confusion and deception (Wistbray Limited v Ferrero S.p.A (unreported, CIV-2007-485-460, 11 December 2008, Dobson J)).

The difference in the goods was decisive. While recognising the strong reputation Ferrero has for its TIC TAC product, the Judge found that the Assistant Commissioner’s reasoning omits the critical analysis as to whether confusion and deception is likely to arise when Wistbray uses the mark for tea, which is a very different product to confectionery.

The Judge referred to the European Court of Justice and English Court of Appeal decisions in Intel Corporation Inc V CPM United Kingdom Limited (Case C-252/07, June 26 2008) and [2007] RPC 35 referring to the requirement for there to be a “link” in the minds of consumers between the earlier and later mark. The Judge referred to the requirement under New Zealand law, in the case of a well-known mark, for there to be “a connection in the course of trade” rather than a “link” but found Jacob LJ’s reasoning in Intel to be helpful. The dissimilarity of the goods was said to be a strong indication against there being a trade connection between TICK TOCK for tea and TIC TAC for confectionery.

The Judge reversed the costs award made by the Assistant Commissioner against Wistbray and awarded costs for the appeal hearing.

World Trademark Review Daily
3 February 2009

New patent legislation at last for New Zealand

Wed, 21 Jan 2009 00:00:00 +1300

After many years of waiting, a bill which completely overhauls New Zealand’s outdated 1953 patent legislation was introduced into the New Zealand Parliament this year.

As it stands at present, New Zealand’s patent legislation is based on the 1949 United Kingdom patents act which was replaced in the United Kingdom in 1977. New Zealand still has local novelty, and does not examine applications for obviousness, which has had to be raised in opposition or revocation.

The Patents Bill 2008 imposes stricter requirements on the grant of a patent and brings New Zealand legislation into line with that of most other countries.

Major features of the Bill are the introduction of absolute novelty, examination for inventive step and a ‘whole of contents’ approach to dealing with conflicting applications. Other notable features are the establishment of a Maori Advisory Committee to provide advice to the Commissioner of Patents on patent applications for inventions involving indigenous plants and animals, a specific experimental use exception, publication of patent applications 18 months from the earliest priority date, the abolition of pre-grant opposition and the introduction in its place of re-examination, and reform of the patent attorney profession.

Standard of proof
Presently, patent applications are examined on the basis that the ‘benefit of the doubt’ is given to an applicant when deciding if a claimed invention is patentable. Instead, there will be a tougher test of satisfying the Commissioner of Patents that an invention is patentable on the ‘balance of probabilities’.

Criteria for granting a patent
A patentable invention is defined in the Bill as an invention that:
• is a ‘manner of manufacture’; and
• is new; and
• involves an inventive step; and
• is useful.

The term ‘manner of manufacture’ has been retained from the current legislation (and repeats the reference to section 6 of the Statute of Monopolies). This has been interpreted by the Courts to exclude ‘products of nature’, mere discoveries, mathematical algorithms, mere schemes or plans, and methods of medical treatments of humans. The retention of this in the
definition of invention means this case law is likely to continue to apply.

There are statutory exclusions from patentability for medical treatment of humans by surgery or therapy and methods of diagnosis on human beings.

The Bill is silent on Swiss-type claims, although it is likely that the case law established by Pharmaceutical Management Agency Limited v the Commissioner of Patents [2000] 2 NZLR 529 will survive. A further exclusion is plant varieties, which are protectable under the Plant
Varieties Act 1987.

The Bill provides for absolute novelty, meaning that novelty will be destroyed by written or oral description or use of the invention anywhere in the world. There has been some erosion of the current local novelty requirement with the advent of the internet, but the change to absolute novelty is likely to receive widespread approval. Introduction of absolute novelty will assist in reducing the risk that patents are granted in New Zealand for inventions that are otherwise known elsewhere and would not be eligible for patent protection in other countries. There is specific acknowledgement of this in the explanatory note to the Bill which notes:

‘A key objective…is to, as far as possible, reduce the possibility that patents will be granted for things that are not innovations and, where such patents are granted, to make it easier and cheaper for the validity of such patents to be challenged.’

Additionally, the Commissioner will now be able to refuse a patent application on the ground that the claimed invention does not involve an inventive step, so that the patent will be refused if the claimed invention is obvious to a person skilled in the art.

Patent applications will also be examined for usefulness, ie, the invention must have specific,
credible, and substantial utility. This criterion reflects the United States’ ‘utility’ requirement and Europe’s ‘industrial application’ requirement. The main reason appears to be to prevent the grant of overly broad patents for genetic material without the applicant demonstrating a particular use.

Whole contents examination
The whole contents of a New Zealand complete specification with an earlier priority date published after the priority date of the examined application will be considered on examination for novelty.
Under the existing legislation, the patent must be prior claimed in a granted patent, a much narrower criterion, which has long been replaced elsewhere around the world and a source of considerable frustration. Most recently it caused considerable difficulty in the SmithKline Beecham litigation against Synthon involving paroxetine mesylate.

Who can apply and be granted a patent
Currently, only inventors or their assignees may apply for a patent. Sometimes overseas applicants have difficulty where the rights to an invention are assigned and the assignment has not been completed before the time limit for filing the application in New Zealand has expired. Due to differing requirements in other countries, the New Zealand application is often filed in the name of the assignee who, at the time of filing, may not have the right to apply under New Zealand law. To overcome this problem, the Bill will provide that any person may apply for a patent, but only inventors and their assignees have the right to be granted the patent.
The requirement for New Zealand residents to seek permission from the Commissioner if they wish to file for a patent application overseas and have not already filed in New Zealand has been dropped.

Inventions made by employees
There are no major reforms in relation to the rights of employees to inventions. The New Zealand government has chosen not to introduce the types of provisions in the UK Patents Act or in other countries such as Japan providing for specific benefits for employees.
Instead, the only reform is to transfer the jurisdiction for determining disputes between employers and employees from the High Court to the Employment Relations Authority (which did not exist at the time of the 1953 legislation).
The position on employee inventors therefore remains to be determined by contract and common law. The complexity of this issue was highlighted in the context of commercialisation in universities in the recent decision of French J in nearby Australia in
the record 400-page decision of University of Western Australia v Gray (No 20) (2008) 76 IPR 222. There may be some debate on this issue at the Select Committee.

Maori Advisory Committee
There is a Maori Advisory Committee, whose role is to advise the Commissioner of Patents on whether a claimed invention is derived from Maori traditional knowledge or from indigenous plants or animals, and, if so, whether the commercial exploitation of that invention is likely to be contrary to Maori values.
A similar committee was set up under New Zealand’s recently amended trademarks legislation. It has operated since 2003, with few adverse decisions resulting in refusal of trademarks.
Publication will now be 18 months from the earliest priority date, instead of as acceptance at present. This brings New Zealand into line with overseas countries and with the date of publication of PCT applications.

Examination procedure – time limits
The Commissioner now has the power to set time limits for response to examination reports issued by the Commissioner in addition to the overall time limit for overcoming all objections that currently exist. Failure to meet these time limits will mean the applications will be deemed to be abandoned.

Disclosure of searches
The Bill requires applicants to disclose to the Commissioner any documentary searches carried out by or on behalf of a foreign patent office for the purpose of assessing the patentability of the invention. Failure to disclose the search reports will mean the Commissioner will refuse to amend the complete specification, if the effect of the proposed amendment would be to remove a ground of objection to the specification arising from the existence of some or all of the information disclosed in those search reports.
This requirement was tried in Australia but was recently withdrawn, so it is surprising that it has been retained in the Bill.

Publication
Currently, patent specifications are not published until after the application has been accepted. This is out of line with most overseas countries and international applications filed under the Patent Co-operation Treaty. Under the Bill, the complete specification of New Zealand patent applications will be open to public inspection automatically 18 months
after the earliest priority date.
All documents relating to applications filed in relation to the patent application will be open to public inspection and examination reports will become available once the application has been accepted.

Re-examination and revocation before the Commissioner
One of the most controversial parts of the new Bill is the removal of pre-grant opposition. This will take New Zealand away from the procedures of its Australian neighbour and is likely to be the subject of considerable debate at the select committee hearings on the Bill prior to the enactment of the legislation. It can reasonably be expected that this will be challenged by a number of parties.
The Bill does however provide for third-party involvement prior to grant by way of re-examination on the basis that the invention concerned is not novel or lacks an inventive step. It specifically allows any person to assert to the Commissioner after publication, that an
invention is not novel or does not involve an inventive step after publication.
The present ability to apply to the Commissioner to revoke the patent within a year of grant (known as belated opposition under the current law) has been retained, but the one year-time limit has been dropped. Any person can apply to the Commissioner to revoke the patent on the basis that it is not novel and lacks an inventive step, and the parties may request a hearing before the Commissioner makes his decision.

Revocation in the court
The Bill retains the current law allowing revocation proceedings to be issued in the High Court. The grounds for revocation in the High Court are as follows:
• the invention is not a patentable invention;
• the patentee is not entitled to the grant of the patent;
• the complete specification does not comply with the requirement to describe the invention, method of performance and claims;
• the scope of a claim is not sufficiently included fine or fairly based on the matter disclosed in the complete specifications, other side the patent was obtained by fraud, false suggestion or a misrepresentation;
• the invention was secretly used in New Zealand before the priority date; and
• the patent has been granted contrary to law.

Infringement
The Bill describes the exclusive rights for the patentee to exploit the invention as ‘making, hiring, selling, or otherwise disposing of a patented product, offering to make, hire, sell, or otherwise dispose of, use or import the product, or keep product for performing those acts’. If the invention is a process, exploitation of a product produced by the process in any of these ways will be an infringement, as will the use of the process.
This is a marked improvement on the current legislation which does not define the rights granted to a patentee nor define infringement itself: instead, the exclusive rights to make, use, exercise, and vend the invention are sent out in patent deed and infringement is taken to be anything that falls within the scope of the rights granted to the patentee.
The Bill specifically provides for contributory infringement. There has been some doubt as to
whether this does exist under New Zealand law. The Bill provides that an infringement occurs if a person supplies another person with a means of putting an invention into effect, if doing so would infringe a patent and the person knows or ought reasonably to have known that the supplied means are suitable and intended for that purpose. There is an exception for the supply of staple commercial products.
Where the invention is a process, exploitation of a product produced by the process is presumed to have been obtained by the patent process for obtaining that product. This means that the onus will then reverse to the defendant to establish that it has not been.
The Bill retains the existing provisions in relation to relief for infringement, being the grant of an injunction, and at the election of the plaintiff, damages are on account of profits. This can be refused if the defendant proves that it did not know or ought not reasonably to have known that the patent existed. Labelling the product with the New Zealand patent number will provide notice that the person knew or ought reasonably to have known of the product. There is no provision in the Bill for a remedy for groundless threats of patent infringement. Unless changes are made at the select committee, defendants will need to rely on other remedies particularly of the tortuous variety.
The Bill retains the right to apply for a declaration of non-infringement if the patentee of exclusive licensee has not provided an acknowledgement to this effect on application from the person applying for it.

Experimental use exception
There is an experimental use exception for acts conducted for experimental purposes relating to the subject matter of an invention if the act does not reasonably conflict with the normal exploitation of the invention. Permitted acts include determining how the invention works, the scope of the invention, the validity of the claims, and seeking an improvement of the invention. The exception is intended to allow further development and improvements in an invention, including new uses of an invention, without fear of an action for infringement, but not to negate unfairly the rights of a patent owner.

Patent Attorney regulation
The Bill sets up a patent attorney standards board comprising the Commissioner, an Assistant Commissioner, at least two persons nominated by the New Zealand Institute of Patent Attorneys, and optionally another person appointed by the Minister. The board’s role includes approving a code of conduct for patent attorneys to be drafted by the Institute of Patent Attorneys, complaints and disciplinary procedures, and determining qualification
requirements. This removes the discipline of patent attorneys from the control of the profession to an independent body. The Bill also allows for the incorporation of patent attorney firms. This will bring patent attorneys into line with recent changes to the legislation governing lawyers in New Zealand. The Lawyers and Conveyancers Act 2006, which came into force on 1 August 2008, now allows for the incorporation of law firms in New Zealand.
The Bill restricts the preparation of specifications or documents relating to an amendment of specification to registered patent attorneys or patent attorney companies.

Conclusion
Although the government of New Zealand changed following the November election, the Bill was reinstated by the new government. It is expected to be considered by a select committee of members of parliament in 2009. Interested parties will be able to make submissions.
Under the New Zealand process, substantial amendments may well be recommended by the select committee prior to the Bill returning to the house to complete the remaining stages, possibly some time before the end of 2009.
This means the earliest the new legislation could be expected to come into effect is during 2010.

This article first appeared in the December 2008 edition of the Asia Pacific Forum News and is reproduced here with kind permission of the International Bar Association, London, UK.

Design applications with single views allowed

Fri, 16 Jan 2009 00:00:00 +1300

A recently published assistant commissioner’s decision has confirmed that a registered design in New Zealand may include only a single view, or minimal views, of the article to which the design is to be applied.

The decision considered five design applications, nos 405512, 406613, 406401, 406343 and 4077794 all in the name of Merz & Krell GmbH & Co KGaA. The applications related to writing utensils.

During prosecution the examiner raised an objection under Regulation 25 of the New Zealand Design Regulations 1954, which provides that “...representations of the design, in a form satisfactory to the Commissioner...” must be supplied.

In the examiner’s view the representations filed were insufficient to show the three-dimensional shape and configuration of the designs.

The applicant requested a hearing on the acceptability of the representations and on receiving a favourable decision
requested, in the public interest, that the decision be made open to public inspection (which it would not have been otherwise).

At the hearing the applicant argued that the purpose of the representations accompanying a design application is to show the extent of the design protection afforded to the proprietor after registration, rather than to show the article in its entirety, relying on the decision of the UK Registered Designs Appeal Tribunal in Ford Motor Company Limited’s Design Application
[1972] RPC 320. It submitted that while this decision was not binding on IPONZ, it was at least highly persuasive, due to it relating to the equivalent provisions of the UK Designs Rules 1949. In Ford’s Application a design was allowed to proceed with only a front view of the article, in that case an automotive wheel.

The applicant also argued that to insist on further views could endanger the claim to priority from the original German applications which did not have such views, referring to Dehyle’s Design Applications [1982] RPC 626.

The assistant commissioner concluded that the representations in question were comparable with those allowed in Ford’s Application, and as such were acceptable.

This therefore represents an important affirmation for New Zealand design applicants that while the representations must fully show the design for which protection is sought, this does not necessarily mean showing the entire article, and that even a single view may be sufficient for this purpose.

This article was published in Managing Intellectual Property, December 2008.

Morality and patentability – stem cell patents in New Zealand

Mon, 05 Jan 2009 00:00:00 +1300

Stem cell research and patents claiming stem cells are a controversial topic around the world. For example, the Enlarged Board of Appeal of the European Patent Office has recently held public oral proceedings to consider an appeal against the rejection of a patent application directed to primate embryonic stem cells filed by the Wisconsin Alumni Research Foundation.[i] In addition, stem cell patents held by the Wisconsin Alumni Research Foundation have been challenged in the United States. [ii]

In New Zealand, patent claims that include stem cells within their scope frequently face a “contrary to morality” objection during examination. This objection is raised under the ambit of section 17(1) of the New Zealand Patents Act 1953 which allows a patent application to be refused if “it appears to the Commissioner in the case of any application for a patent that the use of the invention in respect of which the application is made would be contrary to morality”.

Objections under section 17(1) are raised by examiners in New Zealand against claims directed to stem cells, their use, methods to induce stem cells to differentiate and similar subject matter. Objections under section 17(1) are also raised against claims to transformed cells, if the claim does not clearly exclude cells within a human from its scope. In the context of stem cell claims, an objection may be raised under section 17(1) that a claim encompasses human totipotent cells (which may develop into a human) and that the claim is therefore contrary to morality. The Assistant Commissioner of Patents addressed the appropriateness of such objections in the recently published decision, P22/2007.[iii]

The Assistant Commissioner’s decision

Two patent applications are at issue in P22/2007. These are NZ 532170 in the name of the Wisconsin Alumni Research Foundation and NZ 535243 in the name of Wicell Research Institute, Inc. NZ 532170 is directed to an in vitro method for directing the differentiation of primate embryonic stem cells and NZ 535243 is directed to a method for inducing primate stem cells to differentiate. In each case, the application was refused by the examiner under section 17(1) of the Patents Act. Each applicant requested a hearing before the Assistant Commissioner to decide whether refusal on this ground was warranted. These matters were heard together and a number of issues surrounding stem cells and the application of section 17(1) are discussed in the Assistant Commissioner’s decision.

Can totipotent stem cells develop into a human?
The applicants argued that there is no authority to support the examiner’s position that totipotent stem cells are capable of developing into a human. The Assistant Commissioner rejected this argument because the Assistant Commissioner considered that it is well established and generally accepted in the field that totipotent stem cells do have the potential to develop into an entire human body.

The law in New Zealand and the application of section 17
The applicants noted that there is no judicial comment on the meaning of “contrary to morality” in New Zealand. One of the few references to section 17 in a New Zealand case is in Pfizer v Commissioner of Patents,[iv] where O’Regan J said that

“we do not believe that s17 empowers the Commissioner to decline a patent because the patent would be used for an immoral purpose but rather only if the invention for which the patent is sought would be used for such a purpose.”

In addition, section 17 has been referred to as “a little used provision”.[v] There has also been some discussion of section 17 in academic writing [vi] and during the consultation regarding the review of the Patents Act.[vii] Since there is minimal guidance available regarding the application of section 17 in New Zealand, the “morality” position in other jurisdictions was also reviewed by the Assistant Commissioner in P22/2007.

The law in Europe
The Assistant Commissioner reviewed the position in Europe where Article 53(a) of the European Patent Convention excludes “inventions the publication or exploitation of which would be contrary to ‘ordre public’ or morality” from patentability. In addition, there is a specific exclusion to the use of human embryos for industrial or commercial purposes.[viii]

The European Patent Office Examining Division considered and refused European Patent Application No. 96 903 521.1 “Primate embryonic stem cells”.[ix] This refusal was appealed to the EPO Technical Board of Appeal, which declined to decide whether the application was allowable. The application has now been referred to the Enlarged Board of Appeal, and oral proceedings were recently held.

The applicants in New Zealand argued that the European position is not on point because the law being considered is whether claims to primate stem cells violate the prohibition against the commercial exploitation of embryos, not whether methods of producing stem cells are contrary to morality.

The position in the United Kingdom
The UK Patents Act 1977 has both a “contrary to morality” provision and a paragraph analogous to Rule 23d(c).[x] In addition, the UK Intellectual Property Office has issued Examination Guidelines that refuse to allow claims to human stem cells or their use.[xi] However, the applicants submitted that, as in Europe, the stance in the UK is based on the exclusion of the use of human embryos for industrial or commercial purposes, not on a contrary to morality provision such as New Zealand has.

Other jurisdictions
Neither Australia nor the United States have “contrary to morality” provisions in its legislation, although the Australian Patent Examiners’ Manual does include a section regarding the examination of patent claims directed to stem cells.[xii] The Singapore Patents Act includes a section that excludes from patentability “an invention the publication or exploitation of which would be generally expected to encourage offensive, immoral or antisocial behaviour.” Patents equivalent to NZ 532170 and 535423 have been granted in the United States and Singapore.

The gist of the applicants’ argument is that the law as applied in foreign jurisdictions is not applicable to the situation in New Zealand as the legislation and its application is different.

Is the claimed invention contrary to morality?
The applicants then referred to the definitions of both “morality” (conformity to the rules of right conduct; moral or virtuous conduct) and “contrary” (opposite in nature or character, diametrically opposed, mutually opposed; opposite in direction or position) and submitted that the Assistant Commissioner needed to determine whether using the methods claimed in NZ 532170 and 535423 is “diametrically opposed to behaviour which New Zealand society believes to be right conduct, that belief being deeply rooted in our culture.”

The Assistant Commissioner agreed that this is the appropriate question and accepted that there is no “deeply rooted” belief against stem cell research amongst the New Zealand population as a whole, while conceding that there is widespread debate on the issue.

In addition, the Assistant Commissioner noted that any moral and legal issues relating to the use of these methods are dealt with by legislation other than the Patents Act. For example, stem cells derived from an embryo are excluded from the definition of “embryo” in section 5 of the Human Assisted Reproductive Technologies (HART) Act 2004. Section 16 of the HART Act provides that research in the HART area must be approved by the Ethics Committee on Assisted Reproductive Technology. The New Zealand Public Health and Disability Act 2000 provides a Health and Disability Ethics Committee that includes human embryonic stem cell research in its jurisdiction and the 2006 Ministry of Health Guidelines for using cells from human embryonic stem cell lines for research contain a number of strict conditions and requirements that must be met before research on embryonic stem cells can be performed.

The Assistant Commissioner therefore considered that stem cell research, even if totipotent cells are involved, is not viewed by the government to be inherently contrary to morality and is clearly allowed provided certain conditions are met. The Assistant Commissioner held that “it is not appropriate for the Intellectual Property Office of New Zealand to act as a further arbiter of morality in cases such as this”.

In addition, the Assistant Commissioner noted that there is precedent from the Intellectual Property Office of New Zealand in the form of previously granted patents for methods involving the treatment of embryonic stem cells. Since it is well-settled law that the benefit of the doubt must be given to the patentee, the Assistant Commissioner held that the two applications should proceed to acceptance.

Intellectual Property Office of New Zealand practice regarding section 17(1)
The P22/2007 decision was publicly released on 14 May 2008. Although the Assistant Commissioner makes some strong statements regarding the application of section 17(1), the Assistant Commissioner’s decision does not set a binding precedent for other pending applications. On 13 May 2008, the Intellectual Property Office of New Zealand released a Practice Note regarding raising section 17(1) objections during examination.[xiii] As a general guide, the Note lists subject matter that may attract an objection under section 17(1) including claims directed to

“human beings, processes which give rise to human beings and biological processes for their production; methods of cloning human beings; totipotent human stem cells; human embryos and processes requiring their use; placental and umbilical cord tissues and processes requiring the use of placental and umbilical cord tissues; transformed host cells within a human and other cells and tissues within a human”.

The guidelines state that the Intellectual Property Office of New Zealand will “continue to raise objections under s17(1) where it appears that the use of the invention would be contrary to morality for New Zealand society as a whole or for a significant section of the community, including Māori.” In determining whether an invention is contrary to morality, the Intellectual Property Office of New Zealand states that it will take into account “concerns of interest groups, evidence including appropriate public polls and research, corresponding foreign legislation, case law and guidelines.” In other words, the Intellectual Property Office of New Zealand may consult with non-government parties in order to arrive at an informed decision. It appears that the new guidelines broaden the circumstances in which an invention may be objected to as contrary to morality because the opinion of only a section of the New Zealand community may be considered in some cases.

The Practice Note contradicts the Assistant Commissioner’s approach in P22/2007, where he agreed that the correct question to consider is whether the claimed invention is “diametrically opposed to behaviour which New Zealand society believes to be right conduct, that belief being deeply rooted in our culture.” That is, what should be considered is the belief of New Zealand society as a whole. The Assistant Commissioner also clearly indicated that, at least in relation to inventions encompassing stem cells, it is not the role of the Intellectual Property Office of New Zealand to judge these issues when there are adequate provisions elsewhere for monitoring and approving various forms of stem cell research.

The Practice Note also indicates that the Intellectual Property Office of New Zealand considers it is appropriate to refer to the documentation produced during the review of the Patents Act and the content of the recently introduced Patents Bill itself in determining whether to raise an objection under section 17(1).[xiv] The Patents Bill does include some specific exclusions to patentability as discussed below. However, using the Patents Bill to guide decisions made under the present legislation is a questionable approach because the Patents Bill has not yet been considered or passed by Parliament.

The Patents Bill – exclusions to patentability
The Patents Bill was introduced into Parliament on 9 July 2008, but has not yet begun its progression through the House of Representatives. Clause 14(1) of the Patents Bill excludes from patentability inventions the commercial exploitation of which would be contrary to public order or morality. This is similar to section 17(1) of the present Act. However, clause 14(3) adds a new feature in that the Commissioner may seek advice from the Māori advisory committee (newly established by the Patents Bill [xv]) or any person that the Commissioner considers appropriate. The explanatory note accompanying the Patents Bill describes the role of the Māori advisory committee as:

“to advise the Commissioner in relation to patent applications for inventions involving traditional knowledge or indigenous plants and animals…to provide advice that can be used by the Commissioner to determine whether such inventions are novel, or involve an inventive step, or whether the commercial exploitation of such inventions would be contrary to Māori values.”

In addition to the morality clause (clause 14), the Patents Bill specifically excludes from patentability 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 Bill still has to progress through Select Committee review. It is possible that these provisions will change during this process.

Conclusion
The P22/2007 decision and the May 2008 guidelines issued by the Intellectual Property Office of New Zealand provide conflicting messages about the application of section 17(1). The position on the patentability of stem cells, and of other contentious subject matter, will hopefully become clearer as the new Patents Bill progresses through the Parliamentary process.

This article was published in Patent World, November 2008.

[i] European Patent Application No. 96903521.1. back to text
[ii] US 5,843,780 (primate embryonic stem cells); US 6,200,806 and US 7,029,913 (human embryonic stem cells). back to text
[iii] Wisconsin Alumni Research Foundation and Wicell Research Institute Inc, Decision of the Assistant Commissioner, P22/2007. back to text
[iv] Pfizer v Commissioner of Patents [2005] 1 NZLR 362 (CA) back to text
[v] Paul Sumpter, Intellectual Property Law; Principles in Practice, 2006 back to text
[vi] See, for example, Libby Beadle, Selling the stem cell short? An assessment of the patentability of the results of human stem cell research in New Zealand. 2004. Canterbury Law Review [Vol 10], p 1-35. back to text
[vii] CAB Min (03) 11/5; Hon Judith Tizard, Cabinet Paper: Review of the Patents Act 1953 Stage 3: Part 1 (2003). back to text
[viii] Rule 23d(c). back to text
[ix] Re Application by Wisconsin Alumni Research Foundation, T 1374/04-EPO (21 April 2006). back to text
[x] United Kingdom Patents Act 1977, section 1(3), 1(4) and paragraph 3(d) of Schedule A2. back to text
[xi] Guidelines for Patent Applications Relating to Biotechnological Inventions in the UK Intellectual Property Office (September 2006). back to text
[xii] Australian Patent Manual of Practice and Procedures, National – Patentable Subject Matter, 2.9.5.1 (1 May 2007). A human totipotent stem cell and methods or processes of obtaining human totipotent cells are not patentable under s18(2) of the Australian Patents Act 1990, which is an exclusion to the patentability of human beings and biological processes for their generation. back to text
[xiii] Raising objections under section 17(1) – contrary to morality. Intellectual Property Office Newsletter, 13 May 2008. back to text
[xiv] Patents Bill 235-1 (2008), Government Bill. back to text
[xv] There is already a Māori advisory committee for trade marks. back to text

Managing the risk in China

Fri, 19 Dec 2008 00:00:00 +1300

Rosemary Wallis, Partner, Baldwins Intellectual Property and Director of Baldwins Law Ltd presented at an Auckland District Law Society seminar.

New Zealand businesses needed to register their intellectual property rights in China ahead of time to avoid problems and demonstrate faith in their products, said Baldwins’ partner Rosemary Wallis.

Ms Wallis told the ADLS seminar, “Trading with China - Getting it Right”, that China had around 1400 million people and was the world’s manufacturing powerhouse. New Zealanders couldn’t afford not to go there but they did need to protect themselves, get local help and “put in the hard yards”.

She said it was important for New Zealand businesses to register intellectual property rights as soon as they could.

China was a “first to file” jurisdiction, meaning that the entity which applied for trademark or patent registration first would be entitled to it. Ms Wallis said that trade mark applications were filed with the Chinese Trademark Office, with words, designs, alphabet letters, numerals, three-dimensional marks and colour combinations all being registrable.

Ms Wallis said that planning ahead was particularly important in relation to brands as registration took time. By getting an application in the queue, New Zealand firms could, in the short-term, minimise the risk of an opportunistic distributor or business or unrelated third party making a similar application.

Ms Wallis said that retaining control of the intellectual property in New Zealand was important. “It is a bad idea for a New Zealand business to leave the registration of its rights to its Chinese partner or agree to let the Chinese partner attend to registration. That may be fine while the relationship with the Chinese partner is in good heart. It will not be when there is a falling out.”

She said that, with respect to trademarks, it was important not only to register the English language trade mark, but also to register the Chinese equivalent of a brand.

“If a New Zealand business only registers the English version, a local company may well register the Chinese version. Consequently, if the Chinese brand it not protected, it will be difficult for the overseas owner of the English language brand to stop the Chinese brand owner from using the Chinese equivalent.”

Ms Wallis said that it could take two years or more from application to registration in China. Firms should also be aware that the Chinese trademark office focused quite strongly on the formalities.

Ms Wallis said that all applicants for trademarks must use Chinese agents.New Zealand companies should also register the company name. There were three types of patents in China:
1. invention patents,
2. utility patents, and
3. design patents.

Patents in China had a life of 20 years and it usually took between three and five years to achieve registration of an invention patent.

Bell Gully senior associate, Stephen Layburn, said that one of the big factors in the development of China was the continuing migration from country to city, meaning that a burgeoning urban population needed to be fed.

This arguably placed New Zealand in a very favourable position, not only because of the strengths inherent in its rural economy, but also because of food production technologies which might be able to be licensed or developed in China.

“A further point to bear in mind is that, while the melamine scandal is still being played out, the significance of the involvement of regional and central government agencies should not be underestimated. Anecdotal evidence indicates that doing business can often be very bureaucratic, with a seemingly never-ending list of licences, consents and permits to be obtained.”

Mr Layburn said that New Zealand firms needed to manage risk to ensure that they were paid for the goods and services they supplied, while importers had to make sure they received what they had bargained for when parting with payment.

“The bottom line in both instances is that enforcement through China’s legal system is likely to be difficult and costly. Underpinning this is feedback that, because the Chinese business community often takes a different approach towards contracts and negotiations over the contract price, there are a number of hazards to be avoided, including the risk of a counterparty seeking to renegotiate what was to be a firm price after goods have been ordered or sent.”

Mr Layburn said that the two most commonly used payment methods for export businesses were letters of credit and documents against payment.

Other payment protection methods included trade insurance and the export guarantee scheme operated by the New Zealand Export Credit Office. He said that, as with any overseas market, risk management was often about gauging who was likely to be a bad payer and whether that firm was worth the risk.

“Due diligence is vital. In the case of new customers, seek references from third parties and check those references. Sound credit management policies are equally vital. These include all the usual recommendations about managing your exposure to a customer, whether new or existing.”

Mr Layburn said that up to 90 per cent of profits from a China-based operation would generally be repatriated to New Zealand, subject to payment of taxes. In relation to dispute resolution, he said that a number of standard provisions appeared to be emerging.

One was to require arbitration through the China International Economic and Trade Arbitration Commission. Foreign entities could also choose off-shore arbitration, with some multinationals opting for arbitration in centres such as Singapore.

Mr Layburn said that the Chinese legal system did not appear to have kept pace with the rate of economic development. Although a great deal of effort was being put into improving matters, problems of cost, delays and inconsistent outcomes in dealings involving commercial disputes suggested that there was a good deal of room for improvement.

Concern had been expressed about a lack of separation between the judiciary and various arms of state. It was also significant that there was an absence of reciprocal enforcement of judgments of foreign courts.

“Perhaps these are issues that will see rapid improvement under the various measures included with the New Zealand-China Free Trade Agreement. However, until there are concrete signs of progress, the best advice points to doing your homework before entering into a commercial relationship, managing that relationship throughout its lifetime, and, if the worst does happen, exploring the possibilities for arriving at a commercial solution."

by Catriona MacLennan
This article appeared in issue no. 43 (Novermber 2008) of Law News published by the Auckland Disctrict Law Society.

Australia - New Zealand: copyright/design overlap

Wed, 17 Dec 2008 00:00:00 +1300

Historically, Australia and New Zealand have taken a similar approach to intellectual property rights and their protection. The New Zealand government in particular has expressed a desire that the intellectual property laws of the two countries are in line with each other. The Intellectual Property Office of New Zealand and IP Australia are working together to harmonise practices. However, there is a significant difference between the Australian and New Zealand approaches to intellectual property protection for products that are mass produced or industrially applied. The result is that clients may be able to enforce their rights quite successfully in New Zealand, but may have no enforceable rights at all in Australia.

In New Zealand, functional, industrial and fashion products such as clothing are automatically protected under the Copyright Act 1994 regardless of whether a registered design is held or not. Even if the product has been industrially applied it will attract copyright protection, albeit that the duration of such protection may be shorter than the ordinary copyright term.

In Australia, a product that has been industrially applied will, generally speaking, not have copyright protection if it can be the subject of a design registration.

Clients are sometimes surprised that they can enforce their copyright in New Zealand but not in Australia. Many expect similar rights in both jurisdictions, which can lead to confusion. It is important that clients understand their various options for IP protection in both New Zealand and Australia before launching their products.

Registering a design is not always an appropriate path to take, particularly for clients who have large and often seasonally changing product ranges. Furthermore, the requirements for design registration in New Zealand and Australia mean that the client cannot usually disclose the design before filing an application for registration. In many cases, this is simply not practical. Design registration can be prohibitively expensive for some clients. For clients who have large ranges, it can be difficult to select the right products to register without knowing which products will be popular and perhaps vulnerable to copying. Clients facing these types of difficulties may be saved by copyright protection in New Zealand, but they should be aware that such protection might not be available to them in Australia.

Before launching products in Australia and New Zealand, clients should consider all the issues carefully. It may be that quite divergent paths are taken in the two countries.

New Zealand makes sweeping changes to patent law

Sun, 30 Nov 2008 00:00:00 +1300

More than half a century after passing its Patents Act, New Zealand is to introduce a new patents Law. Mike Hawkins reviews the main changes the Bill will bring.

This year the New Zealand Patents Act was 55 years old. In July 2008, however, a comprehensive Patents Bill was introduced into Parliament. The General Election held on 8 November 2008 will delay its enactment.

In summary

• Absolute novelty replaces local novelty

• “Whole contents” is introduced to deal with conflicting applications

• “Balance of probabilities” replaces “benefit of the doubt” in deciding whether a patent is to be granted

• “Manner of manufacture” is retained as the definition of patentable subject matter but specific exclusions are now included.

• Examination is enlarged to include grounds of lack of inventive step and utility

• Automatic publication of patent specifications at 18 months from the earliest priority date

• A “right to apply” requirement is replaced by a “right to grant”

• Definition of infringement included but with experimental use exception.

• Pre-grant inter-partes opposition proceedings are replaced by a request for re-examination

• Public inspection is allowed of patent application files

Fast-forward to sections

» Absolute novelty
» Enlarged examination
» Whole contents
» Re-examination
» Early publication
» Patent grant
» Revocation before the commissioner
» Exclusions from patentability
» Maori Advisory Committee
» Balance of probabilities
» Micro-organism deposit
» Right to patent grant
» Prior art searches disclosed
» Term
» Infringement
» Regulation of the New Zealand patent attorney profession
» Transitional provisions
» Miscellaneous
» A lost opportunity?

Absolute novelty                                                                   Top
The inclusion of the “local novelty” requirement in the present Act has, in this Internet age, long been considered inappropriate. What the Bill does is to define a “prior art base” which encompasses all information available to the public in any form anywhere in the world, and both novelty and inventive step will then be tested in respect to this “prior art base”.

Enlarged examination                                                           Top
The current Act restricts examination essentially to issues of novelty. The Bill now requires examination to cover novelty, inventive step and utility. The meaning of “useful” is that the “invention has a specific, credible and substantial utility”. The Explanatory Note to the Bill explains that this is intended to ensure that the inventor has identified “a real world use” for the invention, and that the introduction of this test is of particular relevance for inventions involving genetic material where patents have in the past been granted without a specific use being disclosed. One issue arising out of the enlarged examination, which will need careful review by the Intellectual Property Office of New Zealand, is whether the existing patent examining structure is adequate, both in terms of numbers of staff and their resources, to deal with the higher level of examination which will be required.

Whole contents                                                                      Top
The “prior art base” will include, in the assessment of novelty, the information contained in a complete specification filed in respect of another patent application of earlier priority date but which was published after the priority date of the claim under consideration.

Re-examination                                                                     Top
The Commissioner may, and must, if requested to do so by any person, re-examine the complete specification before or after the patent is granted. A request for re-examination before grant will effectively replace the pre-grant inter-partes opposition procedure currently available. The patent will not be granted while a request for re-examination remains undecided. Many practitioners will regret the loss of the present opposition procedure, unless it is reinstated during the passage of the Bill. It has provided a relatively robust and low cost procedure by which applications can be submitted to close scrutiny and, in many cases, refused or at least substantially amended before patent grant.

Early publication                                                                   Top
Under the present Act complete specifications are published only at acceptance. Under the Bill, for non-PCT Treaty applications, the Commissioner must publish a notice in the Journal that a complete specification is open to public inspection after a period of 18 months from the earliest priority date. For Treaty applications, these are deemed to have become open to public inspection on their date of the publication under Article 21 of the Treaty.

Patent grant                                                                     Top
The Commissioner is required to grant a patent as soon as reasonably practicable after three months from the date of the publication of the acceptance of the complete specification and in the absence of a current request for re-examination.

Revocation before the Commissioner                                 Top
Under the present Act an application for revocation to the Commissioner must be made within 12 months of the sealing date. The Bill extends this so revocation can be pursued at any time following the patent grant. The existing High Court procedure for revocation will also remain.

Exclusions from patentability                                             Top
Although the definition of invention, namely a “manner of manufacture”, has been retained from the present Act, there are, in the Bill, specific exclusions: (i) where the commercial exploitation would be contrary to public order or morality; (ii) human beings and biological processes for their generation; (iii) therapeutic methods of treatment of human beings by surgery or therapy; (iv) methods of diagnosis practised on human beings; or (v) plant varieties. In the latter regard, this is to avoid conflict with the protection available under the Plant Variety Rights Act 1987. The exclusion of the methods of human treatment is contrary to the availability of protection for such inventions in Australia.

Maori Advisory Committee                                                Top
The Commissioner is required to appoint a Maori Advisory Committee whose function is to advise the Commissioner, on request, whether a claimed invention is derived from Maori traditional knowledge or from indigenous plants or animals and, if so, whether the commercial exploitation of that invention is likely to be contrary to Maori values. The Commissioner is required to consider, but is not bound by, the advice given by this Committee.

Balance of probabilities                                                      Top
Under the current Act a patent applicant is given the benefit of the doubt in the Commissioner’s decision on whether to grant a patent. This will be replaced by the more stringent test of a “balance of probabilities”. This will be consistent with that used in civil proceedings in the New Zealand courts.

Micro-organism deposit                                                      Top
Where an invention is a micro-organism, for sufficiency of the description the micro-organism is required to be deposited, with a prescribed depository institution, on or before the filing date of the specification.

Right to patent grant                                                         Top
A patent may be granted to a person who is the inventor or derives title to the invention from the inventor. In contrast, any person may apply for a patent. This change of emphasis from the present Act avoids the current problems where an imperfect title to the invention at the time of application will put the resultant patent at risk.

Prior art searches disclosed                                               Top
The applicant is required to inform the Commissioner of the results of any documentary searches by or on behalf of a foreign patent office, carried out for the purpose of assessing the patentability of an invention disclosed in the complete specification or of an equivalent application outside New Zealand. The equivalent requirement in Australia has been recently withdrawn, so whether this provision will survive through to the final Act may be uncertain.

Term                                                                                 Top
The term is 20 years with no extension of term provisions despite the exclusions relating to infringement (see below).

Infringement                                                                     Top
Infringement of a patent is defined as doing anything that the patentee has the exclusive right to do to exploit the invention and to authorise another person to exploit the invention. Infringement also includes supplying the means to infringe to another person i.e. contributory infringement, but specifically excludes an act for experimental purposes if this does not unreasonably conflict with the normal exploitation of the invention or if an activity related to the development and submission of information required for the regulation of the manufacture, construction, use, importation, sale, hire or disposal of any product.

Regulation of the New Zealand patent attorney profession        Top
The Bill sets up the Patent Attorneys Standards Board whose tasks include the approval of a draft code of conduct for patent attorneys to be developed by the New Zealand Institute of Patent Attorneys, dealing with complaints and disciplinary matters, and the qualifications and experience held by candidates for registration as a patent attorney.

Transitional provisions                                                         Top
These include provisions that patent applications made under the existing Act, divisional applications, and also any Treaty applications of early enough date, will continue under that Act.

Miscellaneous                                                                        Top
Various other provisions have been carried over from the current Act. The retention of some of these are a surprise to many commentators, such as the availability of compulsory licenses and patents of addition, while others will be welcome inclusions, such as those relating to divisional applications and the ability to initially file a provisional specification. Interestingly, the “groundless threats of infringement” provisions of the present Act have not survived.

A lost opportunity?                                                                Top
The long awaited introduction of the Bill is welcomed. It comprehensively attempts to bring New Zealand’s patent legislation up to date and to ensure, as far as possible, the granting of stronger patents and the refusal of patent applications below a higher threshold. However, some areas, such as exclusions from patentability and the requirement for disclosure of prior art searches, have lost an opportunity to bring New Zealand usefully closer to the Australian legislation, unless this is remedied during the Select Committee hearings.

This article was first published in Patent World, November 2008.

Anti-Counterfeiting Trade Agreement - ACTA

Thu, 20 Nov 2008 00:00:00 +1300

In May this year the New Zealand government announced its intention to participate in negotiations to develop a multilateral agreement, aimed at combating trade in counterfeit and pirated goods. This agreement has become known as the Anti Counterfeiting Trade Agreement (ACTA) and is being led by the United States of America and a number of other developed countries including, New Zealand, Australia and Japan.

The ACTA, is intended to establish new global standards to safeguard the enforcement of Intellectual Property Rights (IPR), to more effectively respond to the prolific trade in counterfeit and pirated goods. The World Intellectual Property Organisation (WIPO) estimates that counterfeit and pirated goods account for 5 – 7% of all world trade. This worldwide proliferation of counterfeit and pirated goods poses an ever increasing threat to both sustainable economic development and consumers’ health and safety.

Details relating to the substantive provisions of the ACTA are not publicly available yet. However, it is understood that the provisions will centre around three key concepts: “increasing international cooperation between enforcement agencies and right holders; establishing best practices for enforcement; and providing a more effective legal framework to combat counterfeiting and piracy”. The goal of the ACTA is said to be to set a new higher benchmark for enforcement that countries can join on a voluntary basis.

No time frame has been set for when a definitive agreement will be made. The government has indicated that any decision to formally agree to, and be bound by, the ACTA will be made after the substance of the agreement has been agreed on, the public have been consulted and a national cost/benefit assessment has been made.

Stay posted for future developments.

Major Events Management Act 2007

Sat, 15 Nov 2008 00:00:00 +1300

New Zealand has introduced legislation to provide greater protection to sponsors of important events from ambush marketing: the Major Events Management Act 2007.

International sporting events are on the increase in New Zealand with the hosting of the 2011 Rugby World Cup and co-hosting of the 2015 ICC Cricket World Cup. These events are in addition to other world championships such as the Under 17 Women’s Football World Cup 2008, and the Rowing World Championships 2010. As part of New Zealand’s successful bids to host these events, a commitment was given to ensure adequate provisions are in place to protect the sponsors.

The Major Events Management Act 2007 is divided into five parts. The important provisions are found in Part II (protection for major events) Part III (permanently protected emblems and words) and part (IV) (enforcement).

Part II is divided into four sub-parts covering declaration of a major event, protection against ambush marketing by association, protection against ambush marketing by intrusion and prevention of ticket scalping.

On September 24 2007 the first order in Council was issued declaring the Rugby World Cup 2011 to be a major event.

On September 11 2008 the Major Event Emblems and Words (Rugby World Cup 2011) Order 2008 came into force declaring the protection period for the Rugby World Cup 2011 starting on September 11 2008 and ending on November 21 2011.

The emblems declared to be major event emblems for the protection period of the Rugby World Cup 2011 are set out in Schedule one. Schedule two sets out words declared to be a major event word. Words such as International Rugby Board, IRB, Rugby NZ 2011, Rugby World Cup, Rugby World Cup Event, and Rugby World Cup Official Broadcaster are listed. There are over 50 words list in part A of schedule 2 and over 60 words in part B of schedule 2 that are declared to be major event words.

On October 28 2008 New Zealand hosts The FIFA U-17 Women’s World Cup. The Major Events Emblems and Words (FIFA U-17 women’s World Cup) has just declared the FIFA U-17 Women’s World Cup the second event to be declared a major event.

The protection period starts on October 23 2008 and ends on December 15 2008. This is one month after the end of the event.

Emblems such as the official FIFA U-17 women’s world cup 2008 Emblem and the FIFA U-17 Women’s World Cup Trophy and the official FIFA U-17 Women’s World Cup 2008 poster are declared to be official emblems. Words such as FIFA, FIFA U-17 Women’s World Cup, FIFA World Cup, NZ U-17 Women’s World Cup, World Cup New Zealand, World Cup 2008 are declared to be major event words for the protection period.

It will be interesting to see what future events are declared as major events.

This article was published in Managing Intellectual Property, November 2008.

Baldwins clients among fastest growing Kiwi companies

Fri, 07 Nov 2008 00:00:00 +1300

The 2008 Deloitte / Unlimited Fast 50 Index has been revealed, ranking New Zealand's 50 fastest growing companies according to percentage of revenue growth.

The 2008 Deloitte/Unlimited Fast 50 growth trends survey noted "..the importance of intellectual property in allowing many of this year's Fast 50 to secure new channels, capture new markets and charge a premium along the way."

Baldwins is proud to see clients Merino Kids, Winslow Ltd, Trilogy, Kiwibank, Torpedo 7 and NextWindow in this listing of promising Kiwi companies, and for having worked with them on a range of intellectual property issues ranging from obtaining rights to dispute resolution.

For more information about the rankings and the survey please see here.

Do we have the technology to succeed?

Wed, 05 Nov 2008 00:00:00 +1300

Baldwins Intellectual Property was delighted to once again be a principal sponsor of the recent AmCham-UPS Success and Innovation Awards. The United States is New Zealand’s second largest trading partner and it was great to applaud and celebrate New Zealand firms achieving exceptional success with such an influential economy.

With that in mind it is no wonder so many firms want to export their innovations to that market, particularly within the technology sector. One of United States’ most well known brands is Google Inc. Google Inc., had revenues of around USD3.5 billion in 2007. Would you like to compete for a slice of that market? Maybe you can! Google’s core patents are under threat from new US Patent Office policies on what is patentable.

The issue raised by the US Patent Office is whether software is patentable. Software is usually protected by patent as a process for performing a task. The policy presently being followed by the US Patent Office is to regard processes as not being patentable unless they “result in a physical transformation of an article” or are “tied to a particular machine.”

The problem is that, in software, processing is performed on information rather than articles. Also, the US Patent Office has signalled that it does not regard a general purpose computer to be a particular machine. The Patent Office policy is presently being tested before the Courts. If it is held to be correct then it may have dire consequences for the validity of software patents.

Google Inc. has a patent portfolio that has grown exponentially in recent years. It now numbers over 1000 patents and patent applications. The company clearly sees the patent system as a way to maintain a competitive advantage, and appears to file patent applications early, on technologies that it sees as the company’s future, to ensure that its future technology position is secure. One example is the patent applications for the “gPhone”.

Others also clearly perceive Google’s patents to be highly valuable. The best known, and possibly most valuable, patent in the Google portfolio is the original patent for the Google PageRank™ technology. PageRank™ uses the link structure of the web as an indicator of an individual page's value. In essence, a link from page A to page B is interpreted as a vote, by page A, for page B. These “votes” allow a numerical value or weighting to be placed on each page.

The original PageRank™ patent is US6285999 (typing that text into the Google search engine will allow the patent to be viewed in seconds, for those of you who are curious to view the original document). It is owned by Stanford University rather than Google, since the inventors (and founders of Google) were attending Stanford at the time they devised the process. Google has exclusive license rights on the patent from Stanford University. The university received 1.8M shares in exchange for the patent. The shares were sold in 2005 for $336M.

The PageRank patent hasn’t been filed outside the US which says something about the importance of the US market in the global ICT environment.

What can we take from all this in New Zealand? Firstly, the patent system provides a vehicle for proprietorship of visionary new developments. Small companies can benefit from the patent system and use it to grow. Research institutions such as our Universities can also benefit, particularly if they implement policies such as those adopted by Stanford which was clearly prepared to license the rights.

Google’s success has essentially been built on its intellectual property. It does not have factories producing consumer products, and the location of Google is not critical from a logistical perspective – only information is delivered. The US is a huge and valuable market in which Intellectual property rights are respected. Why can’t New Zealand companies pursue that market and replicate Google’s success?

If the Courts do undermine US software patent rights, we can always use the software ideas developed by others to compete, but it would be far better for New Zealand’s future if we were to become a leader through developing our own new technologies.

AmCham – UPS Success and Innovation Awards were held at the Hyatt Regency Auckland on Wednesday 24 September

Tim Jackson, Partner, Baldwins Intellectual property was on the judging panel.

Winners:

Importer of the Year from USA – Tidd Ross Todd Ltd
Investor of the Year either to or from the USA – Fonterra Co-operative Group
Exporter of the Year under $500.000 – Thureon Ltd
Exporter of the Year $500,001-$5Million – Wellington Drive Technologies Ltd
Exporter of the Year Over $5Million – Endace Ltd
Supreme Winner - Fonterra Co-operative Group

Congratulations to all the winners and finalists!

The Montana World of WearableArt™ Awards: Delivering Value

Fri, 17 Oct 2008 00:00:00 +1300

We all have ideas, that brain burst of inspiration that allows us to dream of what could be, but translating ideas into successful commercial ventures requires just a little more than a dream bubble. WOW began from humble beginnings but has since grown into a substantial brand and successful company though vision, belief and commitment.

The Montana World of WearableArt™ Awards show began its life as a promotion for a rural art gallery in Nelson in 1987. Since these small beginnings, the awards have become an iconic event in the New Zealand arts calendar, the show’s fame has spread and entrants now come from all over the world to showcase their creations. Audience numbers have also grown from the hundreds to tens of thousands.

Baldwins Intellectual Property has proudly supported the Awards each year, as well as assisting WOW in protecting its intellectual property assets. When an initial idea grows into an original work such as the Montana World of WearableArt™ Awards, it is essential to put in place the right forms of intellectual property protection and then enforce these rights in order to maintain the originality of your product.

Gabrielle Hervey, CEO of WOW says “As The Montana World of WearableArt Awards Show is a truly unique event, we have gone to some lengths to ensure it has been protected by registering our trademarks in a number of different countries. Baldwins have worked along side WOW and we’ve appreciated, and respected their advice over a great many years.”

Sue Ironside, Partner and Chair person of Baldwins comments "Right from the very early and humble beginnings of WOW there was an understanding of how important it was to identify what intellectual property rights they had in such an amazing and truly unique event. Working with the WOW team on strategies around how to protect and enforce these rights is an invigorating, creative and intellectual challenge which we love. "

Congratulations this year goes to Ornitho Maia, Nadine Jaggi, Wellington for being awarded the 2008 Winner Montana Supreme WOW Award & Winner Air NZ Sth Pacific Section as well as the entire WOW team, designers and all those involved in delivering such a high value event. "A truly unique and wonderful experience" said Sue Ironside.

PUREBABY decision: the end of the essential feature test

Fri, 10 Oct 2008 00:00:00 +1300

The decision of the hearings officer in the matter of Trademark Application 738606 in the name of Purebaby Pty Ltd (Case T19/2008, August 4 2008) has indicated that the essential feature test, as set out in De Cordova v Vick ((1951) 68 RPC 103), may no longer be of much relevance when considering similarity of marks.

In an earlier case, In the matter of Trademark Application 710425 in the name of Marexim Export-Import Ltd (Case T10/2007, March 17 2007), the Intellectual Property Office of New Zealand (IPONZ) had objected to the registration of the trademark ULTRA for goods in Class 11 of the Nice Classification on the grounds that the mark:

was confusingly similar to the earlier registered trademark ULTRALAMP for goods in Class 11; and
lacked distinctive character

However, the hearings officer found that ULTRA was not similar to ULTRALAMP on the grounds that the marks looked and sounded different. She went on to say that the word 'ultralamp' would impart the idea of an extreme or excessive lamp, although adding that she was unsure what an extreme or excessive lamp might be. Despite the fact that the goods covered by both marks overlapped, the hearings officer concluded there was no likelihood of confusion or deception.

In relation to the distinctiveness objection, the hearings officer agreed with the dictionary definition of 'ultra' as going beyond what is usual or ordinary, excessive or extreme. She noted that generally speaking, the word 'ultra' was rarely used on its own but instead used as a prefix. She agreed with the applicant’s submission that the mark ULTRA conveyed a vague notion of excessiveness or extremeness, but did not make any meaningful comments about the goods. There was no disucssion as to whether other traders might want to use 'ultra' as a prefix.

In the present case, the hearings officer reached a similar conclusion about the trademark PUREBABY / PURE BABY. On November 17 2005 Purebaby Pty Ltd filed an application for the registration of the series mark PUREBABY / PURE BABY for goods in Class 25 ("knitted and woven clothing, headgear"). IPONZ objected to the registration on the grounds that the mark was confusingly similar to the earlier registered trademark PURE for goods in Class 25.

Following the same reasoning as in ULTRA, the hearings officer concluded that the marks looked and sounded different. Moreover, she held that the marks were dissimilar from a conceptual point of view. According to the hearings officer, the word 'purebaby' gave the idea of "a baby which is pure", whereas the word 'pure' itself gave the idea of something that is “unmixed, or unadulterated with any other substance or material”.

The decisions in ULTRA and PUREBABY indicate that even if a mark is wholly contained within another mark, it may still be possible to argue that the marks are not confusingly similar - at least in cases before the IPONZ.

This article was published in World Trademark Report, October 2008.

New patents bill introduced

Fri, 03 Oct 2008 00:00:00 +1300

The Patents Bill 2008 was introduced into Parliament on 9 July 2008. With an Election imminent in November this year, there is some doubt as to the timeframe for enacting the legislation. However, in view of the significant differences that the bill introduces, it is worthwhile briefly summarising the main aspects of the proposed legislation.

Important changes include:

The introduction of “absolute novelty”. At the present time, New Zealand still has only a local novelty requirement.
Examination for inventive step. This will be a significant change in Intellectual Property Office practise. At the present time, there is no examination for inventive step (although obviousness is a ground of Opposition and Revocation). Some intensive training of examiner’s is likely to be required, and practitioners will be interested to see how the Intellectual Property Office deals with this, particularly in view of the changes to the standard of proof (which is identified immediately below).
Rather than the current situation where the applicant is provided with the benefit of the doubt in issues of patentability, the Bill introduces the more common principle of these issues being decided on the “balance probabilities”.
The Bill includes a requirement to disclose the results of any official searches conducted in the course of examination of corresponding foreign applications.
The Opposition procedure as it presently exists will be removed. Instead, a re-examination procedure will be introduced. Under this, any person may request re-examination by the Patent Office of a patent up to or after grant. A revocation request can be made before the Courts.
Publication will occur at eighteen months after the priority date, rather immediately after acceptance.
A Maori Advisory Committee will advise the Intellectual Property Office on whether commercial exploitation of an invention may be contrary to Maori values, amongst other matters.
Methods for Medical Treatment of Humans by surgery or therapy, and methods of diagnosis practised on human beings are specifically excluded from patentability.

This article was published in Managing Intellectual Property - October 2008.

Restoration of lapsed design registrations

Wed, 01 Oct 2008 00:00:00 +1300

The government has recently introduced the Regulatory Improvement Bill into Parliament. This Bill contains a number of miscellaneous provisions. Part 3 of the Bill will amend section 12 of the Designs Act 1953 to provide for the restoration of design registrations that lapse through non-payment of a renewal fee. Consequential amendment is made to the Copyright Act 1994. The full test of Part 3 of the Bill is available online.

The Bill will not be passed prior to the General Election, which will be held on 8 November 2008. This means the new provision is unlikely to come into force until some time in 2009, at the earliest.

For some years now, Baldwins has been pressing for a full review of the Designs Act, which is now very out of date. While this is still not on the government's plan of work, we welcome this correction of a serious deficiency in the current legislation.

For further information please contact Mike Hawkins.

Managing your IP in a digital world

Tue, 02 Sep 2008 00:00:00 +1200

AMCHAM's Digital Future Now forum was an opportunity for nearly 100 senior executives from businesses operating in the online environment to discuss the many challenges and issues impacting the industry. Baldwins' presentation addressed the key topic of how intellectual property law relates to those challenges and issues (summary below). If you would like to know more please contact Rosemary Wallis or Gus Hazel.

Patents

software patents are generally allowed in most countries in the world, though the eligibility requirements and test applied vary;
a new Patents Act has been proposed in New Zealand. What is patentable is unchanged. However, the documents that can be taken into account when considering whether a claimed invention is new will be based on documents and other material available anywhere in the world, not just in New Zealand. This is a significant change that aligns New Zealand with most other countries.

Trade marks

a very topical issue is whether the inclusion of trade marks in metatags and sponsored links is "use" and therefore infringement;
different jurisdictions have drawn different conclusions on these topics;
Google's policy, following decisions in various jurisdictions, is to allow trade marks to be used in sponsored links for customers in the US, Canada, the UK and Ireland, but not elsewhere.

Copyright

digital content is easily and accurately copied;
New Zealand's copyright legislation was recently amended to take digital issues into account. The changes include:
- allowing format shifting of music (subject to conditions);
- allowing time shifting of television broadcasts (again subject to some conditions);
- enhancing rights in relation to technological protection measures;
- allowing reverse engineering of software for certain purposes;
- permitting limited transient copying and caching;
- absolving ISP's from liability for infringing material they host (again provided certain conditions are met).

Domain names

the number of available extensions keeps expanding, making protection increasingly difficult;
an effectively unlimited range of "vanity URLs" announced earlier this year will increase the problem;
the relevance of domain names is arguably decreasing given the widespread use of Google and other search engines to locate websites.

In relation to the internet:

a constant stream of lawsuits is targetting search engines and auction sites for infringing content, eg Google and eBay;
there are different results in different countries;
people need to be wary of reproducing material from elsewhere, even if the format is changed.

For further details contact us.

Clarity on methods of diagnosis

Mon, 01 Sep 2008 00:00:00 +1200

As discussed in Managing IP’s March edition, it was becoming increasingly unclear whether method of diagnosis claims were allowable in New Zealand. However, Biosite Incorporated, a recently released decision of the Commissioner of Patents [P31/2007], may assist in clarifyingpractice in New Zealand.

The Biosite application was rejected under section 2 of the New Zealand Patents Act 1953 on the basis that the claims did not provide patentable subject matter. The claims are directed to a method for determining a patient’s prognosis using antibodies against a sample from the patient. The claimed method can be used to select between alternative therapeutic regimens.

Several areas of the law regarding method of prognosis claims were considered in the Commissioner’s decision. Firstly, the Assistant Commissioner stated that “on the basis of the Bio-Digital Sciences decision alone, I believe the present claims are allowable”. The Bio- Digital Sciences [Bio-Digital Sciences Inc’s Application [1973] RPC 668] decision specifically supports the allowability of method of diagnosis claims that produce information.

The application of the Commissioner’s decisions in George N Haddad [P8/2000] and Hughes Aircraft Company [P3/1995] to method of prognosis claims was also considered. These decisions held that method claims that provide a tangible result (Haddad) or commercially useful effect (Hughes) are allowable. The applicant’s argument in Biosite that the claimed method provided both a tangible result and a commercially useful effect was accepted.

The Assistant Commissioner noted that the benefit of the doubt should go to the applicant and that clear doubt exists about whether method of prognosis claims should be allowed. In addition, the Assistant Commissioner made a strong statement that:
Claims should only be rejected under section 2 at the examination stage where it is manifestly clear that a New Zealand Court would refuse the claims as not falling within the definition of ‘invention’ of section 2. Given the decisions of the Courts in New Zealand and in overseas jurisdictions with similar definitions of invention, and the liberal approach taken over many decades by the Courts as to what is to be regarded as properly falling within the definition of invention in section 2, it cannot be said that the present claims would clearly be refused by such a Court.

The claims were held to be acceptable.

This article was published in Managing Intellectual Property, September 2008.

New Patents Bill introduced

Mon, 14 Jul 2008 00:00:00 +1200

The Patents Bill was introduced to the House of Representatives for its first reading on 9 July 2008. The full text of the Patents Bill is available online.

The Bill will introduce a number of important changes to the New Zealand patents regime. For example, the local novelty standard will be replaced with an absolute novelty standard, which means that if an invention has been disclosed anywhere in the world prior to filing, patent protection will not be available. The grounds of inventiveness and utility will be added to the existing novelty examination ground. This brings New Zealand into line with most other jurisdictions. In addition, the Patents Bill specifically excludes diagnostic, therapeutic and surgical methods from patentability. Plant varieties will also be excluded.

Another significant change will be the introduction of a Maori Advisory Committee. The Advisory Committee will advise the Commissioner if an invention is derived from Maori traditional knowledge or from indigenous plants and animals and if so whether the commercial exploitation of the invention is likely to be contrary to Maori values.

The Patents Bill will now proceed through the legislative process and is expected to be sent to Select Committee for review. In view of the general election which will be held late in 2008, there will be no significant progress with the Bill until 2009.

For further information please contact Julie Ballance.

Copyright (New Technologies) Amendment Act

Tue, 01 Jul 2008 00:00:00 +1200

The New Zealand government recently passed an Amendment Act to the Copyright Act 1994 which is said to update New Zealand’s copyright law to ensure that New Zealand “keeps up to speed with recent advances in digital technology”.

Significant changes include:

- The introduction of technology neutral terms by making specific reference to digital formats.

- Allowing transient reproduction of copyright works provided the copying is also incidental and is an integral and essential part of a technological process for making or receiving a communication that does not infringe copyright or fair dealing and “has no independent economic significance”.

- The introduction of a notice and take down regime for ISPs. There is no liability for an ISP when storing and caching information provided the ISP takes down infringing material as soon as possible after it is made aware of it. This requires ISPs to make an assessment of the claim in the notice and make a decision whether it considers the material is likely to infringe copyright.

- Allowing format shifting for sound recordings. Purchasers of sound recordings may make one copy of a sound recording for each device owned by the purchaser (iPod or PC for example) for their own personal use and they must retain the original sound recording. The format shifting provision only applies to sound recordings. It does not apply to visual works such as videos or DVDs or music videos to be played on iPods.

- Significant changes to the provisions for educational establishments, libraries, educational resource providers and archives.

- Allowing reverse engineering of computer programmes by means of observing, studying or testing the functions of the programme in order to determine the ideas and principles that underlie the programme.

Some of the Amendment Act came in to force in April 2008 and the remainder is likely to come in to force later in 2008.

This article was published in Managing Intellectual Property in July 2008.

Controversy over new guidelines on the morality of biotech patents

Mon, 26 May 2008 00:00:00 +1200

The Intellectual Property Office of New Zealand (IPONZ) recently completed a review of its practice of raising objections based on morality considerations, and has just released new guidelines that may cause difficulties for some biotechnology patent applications.

Section 17(1) of New Zealand Patents Act 1953 empowers the Commissioner to refuse a patent application for an invention that is deemed to be contrary to morality. Traditionally, IPONZ would not allow patents for inventions that would be considered contrary to morality by New Zealand society as a whole. Objections were largely restricted to claims covering humans, parts of humans, or processes for the production of a human.

The recently published IPONZ practice provides, as a general guide, that an objection under section 17(1) is likely to arise for any claim directed to human beings, processes which give rise to human beings and biological processes for their production, methods of cloning human beings, totipotent human stem cells, human embryos and processes requiring their use, placental and umbilical cord tissues and processes requiring the use of placental and umbilical cord tissues, transformed host cells within a human, and other cells and tissues within a human.

IPONZ has broadened the ambit of what is contrary to morality by stating that it will raise an objection under section 17(1) where the use of an invention would be contrary to not only New Zealand society as a whole, but to what is termed a “significant section of the community”, including Maori (the indigenous population of New Zealand).

Most commentators agree that decisions based on morality should not be based solely on what some members of public may find objectionable, but rather should involve a detailed analysis of any effect on human health, any economic impact, any environmental issues and prevailing opinions of the population as a whole. It appears that the new IPONZ practice, which considers what may be viewed as offensive to a subset of the population, lowers the threshold of what is considered contrary to morality.

IPONZ has also stated that consideration of the content of a draft Patents Bill, which is waiting to be introduced into the New Zealand Parliament, is appropriate in setting its new practice. This statement may cause some controversy
as many will view IPONZ as preempting legislation not yet passed by Parliament.

The new IPONZ practice may concern those in the biotech industry. Further ambiguity in respect of morality objections has been created, rather than legal certainty.

This article was published in Managing Intellectual Property, June 2008.

New Zealand and China Free Trade Agreement

Mon, 21 Apr 2008 00:00:00 +1200

On 7 April 2008 New Zealand and China signed a free trade agreement (“the agreement”). The agreement is said to provide mutually beneficial concessions in the areas of trade of goods, services and investment and New Zealand is the first country to enter in to any sort of free trade agreement with China.

The agreement refers specifically to the importance of intellectual property rights in “promoting economic and social development, particularly in the new digital economy, technological innovation and trade”.

Under the agreement each party must establish and maintain transparent intellectual property rights regimes as well as reaffirming its commitment to an international intellectual property rights agreement, Trade Related Aspects of Intellectual Property (TRIPS), which provides that members of the World Trade Organisation must maintain basic minimum intellectual property rights regimes. The TRIPS Agreement is specifically incorporated into and made part of the agreement.

The parties agree to co-operate in eliminating trade in counterfeit goods. This may be viewed as a hollow promise on China’s part given the scale of China’s counterfeiting trade. Anecdotal evidence is that China is the world’s single largest manufacturer of counterfeit goods, with the vast majority of counterfeit goods coming out of China.

The Agreement also comes at a time when China is under the spotlight for both human rights and environmental abuses particularly as the Beijing Olympics draws closer.

In real terms however it promises to remove tariffs on 96% of New Zealand exports to China and to save NZ$115.5 million on duty based on current trade. This is significant given that China is currently New Zealand’s fourth largest export market behind Australia, the United States and Japan.

The agreement has highlighted the need, more than ever, for New Zealand businesses who intend to trade in China to protect their intellectual property rights in China.

Australian trade marks

Thu, 27 Mar 2008 00:00:00 +1300

Warning - Overdue Australian trade mark renewals grace period reduced, effective 28 March

While it is advisable to renew trade mark registrations on time, it has been possible to renew Australian trade mark registrations up to twelve months after the due date for renewal.

IP Australia has now cut this to six months effective from 28 March 2008, upon which the trade mark will be deemed to have expired.

If you are concerned about your Australian trade mark renewals please contact your Baldwins IP advisor.

Baldwins ranked top tier NZ patent firm

Fri, 22 Feb 2008 00:00:00 +1300

Managing Intellectual Property "World IP Survey 2008" results have been released.

Baldwins has again participated in Managing IP's survey of leading firms in 65 jurisdictions.

The results rank firms by country indicating their capabilities in prosecution and contentious work for both patents and trade marks.

Baldwins maintains its position from last year, ranked at the top - Tier 1 for New Zealand in both patent prosecution and contentious work.

"The World IP survey is not simply a list of the biggest firms, or a list of those that have the biggest caseload or are the oldest. Instead, it is a qualitative ranking of the leading firms in each category and reveals which firms are rated by their peers for the strength of their expertise and the depth of their ability to service cilents." MIP, February 2008

The results of the whole survey are being released progressively, starting with patents this month, trade marks in March, and this year for the first time copyright in April.

More detail on the survey and methodology can be found on MIP's web site.

To access the results please see links at the bottom of the page.

Genealogy services not similar to services to trace living relatives

Thu, 14 Feb 2008 00:00:00 +1300

In Intellectual Reserve Inc v Sintes (CIV 2007-404-2610, December 13 2007), the High Court has dismissed an appeal from the decision of the assistant commissioner of trademarks in relation to a stylised version of the words 'family search'.

Intellectual Reserve Inc is a not-for-profit corporation based in the United States which licenses the right to use the trademark FAMILYSEARCH in New Zealand and elsewhere to the Church of Jesus Christ Latter-Day Saints. Intellectual Reserve owns:

registrations in New Zealand for stylised and word versions of FAMILYSEARCH for genealogical services, among other things;
word mark registrations for FAMILYSEARCH for training, educational and cultural activities relating to genealogical research; and
stylised representations for wholesale and distribution of various media containing information and advice on ancestry, family history and genealogy, among other things.

Intellectual Reserve opposed an application by an individual, Robert Sintes, for the registration of a stylised version of the words 'family search' in Class 45 of the Nice Classification for services for locating birth parents and adopted children.

The assistant commissioner compared only the stylised versions of each party's marks and found that the marks were not similar.

In comparing the services, the assistant commissioner held that Sintes's services help to find living family members, birth parents or adopted children, whereas Intellectual Reserve's services concerned genealogy. The assistant commissioner also found that the markets overlapped because a person might be looking for both dead and living family members. However, she did not make a separate ruling on whether Sintes's mark covered the same or similar services, perhaps because having ruled that the marks were not similar, there was no need to make any finding as to the similarity of the services. The assistant commissioner thus dismissed the opposition. Intellectual Reserve appealed.

The High Court considered that the marks were similar. Turning to the services, the court found that there was only a superficial similarity between the services offered in that they relate to genealogy. Intellectual Reserve's services offer the tools for a person to research his or her own family genealogy, while Sintes's services help to research and trace lost family members. The judge concluded that the services were not similar and, as such, confusion or deception between the marks was unlikely.

Therefore, the court dismissed the appeal and ordered the registration of Sintes's mark.

This article was published in World Trademark Report February 14, 2008

Great Barrier Air banned from using its name

Thu, 07 Feb 2008 00:00:00 +1300

In Great Barrier Airlines Flight Operations Limited v Great Barrier Air Limited (CIV 2007-404-5710, December 13 2007), the High Court has issued an interim injunction preventing the use of the name Great Barrier Air in relation to an airline service offering flights to and from Great Barrier Island.

Both parties operate airlines to Great Barrier Island, a small island off the coast of New Zealand. Great Barrier Airlines Flight Operations Limited, which sought the injunction, had been trading since 1995 under the name Great Barrier Airlines. Great Barrier Air Limited had been offering flights to and from Great Barrier Island for some time, but had previously traded under the names Great Barrier Xpress and Mountain Air.

Great Barrier Airlines claimed that Great Barrier Air was engaging in passing off and breaching the Fair Trading Act, which prohibits misleading and deceptive conduct in the course of trade. It sought an interim injunction in the district court. The district court refused to grant the injunction and Great Barrier Airlines appealed to the High Court.

Despite the fact that both parties' names were descriptive, the court ruled that Great Barrier Airlines had a strong case. The court did not consider whether Great Barrier Airlines had the requisite reputation, a necessary ingredient for a passing off or Fair Trading Act claim.

The court found no difficulty in awarding an interim injunction against Great Barrier Air. The problem was that Great Barrier Air had acquired a telephone directory listing for Great Barrier Air; it admitted that this move was designed to ensure that its listing appeared before the listing for Great Barrier Airlines. The telephone directory was reprinted only yearly and it was impossible to remove Great Barrier Air's listing from the thousands of hard copies which had been distributed.

Great Barrier Airlines suggested an independent telephone monitoring service whereby the caller would be interrogated as to which airline he or she had intended to call. Great Barrier Air objected to the imposition of a monitoring service, citing cost and annoyance to customers. The court had little sympathy for Great Barrier Air, stating that it had placed itself in a difficult position by choosing a name so close to its principal competitor. The judge ruled that the monitoring service was the best available means of minimizing any confusion between the parties, while still allowing the respondent to trade. The judge ordered the costs of the monitoring service to be shared equally between the parties on an interim basis, leaving the question of which party should ultimately pay for the service until trial.

This article was published in World Trademark Report - February 7, 2008

Application to register mark by co-owner deemed to be in bad faith

Mon, 04 Feb 2008 00:00:00 +1300

In Neumann v Sons of the Desert SL (CIV 2007-485-212, November 5 2007), the High Court has confirmed that where there are co-owners of a trademark, an application to register the mark by only one of the owners without the co-owner's knowledge is deemed to have been made in bad faith.

In 1998 Herbert Neumann and two others incorporated a company in Spain with the purpose of marketing clothing using the mark EL NINO TARIFA and a logo of a seated boy.:

There was allegedly an oral agreement that the mark and logo would be jointly owned by all three parties worldwide.

Neumann's submitted evidence was that, over time, he and a certain Mr Galdeano became worldwide co-owners of the mark, two of the original three owners having withdrawn from the business. Galdeano's company, Sons of the Desert, subsequently sought to register the mark in New Zealand without Neumann.

Neumann argued that:

Sons of the Desert's attempt to register the mark in New Zealand was contrary to the agreement made in Spain in 1998; and

the application had been made in bad faith.

At opposition level, the assistant commissioner found that bad faith had not been established and allowed the application. Neumann appealed to the High Court and brought new evidence of the relationship between the parties.

On appeal, the High Court applied Justice Aldous's test for bad faith as set out in Harrison's Trademark Application ([2005] FSR 177) - that is, the court must decide whether the knowledge of the applicant was such that its decision to apply for registration would be regarded as bad faith by persons adopting proper standards.

The court found that Galdeano and Neumann were co-owners of the mark. Galdeano controls Sons of the Desert, the applicant for the trademark, and thus Sons of the Desert had knowledge of the co-ownership agreement. The attempt to register the mark without Neumann's knowledge would deprive Neumann of the benefit of registration, and ultimately use, of the mark in New Zealand.

Therefore, the appeal was allowed and the trademark application filed by Sons of the Desert was cancelled.

This article was published in World Trademark Report - February 4, 2008

Supreme Court hears first trade mark case

Fri, 01 Feb 2008 00:00:00 +1300

The recently established Supreme Court, which replaced the Privy Council as the final court of appeal, has determined its first trademark case in Austin Nichols & Co Inc v Stichting Lodestar ([2007] NZSC 103, December 11 2007). The main question for determination was the weight to be placed on the decision of the commissioner of trademarks in an opposition.
In June 2000 Stichting Lodestar applied to register the trademark WILD GEESE in respect of beers and other alcoholic beverages. Austin Nichols & Co Inc, the owner of the registered trademark WILD TURKEY in respect of the same types of goods, opposed registration. The assistant commissioner held that there was no reasonable likelihood of deception or confusion between the two marks.
Austin Nichols appealed to the High Court. The court accepted that the commissioner's decision had to be accorded weight, but that as an appeal court, it had to determine for itself whether there was a reasonable probability of confusion. The court found that there was a reasonable probability of confusion and allowed the appeal.
The Court of Appeal took the view that the High Court had not given weight to the commissioner's opinion; although the High Court was entitled to reach its own view, it should have given some deference to the decision of the commissioner. The Court of Appeal placed weight on the commissioner's decision and came to its own conclusion that there was no reasonable probability of confusion, thereby allowing Stichting Lodestar's appeal.
On appeal by Austin Nichols to the Supreme Court, the issue was whether the appellate court should give deference to the decision maker below - that is, whether the High Court should defer to the assessment of the commissioner. The Supreme Court held that while the extent of the consideration given to the decision appealed from is a matter of judgment, the appellate court must form its own view.
Although the Court of Appeal criticized the approach of the High Court, it went on to form its own view of the similarity of the marks. As the Supreme Court could find no error in the approach of the Court of Appeal, it dismissed the appeal. Although Austin Nichols was successful to the extent that the Supreme Court agreed with it about the weight to be placed on the decision of the commissioner, it was ultimately unsuccessful, as WILD GEESE is now eligible for registration despite the existence of the WILD TURKEY mark.

This article was published in Managing Intellectual Property - February 2008

Tax Incentives for Innovation in New Zealand

Tue, 15 Jan 2008 00:00:00 +1300

The New Zealand government has enacted legislation bringing in a new tax credit regime as a means of spurring private sector investment in research and development in New Zealand. The Act is due to come into force for the 2008-2009 financial year. The new scheme, which is regarded as being one of the most generous schemes in the world, is expected to encourage innovation and investment in intellectual property.

The scheme provides for a 15 percent tax credit on research and development. Two categories of research activities are covered: core activities and supporting activities. Core activities are systematic, investigative or experimental activities designed to acquire new knowledge or create new or improved products, processes or services. They must also either seek to resolve scientific or technological uncertainty, or involve an appreciable element of novelty. Supporting activities are other activities that are commensurate with, required for and integral to, the carrying out of core activities.

While activities such as commercial or legal aspects of patenting are excluded from core activities, they may be claimed as supporting activities. To qualify, the entity claiming the credit must be New Zealand based and must own the results of the research, while the research must be carried out predominantly in New Zealand and must relate to the entity’s business. Universities and government research organisations are excluded, as is the acquisition of core technology.

The research and development regime will be administered by Inland Revenue. All claims must be filed electronically, on the same day as the business files its tax return. As self assessment of research and development activities underpins the regime, it will be important to thoroughly document the research and development process in order to confirm eligibility for the tax credit. Necessary documents to support a claim will most likely include project plans, test reports and technical data. If an entity does not assess the activities correctly, it will not receive the credit, however the research need not be successful to qualify. The regime is likely to act as an incentive for international companies to conduct research and trial
work in New Zealand through locally based companies.

There are no restrictions on the type of entity that can claim the credit, which will extend to individuals, partnerships, companies and trusts. However the entity must have a minimum expenditure of $20,000 per annum on research and development, and must bear the associated financial and technical risks.

Not so Happy Valley

Mon, 24 Dec 2007 00:00:00 +1300

Solid Energy operates coal mines in New Zealand. Save Happy Valley Coalition is an environmental group. The parties have been involved in litigation in relation to Solid Energy’s proposed mine at Happy Valley in New Zealand for some time.

Solid Energy became aware of a mock report about its mining activities produced by Save Happy Valley and/or some of its members. The mock report featured Solid Energy’s logo and name. The mock report also copied parts of earlier Solid Energy reports. The mock report was highly critical of Solid Energy. Solid Energy filed proceedings for an interim injunction claiming infringement of its registered trade marks, infringement of its copyright and breach of the Fair Trading Act which prohibits misleading and deceptive conduct in the course of trade.

Solid Energy was careful to categorise this as a property rights case and not to be seen to be interfering with Save Happy Valley’s freedom of expression. Solid Energy had earlier pleaded injurious falsehood and defamation but restricted the interim injunction application to intellectual property rights causes of action.

It was argued that Save Happy Valley’s mock report was a parody and the use of Solid Energy’s name and logo was designed to add an element of surprise to the parody. Under the Fair Trading Act the judge found no arguable case because Save Happy Valley was not doing anything in trade. He did not, however apply the same reasoning to the Trade Marks Act.

The judge referred to section 10 of the Trade Marks Act which provides that the owner of the trade mark has the exclusive right to use the trade mark. He deliberately chose not to consider the infringement provision, section 89. activities were in the course of trade or were for the same or similar goods or services, or whether there was likely to be confusion or deception. There was no consideration paid in the judgment to the dilution provision in the Trade Marks Act which provides relief for the owner of a well known mark in relation to dissimilar goods or services where such use is likely to damage the character or repute of the mark.

In the circumstances, dilution would seem to have been the plaintiff’s strongest ground for getting home under the Trade Marks Act. Although it was an interim injunction application and the plaintiff only had to show an arguable case, the judge ignored the normal trade mark infringement requirements of use in the course of trade, similarity of goods or services, and likelihood of confusion or deception. The judge referred only briefly to copyright simply saying there was an arguable case that use of Solid Energy’s name and logo infringed its copyright without any discussion of whether the name or logo were original copyright works.

While the logo may well have been an original copyright work it is very doubtful the words “Solid Energy” would qualify as a copyright work. The judge dismissed Save Happy Valley’s arguments that its copying was fair dealing simply saying that that was a matter for the trial. The judge also appeared to ignore the large time delay between the publication of the mock report and the hearing (five months) a factor which is often fatal to a plaintiff under the balance of convenience head in an interim injunction application. The matter will now proceed to trial unless it is settled before then.

Convention Priority or Registrability First?

Fri, 21 Dec 2007 00:00:00 +1300

On 27 October 2005 Unilever applied for DOVE SUMMER GLOW in class 3.

On 6 December 2005 Neutrogena applied for SUMMER GLOW and claimed convention priority from a United States application dated 21 August 2005.

The Unilever application was accepted by the Intellectual Property Office of New Zealand but acceptance was subsequently revoked when the Neutrogena mark was filed, as provided for under section 42 of the Trade Marks Act 2002 which provides that the Commissioner may revoke acceptance if another application has priority. Unilever requested a hearing.

At the hearing Unilever argued that Neutrogena’s application was not distinctive and would never reach acceptance or registration and for that reason Unilever’s acceptance should not have been revoked. The Hearings Officer ruled that the scheme of the legislation required the priority of trade marks to be dealt with before registrability. Unilever appealed to the High Court claiming that the Hearings Officer should have considered the registrability of Neutrogena’s mark and had not done so. Neutrogena acted as an intervener to the appeal.

Unilever presented two arguments to the High Court.

The first argument was that considering priority before registrability will result in unnecessary expense because Neutrogena’s mark is not registrable and would not survive initial consideration by the Intellectual Property Office. The High Court dismissed this argument stating that it failed to see any significant difference. In one scenario Unilever’s mark could be accepted first and then opposed and in the other Neutrogena’s mark could be accepted and then opposed.

The second argument relied on Re Carter Medicine Cos Trade Marks (1892) 3 Ch. D. 472 as authority for the point that the discretion to revoke acceptance should only be exercised if the earlier mark is registrable.

In Carter Medicine counsel for Carter Medicine argued that the British legislation was to be interpreted as meaning that its application in the United States to register the word “PILLS” meant that it was entitled to have the word registered in Britain. In Carter Medicine North J rejected the argument that the fact of an application in the United States automatically meant that the application was entitled to registration in Britain. The High Court ruled Carter Medicine not to be authority for the point that registrability must be considered before priority.

The High Court agreed with the Assistant Commissioner that the scheme of the legislation dictates that priority must be dealt with before registrability. We now wait to see how the Intellectual Property Office deals with the Neutrogena application and subsequently with the Unilever application.

Yellow Pages, Books and Ducks.

Mon, 17 Dec 2007 00:00:00 +1300

The owners of the Yellow Pages hard copy and online directory of that name were disturbed to find what appeared to be copies of their directories on the websites www.yellowbook.co.nz and yellowduck.co.nz.

They sued for infringement of copyright, and breach of the Fair Trading Act, which prohibits misleading and deceptive conduct in the course of trade.

The first defendant is a company incorporated in Australia and sought leave to allow a director to represent the company in court. The High Court rejected the application on the basis that the rules are clear that while individuals may represent themselves, companies must be represented by counsel. The second and third defendants were individuals and could therefore represent themselves.

The defendants also sought to argue that the New Zealand courts had no jurisdiction or alternatively were forum non conveniens and the dispute should be heard in Australia. The court rejected both of these arguments. The judge found that because the defendants’ websites were available in New Zealand they had chosen to act in such a way as to bring themselves within New Zealand law. Further, Australian courts have no jurisdiction to hear a dispute about infringement of rights held in New Zealand.

The Yello Pages companies (the plaintiffs) successfully showed an arguable case of copyright infringement despite the defendants’ claims that they had compiled their own directory.

The judge then turned to consider trade mark infringement. The judge agreed with the plaintiffs’ submission that YELLOW PAGES and YELLOW BOOK are confusingly similar. Relevant factors included:

BOOKS and PAGES have a similar idea or meaning
Consumers are likely to recall the marks by the word YELLOW
YELLOW is an essential feature of both marks
The first plaintiff has an extremely strong reputation in the name YELLOW PAGES

The judge had no difficulty in finding an arguable case of trade mark infringement. The same was true of the claim under the Fair Trading Act for misleading and deceptive conduct in the course of trade.

The balance of convenience also favoured the plaintiffs. There was no evidence the defendants could pay damages. Given that they submitted they could not afford legal representation, and the second defendant was bankrupt, this is no surprise. The plaintiffs on the other hand, have significant businesses in New Zealand.

The judge issued orders restraining the defendants’ from hosting business directories at www.yellowbook. co.nz and www.yellowduck.co.nz. The plaintiffs also attempted to restrain the defendants’ use of the colour yellow and any use of the word “Yellow”. The judge refused stating that the plaintiffs’ case was not run on any basis which would justify such restraints.

The judge directed the matter be set down for trial without delay.

Australian Patent Act 1990 - Amendment

Fri, 14 Dec 2007 00:00:00 +1300

Good news for innovators - amendment due on experimental use exception

The Australian government has responded to the recommendations of the Advisory Council on Intellectual Property (ACIP) report, Patents and Experimental Use, and agreed to amend the Patents Act 1990 to clarify the experimental use exception to patent infringement.

The changes will provide researchers and innovators with a clearer picture on where they can tread without infringing a patentee's rights.

The proposed amendment means that there will no infringement of a patent if the actions performed in respect of a patented invention:

are done for experimental purposes;

relate to the subject matter of the invention; and

do not unreasonably conflict with the normal exploitation of the patent

It is also expected that the changes will include examples of what such experimental use could comprise, such as determining both how an invention works and the scope of the invention, determining the validity of patent claims and attempting to improve the invention.

The changes are in line with Australian government policy of supporting economic growth by encouraging innovation.

For further information please either contact Theresa McSherry or visit IP Australia.

Guide to Intellectual Property for Maori Organisations and Communities

Mon, 03 Dec 2007 00:00:00 +1300

The New Zealand government has released a free Guide to Intellectual Property for Maori Organisations and Communities.

The guide is part of the first phase of a three-step work programme to examine more closely the relationship between IP rights and systems and traditional knowledge.

One of the aims of the first stage is to "build the capacity of the Maori so they understand the opportunities and risks that the IP system provides to traditional Maori knowledge and its holders". The second stage is designed to identify any problems associated with the relationship between intellectual property and traditional knowledge in New Zealand. The third stage involves the development of possible solutions to address some of the issues that will have become apparent during the first and second stages.

The guide is separate from what is colloquially referred to as 'WAI 262'. WAI 262 refers to a claim brought against the New Zealand Crown in 1991 by the members of six tribes under the Treaty of Waitangi. The treaty was signed in 1840 by the Maori and the Crown; the Maori gave the Crown rights to govern and develop British settlements, while the Crown guaranteed the Maori full protection of their interests and status, as well as full citizenship rights. Generally speaking, the claims assert exclusive rights to flora and fauna, cultural knowledge and property. The issues raised in WAI 262 are similar to those raised in other jurisdictions by indigenous groups.

Some 16 years after the claim was first filed, the WAI 262 hearings have been concluded and the Waitangi Tribunal is working on its recommendations to the government.

The guide does not deal specifically with any of the issues raised in WAI 262, but, according to the government, is "mindful of the relationship between [WAI 262] and IP policy and legislation".

Build-a-Bear Workshop – Premature Rejection

Fri, 30 Nov 2007 00:00:00 +1300

Build-A-Bear Workshop, Inc. applied for a trade mark for the three dimensional shape of a heart in classes 28 and 35 in relation to, inter alia, toys and dolls and retail of such items.

The Intellectual Property Office of New Zealand rejected the application on the basis that it has no distinctive character. Build-A-Bear Workshop, Inc. did not submit any evidence of use and relied on the inherent distinctive of the shape.

The application then went before a Hearing Officer who reached the same conclusion as the Intellectual Property Office of New Zealand.

Build-A-Bear Workshop, Inc. appealed to the High Court claiming that the Intellectual Property Office of New Zealand had rejected the application prematurely. The applicant claimed that if there was any risk of legitimate use by other traders such traders could have opposed the application.

Before the High Court Build-A-Bear Workshop, Inc. accepted that there was nothing in its shape or description to limit its size, colour, material or use.

The High Court looked at the scheme of the Trade Marks Act 2002 and noted:

The Commissioner of Trade Marks must examine trade mark applications
If the Commissioner thinks an application does not comply he or she must give the applicant an opportunity to respond or amend the application
If the Commissioner remains of the same view he or she must tell the applicant
The applicant must be given the opportunity of a hearing and can submit evidence
If the Commissioner is still not satisfied then he or she must reject the application

Taking into account the statutory scheme the High Court said that the Commissioner has a duty to consider an application, whether or not anyone opposes an application. The grant of a trade mark registration is the grant of a statutory monopoly and there is a public interest factor. The Commissioner has to satisfy him or herself that the application meets the criteria of the Act or is bound to reject an application. The High Court made it clear that the onus is on the applicant to satisfy the Commissioner.

The High Court found that the Hearings Officer’s view that the shape is capable of being used as a toy or part of a toy “seems unassailable”. The evidence was that other traders were using heart shapes in relation to toys. The High Court found the Hearings Officer’s conclusion that other traders are likely to want to use the mark “almost inevitable”.

This decision indicates the importance that the legislation places on the examination process by the Intellectual Property Office.

Doha Declaration on TRIPS and Public Health

Fri, 16 Nov 2007 00:00:00 +1300

Possible acceptance of TRIPS Amendment by New Zealand

The purpose of this consultation document is to obtain the views of the public on whether New Zealand should accept a Protocol amending the World Trade Organisation (WTO) Agreement on Trade Related Aspects of Intellectual Property Rights ("the TRIPS Agreement").

The Doha Declaration deals with the granting of compulsory licenses for the production of patented pharmaceuticals for export to countries which require such pharmaceuticals to deal with public health problems, but have insufficient or no capacity to produce them themselves.

This discussion document sets out the issues and considers legislative amendments necessary to give effect to the Protocol if New Zealand accepts it, and seeks public input on these issues.

Click here for the full discussion document.

Extending the scope of privilege with the New Zealand Evidence Act 2007

Mon, 12 Nov 2007 00:00:00 +1300

Recent reforms on the law of evidence to increase protecting communications between patent attorneys and their clients.

To read in full please click here.

This article was published in Patent World, November 2007.

You will require Adobe Acrobat Reader to view this file.

The Sun Rises on .asia

Sat, 29 Sep 2007 00:00:00 +1200

A new Top Level Domain (TLD) for the Asia-Pacific region is set to launch on 9 October 2007.

.asia will provide a region specific domain registry for the Asia-Pacific community. It is likely to be the biggest domain name launch since the 2005 release of the European .eu registry.

Aimed at what is claimed to be the world’s largest and fastest growing combined online and offline market, the release of .asia will be a major event in domain name and e-commerce circles. It will be important for businesses in the Asia Pacific region, including New Zealand and Australia, to act quickly if they want to secure .asia domain names for their business and trade marks.

To be eligible, an applicant must be a legal entity within the Asia-Pacific geographic region. This is defined broadly, and includes both New Zealand and Australia.

Eligible entities are:

corporations and companies
cooperatives, partnerships and collectives
government bodies, states, sovereigns and municipalities
political parties and trade unions • trusts, estates, associations and societies
institutions
natural persons

Sunrise Period

The sponsor organisation responsible for .asia, the DotAsia Organisation, plans a three-stage sunrise period, running from 9 October 2007 to 15 January 2008, before the .asia TLD is opened to the general public.

During Sunrise Stage 1, which starts on 9 October 2007, national government bodies can register domain names relevant to their local community, such as country, state, province or city names.

During Sunrise Stage 2(a), which runs from 9 October 2007 to 30 October 2007, owners of trade marks registered within the Asia-Pacific region before 16 March 2004 and currently in use can register domain names identical to those marks.

During Sunrise Stages 2(b), 2(c) and 3, which run from 13 November 2007 to 15 January 2008, the owners of trade marks registered within the Asia-Pacific region before 6 December 2006, and currently in use, can register domain names identical to their trade marks, or extended domain names incorporating the trade mark itself and words from the relevant description in the Nice classification system. For example, the owner of the trade mark ‘ABC’ in class 25 (clothing) could register the domain name “ABCClothing.asia”.

Registered entity names, such as company names, can also be registered during this period. The relevant name must have been registered in a country within the region before 6 December 2006 and documentary evidence of registration, such as a certificate of incorporation, must be submitted with the application.

Land Rush

A Land Rush period will follow the sunrise period. During this period, applications for domain names by the general public will be taken, providing these meet the necessary eligibility requirements. This is planned for February 2008, though exact dates are yet to be confirmed.

If multiple applications for the same domain name are received during the Land Rush period, all the applicants will be invited to take part in an auction for the domain name at the Land Rush’s conclusion, with no account taken of the order in which the applications were received.

Go-Live At the conclusion of the Land Rush period the ‘Go- Live’ phase will begin. Registrations will then be open to anyone meeting the eligibility criteria on a first-in, September 2007 Issue 033 email@baldwins.com www.baldwins.com In legal matters, no publication can take the place of professional advice. Although every effort has been made to ensure the accuracy of the information in this publication, it should not be treated as a basis for formulating business decisions without further advice. ©2007 Baldwins. first-served basis. This is planned to start some time in March 2008, although again, an exact date is yet to be confirmed.

Conclusion

Registration costs for .asia domain names are yet to be published, but we will keep you advised as soon as any relevant information comes to hand.

Businesses operating in the Asia-Pacific marketplace should be prepared for the upcoming release of .asia. If you have not done so already, you should seriously consider the opportunities a .asia domain name offers for your business. In general, we advise seeking to register domain names in all relevant markets for your business names and most important trade marks.

The DotAsia Organisation has stated that the UDRP domain name dispute mechanism will apply to .asia domain names. However, it is also exploring the possibility of having local dispute resolution mechanisms apply when both parties to a dispute are in the same territory. We strongly recommend that you take proactive steps to protect your business name and trade marks, to avoid becoming embroiled in dispute resolution procedures if someone else registers them as domain names.

If you would like any assistance in relation to the launch of .asia, or otherwise in relation to your domain name portfolio, please do not hesitate to contact your usual advisor at Baldwins.

Hearings Officer’s Views to be Given Weight by Appellate Courts

Thu, 30 Aug 2007 00:00:00 +1200

The Court of Appeal has overturned the High Court’s ruling that WILD GEESE is confusingly similar to WILD TURKEY in respect of class 33 goods.

In 2004 a Hearings Officer ruled that although there were conceptual similarities between WILD GEESE and WILD TURKEY, the marks did not look or sound the same and were not confusingly similar.

Austin Nichols, the owner of Wild Turkey, appealed the Hearings Officer’s ruling to the High Court. In the High Court Gendall J accepted that GEESE and TURKEY did not look or sound similar but considering the marks as a whole, the idea of both marks was a large wild bird that is the subject of a hunt. Gendall J placed considerable emphasis on the idea of the marks.

In the High Court, the owner of Wild Geese, Stichting Lodestar, argued that substantial weight should be given to the Hearings Officer’s view. Referring to VB Distributors Limited v Matsushita Electrical Industrial Co Limited (1999) TCLR 349 (HC) Gendall J concluded that he did not have to give any weight to the views of the Hearings Officer.

The Court of Appeal disagreed stating that the High Court on appeal from the Hearings Officer is required to give some weight to the decision of the Hearings Officer in an area within the Hearings Officer’s expertise. The Court of Appeal called for deference by the High Court to the expertise of the Hearings Officer. The Court of Appeal placed weight on the “stark differences” between GEESE and TURKEY. The Court of Appeal ruled that the concept of the marks was not strong and the class of “hunted birds” is broad and ill-defined.

The Court of Appeal allowed the appeal, awarded costs to Stitching Lodestar and reversed the costs award in the High Court. Stitching Lodestar is entitled to costs in the Court of Appeal, High Court and for the opposition before the Hearings Officer.

The Court of Appeal’s decision is useful for parties who were successful before a Hearings Officer but find themselves as respondents to an appeal at the High Court. The Court of Appeal’s decision may also have an effect on examination practices by the Intellectual Property Office of New Zealand. As a result of the High Court decision the Intellectual Property Office has been maintaining citations of confusingly similar marks on the basis that the idea of the marks is similar. It is likely that the idea of the mark will be given less prominence at the examination stage.

The owner of Wild Turkey, Austin Nichols, has appealed to the Supreme Court. The Supreme Court is likely to hear the case before the end of 2007.

Is it “Use” of a Trade Mark if it is Not Used on the Goods?

Thu, 30 Aug 2007 00:00:00 +1200

In Aqua Technics Pool and Spa Centre New Zealand Limited v Aqua-Tech Limited (unreported, CA257/05, 22 March 2007, Court of Appeal) the Court of Appeal was asked to consider whether the respondent, Aqua-Tech Limited (Aqua-Tech), had established use of the trade mark “Aqua-Tech” in relation to spa and swimming pools.

Aqua-Tech was the manufacturer of spa and swimming pools and sold mostly to trade. In particular it sold to an associated company, Cascade Industries Limited, who acted as a retailer. Aqua-Tech’s materials referred to these pools as “Cascade pools”, however, all products were advertised under the heading of “Aqua-Tech” and “Aqua-Tech” featured on catalogues as well as each pool having a notice attached referring to “Aqua-Tech”.

The appellant, Aqua Technics Pool and Spa Centre New Zealand Limited (Aqua Technics), argued that the use was part of a company or trading name, as in “Aqua- Tech Industries Limited” or Aqua-Tech Industries”, which featured on some materials. It also argued that it was not use on or in relation to goods, not use as a trade mark and it was use for services not for goods. The Court of Appeal rejected all of Aqua Technic’s arguments.

The Court of Appeal had no difficulty in accepting that a trade mark could be used as part of a company or trading name and still constitute use as a trade mark. It also had no difficulty in accepting that use could be on promotional materials and not on the goods themselves.

The use was said to be sufficient to qualify as use of a trade mark because it was designed to establish a connection between the goods and the manufacturer. This was considered to be a link between Aqua-Tech and the origin of the goods and was therefore use as a trade mark.

Because Aqua-Tech was the manufacturer the Court of Appeal accepted that that was use in relation to goods, as opposed to services. The Court of Appeal linked this back to the connection between the goods and the manufacturer and a manufacturer being responsible for the quality of goods.

An interesting aspect to this case was Aqua Technics criticisms of Aqua Tech’s evidence for being unreliable. The case began as a trade mark opposition where evidence is given by statutory declaration or affidavit. There is a right to cross-examine witnesses but this is rarely done. The Court of Appeal said that if Aqua Technics had wanted to challenge Aqua-Tech’s evidence it should have asked for the right to cross-examine. It went on to say that it is unfair to challenge the veracity of a witness on appeal when the challenge had not been put earlier.

Aqua Technic’s application for leave to appeal has been declined by the Supreme Court. There are no further rights of appeal and the Court of Appeal’s ruling stands.

TICK TOCK for Tea Too Similar to TIC TAC for Confectionery

Thu, 30 Aug 2007 00:00:00 +1200

A Hearings Officer recently upheld the opposition by Ferrero to registration of TICK TOCK in class 30 for tea.

Wistbray Limited, a United Kingdom company, applied for the trade mark TICK TOCK in class 30 for tea. Ferrero opposed claiming that it was too similar to its own mark TIC TAC, which it had used extensively for confectionery in New Zealand for some years. Ferrero, relying on its reputation in the mark TIC TAC for confectionery, produced a survey demonstrating that over 95% of consumers were aware of the TIC TAC brand. It also relied on several registered trade marks covering confectionery. Wistbray did not file any evidence.

In the Hearings Officer’s view TICK and TIC are pronounced the same. The hearings officer went on to say that not only were TAC and TOCK similar but “may even be identical” and further that to all intents and purposes, the marks “became the same”.

In relation to the goods the Hearings Officer conceded that the goods (tea and confectionery) were quite different and were unlikely to be positioned together in supermarkets and convenience stores. However, the strong reputation in the TIC TAC mark and the strong similarity between the marks was said to be likely to lead to confusion and deception despite the difference in the goods.

Although Ferrero had several trade mark registrations for TIC TAC for non-medicated confectionery in class 30, Ferrero failed on this ground. The Hearings Officer dismissed the opposition on the basis of the earlier registrations simply stating that use of TICK TOCK in relation to goods covered by the application is not likely to deceive or cause confusion. It is difficult to understand how an opposition can succeed on the basis of reputation but fail on the basis of trade mark registrations for the same mark for the same goods as the reputation is claimed for.

Ferrero also claimed that the mark TICK TOCK lacked distinctive character. Presumably this was on the basis that it would always be confusingly associated with TIC TAC and was not capable of distinguishing Wistbray’s goods from those of Ferrero sold under TIC TAC. The Hearings Officer dismissed the opposition on this ground on the basis that there was no evidence before him to address the objection that the mark TICK TOCK lacked distinctive character.

Neither party requested to be heard at a hearing or filed submissions. Rather, both parties asked that the matter be decided on the papers filed. In the absence of submissions from the parties the Hearings Officer appeared to lack understanding on how the evidence related to the grounds of opposition as pleaded.

Wistbray is not known to have lodged an appeal to the High Court and for the time being the Hearings Officer’s ruling stands.

Chinese domain names and internet keywords

Thu, 23 Aug 2007 00:00:00 +1200

Have you recently received an email from a Chinese internet company, saying that someone else has tried to register your name as a domain name or internet keyword in China? If so, you are not alone.

At Baldwins we are receiving an increasing number of enquiries from clients about these emails, which typically state that:

the sender is an authorised domain name registrar in China;
a third party has attempted to register a name as a domain name or as an internet keyword;
an internet check showed the name may be connected to you;
the registration has been delayed while the registrar contacts you;
the registrar can register the domain name or keyword on your behalf to block the third party from doing so.

These emails are misleading, if not fraudulent.

Chinese domain names

The most common domain names referred to are:

.cn, which is the general designation for China; and
.com.cn, which signifies a business or company in China, similar to .co.nz in New Zealand and .com.au in Australia.

Like .com and .co.nz domain names, .cn and .com.cn domain names are registered on a first come, first served basis. We are not aware of any requirement on registrars to investigate whether domain name applications raise any trade mark issues, or to impose a stand down period while such issues are explored.

We have registered a number of Chinese domain names for clients without experiencing any such process or delay, and the body responsible for Chinese domain names states that registrations are entered into the registration database immediately.

If a third party was interested in your name, it would have simply registered it and an email such as this would not arise.

Chinese internet keywords

These are short form words that can be used as searching tools. Each keyword is linked to a particular domain name or website. For example, we could register BALDWINS as an internet keyword and link it to our website at www.baldwins.com. When someone typed BALDWINS into the address bar of their internet browser they would be directed to our website.

The intention of these keywords is that it will be easy for people to find you by typing in a keyword rather than having to guess what your whole domain name is.

However, these keywords:

only operate in China; and
only operate on certain supported internet browsers.

Accordingly, registering a keyword is of limited value, as only internet users in China, who are on a site that supports keywords, can use them.

Also, internet users in China are more likely to enter Chinese characters than English words when looking for your company. This further reduces the value of an English keyword.

Like Chinese domain names, we are not aware of any requirement on registrars to investigate whether internet keywords raise any trade mark issues, or to impose a stand down period while such issues are explored. The body responsible for internet keywords states that internet keywords will be operational within 24 hours of registration.

Scare Tactics

The companies that send these emails appear to base them on existing domain names. They are simply trying to scare you into registering domain names and internet keywords, as a means of creating business for themselves.

We advise against dealing with them.

If you wish to register Chinese domain names or internet keywords, either because they are relevant to your business or to protect yourself from others, we can easily and immediately register them through a reputable registrar. One we use charges US$23.50 per year for a domain name registration, which can then be redirected to your existing website.

We would only recommend registering Chinese internet keywords if you would be particularly perturbed if Chinese websurfers, who use an internet keyword, on a site that supports them, and enter queries in English rather than Chinese, were directed to someone else’s website.

If you would like more information, have received an email you are concerned about, or would like any Chinese domain names or internet keywords registered on your behalf, please contact your usual advisor at Baldwins.

Businesses need to get ready for the Anti-Spam Act

Fri, 22 Jun 2007 00:00:00 +1200

Daniel Gilchrist

The Unsolicited Electronic Messages Act, which comes into force on 6 September 2007, brings with it a number of compliance issues for New Zealand businesses.

The Act, passed in March this year, aims to crack down on unsolicited emails and other electronic messages (spam) in New Zealand. There are estimates that spam makes up to 80 percent of worldwide email traffic. According to Communications Minister David Cunliffe, the Act will stop New Zealand from becoming a ‘safe haven’ for spammers.

The Act applies to all messages originating in, sent to or accessed from New Zealand, including messages sent to any email address ending in .nz or a telephone number beginning with the ‘64’ international access code.

The Act raises compliance issues for businesses that rely on commercial emails or other types of electronic message to advertise. It bans all unsolicited commercial electronic messages and will require businesses to seek consent from recipients before sending any unsolicited electronic messages. One way of achieving this, for example, would be to require visitors to your website to tick a box confirming their consent to receiving commercial electronic messages.

All subsequent electronic messages will need to include accurate identification and contact information for the sender and a functional and clear unsubscribe facility that allows recipients to opt out of receiving further messages. Businesses breaching these provisions could be liable for fines of up to $500,000.

The Act has been criticised for these additional compliance burdens, which may particularly impact on small businesses who market electronically. Critics also claim that the Act will have little actual impact on the volume of spam received by New Zealanders, as most spam is sent from overseas, making the Act difficult to enforce against foreign spammers.

The Act is a well-meaning attempt to establish a legislative framework upon which to address the problems spam poses for business and individuals. The reality, however, is that the Act will likely do little to reduce the amount of spam received by New Zealanders and will to some extent increase compliance costs for New Zealand businesses. The Act is not a replacement for spam filters or other technological protection measures, which remain a more effective means of stopping spam from reaching your inbox. Businesses will need to be careful to ensure compliance with the new provisions by 6 September 2007 if they do not wish to expose themselves to the risk of significant fines for breaching the Act.

If you would like further information or assistance in preparing your business for compliance with the Act, please contact a professional advisor at Baldwins.

InternetNZ releases draft anti-SPAM code of practice for ISPs

Fri, 08 Jun 2007 00:00:00 +1200

Public comments on a draft code of practice for ISPs in relation to New Zealand’s anti-spam legislation are invited by 18 June 2007.

The Unsolicited Electronic Messages Act is due to come into force on 6 September 2007. The Act is intended to reduce the amount of unsolicited emails and other electronic messages (spam) sent and received in New Zealand.

Everybody sending or receiving e-mails within New Zealand does so through an Internet Service Provider (ISP). InternetNZ, in collaboration with the NZ Marketing Association and the Telecommunications Carriers’ Form, has prepared a draft code of practice for ISPs in relation to spam and the Unsolicited Electronic Messages Act.

The code will establish minimum acceptable practices for parties that provide any goods, services, equipment or facilities that enable or facilitate telecommunications. This includes ISPs.

The obligations imposed on ISPs by the draft code are to:

provide customers with information about their obligation not to send spam, methods of minimising the amount of spam received, complaint procedures for reporting spam, and whether or not the ISP filters email messages for spam;
co-operate with law enforcement agencies that are investigating spam;
make spam filters available to customers;
not allow unauthorised persons to send email messages via their systems;
retain information about IP addresses assigned to customers;
consider and implement best-practice actions that may reduce spam.

Surprisingly, a failure to meet the standards specified in the draft code is not actionable under the Unsolicited Electronic Messages Act. Instead, action must be taken under other legislation, such as the Telecommunications Act, the Fair Trading Act or the Consumer Guarantees Act. In such proceedings the draft code can provide evidence of what might be considered best practice for ISPs in relation to spam.

The draft code is available on InternetNZ's website (http://www.internetnz.net.nz/issues/current-issues/anti-spam) and public comments on it are invited by 18 June 2007.

If you would like more information, or would like assistance in preparing submissions on the draft code, please contact your usual advisor at Baldwins.

The New Zealand Major Events Management Bill

Fri, 01 Jun 2007 00:00:00 +1200

Sport is a billion dollar business these days and leading brand owners are turning to major events such as the Olympics and World Cups as part of their marketing strategies. Income for major events is primarily generated from corporate sponsorship, sale of television rights and tickets.

One of the largest global sporting events is the FIFA World Cup. The 2006 FIFA World Cup is reported to have brought in €5 million in sponsorship spending, with the event reportedly boosting Germany’s annual GDP by 0.01%.

Sportbusiness International recently reported that the ICC Chiefs expected profit of US $239m from the Cricket World Cup. In return for such high levels of investment, major sponsors expect strong protection for their brands. Other countries have enacted legislation for each event, such as that for the 2000 Sydney Olympic Games, the 2006 Melbourne Commonwealth Games and the 2012 London Olympics.

New Zealand is adopting an innovative approach and instead is enacting umbrella legislation to cover any number of events which arise in the future.

With New Zealand hosting the Netball World Cup in November 2007, Under-17 Women’s Football World Cup in 2008, the Rowing World Championships in 2010, Rugby World Cup 2011 and co-hosting the Cricket World Cup in 2015, it was not surprising to see the introduction of the Major Events Management Bill on 12 December 2006. The Bill is currently with the Commerce Select Committee, submissions were due on 5 April 2007.

With the Netball World Cup in November 2007, I am sure the Government will want this legislation in place by then.

The Major Events Management Bill is divided into 5 parts. The important provisions are found in Part II (protection for major events), Part III (permanently protected emblems and words) and Part IV (enforcement).

Part II is divided into 4 sub-parts covering declaration of a major event, ambush marketing by association protections, ambush marketing by intrusion protections and prevention of ticket scalping.

Declaration of a Major Event

The Bill proposes that the declaration of a major event will be made by the Governor General by Order in Council made on the recommendation of the Economic Development Minister after consultations with the Commerce Minister and the Sports Minister. This section provides great flexibility around what could constitute a major event. This could cover a wide range of events, such as sporting, concerts, and cultural events.

The ability to identify individual events as a major event on a case by case basis under a single piece of legislation seems to be unique to New Zealand. Overseas, such events have usually been the subject of separate legislation on each occasion. Another interesting feature is that the major event does not need to be held solely in New Zealand.

Ambush Marketing

One of the most creative methods used to associate a brand with an event, team or individual is ambush marketing.

Ambush marketing is where one brand pays to become an official sponsor and a third party, normally a competing brand, attempts to associate itself with the event even though it is not an official sponsor.

This occurred in New Zealand in 1996. It was the first case of ambush marketing in New Zealand and came before the High Court. The New Zealand Olympic and Commonwealth Games Association took action against Telecom for its advertisement relating to coverage around the time of the Atlanta Olympic Games.

The feature of the advertisement was the use in the same colours and special arrangement as the Olympic ring symbol of the word “ring”. The colours of the individual words were top line left to right: blue, black, red; and lower line: yellow and green (the Olympic colours). Telecom was not an authorised sponsor, Bell South was.

While finding Telecom unwise and the case finely balanced, the Court held that Telecom had not crossed the line into unlawful activity. The Court required that there be precision and representations that actually misled or deceived.

With such high sums at stake, ambush marketing is growing in popularity as brand owners try to gain promotional opportunity for their brands without incurring the cost connected with being an official sponsor.

The ambush marketer is not bound by any contractual constraints and by being cunning can get greater leverage and return on a much smaller investment.

There have been many examples of ambush marketing, despite legislative attempts to prevent it.

At the Sydney Olympics 2000 – use of Kathy Freeman’s image in this advertisement by Qantas. Qantas was a sponsor of Kathy’s but not an official Olympic 2000 sponsor. Qantas embarked on advertisements featuring prominent athletes. Australians thought Qantas was an official sponsor – it was not, Ansett was.

FIFA World Cup 2006 – Lufthansa planes with soccer balls painted on their noses (Emirates was the official sponsor).

In general, ambush marketing by association protection has been provided by existing intellectual property laws such as the Trade Marks Act 2002, passing off, the Fair Trading Act 1986 and the Copyright Act 1984.

However, there is generally no protection in existing laws against activities which amount to ambush marketing by intrusion.

Clean Zones

The Bill attempts to control the intrusive form of ambush marketing by declaring “clean zones” around the event venues and stadia. All unauthorised advertising and street trading is prohibited in the clean zone during a specified clean period around the time of the major event. This clean zone includes the venue and areas close to the venue and extends to clean transport and routes which extend up to 5kms from the boundary of the clean zone. No unauthorised advertising can be undertaken that is clearly visible from the clean zone.

It is interesting to note that at the end of 2006 Queensland Parliament introduced the Major Sports Amendment Act ( No.2) 2006. This Act amended the Major Sports Facilities Act 2001. The aim of the Act is to restrict ambush marketing at major sporting events. The Act bans advertising within sight of Queensland’s major sports facilities. This includes sign-writing, aerial displays by aircraft and billboards on buildings ,banners or signs attached to aircraft, hang gliders, parachute, para-glider or similar device or a person suspended from any of these devices ; matter on a flag (other than a State or National flag) that has an area more than 5m2, unless written application is approved allowing the display. A maximum penalty of $52,500 is imposed. Advertisements that are of a more permanent nature displayed on a building or other structure are not banned.

In February 2007 the Victorian Minister for Sport announced the introduction of Victorian legislation outlawing the practice of aerial ambushing. This is likely as a result of the aerial blimp employed by Holden at the AFL Grand final. Holden were not a sponsor of this event. Events such as the AFL Grant Final, Formula One Grand Prix and the Australian Tennis Open will be protected events.

Representations

The greatest challenge in enforcement will be around the Bill’s attempts to curb representations made in a way likely to suggest to a reasonable person that there is an association between the major event and the goods or services or a brand or a person who provides goods and services at the major event. The court will be entitled to presume that a representation is in breach if it includes a major event emblem, major event word, or a representation which closely resembles a major event emblem or major event word, as to be likely to deceive or confuse a reasonable person.

There are exceptions created where written authorisation is gained and where the association is made in accordance with honest practices.

Ticket controls

One of the key areas of revenue gathering for a major event is from tickets. The bill prevents selling or trading of a ticket to a major event activity for a value greater than the original sale price of the ticket.

Tickets also provide an opportunity for the event organiser to place terms and conditions for entry to the event.

At the 2006 FIFA World Cup fans were asked to remove orange lederhosen with the name of a Bavarian beer on them as Anheuser Busch was the official sponsor.

Fans removed the lederhosen and watched the game in their underwear. The following day fans were provided with orange boxer shorts to wear bearing the Bavarian beer brand. Ambush marketers often move quickly to maximise an opportunity at short notice. By the time action has been taken the ambush marketer has undertaken a successful ambush.

Seeking removal of the lederhosen created worldwide publicity and thereby greater exposure in this instance of Ambush marketing.

This must be welcomed by the organisers of major events where tickets to major events are in demand and start appearing for sale on internet auction sites. Event organisers can place terms and conditions for entry as a condition of the purchase of a ticket stipulating that the purchaser cannot resell the ticket at a premium. Resale would constitute a breach of contract and the ticket holder will be denied entry to the venue.

Pressure can be placed on internet auction sites to stop resale, while TradeMe in New Zealand is receptive to this, eBay takes a different position on the basis it is not selling the tickets.

Emblems

Part 3 of the bill provides for permanently protected emblems and words relating to the Olympic Games & Commonwealth Games. There are shown in schedules to the Act. These emblems and words are currently protected in the Flags, Emblems and Names Protection Act 1981, but it is intended that they be protected instead in the Major Events Management Bill.

It will be crucial to check the words and emblems protected by the Act to ensure any use is authorised.

Enforcement

Breaching provisions of the Bill are likely to result in fines not exceeding $150,000.

Part 4 of the Act relates to border protection measures.

Event organisers know only too well the importance of protecting trade marks for specific events, logos and names. Once registered trade marks are obtained these trade marks can be licensed and a control maintained over their use.

Rights are then granted for action to be taken against those that use the trade marks in an unauthorised manner and where counterfeit product appears on the market.

At the time of the Lions Tour to New Zealand several high profile clothing manufacturers policed the market for counterfeit ALL BLACK and LIONS jerseys and merchandise. This proved to be successful as after the first game, very few counterfeit products were found on the market.

The Bill is also taking a harder line on unauthorised traders, including street traders.

Enforcement officers will be appointed to identify breaches, to issue formal warnings, to inspect and monitor clean zones, to obtain search warrants. Enforcement officers are to be given the power to seize or cover anything the officer believes is a breach.

On 4 April of a supplementary order paper inserted a new subpart 5 into part 2. The subpart makes it an offence for a person to go onto a playing surface or to propel an object onto the playing surface at a major sporting event.

Breaching these provisions are likely to result in a term of imprisonment not exceeding 3 months or to a fine not exceeding $5000.

This addition has been made to ensure the smooth running of major events so streakers beware!

Summary

It will be interesting to see the final version of the Major Events Management Bill in New Zealand and how successfully it can combat ambush marketing.

We will all be watching with interest the continued development and refinement in Australia and around the world, of other legislation attempting to combat ambush marketing.

Ambush marketers are adept at taking advantage of any opportunity at short notice.

Australian domain name policy under review

Wed, 23 May 2007 00:00:00 +1200

The auDA is calling for submissions on the policy framework for .au domain names by Friday 15 June 2007.

The auDA is reviewing the framework governing the allocation and use of Australian (.au) domain names. It released an Issues Paper in May 2007. Public submissions on that paper are due by Friday 15 June 2007.

Three issues are under discussion:

Whether domain names of the format www.yourname.au should become registrable (eg www.baldwins.au). At present Australian domain names, like New Zealand domain names, must be registered within a particular Second Level, such as .com.au or .net.au.
Whether the policy rules for the main Second Level domains (eg .com.au) are appropriate or whether they should be changed. These domain names are currently subject to registration criteria and rules. auDA is particularly interested in hearing about situations where the rules have prevented a party registering a domain name that they should reasonably have been able to register, and situations where, despite the rules, a party has been able to register a domain name for an improper or unfair purpose.
Whether registrants should be allowed to sell their Australian domain names. In an attempt to minimise cybersquatting, transfers of domain names are currently only permitted in certain, narrow, situations, such as where a business has been sold, or intellectual property rights transferred from one party to another. auDA invites comments on whether this position should be relaxed. The Issues Paper provides further details of the current position on each of these three issues and arguments for and against changing those positions. It can be accessed on the auDA's website (http://www.auda.org.au/2007npp/2007npp-index/).

If you would like a copy of the Issues Paper, would like Baldwins to prepare submissions on your behalf, or have any other questions about this review, please do not hesitate to contact your usual advisor at Baldwins.

Baldwins 2006 Law and Information Technology Award

Tue, 15 May 2007 00:00:00 +1200

Baldwins support several awards recognising outstanding academic achievement.

The 2006 Baldwins Law and Information Technology award was presented to winner Ms Devaki Sharma. To win this award, Ms Sharma showed excellence in her studies of this subject at the University of Auckland Faculty of Law.

The prize, a $1000 cheque gifted by Baldwins was presented to Ms Sharma by partner Wes Jones during a ceremony held at Baldwins in Auckland. The ceremony was also attended by Ms Sharma’s family and several Baldwins professionals.

New Dosage Regimes for Pharmaceuticals now Patentable in New Zealand

Tue, 01 May 2007 00:00:00 +1200

The Intellectual Property Office of New Zealand (IPONZ) has just released a decision of particular significance to the pharmaceutical industry. The decision follows a hearing at IPONZ on the patentability of Swiss claims where the novelty of the claimed subject matter resides in a dosage regime, rather than the active ingredient or the disease to be treated.

The patent application is jointly owned by Genentech Inc. and Washington University. The active ingredient of the claims, insulin-like growth factor-1 (IGF-1), was previously known for treating various diseases, but patients suffered from side effects and the particular problem that continuous treatment rendered IGF-1 ineffective over time. The applicants had found that intermittent treatment using IGF-1 maximised efficacy and minimised side effects.

New Zealand does not allow patents for methods of medically treating humans.This position is in line with the vast majority of countries, the notable exceptions being the United States and Australia. However, following a decision of the Court of Appeal in 2000, known as the Pharmac case (Pharmaceutical Management Agency Ltd v The Commission of Patents [2000] RPC 857), Swiss claims have been allowable in New Zealand. Swiss claims effectively protect a new use of a known pharmaceutical ingredient.

However, the interpretation of relevant case law by IPONZ has been rather restrictive and is reflected in its “Guidelines For the Examination of Swiss-type Claims” that issued in September 2006. The Guidelines considered the conflicting positions of the UK and Europe. The UK Court of Appeal in the Bristol-Myers Taxol case (Bristol-Myers Squibb v Baker Norton Pharmaceuticals [2001] RPC 1) refused to allow a Swiss claim having a faster administration rate as its novel feature. In contrast, the decision of the EPO in the Genentech Inc. case (T1020/03) allowed claims equivalent to those that were the subject of the New Zealand decision. The Guidelines controversially concluded that the novelty must reside in the newly discovered purpose (of the known pharmaceutical) and not the mode of administration or the amount, timing or frequency of dosage.

The New Zealand decision reviewed the UK and European decisions, as well as earlier IPONZ decisions on the issue, and disagreed with the statement in the Guidelines that claims of this type are not valid Swiss claims. The IPONZ decision noted that the applicants had produced a means of overcoming or alleviating problems associated with the continued use of IGF-1 and that it was proper that they should be able to obtain patent protection for their contribution. The decision went on to explain that the only contrary view was that expressed by the UK Court of Appeal in the Bristol-Myers Taxol case, and that case, although persuasive, was not binding in New Zealand nor had it been followed by later European Board of Appeal cases.

The decision represents a positive step forward for many in the pharmaceutical industry, and reflects the continued expansion of areas of pharmaceutical innovation that can be patented in New Zealand.

The Sixth P - Protection

Thu, 05 Apr 2007 00:00:00 +1200

The key to a successful marketing strategy: the power of distinctive brands.

You all know about the famous 4 Ps of marketing – Product, Price, Promotion and Placement and chances are you have heard of the 5th P being People. In today’s highly competitive age marketing experts are realising that the key to a successful marketing strategy is in fact dependent on a 6th P – Protection.

Philip Thoreau, partner and patent atorney at Baldwins, considers intellectual property protection to be one of the critical areas of any marketing strategy.

Intellectual property protection is not just a matter of taking someone to court when things go wrong, but a process of building brand identity and then holding on to it. It is as much about developing distinctive products as it is about stopping others from using them.

Wine consumers have a huge choice and buyers are increasingly lured by price specials. However, the reputation and distinctiveness of products will influence a consumer’s purchase decision beyond the dollars and cents.

Brands like Cloudy Bay, Wither Hills, Kim Crawford and Lindauer are immediately recognisable through their packaging and design, while others can take more time to search out. In a time-negative age wine marketers need to be savvy and creative, decreasing the consumers’ opportunity to be attracted to competitor products.

Off-beat marks like SQUAWKING MAGPIE and CAT’S PEE ON A GOOSEBERRY BUSH are memorable names and have achieved success both in New Zealand and overseas.

One of the top-selling wines leading New Zealand’s $200M USA export business is MONKEY BAY, a product that features an animated lime green monkey swinging across the label. Simple, memorable characteristics are key to distinctiveness and an opportunity to further protect your brand through IP protection.

Your product does not need to be brash to be distinctive - subtle elements like font, colour and label shape can be used to great effect. Even label stock is important – DASHWOOD’S transparent stock label with its hand-painted swirl is a good example.

Distinctiveness does not stop there. Intellectual property resides not only in the label but the product’s whole look – from the shape of the bottle and the way it is packaged, to how it is advertised, slogans, by-lines and POS material.

People can even protect sounds and smells as trade marks, and in Europe there are a handful of trade mark registrations for a product’s taste although Thoreau is quick to point out that the level of distinctiveness required to successfully register such a trade mark is quite high.

ABSOLUT Vodka and BOMBAY SAPPHIRE Gin are recognisable products in the liquor industry. Industry observers suggest they can be identified from 100 feet away or out of the corner of an eye. Millions have been spent on the development and maintenance of the brand signature.

“It can pay off” says Thoreau, “Ultimately, this recognition builds up to promote a consumer’s feeling of familiarity and security with the brand, meaning people are more likely to buy the product when faced with a large number of choices or where getting it right is particularly important to them, like when buying a product to enjoy with friends – or to impress.”

So how do you ensure your brand is truly distinctive?

First, identify your brand’s point of difference. Do some ground work in the trade – scour retail in the local and overseas market to get a feel for what is out there. From there, ask your qualified patent attorney to do a clearance check to ensure the final product will stand out as much as possible – good patent attorneys are prepared to critique your brand rationale and advise on ways of making the product.

Clearance checks are not only useful in strengthening your point of difference, they are also a very powerful tool in determining the behaviour of current and future competitors, well before your product hits the shelves.

In some situations a clearance check can give you a picture of several markets at once. In Europe, for example, the European Community Trade Marks System provides access to all EU member countries - one registration has effect in 28 major countries across Europe. The US Patent & Trademark Register is similarly wide-reaching, federally.

So you’ve got something different, how do you make it memorable?

Develop an identity and stay with it. True distinctiveness is built on a number of layers – not just the brand name or artwork. Develop an identity through brand layers and ensure your signature is carried consistently through the brand family.

The BOMBAY SAPPHIRE brand has several layers, from the shape and colour of the bottle to the shape of the label, the label’s colour combinations (blue, white and gold) to the blue back-light repeated in supporting print media.

Brand layering can be vital to developing a strong brand family, where parent brands can push emerging sub-brands along and reduce cost at entry.

It is interesting to see how the Lindauer brand has developed over the years. Historically, the name Lindauer was very much on an equal footing with Montana in terms of label real estate. Over the years the Montana mark and the Wine Press device have shrunk considerably in favour of ‘LINDAUER’. Now that the Lindauer brand can stand on its own feet, the Montana brand hardly features on that label.

What’s more, the Lindauer mark today almost takes a back seat to the product’s other characteristics – the diagonal stripe across the label and the red-pink and gold-yellow colour combinations. This certainly could make choosing Lindauer a subconsciously safe choice. With a lot of unknowns in the sub-$15 methodes and sparkling market, this is important to the producer.

Now, if developing distinctiveness in branding is important in New Zealand, it is absolutely vital overseas.

Geographical Indications

Overseas at least for markets in the know, geographical indications like Hawkes Bay and Marlborough are revered as much as the likes of Sancerre, Cotes du Rhone and Alsace. When you have that level of association with a region, you must ensure consumers don’t buy any old Hawkes Bay wine – they buy your Hawkes Bay wine.

Not only is distinctiveness vital to consumer relations, but competitor relations also. Generally, the more distinctive a product is, the easier it is to protect against those set on trading off the back of the reputation you have taken years to build.

Baldwins’ advice to wine producers is to seek protection at the earliest possible stage. Stopping someone once they are already in the market place is a lot harder and (almost always) vastly more expensive to the rights owner than preventing them from going to market in the first place. The true value of trade mark registrations is their deterrent value, not a basis for litigation. This is a greatly misunderstood concept.

Patent attorneys are often approached by clients who knew they should have sought protection at the outset but for one reason or another, didn’t do it.

When problems arise they either have to accept the situation or undertake significant cost to engage in what could have been an entirely unnecessary rearguard action.

Most importantly remember that your intellectual property protection strategy is just as important for driving business as it is for reducing costs.

Get that right and you might be seeing more of that other important P – Profit.

This article was published in FMCG magazine, March 2007.

New Zealand: Meeting the digital copyright challenge

Mon, 05 Mar 2007 00:00:00 +1300

The New Zealand government is proposing significant amendments to the Copyright Act 1994 (the Act) with the Copyright (New Technologies and Performer's Rights) Amendment Bill (the Bill).

In particular the Bill:

provides an exception to infringement for transient copying (for example, by automatic computer or communications network processes);
amends existing broadcast rights to a technology-neutral right of communication to the public;
limits the liability of internet service providers for infringements by those using their services;
expands the provisions relating to technological protection measures and their circumvention;
provides protection for electronic rights management information (for example, copyright notices, the author's identity and terms of use);
amends/clarifies the existing permitted acts or fair-dealing exceptions to infringement, such as library, archiving, research and educational use;
and introduces new exceptions by allowing so-called format-shifting of sound recordings for private and domestic use (for example, transferring songs from CD to MP3 format), and allowing reverse engineering of software for decompilation and error correction purposes.

The proposed amendments highlight the inherent conflict between the interests of owners and users in the Copyright Act, and a number of them may not sit well with copyright owners.

In particular, software owners are unlikely to want anyone to be able to reverse engineer their software for any reason, particularly where there is a risk that this could lead to the software being copied.

The amendments will prevent copyright owners from excluding by contract the right to reverse engineer software. This removes a large part of the legal protection for software in New Zealand and conflicts with both UK and US copyright law. If enacted, this provision could effectively discourage international software developers and companies from bringing their products to market in New Zealand.

This article was published in Managing Intellectual Property in March 2007.

New Zealand revamps IP regime

Fri, 02 Feb 2007 00:00:00 +1300

What's happening with New Zealand's latest IP legislation and draft bills under consideration

New Zealand for the most part has rather antiquated intellectual property legislation. The Trade Marks Act was in force for nearly 50 years before being replaced in 2002 and the Patents Act has been in force for more than 50 years. In a flurry of activity, two IP-related pieces of legislation were passed in late 2006 and there are several other draft bills being considered.

The Geographical Indications (Wine and Spirits) Registration Act 2006 was introduced in late 2006 as well as the Evidence Act 2006, which broadened the scope of registered patent attorney privilege.

A Patents Bill and a Plant Variety Rights Bill have been drafted and both should be introduced into Parliament in early 2007.

The Copyright Digital Amendment Bill, which covers issues such as technological protection measures and format shifting, is likely to be passed some time in 2007. The government is also considering amendments to the commissioning rule.

The government has indicated it will introduce a Major Events Management Bill to combat ambush marketing in relation to sports events and concerts. Again, it is likely to be passed some time in 2007.

Despite only passing a new Trade Marks Act in 2002, the government has also indicated that it intends to accede to the Madrid Protocol and the Nice Agreement. It also recently signed the Singapore Treaty on the Law of Trade Marks. All of these changes will require amendments to the Trade Marks Act.

Intellectual property legislation has typically been a low priority for the New Zealand government and the indicated timeframes will not necessarily be met. There will be an election in New Zealand in 2008 and if the bulk of the legislation is not introduced in 2007 then it is unlikely to make any real progress in 2008.

This article was published in Managing Intellectual Property, February 2007.

New Zealand tackles ambush marketing

Thu, 11 Jan 2007 00:00:00 +1300

The New Zealand government is drafting a Major Events Management Bill (the Bill) to help prevent ambush marketing in connection with such events. Ambush marketing occurs where a person or organization represents that it is associated or in some way connected with the event, when it is not, frequently to the frustration of its competitors who are official sponsors and will have paid for their sponsorship or in some other way sponsored the event. It is in some ways akin to passing off.

There have been many examples of ambush marketing in recent years in connection with major sporting events. To protect these events and the official sponsors and to ensure that such sponsors can continue to be found, specific legislation is now seen as necessary.

The Bill is directed at sporting activities such as the Olympic and Commonwealth Games but more particularly is likely to be used in tournaments being held in New Zealand such as the Rugby World Cup in 2011, the Cricket World Cup in 2015 and the World Rowing Championships in 2010.

In drafting the legislation the New Zealand government has had regard to the recent London Olympic Games and Paralympic Games Act 2006 as well as similar legislation in Australia and South Africa.

It will mainly protect the event and its sponsors by creating clean zones, preventing unauthorized advertising around the area where the event is taking place, and also preventing unauthorized parties misrepresenting that they are in some way connected with the event or with a person who is authorized to provide goods or services in connection with that event.

It is hoped that the Bill will become law in New Zealand by the middle of 2007.

This article was published in Managing Intellectual Property, December 2006

Maintaining market share after your patent expires

Thu, 30 Nov 2006 00:00:00 +1300

A patent provides up to a 20 year monopoly in an invention in return for the inventor fully disclosing the invention to the public. When the patent expires, anyone is entitled to exploit the invention. How does a company maintain its market share once its patent expires?

A company like Fisher & Paykel continually innovates to maintain and expand its business. In 1985 Fisher & Paykel launched the “Gentle Annie” washing machine, the world’s first electronic washing machine. This was followed in 1991 by the launch of the SmartDrive™ washing machine and then in 1997 by the launch of the unique double drawer dishwasher DishDrawer™. Patents for the original Gentle Annie™ technology have expired, but the original patents for SmartDrive™ and DishDrawer™ remain. Fisher & Paykel have patents for improvements but once the patent for the original technology has expired, the original technology is free for anyone to use.

There are 237 New Zealand patents that will expire in 2006 having reached the end of their 20 year term. Not all of the patent owners will be in the position of Fisher & Paykel and be able to rely on new innovative products for continued business success. But if they have planned ahead there are other mechanisms that will help reduce the impact of the loss of their monopoly.

Branding

Don’t underestimate the value of a strong brand. Methven’s Nefa™ valve was developed to protect the low pressure water cylinders installed in most New Zealand houses built prior to the 1980s from the mains pressure system. It drops mains pressure to low pressure. The patents expired in the 1980’s yet the Nefa™ valve presently accounts for about 50% of the low pressure valve market. Methven attributes this to the strength of the Nefa™ brand. Methven continues to develop strong brands, such as SatinJet™, with its new shower technology. Boots Healthcare’s international patents for ibuprofen expired in the late 1980’s and yet in 2004 its ibuprofen product Nurofen™ made up 96% of all ibuprofen sales in pharmacies in New Zealand.

Market channels

Consider market channels. Boots Healthcare was recently successful in applying to Medsafe to allow ibuprofen to be sold in shops and supermarkets, a strategic move that will increase Nurofen™ brand awareness and sales volume and help mitigate sales loss through competition.

Improve, Modify and Protect

Protecting improvements and modifications to products and manufacturing processes made after filing a patent can provide strategic advantage and keep competitors at bay.

Utilise patent clustering strategies. Filing additional patents for improvements to an existing patented product will ensure you are always one step ahead of competitors. Boots Healthcare have a number of New Zealand patents for advanced formulations of ibuprofen, such as effervescent and sustained release products, which its competitors cannot produce.

Trade secrecy may be an option. If improvements or modifications to patented products or processes are capable of being kept secret and are not susceptible to reverse engineering, trade secrecy can provide a strategic long term advantage which can well outlive the life of any patent. But beware leaks by employees and independent development by competitors. Once the secret is out, it is available for all to use. Consider the recent incident at Coca Cola. Three employees have been charged with stealing and selling trade secrets relating to a proposed new product for PepsiCo. In this instance PepsiCo alerted Coca Cola to the issue, but consider the consequences if this had not happened.

Figurative mark trampled by Red Bull

Wed, 22 Nov 2006 00:00:00 +1300

Red Bull successfully opposed the application of a mark for a horned bovine skull on a predominantly red background made by Carabao Tawandang Co Limited

In Carabao Tawandang Company Limited v Red Bull GmbH (CIV-20065-485-1975, August 31 2006), the High Court in Wellington has upheld Red Bull GmbH’s opposition to the registration for energy drinks in Class 32 of the Nice Classification of a figurative mark made up of a horned bovine skull on a predominantly red circular background and the word CARABAO.

Carabao Tawandang Co Limited was established in Thailand in 2001 with the objective of manufacturing and distributing beverages. Carabao launched a range of energy drink products in Thailand in 2002, but is yet to launch the range in New Zealand. Red Bull’s energy drinks have been available in New Zealand since 1996. Following Carabao’s application to register its mark, Red Bull raised a successful opposition before the assistant commissioner at the New Zealand Intellectual Property Office. Carabao appealed to the High court.

The court found Red Bull’s various trade marks, which include the words RED BULL, a device showing two bulls charging with a circle or disc in the background and some other bull devices, to be extremely well known in New Zealand.

Red Bull claimed that Carabao’s mark evoked core aspects of its trade marks, including the concept of a bull. Use of the colour red evoked the concept of “red bull” especially when combined with the device of a bull’s head and the circle behind the skull evoked the circle behind Red Bull’s charging bulls logo.

The court held that despite differences that were clear when the marks were compared side by side, including the brand names, the dominant concepts were the same. Commenting on the idea of the marks, the central concept was said to be that of horned cattle, a beast or bull, in association with the colour red. The mark was not limited to the colour red, even though it was applied for in colour. Therefore, it should have been taken as a black and white mark with the applicant having the right to use the mark in all and any colours. The court may have taken the use of the colour red in the application as an indication of the colour in which Carabao was likely to use the trade mark.

The court believed that consumers would, either consciously or unconsciously, associate Carabao’s mark with the Red Bull products. While the decision itself is fairly pedestrian it adds to current New Zealand jurisprudence about the idea of a mark. In 2005 the High Court ruled that WILD GEESE was confusingly similar to WILD TURKEY when applied to beverages, both trade marks evoking the idea of a wild large bird that is the subject of a hunt. However, in August this year the High Court ruled that PLATINUM HOMES did not evoke the same idea as GOLDEN HOMES, (i.e. the idea of a precious metal and a home). The judge in that case also found that to hold GOLDEN HOMES and PLATNUM HOMES similar would give the owner of GOLDEN HOMES a monopoly over any mark evoking precious metals and homes. In the mark GOLDEN HOMES, the word “homes” is clearly a descriptive word, whereas in the case of RED BULL and WILD TURKEY, both bulls and turkeys have little if anything to do with beverages. Thus, the approach of the High Court to the idea of the mark will depend on the relevance of the idea of the mark to the goods or services.

This commentary was first published in World Trademark Law Report on 1 November 2006.

Finding the balance

Wed, 01 Nov 2006 00:00:00 +1300

The theme developed during the FICPI World Congress earlier this year revealed how many areas of intellectual property are presently in a state of imbalance.

The FICPI World Congress which took place in Paris this May, has been hailed as a major success.This was due in part to its splendid location and organisation, but also because of the importance and topicality of its chosen theme, namely the search for balance in all areas of intellectual property. As this theme was developed during the Congress by the many distinguished speakers, it became clear how many areas of intellectual property are presently in a state of imbalance, and that this is due to a large number of essentially unrelated factors which have all come to the fore at this time.

In the area of patents there is the ongoing concern at the quality of patents being granted, as well as the subject matter of their inventions, with these concerns particularly affecting the areas of business methods and software. Another area of concern is the recent emergence of the so called patent trolls, which have gained international prominence with NTP’s pursuit of the manufacturer of the Blackberry™ handhelds and which until the recent last minute settlement would have resulted in the Blackberry™ devices being the subject of an injunction. These relatively new factors are however just additional stress points in an area which has always been the subject of inherent tensions between the competing interests of IP owners and users. Included in the many examples of such tensions that were identified in Paris, the North/South conflict of course, especially in respect of the availability of patented pharmaceuticals, loomed large. However there were many other examples where valid positions could be taken by both sides of the debate.

Many possible solutions were discussed in Paris ranging from the denial or dilution of the relevant intellectual property right to the use of some superimposed right such as a compulsory licence or a right of repair. None had any clear universal application but the Paris Congress had asked the right question, and if the intellectual property system is to prosper the search for the correct balance must be vigorously pursued until the solutions are found.

This editorial comment was published in Patent World in September 2006.

Rotary case sheds light on similarity

Mon, 09 Oct 2006 00:00:00 +1300

It looks different so where's the confusion?

A judgment in the unsuccessful trade mark opposition brought by Rotary International (RI) against Carl Bird, proprietor of the trade mark Rotary Engine, has issued.

Mr Bird sought to register the mark Rotary Engine in relation to clothing in class 25. He declared that the Rotary Engine trade mark was used in relation to clothing for 15 to 25 year olds interested in cars with Rotary Engines. A purchaser of Rotary Engine clothing would be unlikely to purchase or wear goods upon which the rotary name was applied as it was associated with an older age group.

In turn, RI argued that it has a substantial reputation in New Zealand based upon the spill-over reputation form its international activities, a long established presence and substantial number of Rotary clubs and members in New Zealand. It licenses third parties to use the Rotary name on a wide variety of goods, including clothing, and has registered the mark in several classes in New Zealand.

While RI was able to establish that it has a substantial reputation in New Zealand, the opposition was dismissed on the basis that the respective trade marks are visually, phonetically and conceptually dissimilar. The trade channels were also noted to be dissimilar and the Hearings Officer stated that consumers of the applicant’s goods were more likely, when seeing the mark Rotary Engine, to think of a rotary engine and not the name of the opponent’s organization.

The market for goods bearing the Rotary Engine mark, would not, in the Hearing Officer’s opinion, be deceived into believing that the applicant was in any way connected with the opponent. Therefore, it would be unlikely to deceive or confuse a substantial number of relevant consumers.

A substantial reputation associated with a trade mark by itself would seem insufficient to cause likelihood of deception or confusion with another mark. There must also be sufficient similarity between the respective marks.

This commentary was published in Managing Intellectual Property - September 2006.

Nice Agreement and Madrid Protocol

Fri, 15 Sep 2006 00:00:00 +1200

Baldwins' submissions to the Foreign Affairs, Defence and Trade Select Committee for consideration of New Zealand's accession to the Nice Agreement and the Madrid Protocol.

To read the document submitted in September 2006 click here.

You will require Adobe Acrobat Reader to view this file.

Can You Patent An Old Dog Doing New Tricks?

Wed, 19 Jul 2006 00:00:00 +1200

The most well known New Zealand example may interest a lot of chemists

This issue marks the 10 year anniversary of the Patent Proze column being published in Chemistry in New Zealand. Accordingly, at this time it may be appropriate to ask a question that may interest a lot of chemists: “Can I patent an old dog doing new tricks?” Potentially you can. The most well known New Zealand example being the discovery, patenting and subsequent court battle over the antibiotic amoxycillin.

SELECTION INVENTIONS

Amoxycillin was developed in the seventies and patented by Beecham Group in the face of strong opposition from Bristol-Myers Company on the basis that amoxycillin was broadly claimed in an earlier patent, and its likely antibiotic activity was known (Beecham Group Ltd v. Bristol-Myers Company [1980] 1 NZLR 192). Following numerous court battles around the world on the subject, subsequent patent applications by Beecham for the preparation of a composition for oral administration containing amoxycillin were generally accepted as patentable a “selection invention”. This goes against conventional wisdom, in that most people would presume that once a group of compounds is claimed by one inventor, another inventor cannot then claim the same compound.

There were two key issues at stake in this case. First of all, despite Bristol-Myers claiming amoxycillin under a patent for ampicillin-derivatives, amoxycillin (6[(-)-oc-amino-p-hydroxyphenylacetamido]penicillanic acid) had not previously been isolated or specifically synthesised, from the racemic mixture containing both the (-)- and (+)-epimers of 6(oc-amino-p-hydroxyphenylacetamido)penicillanic acid. Subsequently, Beecham purified amoxycillin and discovered the compound’s surprisingly good oral absorption when compared to the other ampicillin-derivatives claimed by Bristol-Myers. Because Beecham was the first to purify amoxycillin and identify its significantly better oral absorption properties the patent applications for amoxycillin succeeded because the compound amoxycillin, which had been ‘selected’ out of all the compounds claimed by Bristol-Myers, exhibited a “special and unexpected advantage” over any of the other claimed compounds. The term ‘selection invention’ is used to describe a subsequent invention borne out of an earlier, and usually more generically defined invention. All of the compounds which are the subject of a selection invention must exhibit some unexpected properties, or overcome a disadvantage, of the earlier class of compounds. Therefore, selection inventions tend to be directed to a narrow class of compounds.

COLLOCATION OF KNOWN AGENTS

A further example of a patentable invention is the combination of two or more previously known agents which together exhibit a working interrelationship to produce a benefit or to overcome a disadvantage. An example of this could well be a process which normally occurs at a very slow rate, but which is sped up by an otherwise inactive catalyst, or a combination of drugs exhibiting synergistic activity. For example, amoxycillin is an effective antibiotic to which bacteria quickly became resistant. Clavulanic acid is a beta-lactamase inhibitor with no bacteriocidal activity in itself, but when co-administered with amoxycillin, potentiates the antibiotic effect of amoxycillin. Subsequently, this combination was patented because the effectiveness of the combination was superior to what could be expected by simply adding the two compounds together.

SECOND MEDICAL USES OF DRUGS

While a new use for an old invention is generally not patentable, there is an exception when it comes to second medical uses for previously known drugs. In other words, if it is found that a well known drug is effective against condition A, but is later found to also be effective against condition B, it is possible to patent the drug for use in preparations designed to treat condition B. A potential example where a second medical use could have been claimed is the anti-inflammatory drug aspirin, which was subsequently found to be useful when administered in low doses for the prevention of potentially deadly blood clots.

Therefore, if you do find that it is possible ‘to teach an old dog new tricks’ then it may be possible to secure patent rights over any ‘new trick’ which is developed.

This article was published in Chemistry New Zealand, July 2006

Off the starting block

Sat, 15 Jul 2006 00:00:00 +1200

Case commentary on New Zealand's Supreme Court first patent case, as it reaches its conclusion.

To read article click here.

You will require Adobe Acrobat Reader to view this file.

Intellectual Property in New Zealand and Australia

Thu, 06 Jul 2006 00:00:00 +1200

With increasing globalisation and the impact of FTAs, an IP strategy that fails to include New Zealand and Australia creates a serious gap which can be exploited by competitors.

New Zealand and Australia have traditionally been countries which have not featured prominently in the intellectual property strategies of intellectual property owners. This has been to the benefit of New Zealand and Australia and to the detriment, over time, of intellectual property owners. With increasing globalisation and the impact of Free Trade Agreements between a variety of countries, any intellectual property strategy that does not include New Zealand and Australia has a serious gap which can be exploited by competitors.

New Zealand and Australia can in most respects be considered a single market which is governed by the Closer Economic Relationship ("CER") agreement between the two countries. Australia is New Zealand's most important economic partner, and New Zealand is Australia's fourth largest market. The resulting close trade and legal relationship between the countries gives businesses duty free access to a population of over 27 million.

The Culture

New Zealand and Australia share a common British heritage. The intellectual property systems of both countries are based on the British model and both countries initially adopted intellectual property legislation that was essentially identical to that of Britain. Therefore, the intellectual property traditions of both countries have been based on the British model and the training of the intellectual property professions of both countries (the New Zealand Institute of Patent Attorneys (NZIPA) and the Institute of Patent and Trademark Attorneys of Australia (IPTA) is internationally based.

The countries themselves share a similar culture and legal system to that of the United States of America, Canada and Britain. Registered and unregistered intellectual property rights are respected and enforced. The registered intellectual property rights include patents, trade mark, and registered designs. Unregistered rights include copyright, trade secrets, passing off, and fair trading legislation.

In a general sense, New Zealand, Australia, the USA, Canada and Britain have a common culture and Western approach to consumer issues. New Zealand is particularly useful as a test market for consumer goods, as New Zealanders have traditionally been early adopters of technology and because the New Zealand market is relatively small and contained. Mistakes can therefore be made without large-scale implications.

With the common background and language, New Zealand, Australia, the USA, Canada and Britain have traditionally had strong trade relationships. The ties between the countries are long-standing and have been developed through defence relationships over many years. The ANZAC (Australia New Zealand Army Corps) relationship is particularly strong. The ANZUS (Australia New Zealand United States) defence relationship is also strong although New Zealand's antinuclear stance and its refusal to allow US nuclear powered or armed ships access to its ports has strained this relationship in recent times. The development of a New Zealand market can readily be used as a stepping stone into the larger markets of Australia, the USA, and Britain.

Free Trade Agreements

New Zealand has a number of free trade relationships, including recent economic co-operation agreements with Singapore and Thailand. A Trans-Pacific Strategic Economic Partnership Agreement (Trans-Pacific SEP) between Brunei, Chile, New Zealand, and Singapore came into force on 1 May 2006. A New Zealand–Malaysia Free Trade Agreement is under discussion as is a Closer Economic Partnership (CEP) Agreement between New Zealand and the Hong Kong Special Administrative Region.

New Zealand also has world-first negotiations with the People’s Republic of China, which will significantly increase the size of the New Zealand consumer market. New Zealand's exports of goods and services to China between 2007 and 2027 are expected to grow on average between NZ$260 million and NZ$400 million a year. Chinese exports of goods and services to New Zealand between 2007 and 2027 are expected to grow on average between NZ$55 million and NZ$100 million a year.

On 30 November 2004, New Zealand Prime Minister Helen Clark and Australia's Prime Minister John Howard, announced that negotiations would commence on a free trade agreement (FTA) between Australia, ASEAN and New Zealand.

Australia has also concluded free trade agreements with Singapore, the United States and Thailand. Australia is also looking at free trade agreements with China, the UAE and Japan.

The number of free trade relationships that both New Zealand and Australia have completed, or are looking to complete, link both countries into trading relationships with large consumer markets. It is no longer sensible to treat countries such as Australia and New Zealand as individual, isolated, markets. Any intellectual property licensing agreements which do not include New Zealand and Australia, potentially create options for competition not only in those countries but also in other countries with which they have free trade agreements. This reduces the value of the intellectual property to potential licensees and, as a result, reduces the returns to the intellectual property owner.

The Internal Markets

New Zealand has a relatively small population of about 4 million people. Because of this there is a natural focus on the export of goods and services to other countries. New Zealand's primary strength is in the agricultural sector which includes the dairy and sheep industries, as well as forestry, horticulture, and fisheries. Traditionally New Zealand has focused on export of quality products from these sectors (e.g. milk, wool, timber and fish) but more recently there has been an increasing focus on technology related aspects. There is an internationally recognised expertise in biotechnology related aspects of agriculture as well as electronics, food technology, wood pulp and paper processing technology.

New Zealand's best known companies internationally would probably be Fonterra and Zespri. Fonterra is the world's largest exporter of dairy products and now has research and development facilities in both New Zealand and Australia. Zespri is the world's premier kiwifruit producer and exporter and has an internationally recognised branding regime which is based on the excellence of its product. Both companies are founded in New Zealand's agricultural sector and are based around farmer/grower cooperative structures. For those interested in the pharmaceutical sectors, the "Glaxo" part of Glaxo SmithKline, began life as a small milk powder producing company in New Zealand. There is a strong agrichemical/veterinary medicine industry and market in New Zealand.

Australia has a larger population of around 24 million. While there is a focus on the export of goods and services to other countries it also has a larger internal market which local companies can focus on. Australia's natural resources provide the basis for its strong economy. Its mining sector in particular is strong and its heavy industry is internationally competitive. It also has an increasing expertise in biotechnology, electronics, and industries that are related in particular to the mining and heavy industry sectors. Australia's pharmaceutical sector is rapidly expanding and will be taking advantage of the Free Trade Agreement that Australia has with the USA.

As a combined internal market, New Zealand and Australia together provide a commercially attractive target consumer market for high-technology goods and services as well as a source of intellectual property rights which can be accessed by way of technology transfer. The internal markets are competitive and are able to quickly adapt to changing international opportunities.

For any intellectual property owner with an international growth strategy, it is becoming increasingly important to ensure that both New Zealand and Australia are an integral part of the intellectual property aspects of that strategy.

Chinese Involvement in the New Zealand Market

The New Zealand Herald on 14 February 2006 reported that a large Chinese technology company Huawei Technologies Ltd had entered into a partnership with South Africa based Econet to compete in New Zealand's NZ$2 billion plus mobile telephone market. The partnership would be the third mobile phone network alongside Vodafone and Telecom New Zealand.

Huawei Australia managing director Rio Zhang was reported in the New Zealand Herald as saying that the Chinese telecommunications market was reaching maturity and it is in less developed nations - such as New Zealand - that the company is looking for growth. Huawei opened an East-Pacific headquarters in Sydney to serve as its nerve center for expansion into Australia, New Zealand, South Korea, Hong Kong and the Pacific islands. Huawei was reported as being seen as a major threat by multinationals. Swedish telecommunications giant Ericsson last year agreed to buy British equipment maker Marconi for £1.2 billion ($3.1 billion). The move was reported as being seen as strategic in nature, to keep Huawei from buying Marconi and establishing a foothold in Europe. The New Zealand/Australia option appears to have been seen to be an alternative route into the Western telecommunications markets for Huawei.

New Zealand and Australian companies are clearly looking at the Chinese market as a source of increasing consumer demand. Equally, the large Chinese companies are now looking outside of China for opportunities for investment and growth. The New Zealand and Australian markets will be increasingly attractive given their relatively strong economies and Western culture consumerism.

IP Tips for Entry into the New Zealand Market

Check the Intellectual Property Office of New Zealand (IPONZ) records for the existence of registered intellectual property rights (patents, trademarks, registered designs) that could restrict your ability to enter the New Zealand market. These records can also serve as sources of intellectual property ownership information should you be looking to enter into business relationships in New Zealand.
Ensure that your intellectual property rights are protected before entering the New Zealand market. New Zealand is often excluded from international patent filing strategies, and you should ensure that your rights have in fact been protected in New Zealand. New Zealand has "local novelty" requirements in its patent and registered design legislation at present and therefore, provided information about your product has not been received in New Zealand, it may be possible to obtain registered rights in New Zealand at a later stage.
Investigate whether copyright may exist in the product you intend to release. New Zealand's copyright legislation includes protection for three-dimensional articles. There is a "registered design/copyright overlap" which allows the copyright owner in New Zealand to have copyright protection for the actual product. In other countries, Australia for example, there is no such "overlap" and unless registered design protection is sought, there may be little or no copyright protection available for the actual article. In New Zealand, copying the actual product or the original copyright drawings can result in infringement. Therefore, if you are looking to export a product to New Zealand based on an existing New Zealand product, copyright issues may well arise. Of course, if you are the copyright owner, you may have rights in New Zealand which do not exist in other countries. The term of copyright protection in New Zealand runs for 16 years from the date of first commercial use (defined as 50 or more units) of the product in question anywhere in the world.
Investigate whether environmental legislation requirements are met. New Zealand's environmental protection legislation is rigorous. The Hazardous Substances and New Organisms (HSNO) legislation has a number of mandatory requirements that must be met before any new organism or hazardous substance can be released in New Zealand. The threshold for what is "hazardous" is extremely low and therefore any new product that enters the New Zealand market is likely to need to get approval from the Environmental Risk Management Authority (ERMA) before the product can be released. ERMA is the body responsible for implementation of the HSNO legislation. Before release of a new product into New Zealand you should determine whether or not approval is required. A small change in the composition of a product (e.g. a pesticide, hand soap, paint etc) may require a new approval.
Investigate whether the "look" of your product is similar to the "look" of an existing product in New Zealand. New Zealand has well developed unfair competition rules based on both common law and legislation. If your product could create confusion with an existing product in the market, then you may experience difficulties. Your activities could be considered to be misleading, and therefore breach the Fair Trading Act 1986, or your activities may be seen to be passing off your product as someone else's.
Do not assume that because the product can be released in Australia that it can also be released in New Zealand (or vice versa). It is important to ensure that you have freedom to operate in both countries individually.

Off the starting block - New Zealand's Supreme Court first patent case

Fri, 30 Jun 2006 00:00:00 +1200

A case comment on New Zealand's Supreme Court first patent case, as it reaches its conclusion. See here.

This article was first published in Patent World, June 2006.

A Dispute Resolution Policy for .nz Domain Names

Thu, 01 Jun 2006 00:00:00 +1200

1 June 2006 marks the beginning of a new era for .nz domain names, with the launch of InternetNZ’s .nz Dispute Resolution Service Policy.

Previously anyone who objected to another’s registration of a .nz domain name had to either negotiate with the registrant, or issue court proceedings to stop that person from using it.

Negotiations can be difficult if the registrant does not want to talk, refuses to transfer the domain name, or will do so only in exchange for an exorbitant sum. In some cases, disputes over domain names are resolved through negotiation. However, in many cases they are not.

Court proceedings are expensive, time-consuming and in many cases only result in an injunction preventing the use of the domain name in ways that will infringe the complainant’s rights. They do not usually result in the domain name being transferred to the complainant.

The policy, which is available on the Domain Name Commissioner's website (www.dnc.org.nz), gives parties who believe their rights are infringed by a .nz domain name registration a third option, resolving their dispute “in-house”.

If overseas experience is anything to go by, this will provide parties with a fast and cost-effective means of recovering domain names that have been registered in breach of their rights.

The dispute policy is based on a similar policy operated by Nominet, the organisation responsible for .uk domain names. The procedure also resembles the Uniform Domain Name Dispute Resolution Policy (UDRP) administered by the World Intellectual Property Organisation and other parties; which Baldwins has used to recover domain names such as www.steinlager.com, www.airnewzealand.com and www.russellcoutts.com for clients.

The essence of the policy is that a party objecting to the registration of a domain name (the Complainant) by another (the Respondent) must establish that:

the domain name is identical or similar to a name or mark in which the complainant has rights; and
the domain name, in the hands of the respondent, is an unfair registration.

Procedure

The complainant initiates an action under the policy by filing a complaint with Internet NZ. This:

is a written document;
is limited to 2,000 words;
sets out the complainant's argument, including establishing that it has rights in the domain name and that the registration is unfair; and
can be accompanied by any suitable supporting evidence (though this cannot be used to extend the word limit for the submissions contained in the complaint).

The complaint must also state whether the complainant wants the domain name transferred, suspended, cancelled or amended, though in practice most complainants will probably request a transfer.

The respondent then has 15 working days in which to file a response, setting out the respondent’s argument as to why it should be entitled to retain the domain name. Like the complaint, this is a written document limited to 2,000 words, and can be accompanied by suitable supporting evidence.

Unlike the UDRP, the complainant then has 5 working days in which to file a reply to the response. This is limited to 2,000 words and may only address any new points raised in the response.

There is no charge for filing a complaint, response or reply.

If a response is filed, the dispute is then referred to informal mediation, paid for by Internet NZ. If the parties settle at mediation, the dispute is resolved.

If a response is not filed, or if one or both parties refuse to mediate, or if mediation takes place but the dispute does not settle, the complainant can pay a fee of $1,800.00 (+GST) to have the matter referred to an expert panelist for determination. The expert determines the complaint on the basis of the documents.

Internet NZ has appointed eight highly-experienced experts in this area to its panel. They are Andrew Brown QC, Hon Sir Ian Barker QC, Hon Robert Fisher QC, Hon Barry Paterson QC, Clive Elliott, Warwick Smith, Terence Stapleton and Dr Clive Trotman.

Once issued, the panelist’s decision is implemented by Internet NZ, unless either party appeals. An appeal costs $6,600.00 (+GST), with the determination being reviewed by a panel of three experts. Each party may file a single appeal document, limited to 1000 words.

At any time before the appeal panel issues its decision, the parties can settle a dispute on any terms they see fit.

Grounds required to establish a case under the policy

To succeed, the complainant must show that the domain name is identical or similar to a name or mark in which the complainant has rights, and that the domain name, in the hands of the respondent, is an unfair registration.

The rights of the complainant can be any rights enforceable under New Zealand law. This includes registered trade marks, and also includes other rights, such as unregistered trade mark rights enforceable under the Fair Trading Act or under the tort of passing off. These might include trading names, company names, well-known tag lines, and names of celebrities or other well-known individuals.

A registration is unfair if:

it took unfair advantage of or was unfairly detrimental to the complainant's rights when it was registered or otherwise acquired; or
it has been or is likely to be used in such a manner.

This is an important difference from the UDRP, where the complainant must show that the domain name was registered AND is being used in a manner that is objectionable.

It also means that the policy covers domain names that are not currently in use, and domain names which are not in the hands of the original registrant.

The policy sets out examples of what might constitute an unfair registration. These include domain names registered:

in order to profit by selling them to the complainant or its competitors;
in order to block the complainant from using that domain name;
to unfairly disrupt the complainant's business;
to cause confusion with the complainant's business;
as a part of a pattern of registering well-known names or marks in which the respondent does not have rights;
using incorrect contact details; or
out of a relationship between the complainant and respondent, where it is clear that the complainant was intended to own the domain name.

The evidence of unfairness must be under three years old. This provides an incentive to Complainants to take action once they have identified an unfair registration.

Grounds required to defend a case under the policy

The policy also gives examples of how a respondent may demonstrate that its domain name registration is not unfair. These include that:

the respondent has used or prepared to use the domain name in relation to a genuine offering of goods and services;
the respondent is known by or legitimately connected with a mark similar or identical to the domain name;
the respondent has made legitimate non-commercial or fair use of the domain name (which might include operating a fan site or criticism site);
the domain name is generic or descriptive and has been used in its generic or descriptive sense;
the respondent is entitled under a written agreement between the parties to hold the domain name registration; or
that no pattern of registering well-known names or marks exists as the domain name is significantly different to the Respondent's other domain names.

These grounds are indicative, not exclusive, and either party can rely on other grounds.

Comments

It is important to recognise the limitations of the policy.

First, it is targeted solely at situations where the complainant has established rights and the respondent is attempting to take advantage of those rights. For example, it is not appropriate for situations where two different parties both have genuine rights to the same name or mark. A recent example is the use of APPLE by both the computer company and the record label. Until recently, when the nature of the market changed, these marks co-existed relatively comfortably, as the services provided by the two companies were reasonably distinct.

This problem arises frequently in the domain name context, where, unlike trade marks which can be registered in a variety of classes, only one party can register www.apple.co.nz.

The policy is not an appropriate forum for resolving disputes arising out of the use of generic terms such as ONLINE PHARMACY or WATER DIRECT.

One interesting issue will be how experts decide cases where resellers or distributors have registered domain names in their own name, for instance if Nissan New Zealand registers www.nissan.co.nz in its own name. This often occurs, and often leads to disputes, particularly where the reseller or distributor ceases to be the authorised reseller or distributor. UDRP decisions on this particular point are divided and it is not clear how the experts under the Policy will deal with this issue when it arises. Because the New Zealand policy is based on the Nominet policy, which has already produced a large body of decisions, experts will look to and be influenced by Nominet decisions that raise the same issues. It will accordingly be important for New Zealand parties to consider any relevant Nominet decisions on their particular points when preparing their complaints and responses.

One final issue is that the policy prohibits a complainant initiating a proceeding in relation to a domain name and respondent in relation to which it has previously had a decision. This is to prevent complainants “having a go", seeing which points they failed on, then filing an ‘improved’ complaint and trying again. The practical effect of this is that we recommend that parties obtain proper advice before filing a complaint, to ensure they do not undermine their own position by filing a poorly-constructed or poorly-supported complaint, then being barred from further action.

Conclusion

In recent years Baldwins has seen a number of disputes involving .nz domain names go unresolved where parties have been unable to negotiate a solution but have been unwilling to incur the expense and inconvenience of court proceedings.

If the success of the UDRP and Nominet’s .uk dispute resolution policy are anything to go by, parties in New Zealand will welcome the introduction of the .nz Domain Name Service Policy, which will enable them to have their disputes considered faster and for a much lower cost than that of court proceedings.

MAX mark screened from IMAX opposition

Tue, 16 May 2006 00:00:00 +1200

IMAX and Village Roadshow MAX trade marks not similar

IMAX is a Canadian Corporation specialising in large screen and large format, motion simulator entertainment. IMAX opened one of its theatres in a prominent position on one of the main streets of Auckland, New Zealand in July 1999. That theatre closed in April 2002 and the trade mark IMAX has not been used again in New Zealand. IMAX is the registered owner of New Zealand the trade mark IMAX in class 41 for, inter alia, entertainment services provided through the medium of motion picture theatres.

Village Roadshow Corporation applied for a stylised “max or “Vmax” for more or less the same services:

It claimed it wished to use the mark for large screen cinema services in New Zealand. There was some debate between the parties as to how the trade mark would be pronounced by the public. Village claimed it was just a stylised “max”. IMAX claimed it would be pronounced “vmax”.

IMAX opposed Village Roadshow’s application on the basis of its trade mark registration and it use made of the trade mark IMAX between 1999 and 2002. IMAX was unsuccessful before the Assistant Commissioner of Trade Marks on the basis that the trade marks were not similar and no confusion or deception was likely.

IMAX appealed to the High Court. The hearing was held on 5 December 2005 and a decision issued on 29 March 2006 (IMAX Corporation v Village Roadshow Corporation Limited (unreported, 29 March 2006, CIV-2005-404-3248, Williams J)).

Williams J gave no firm view of how Village Roadshow’s trade mark would be seen, pronounced or written by the public, but suggested that if it were referred to as “VMAX” that would not in fact be use of the trade mark, because the mark is a layered “v” stylised logo. He believed it likely that people will write the mark as “Village Roadshow Max”. Williams J considered that however it was seen, written or pronounced it was not similar to the IMAX trade mark.

On the question of similarity of services, Williams J noted that Village Roadshow specialised in blockbusters, whereas IMAX’s films were mostly documentaries. In William’s J view, consumers go to cinemas to see a particular film. They identify it by name and may select for the type of film, actors, story or director. He concluded that there was little in the evidence to suggest consumer choice was influenced by it being an IMAX or Village Roadshow product. There was no consideration in Williams’ J decision of the level of service, pricing or physical environment of the cinema being a factor in consumer choices. One would have thought that one of the key factors when consumers choose a cinema is the quality of the environment provided, such as the size of the seats and the size of the screen.

Williams J accepted that there was some overlap of services but agreed with the Assistant Commissioner, and found that she had not erred, in finding that the trade marks at issue were not sufficiently similar for confusion or deception to be likely to occur.

The appeal was rejected. Unless IMAX file an appeal at the Court of Appeal, the Village Roadshow trade mark will proceed to registration.

Plant Variety Rights

Wed, 22 Mar 2006 00:00:00 +1200

Commentary on the first case to consider infringement of plant variety rights in New Zealand.

PLANT VARIETY RIGHTS

Plant variety rights cases are rare and the first case to consider infringement was decided in the High Court of New Zealand in September 2004, followed by an appeal to the Court of Appeal by the first and second defendants in 2005.

In New Zealand plant variety rights (“PVRs”) are governed by the Plant Variety Rights Act 1987 (“the Act”). PVRs give the owner of the PVR the exclusive right to “produce for sale, and to sell, reproductive material” of the variety protected (see section 17 of the Act). Infringement of the exclusive rights is actionable in the High Court. An appeal lies to the Court of Appeal.

The facts of the case

In Cropmark Seeds Ltd v Winchester Intl (NZ) Ltd & Ors*, Cropmark, a New Zealand company, sued another New Zealand company and its two directors personally for infringement of its PVR in a barley called “Optic” used in brewing beer.

Cropmark alleged the defendants “arranged” for the sale of Optic barley seed.

Optic barley was developed in the United Kingdom. Cropmark was the exclusive licensee in New Zealand. There were sub-licensees in New Zealand who paid a royalty to Cropmark.

The facts of the case revealed a complex web whereby the defendants arranged for sales of uncertified Optic seeds from a third party. They did not sell seed themselves. The parties involved in the sale of the uncertified seed documented the sales and supply of seed as “feed” and not for “sowing” to avoid the need to pay levies and royalties to Cropmark. The seed was sold in plain bags, without tags. Purchasers of the seed were asked not to tell anyone about the purchase and that they would be billed for “straight barley” so as to leave a non-descript paper trail.

The second defendant was found to have gone to some lengths to hide the true nature of the sales. The judge, John Hansen J, also found discrepancies in the evidence. In relation to the second defendant, he found him “disingenuous, prone to dissemble, sometimes contradictory, and frequently answering a completely different question to what was put”.

The High Court decision

The judge came to the view that the second defendant knew that legally only Cropmark had the right to sell Optic barley, and had decided that if he did not sell directly, but merely arranged sales, he would avoid infringing Cropmark’s rights.

The defendants claimed that because there were no “sales” and as such no infringement based on the words of section 17 “produce for sale, and to sell, reproductive material”.

John Hansen J’s decision includes an interesting discussion of the extent of the rights granted by the Act. The Act was said to give proprietary rights. Infringement is a violation of those rights, and in the judge’s view could not be limited to sale. The judge appeared to work backwards, stretching the words “produce for sale, and to sell, reproductive material” to include arranging sales. He said that otherwise sales of seed could be organised, in breach of proprietary rights, but escape liability.

How can it be an infringement if the rights do not extend that far?

It was the judge’s view that Parliament did not intend to exclude arranging sales from infringement. While this may be true, the words of the Act do not extend that far.

The Judge found that the first and second defendants infringed Cropmark’s proprietary rights. The third defendant, as director of the first defendant, was found not to have infringed because he lacked the necessary knowledge of the activities.

The question then turned to damages. There was no evidence that the defendants profited from their activities. If this was the case then one wonders why the defendants bothered to arrange sales. In any case, the judge saw no point in seeking an account of profits or damages.

Cropmark asked for exemplary damages. Exemplary damages are available where the defendant’s behaviour is reprehensible and are intended to punish a defendant.

The judge had no difficulty in finding there was a blatant and deliberate disregard of Cropmark’s rights. An award of $5,000 against each of the first and second defendants was awarded.

The Court of Appeal decision

The defendants challenged the High Court judgment as to liability, the award of exemplary damages and an order for payment of costs#.

The question was said to be whether the defendants’ conduct has diminished Cropmark’s enjoyment of its exclusive right.

Each of the sales was of reproductive material namely Optic seed. Since Cropmark possessed the exclusive right to engage in such conduct, undoubtedly the defendants infringed the exclusive right by depriving it of potential royalties.

The defendants may now apply to the Supreme Court for leave to appeal to that Court.

Did the courts get it right?

Possibly not, because arranging sales is not one of the exclusive rights granted to the proprietor under section 17. But the defendants’ actions did deprive Cropmark of royalties and were deliberately designed to do so.

A judge can only operate within the confines of the law under consideration (although judges have at times been accused of stretching the law into the area of judicial lawmaking). Interest and lobby groups can then pressure Parliament for a change. The New Zealand Government is currently considering a change to the Act. The Plant Variety Rights Amendment Bill (“the Bill”) has been released to the public for discussion but does not specifically cover “arranging sales”. It does set out an expanded group of rights including the right to prevent other people, without the PVR owner’s authorisation, “from producing or reproducing, conditioning for propagation, offering for sale, selling or marketing, or importing or exporting the reproductive material of a protected variety” likely to be subject to some exceptions. The Bill also includes the right to prevent other people stocking that material for any of those purposes and authorising other people to do any of those things.

If passed by Parliament in its current form the Bill may be more likely to capture the defendants’ activities in the present case. While the words of the Bill do not expressly include “arranging sales” such an activity may be caught by the words “offering for sale” and/or “marketing” or as “authorising” other people to sell or offer for sale or market a protected variety. It seems that Parliament’s intention in drafting the Bill is to broaden the exclusive rights granted to PVR owners. However, the Bill is not yet law and has no effect on the case of Cropmark Seeds v Winchester.

*Cropmark Seeds Ltd v Winchester Intl (NZ) Ltd & Ors (HC, 28/9/04, John Hansen J, Timaru CIV 2003 – 476 – 8).

# Winchester Intl (NZ) & Anr v Cropmark Seeds Ltd (CA, 5/12/2005, Anderson P, Glazebrook J, Baragwanath J, Wellington, CA226/04)

Appellant Wins Battle Only to Lose the War

Wed, 01 Mar 2006 00:00:00 +1300

First trade mark case determined by recently established Supreme Court.

In June 2000 Stichting Lodestar applied to register the trademark WILD GEESE in respect of beers and other alcoholic beverages. Austin Nichols & Co Inc, the owner of the registered trademark WILD TURKEY in respect of the same types of goods, opposed registration. The assistant commissioner held that there was no reasonable likelihood of deception or confusion between the two marks.

Austin Nichols appealed to the High Court. The court accepted that the commissioner's decision had to be accorded weight, but that as an appeal court, it had to determine for itself whether there was a reasonable probability of confusion. The court found that there was a reasonable probability of confusion and allowed the appeal.

The Court of Appeal took the view that the High Court had not given weight to the commissioner's opinion; although the High Court was entitled to reach its own view, it should have given some deference to the decision of the commissioner. The Court of Appeal placed weight on the commissioner's decision and came to its own conclusion that there was no reasonable probability of confusion, thereby allowing Stichting Lodestar's appeal.

On appeal by Austin Nichols to the Supreme Court, the issue was whether the appellate court should give deference to the decision maker below - that is, whether the High Court should defer to the assessment of the commissioner. The Supreme Court held that while the extent of the consideration given to the decision appealed from is a matter of judgment, the appellate court must form its own view.

Although the Court of Appeal criticized the approach of the High Court, it went on to form its own view of the similarity of the marks. As the Supreme Court could find no error in the approach of the Court of Appeal, it dismissed the appeal. Although Austin Nichols was successful to the extent that the Supreme Court agreed with it about the weight to be placed on the decision of the commissioner, it was ultimately unsuccessful, as WILD GEESE is now eligible for registration despite the existence of the WILD TURKEY mark.

This article was published in Managing Intellectual Property - February 2008

The Death Knell

Wed, 25 Jan 2006 00:00:00 +1300

Could local novelty be on the way out in New Zealand? Case commentary on two recent decisions from the Assistant Commissioner of Patents.

To downlaod the article in PDF format: The Death Knell

You will require Adobe Acrobat Reader to view this file.

Submarine Patents

Tue, 29 Jun 2004 00:00:00 +1200

The problem with submarine patents is that they have been used to generate royalty incomes, by people who have been able to predict developments in a technology, rather than to protect their own developments.

In the US, it has been possible to continuously re-file an application, as a divisional or a continuation, thereby effectively allowing the application to remain pending at the USPTO without going to grant. Before 1995, the patent term of a US Patent was 17 years from the grant of the patent with patent applications not being published until grant.

This system has been used to suppress patent applications, which are then allowed to proceed to grant and receive the 17 year monopoly, at the patentee’s discretion. Such patents have been referred to as “Submarine Patents”.

The problem with Submarine Patents

The problem with submarine patents is that they have been used to generate royalty incomes, by people who have been able to predict developments in a technology, rather than to protect their own developments. For example, an inventor or company may be able to predict the future direction of a particular technology, or the activities of their competitors. In doing so, a patent application could be filed in the US which is not allowed to proceed to grant, but rather is kept pending.

Because there was no pre-grant publication of patent applications in the US before 2000, a third party may then develop a product, which is covered by the scope of the submarine patent, unaware of the pending application. Once the product is on the market, the patent application can then be allowed to proceed to grant. The patentee can then demand a royalty from the unsuspecting third party.

In 1994, the US Congress made moves to prevent submarine patents by amending the patent law so that instead of the term of a patent being 17 years from issue, the term became 20 years from the date of filing. Therefore, if an application is allowed to remain pending at the USPTO, then the applicant is essentially using up their own patent term.

In 1999, Congress took a step further to restrict submarine patents, and from 2000 every US patent application is published 18 months following filing (although there are some exceptions to this automatic publication). It is therefore no longer possible to keep a patent application that is pending at the USPTO secret. There is now a strong incentive for inventors to allow their applications to go to grant sooner, rather than remain pending at the USPTO.

However, there is still some concern that there may still be some submarine patents filed before 1994 that are yet to surface and wreak havoc on potential licensees. However, a recent decision in the US may have finally put the issue of submarine patents to rest.

Symbol Technologies, et. al v Lemelson

Jerome Lemelson was described as a prolific inventor who filed a large number of patent applications, beginning in the 1950’s and continuing through to the 1970’s. Lemelson made few prototypes to confirm his inventions, and he did not directly commercialize any of his inventions. Rather, Lemelson allowed many of his broad technology based patent applications to remain pending at the USPTO, as submarine patents.

Over the years the applications were amended to include supporting data generated from subsequent developments made by others in the field and eventually, when the time was right, the applications were allowed to proceed to grant. Lemelson would then enforce royalty streams from products already on the market. The inventor eventually died in 1997, however, his practices were continued by his company; Lemelson Medical, Education & Research Foundation, Limited Partnership.

At issue in one particular case were a number of Lemelson’s patents that related to machine vision and bar code identification technology. These applications were allowed to proceed to grant in the 80’s and the Lemelson Partnership then demanded significant royalty streams from any products that utilized this technology. While a number of companies agreed to the licenses offered by Lemelson, three companies; Symbol Technologies Inc, Cognex Corporation and Telxon Corporation, counterclaimed against the patents.

Comment by the Judge

In a recent judgment from the US District Court in Las Vegas, the Judge held that the patents were invalid given that the originally claimed system could not be used to read a bar code. Of particular note the Judge also found that it would be inequitable to enforce the patents given the considerable delay, caused by Lemelson’s Partnership, in securing and enforcing the patent rights.

The Judge stated that:

“Lemelson’s delay in securing the asserted patent claims is unexplained and unreasonable. Plaintiff’s ample evidence of intervening rights vividly illustrates the type of public and private injury which can result from an unreasonable delay in prosecuting patent claims. As a consequence, Lemelson’s asserted claims must be deemed unenforceable.”

While it is likely that the Lemelson Partnership will appeal this decision, if it is upheld then it will make it very difficult to enforce future submarine patents, especially where the delay in grant is directly due to the applicant.

This article was previously published as a regular X-Factor column in NZ BioScience, February 2004.

Now They Can Jail You For Stealing A Trade Secret - Whatever That Might Be

Tue, 29 Jun 2004 00:00:00 +1200

Mark Paton

A new section in the Crimes Act 1961 means that stealing trade secrets is now a criminal offence punishable by up to five years in prison.

This section makes it an offence for someone to dishonestly take, copy or obtain any document describing a trade secret knowing that it contains a trade secret, with the intention of obtaining a pecuniary advantage or to cause loss to someone else.

What is a trade secret?

A "trade secret" is now defined in the Crimes Act 1961 as meaning any information that:

is, or has the potential to be, used industrially or commercially; and
is not generally available in industrial or commercial use; and
has economic value or potential economic value to the possessor of the information; and
is the subject of all reasonable efforts to preserve its secrecy.

The new section came into force on 1 October 2003 and is yet to be tested in court. One of the challenging issues will be determining what qualifies as a trade secret. For a prosecution to succeed, it will need to be shown that what was taken, copied or obtained was intended to be kept secret, and that reasonable efforts were taken by the true owner to prevent the information from becoming more widely known.

The definition of a trade secret is taken directly from common law, where determining what amounts to a trade secret has not been easy. Trade secrets have included for instance processes for the cultivation of pearls, quotations and plans prepared for contract bidding, and knowledge acquired by employees as part of their employment.

The new offence appears to require knowingly taking a document or description describing a trade secret. Acquiring knowledge of a trade secret and commercialising it, without physically taking, copying or obtaining a document disclosing the trade secret, may not be sufficient for a prosecution under the offence.

Theft of intellectual property

Other changes to the Crimes Act mean that theft of intellectual property may now also be a criminal offence, punishable by up to seven years in prison.

For theft, the Crimes Act requires the dishonest taking of property with intent to deprive an owner permanently of the property or any interest in the property. The definition of "property" has now been widened to include any tangible or intangible thing.

Intangible property may include intellectual property or confidential information. A dishonest person could offend under this section by depriving the true owner of the ability to obtain intellectual property protection and commercialise his/her intellectual property.

If a dishonest person takes confidential information from someone else, such as his/her employer, and applies for patent protection in his/her own name without the consent of the true inventor, and with the intention of depriving the inventor of the right to commercialise the invention or the right to obtain patent protection, that person could now be charged with theft.

A dishonest person may not even need to apply for patent protection in order to satisfy "taking" property by theft. An invention must be new and inventive on the date of filing in order to obtain a valid patent.

Disclosing confidential information without the permission of the true inventor intentionally directed at depriving him/her permanently of the right to obtain patent protection or commercialise the invention might be sufficient for theft.

A court would need to accept that the disclosure of confidential information equates to the "taking of property".

Establishing ownership

However, a charge of theft could not be brought where someone applies for patent or trade mark protection with a genuinely held belief that he or she is entitled to do so. Only deliberately intending to deprive the owner permanently of the property or any interest will qualify as theft. Employees who are found to have a genuine belief that they own the intellectual property are unlikely to offend.

The new definition of theft to include tangible and intangible property acknowledges that property may come in a variety of forms and that the particular nature of the property should not dictate whether there has been theft.

In the past a true owner has had to apply under the Patents or Trade Marks Acts to establish ownership where someone has filed for patent or trade mark protection in contravention of the owner's rights. The true owner will still need to take such action against the dishonest party in order to assert his/her rights to the patent or trade mark registration, regardless of whether the thief is actually charged under the Crimes Act.

Recognition of the crucial importance of trade secrets and the economic damage caused by industrial espionage is welcome. Enforcement of the new provisions in all but the worst cases by an already overstretched police force will be another issue.

This article was also published in The Independent, 17 December 2003.

New World Order: Changes In Technology Patent Trends

Tue, 29 Jun 2004 00:00:00 +1200

The debate about patentability of business methods and gene technology and the desirability of such patents has been enlivened by DET and GT.

INTRODUCTION

Major patent litigation in New Zealand has, in the past, predominantly concerned the pharmaceutical and chemical industries. To some extent this has occurred because major international companies involved in those areas have seen New Zealand as a country with a well established court structure, having well-defined, if old, patent laws, (based on the United Kingdom Patents Act 1949); and Courts which are favourably disposed towards intellectual property owners. However, there is a recent trend for New Zealand patentees in various new technologies to aggressively enforce their patent rights and this is having an impact on the relevant industries in New Zealand. Industry perceptions of patent rights and what can be patented are also being challenged.

The biotech industry is one example of this, where the Australian company Genetic Technologies (GT) has approached numerous New Zealand district health boards, government research organisations and private companies regarding its New Zealand patents covering test procedures utilising “non-coding” or “junk” DNA. GT is named as patentee in two New Zealand patents entitled respectively, “Intron Sequence Analysis Method For Detection of Adjacent And Remote Locus Alleles As Haplotypes” and “Genomic Mapping Method By Direct Halotyping Using Intron Sequence Analysis Variations”. The patents both have equivalent patents outside New Zealand, including in the United States, Canada, Europe and Japan. Interestingly, the inventor named in the patents is a New Zealander, Dr Malcolm Simons, a co-founder of GT.

The New Zealand media has reported GT requesting, in one instance, for a signing on fee and a waiver of past patent infringements, NZ$10 million (US$6 million approximately), and an ongoing annuity of NZ$2 million.

Inevitably there has been a strong reaction from New Zealand companies and organisations involved in this industry in respect of these demands and the desirability of patents being granted in this area of technology.

DET PATENT

Another industry is the information and communication technologies (ICT) industry which has recently been alarmed by allegations of patent infringement by DE Technologies Incorporated (DET), a small Canadian company.

The DET patent is entitled “Universal Shopping Centre For International Operation”. The subject matter generally relates to an international transaction system for operation over the internet or an intranet for the sale and purchase of goods. DET has written to approximately fifteen New Zealand etailers, alleging patent infringement. The letters also invite the recipient to negotiate a license with DET. The up-front license fee is a considerable sum for those in the New Zealand e-commerce sector, who are relatively small enterprises.

The patent was granted in New Zealand more than one year ago, meaning that alleged infringers can now only contest the validity of the patent before the Courts, rather than before the New Zealand Intellectual Property Office. Since proceedings before the Courts are usually significantly more expensive, this is placing greater pressure on the recipients of DET’s threats to take licences from DET.

This has caused significant controversy in the ICT industry since many industry players perceive the ordering system at the heart of the DET patent to be well known, or at least obvious, at the priority date. However, another primary concern of many of those in the industry is that the media have mistakenly referred to the DET patent as protecting fundamental aspects of e-commerce which any international etailer will need to use. These reports have also caused widespread concern in Australia.

The main claim of the DET patent requires the following functional steps:

Determination of a language.
Determination of a currency.
Product selection.
Database access to obtain at least one of: price; product code, or; shipping information;
Provision of shipping destination;
Shipping costs calculation;
Confirmation of funds availability;
Generation of an “electronic title”.

The patent also includes a broad claim to a “signal stream” generated by a system according to the invention.

ISSUES RAISED BY DET PATENT CLAIMS

The claims raise a number of interesting issues.

Firstly, the features to be performed by the invention as claimed appear to be more limited than the media are speculating, and there certainly appears to be scope for alleged infringers to avoid using features of the claims and thus avoid infringement. However, it is very likely that there are a number of etailers who infringe, so validity of the DET patent may be contested. This will provide an interesting situation because as yet New Zealand has not seen any litigation of a “business method” type patent.

Also, being largely based on the United Kingdom Patents Act 1949, the definition of invention in New Zealand is still taken directly from the Statute of Monopolies in relation to which there is a body of case law which excludes “mere schemes or plans” from being patentable.

Therefore, one argument for invalidity is that the invention claimed is no more than a mere scheme of doing business. In other words, simply implementing a business scheme in a computer or communications environment without adding any additional invention should not be patentable.

Another interesting aspect of the validity or invalidity of the DET patent is whether the underlying business method, i.e. the underlying transaction process, is nothing more than process that has been performed manually already. For example, if transactions were previously conducted by letter or email in accordance with the functionality claimed by the DET patent, is there any invention in simply translating this method into a computerised environment?

Novelty is another aspect which may be of considerable interest to practitioners should litigation ensue. The first matter of interest is the priority date. DET obtained a corresponding US patent (US6,460,020) based upon a provisional application filed in 1996. A complete application was filed in 1997, and it is from this complete application that priority was claimed in New Zealand. Therefore, there are questions about the validity of the priority date that has been claimed, in view of the existence of an application made more than 12 months previously.

Quite apart from the priority date issue is the fact that New Zealand still has only a local novelty requirement. Accordingly, the prior art available to contest validity of the DET patent could be quite narrow. DET has a corresponding US patent that has somewhat narrower claims than the New Zealand patent. This is thought to be because New Zealand’s local novelty requirement has precluded some relevant prior art.

INTERNET PUBLICATION

However, the recent defamation case in Australia, Dow Jones and Co. Inc. v. Gutnick [2002] HCA 56, opens up some interesting possibilities for argument about publication via the internet. The decision held that the place of publication of material on the internet was the place the material is viewed, rather than the location of the server on which the material is stored. Under New Zealand’s local novelty provisions novelty arguments usually rely on the existence of a physical product or document that was clearly publicly available in New Zealand. There may now be an argument that publications available to New Zealanders via the internet are publicly available in New Zealand.

DET has claimed some success in licensing rights to the invention in the USA. DET also has a granted patent in Singapore. Of concern to the ecommerce industry in New Zealand is whether DET will have sufficient success to the extent that its transaction method becomes a de facto standard for ecommerce international transactions. But it is difficult to find any real evidence of success that DET may have had with licensing their patent rights. So there is a strong suspicion that DET is attempting to enforce its rights in New Zealand to gain leverage elsewhere.

WHY CHOOSE NEW ZEALAND?

There are a number of reasons, additional to those mentioned in the opening paragraph, for choosing New Zealand as the jurisdiction to enforce patent rights in the ecommerce area.

Firstly, there may be a relatively weak prior art base for infringers to contest the validity of the patent rights.

Also, although there is no authority that business method patents are valid in New Zealand, the Intellectual Property Office appears to accept that patents should be obtainable for business methods.

In the gene technology area an additional reason may be the New Zealand requirement to satisfy only local novelty may enable patents to be granted here which may not be granted, or may have a much wider scope than, in other countries.

There is also the advantage for litigating patents in all areas that legal costs in New Zealand are significantly lower than in other jurisdictions while having a relatively efficient legal system.

So New Zealand provides an attractive forum for asserting the patent rights and litigating to enforce those rights if necessary. Therefore there is significant opportunity for New Zealand patentees to persuade others in foreign markets to accept that their patents may have validity and that a licence should be obtained.

Whatever the outcome, the allegations made by DET and GT have created considerable increased awareness in New Zealand of patent rights and have considerably enlivened the debate about the patentability of business methods and gene technology and the desirability of such patents.

This article was previously published in Patent World, October 2003

Crack Down On Parallel Imports

Tue, 29 Jun 2004 00:00:00 +1200

Under the Copyright (Parallel Importation of Films and Onus of Proof) Amendment Act 2003, the onus of proof of copying has now been reversed, with imported copies of films, DVDs, CDs or videos being presumed to infringe in the absence of evidence to the contrary.

The timing is probably pure chance, but changes passed to the New Zealand parallel importation laws coincide with the impending international release of The Return of the King , the third part of the fantastic Lord of the Rings trilogy on 1 December 2003.

The new provisions in the Copyright (Parallel Importation of Films and Onus of Proof) Amendment Act 2003 mean that no-one other than the producers of The Return of the King and their licensed distributors will be able to import into New Zealand any copies of The Return of the King , or for that matter, any other new film, for nine months following public release anywhere in the world. The new law covers all commercial films, regardless of format, whether this is DVD, CD or videos.

Private individuals will still, of course, be able to buy these overseas and bring them in for their own use. The restriction on parallel importation is directed essentially at commercial distributors.

Nine month period

The nine month period for new films has been selected as an appropriate period within which copyright owners and cinema operators may derive an economic return on the cinematic release of films. Whether the measure will have any real impact on the targeted rural cinema owners remains to be seen. The fall-off in cinema audiences may have more to do with distance, the reluctance by Kiwis to leave their own couch, the large screens in their living rooms, and competing entertainment choices.

The definition of films covered by the measure relates to those intended for commercial release, having been specifically amended during passage to exclude films intended for educational distribution. The nine month window has a sunset provision, expiring in 2008.

Coupled with the nine month ban are beefed up provisions to protect against imports of counterfeit films, sound recordings and computer programs. Infringement will occur if the importer knows or ought reasonably to know that the imported item is an infringing copy. The onus of proof of copying has now been reversed, with imported copies being presumed to infringe in the absence of evidence to the contrary. It will be up to the importer to prove that parallel imports are not pirated copies.

The changes are essentially technology driven. The ability to mass produce identical/perfect copies at the push of a button makes it much harder to distinguish counterfeit copies from genuine copies which have been parallel imported. It is much more difficult to distinguish between a counterfeit DVD and the genuine article than it is to pick a fake pair of Nike shoes.

Extent of the counterfeiting problem

The extent to which there is a genuine problem is unclear. The current government was critical of the previous regime when parallel importation restrictions were removed in 1998, and promised a review. The review did not show up any particular difficulties, with the possible exception of the movie industry.

Microsoft puts the incidence of software piracy in New Zealand at 26 percent of the market and a cost of $30million a year, although how much of this is due to legitimate parallel imports is not clear. Counterfeit sound recordings are being imported into New Zealand, with some of the packaging containing such bad mistakes that they provoke hilarity, but internet down-loads are probably a much greater problem.

One rather unusual feature of the new laws is the stipulation that the court must not require the defendant to reveal its source of product in circumstances where it would be unreasonable for it to do so. In a normal court proceeding for copyright infringement, revealing the source of the product would be an expected outcome of the discovery process.

Once the copyright owner had the identity of the source, its response would most likely be an attempt to shut down the parallel importer's source of supply. Because the government remains of the view that parallel importation is in the interests of consumers, it has attempted to reduce the impact of the presumption that products are counterfeit by leaving it open to the importer to argue to the court that it would be unreasonable for it to disclose where it obtained its products. Defendants may find it difficult to establish that they are importing genuine products, without revealing the source of supply, so the practical effect of this particular provision will be of interest. It has the appearance of a trade-off for no longer requiring copyright owners to prove copying.

The changes may spur copyright owners to make greater use of the under-utilised customs notice procedure. This allows notices to be lodged with the Customs Department by copyright and trade mark owners identifying their intellectual property rights. Customs can then intercept and detain any suspicious looking imported products at point of entry for a short period of time, while IP rights holders can determine whether to issue court proceedings to seize them. While it is by no means foolproof, it is cheap and effective.

Adjustment to the Trade Marks Act 2002

Finally, one small adjustment is made to the Trade Marks Act 2002 as part of this legislation. This is to prevent registered trade marks being used to stop parallel importation of goods. If goods bearing a particular trade mark have been put on the market anywhere in the world by the trade mark owner or with the trade mark owner's consent, then these goods will be able to be parallel imported into New Zealand.

Until now, this has been unclear, and there was case law which raised the possibility of having the trade mark held by a different company in New Zealand to the overseas brand owner and using that separate ownership to prevent the importation of trade mark goods into New Zealand.

This article was previously published in The Independent, 19 November 2003

New Zealand exporters at serious risk from counterfeit havens

Thu, 23 Oct 2003 00:00:00 +1300

The strength of New Zealand brands will assist the New Zealand apparel industry to avoid the risk of being squeezed out of the market by an influx of cheap imported clothing.

New Zealand is recognised internationally for its sporting, adventurous, outdoors identity, and the clothing going with it. This country is also rapidly gaining recognition as an origin of high fashion. It is the strength of the brands and innovation of the material and product, which carries New Zealand's reputation at home and abroad.

New Zealand apparel industry

Traditionally, New Zealand has been a market almost in isolation - approaching merchandising as a self-sufficient entity, making, designing and selling its own products and enhancing its reputation at home and abroad as made in New Zealand.

The government proposal to cut tariffs on imported clothing sits as a Damocles' sword over our apparel industry. On the one hand, New Zealanders will have a wider choice and cheaper clothes. On the other, the New Zealand apparel industry runs the risk of being squeezed out of the market by an influx of cheap imported clothing. As the availability of low-cost clothing increases, New Zealand merchandisers will find it increasingly difficult to compete at the lower end of the market.

Partly under the influence of increased migration, increasingly, New Zealanders are demanding value for money, quality and internationally recognised brands. Changing focus from affordability to New Zealand quality should allow the New Zealand merchandiser to survive increasing import competition. By building goodwill through its brands, the New Zealand clothing industry can thrive.

How should New Zealand industry future-proof itself? How might the New Zealand apparel industry hedge against the increased level of imports likely to follow tariff reduction?

Branding and brand protection

New Zealand based manufacturers can protect their unique market position by exploiting New Zealand's clean, green image as a point of difference. Increasingly, the brands and goodwill of New Zealand merchandisers will be the basis on which people who value quality can make their purchasing choices. By increasingly emphasising brands and their reputation, New Zealand merchandisers can increase their impact on the world stage and survive the invasion of overseas imports.

A prime example of the way forward through branding can be seen in the expansion and exposure of Specialty Brands through its brands Logan and Rodd & Gunn. Established in 1987, Speciality Brands quickly developed a reputation for quality clothing design and manufacture. It expanded throughout the world, its reputation protected by its valuable brands.

To put in place intellectual property protection, the first step is to look to New Zealand. First, identify the areas of operation, and special products and services. Next, identify the brands and logos synonymous with the business's reputation in the market place. Then prevent other traders operating under similar brands and logos.

These core areas should be protected by filing for registration of the brands and logos as trade marks. Registered trade marks can prevent importation of competing products under the same or similar brand. A registered brand will form the base for establishing goodwill and provide foundations on which to build.

Looking abroad

The second step is to look abroad. Where are the exports going now and where are they going in the future? Which countries might seek to rip-off the brands? Can the commercial risk be borne without the benefit of the protection of registered rights?

Trade mark registrations are jurisdiction-specific. This means that the protection under a New Zealand trade mark registration ends in New Zealand. If the countries one exports to are havens for counterfeiters, there is a risk.

After a trade mark application is filed in New Zealand there is a six month window in which to determine priorities in other markets, as the New Zealand application provides the base date for any overseas applications.

Cutting tariffs is not without opportunities for manufacturers. Some may be able to source new materials, cheaper manufacturing options and large-scale product facilities, thus enabling them to expand market focus. Enterprising manufacturers who position themselves well should be able to survive the reduction in tariffs.

This article was also published in The Independent, 23 October 2003

Trade mark law gets historical overhaul

Wed, 20 Aug 2003 00:00:00 +1200

The new trade mark law, which came into force today, is the first complete overhaul of the law for 50 years and brings some welcome changes for brand owners.

20 August 2003 is a red letter day in the New Zealand trade mark world as new mark law comes into force. It 's the first complete overhaul of the law for 50 years, New Zealand's trade mark law having lagged behind that of its major trading partners for some years.

Changes

The new legislation brings some welcome changes for brand owners. For instance:

It will now be possible to have a single registered trade mark covering a whole range of goods and services, instead of having to make multiple applications.

There is increased protection for internationally well known marks, which will meet the approval of the international mega-brand owners.

There is more extended protection against counterfeit products and the penalties for infringing counterfeit products are much tougher.

Overall, the procedures are simpler, and the cost of obtaining and maintaining trade mark registration should be reduced.

Consumers will notice other important changes which may find less favour with brand owners. In line with other countries, businesses can now use the trade marks of their competitors in comparative advertising - providing they do so fairly.

Generic marks

Registered trade marks which have become words in everyday use, and are used as part of ordinary language can be removed from the trade mark register more easily, freeing them for unrestricted use.

Trade marks such as "trampoline" and "thermos" are examples of words that started out as trade marks and have ended up in common parlance as generic terms. To counter this, trade mark owners will need to correctly use their trade marks themselves and vigilantly police use by others to prevent them from becoming generic.

Non-use

Trade marks not used for 3 years can be removed from the register. Trade mark owners will need to regularly review their trade mark use and ensure some substantive commercial use of a trade mark every three years, if they want to retain control of a mark and prevent its use by a competitor.

Indigenous marks

There is also increased protection for indigenous marks. While it has been difficult to register these for some time without meeting strict criteria imposed by the Intellectual Property Office of New Zealand, that practice is now enshrined in law.

No harmonisation with Australian law

There are, however, a couple of frustrations with the new act.

First, New Zealand has missed an opportunity to harmonise its trade mark law with that of our closest neighbour and largest trading partner, Australia. We have enacted legislation which differs in form and to some extent in substance from that which applies across the Tasman.

Australia modernised its legislation in 1995, and its statute would have been the logical starting point for our long awaited new law. Instead, the government has derived the New Zealand Trade Marks Act 2002 from the Singapore Trade Marks Act 1998, which is in turn based on the United Kingdom Trade Marks Act of 1988.

Why, you might ask? I did and, so far I've heard nothing to sufficiently justify why we did not look to the equivalent Australian legislation. I have heard it said that the Singaporean Act was chosen because it updated the British Act. While New Zealand intellectual property law has traditionally been directly taken (mostly word for word) from British law, the justification for that is no longer strong.

British law is now heavily influenced by European law. The government has long made clear its plans to jettison the Privy Council as New Zealand's court of last resort, and case law issuing from the United Kingdom will inevitably be less relevant than it might have been, with Singaporean case law even less so.

Not using Australian law also defies business reality. Much of the international business world treats this region commercially under the one umbrella, and has difficulty grasping that we are not in fact part of Australia. As a country, we do most business with Australia. We should make this as easy as possible, and common laws help.

Harmonised legislation would have enabled close co-operation between the two intellectual property offices charged with administering the two acts. Lawyers could have advised their clients with more certainty as to the meaning of the new law and the courts would have had a ready-made body of decided cases based on legislation drafted in the same terms to help them interpret the new law.

This would have decreased the costs to the business community, which will most likely bear the expense of working out what the new law means on those occasions where there is a lack of clarity.

Hopefully, the same path will not be followed with the new patents legislation to be introduced over the next year. In the absence of good reason to the contrary, we should capitalise on the experience gained by Australia since it first modernised its patent legislation in 1990 and has subsequently amended it.

Awkward drafting

The new Trade Marks Act is awkwardly drafted in more than one respect. While some improvements were made during the legislative process, there are still some problems. Attempts to point this out have been met with the response from the relevant authorities that interpretations placed on some of the apparently anomalous provisions are not what the draftsman intended and anyone reading it can work out it means. We shall see.

This article was also published in The Independent, 20 August 2003

One click lands book vendor in cart

Wed, 16 Jul 2003 00:00:00 +1200

There is an ongoing debate around the world on whether software or business-method patents should be patentable in the US and other countries.

Amazon's controversial "one click" technology could soon be patented in New Zealand. The Intellectual Property Office of New Zealand (IPONZ) has recently accepted a New Zealand patent application made by Amazon.com Inc for its controversial "one click" technology (patent application no. 503311 on the IPONZ website: www.iponz.govt.nz).

This application corresponds to US Patent No. 5,960,411, which was granted to Amazon in the United States in September 1999. Three weeks after receiving its US patent, Amazon.com sued Barnes & Noble, a large US bookseller, for patent infringement. Amazon sought a preliminary injunction against Barnes & Noble's use of its on-line purchase system.

What is one-click technology?

The technology is for a method of doing business over an electronic network. More specifically, it is a method for completing a purchase order over a client or server system using only a single action. This action may be a single mouse click, key stroke, voice command or something similar. Amazon claims the one click method overcomes problems with the shopping cart method, the previous business model for Internet shopping. When the US patent was granted it was viewed with considerable scepticism by the internet community, which believed that it should not be the subject of a patent and was too broad in scope.

Amazon's preliminary injunction application was successful, but Barnes & Noble immediately appealed. The appeal court considered that existing systems known at the time Amazon applied for its patent raised serious questions about the patent's validity, so it reversed the trial court's decision on the preliminary injunction. The parties apparently settled the matter rather than proceeding to a full trial. As a result, there is still no clear determination on whether Amazon's US patent is valid. Business methods are however considered patentable in the US.

Are business-method patents valid?

There is an ongoing debate around the world on whether software or business-method patents should be patentable in the US and other countries. In fact, a review of patent history shows resistance to the expansion of patentable subject matter is not new. For example, in the 1880s there was a rapid increase in the number of patents filed as a result of the new telegraph and electrical technology being developed. Inventors such as Thomas Edison and Alexander Graham Bell sought patents, over which companies fought for control, resulting in many high profile law suits which captured the imagination of the public and stimulated debate about the desirability of the monopolies afforded by patents for these new technologies and those who controlled them.

At various times critics have warned that new kinds of patents such as the telephony processes of 120 years ago, biotechnology patents of 20 years ago and software patents in the last decade or so, stifle innovation but history shows that innovation and discovery have continued and have arguably intensified.

The business method controversy derives partly from the scope of the business method patents that are being issued in the US. This is a separate issue to whether or not the subject matter should be patentable. The lack of well indexed prior art, together with overworked and perhaps under skilled examiners at the US Patent and Trademark Office (USPTO), have led to many overly broad patents being issued.

Substandard patent examination

The USPTO is taking steps to improve examination of the e-commerce related patent applications, but vocal critics such as Gregory Aharonian (see www.bustpatents.com) consider that examination is still not up to scratch. A problem in the US with substandard examination is that US patents, once granted, have a presumption of validity and the US does not have an opposition process. This means that the expensive process of a revocation action before the Courts is necessary to invalidate a US patent. The effect of this is well illustrated by the Amazon and Barnes & Noble litigation. Since Amazon was so quick off the mark with its injunction application, which was also heard quickly, Barnes & Noble did not have sufficient time to locate all the information necessary to conclusively question the validity of the Amazon patent, so the patent was presumed valid and a preliminary injunction was granted. It was not until the appeal was heard some two years later that Barnes & Noble had the further opportunity to provide enough evidence to cast doubt on the validity of the Amazon patent. In the meantime Amazon was able to exercise its monopoly.

Situation in New Zealand

In New Zealand, as in a number of other countries including Australia, an opposition procedure exists whereby an application, once accepted by the Patent Office, is advertised after which a period of time is allowed for interested parties to oppose the application. Opposition provides an opportunity for an overly broad patent application to be reduced in scope or invalidated on a number of grounds for example by raising further prior art that has not been located by the examiner. Interested parties have until 30 August 2003 to oppose Amazon's New Zealand patent application. New Zealand has not seen any litigation in relation to business method patents, so it will be interesting to see whether an opponent takes up the challenge.

Indications, at least in the US, are that business-method patents are here to stay. So it is important for innovators in this area to conduct patent searches to minimise business risk before committing to a new venture, and to carefully consider protecting truly innovative ideas.

This article was also published in The independent, 16 July 2003

Comparative advertising

Tue, 01 Jul 2003 00:00:00 +1200

The Trade Marks Act 2002 changes the legal approach to comparative advertising.

The Trade Marks Act 1953

Under the Trade Marks Act 1953 comparative advertising is conduct that is likely to infringe a registered trade mark. There is a specific defence however, where the trade mark for registered in Part B of the register. This defence applies to the exceptions listed in section 8 (1A) (b) and (c), that is where the trade mark used is an identical trade mark on similar goods or services or to a similar trade mark on identical or similar goods or services. The defence does not apply where there is use of the identical trade mark on the identical goods or services for which the trade mark is registered ( PC Direct Ltd v Best Buys Ltd unreported High Court, Auckland, CP27/97).

Mitre 10 v Benchmark

A High Court decision earlier this year, considered comparative advertising (Mitre 10 (New Zealand) Ltd and Mitre 10 Ltd v Benchmark Building Supplies Ltd unreported, High Court Auckland, Cp.521-SW02, 17 March 2003, Rodney Hansen J).

The case considered Benchmark's use of Mitre 10 brochures in three of its stores. Benchmark operates three retail hardware and garden supplies outlets under the name "Bunnings Warehouse". Benchmark introduced a new format advertising its Benchmark stores in October 2002. It displayed copies of Mitre 10 brochures in showcases near the entrance to its stores. Coloured stickers were said to have been placed adjacent to selected items in the brochures. On the stickers were written the words "Bunnings' price" followed by a dollar sum. The Bunnings' price shown was lower than the price in the brochure for the specified goods. Rodney Hansen J found that there was an unmistakable representation that Bunnings was selling the same goods for the lower price specified.

To add insult to injury, there were several errors made by Benchmark in the display of the Mitre 10 brochures. The shelf price and the ultimate selling price of the Bunnings product were higher than the price shown on the sticker and in some cases the product sold by Bunnings was different from that advertised by Mitre 10.

Rodney Hansen J applied the principles from the well-known comparative advertising cases of Villa Maria Wines and PC Direct that a trade mark is infringed where the trade mark is used to refer to the proprietor's goods in a comparative advertisement.

Benchmark were found to have "stood on the shoulders of Mitre 10". The brochures were "an instrument of denigration". The brochures were found to fall squarely within the idea of use articulated in Villa Maria Wines and PC Direct and there was found to be an arguable case that the use of the brochures by Benchmark infringes Mitre 10's trade marks.

Trade Marks Act 2002

The Trade Marks Act 2002 changes the legal approach to comparative advertising. Section 94 provides that there is no infringement for comparative advertising of registered trade marks. There is a proviso that if such use is otherwise than in accordance with honest practices in industrial or commercial matters its use must be treated as infringing if the use, without due cause, takes unfair advantage of, or is detrimental to, the distinctive character or the repute of the mark. This proviso attempts to ensure that a "no holds barred" approach to comparative advertising does not ensue.

How would the Benchmark case be treated under the Trade Marks Act 2002?

Prima facie, Benchmark's brochures comparatively advertising using Mitre 10's trade marks would not infringe Mitre 10's trade marks. Mitre 10 would be powerless unless the use is dishonest and without due cause, takes unfair advantage of, or is detrimental to, the distinctive character or the repute of the mark. In this respect, the errors made by Benchmark, including incorrect prices and comparisons made to different products than those advertised by Mitre 10 may fall into that category.

The moral of the story is: comparatively advertise to your hearts content, but do it carefully.

Brandsquatting in an expanded Europe

Thu, 19 Jun 2003 00:00:00 +1200

As a result of a time lag between now and May 2004, a type of "brandsquatting" could be one of the consequences for international brandowners of an expanded Europe.

A type of brandsquatting plaguing international brand owners will likely attend the expansion of the European Union. Readers will be familiar with the plague of domain name cybersquatting afflicting the Internet world. In May 2004, 10 new countries will join the European Union: the Czech Republic, Poland, Slovenia, the Slovak Republic, Hungary, Lithuania, Estonia, Latvia, Cyprus and Malta - bringing with them an expanded market of 100 million new Europeans with their 450,000 trade marks.

Under current trade mark rules, a brand owner can obtain a single trade mark covering the current 15 countries in the European Union. This is a unitary right, which means that the trade mark must be available for registration in each of those 15 countries. When the union expands in less than a year’s time, existing European trade marks, known as Community Trade Marks or CTMs, will be automatically expanded to include these 10 new member countries. The CTMs will be expanded at no additional cost.

Drawbacks to expanded coverage

But there is a downside to this expanded coverage. It results from the time lag between now and next May. During this time opportunists in those 10 countries can apply for other people’s trade marks, thus blocking the use of the CTMs, at least initially. International brand owners are, on past history, likely targets of this sort of activity. The preference of trade mark owners to brand across the entire market will mean that the additional attraction of 100 million extra consumers will be tempered by the possibility of opportunist brandsquatting.

While the rules governing CTMs will prevent an existing CTM from being cancelled because registration has already been secured by a third party in the expanded states, a brandsquatter will be able to use the local trade mark infringement law against a legitimate brand owner. As is the case with cybersquatting of domain names, trade mark registrations made in bad faith are likely to be able to be overturned. Unfortunately, there is as yet no uniform definition of what constitutes bad faith as this has yet to be agreed by the Community Trade Mark Office administering the CTMs and the governments of the expanded states.

Bad faith registration While a bad faith registration may ultimately be overturned, there will be time delays and costs in doing so, and brand owners may find it easier to buy the local trade mark, in the same way that many have been forced to pay to dispose of troublesome domain name cybersquatters in the internet world. It is little short of blackmail.

Another problem resulting from the expansion of the European Union will be the ability from November onward, for those in those expanded states to oppose any CTM applications on the basis of an existing local registration. This means that owners of the CTM applications could well face oppositions from people in countries which are not yet members of the European Union, but who can prevent them from obtaining registration of their CTM throughout the European Union. This forces them to adopt national registrations in the individual countries of the European Union at greatly increased cost, rather than having a single trade mark covering Europe.

How do brand owners protect themselves?

Brand owners can take several steps to protect themselves. They can file an international trade mark application under the Madrid Protocol, which would cover eight of the 10 countries, and file national trade mark applications in the countries which are not participating in the international trade mark system. After May 2004, if they have established that the coast is clear and there are no conflicting marks, then these national applications could be dropped in favour of the CTM which would then be expanded to cover all of the European Union states without impediment.

It is, of course, impossible for brand owners to know which of them are going to be singled out as brandsquatters’ targets, but those picked on by unscrupulous opportunists may face time delays and extra costs in obtaining European-wide coverage in an expanded Europe.

This article was also published in The Independent, 18 June 2003

Fresh exemption for patent infringement in New Zealand

Thu, 01 May 2003 00:00:00 +1200

The enactment of an amendment to the New Zealand Patents Act 1953 in December 2002 has the potential to reduce the effective life of pharmaceutical patents.

In a surprise move just prior to Christmas 2002, an amendment to the New Zealand Patents Act 1953 was enacted. The amendment has important implications for owners of patent rights operating in industry sectors where marketing approval is required to market a new product. In particular, the amendment has the potential to reduce the effective life of pharmaceutical patents.

A new section has been inserted into the Patents Act, which reads:

Regulatory review exception It is not an infringement of a patent for a person to make, use, exercise, or vend the invention concerned solely for uses reasonably related to the development and submission of information required under New Zealand law or the law of any other country that regulates the manufacture, construction, use, or sale of any product.

The Government commentary supporting the amendment states that the new section is:

“…to provide that, where a patent protects an invention, the production, use, or sale of the invention, without the consent of the patent owner would not infringe the patent. This would be solely for the purposes of gaining marketing approval to market the invention in New Zealand or any other country”.

The commentary also states that the amendment:

“…would facilitate the entry to the New Zealand market of generic products, such as generic pharmaceuticals. This could mean that cheaper pharmaceuticals might become available in New Zealand sooner than at present. It would also assist New Zealand manufacturers of generic products to gain access to the New Zealand market and export markets on comparable terms to competitors from other countries which, we are told, have already implemented a similar policy”.

Springboarding into Markets

The primary purpose of the amendment is to allow so-called “springboarding” into pharmaceuticals markets where drug trials are conducted by a generic manufacturer while a patent for the drug is still in force. Previous law in this area came from the New Zealand Court of Appeal in the decision Smith Kline & French Laboratories Ltd v Attorney-General [1991] 2 NZLR 560 and the New Zealand High Court decision in Monsanto Company v Chemical Company (N.Z.) [1984] FSR 559. The Courts protected the rights of patentees by restricting the activities of generic manufacturers until relevant patents had expired.

Monsanto concerned an application for an interim injunction to prevent the conduct of field trials of a Stauffer product needed for registration with the New Zealand Pesticides Board. Monsanto had patent protection in New Zealand for glyphosate, the active ingredient in the herbicide ROUNDUP. Stauffer’s product included a glyphosate salt that, in Monsanto’s view, infringed its New Zealand patent. The High Court granted interlocutory relief and held there was a serious question to be tried on the issue of infringement. The Court considered that the field trials were designed to obtain the data necessary to achieve permission for commercial use of the product in New Zealand and were a stepping stone to a full commercial launch. This activity amounted to gaining a commercial advantage during the lifetime of the patent and thus would constitute an infringement of the patent.

Smith Kline concerned an application to the New Zealand Department of Health for consent to distribute a generic cimetidine product, under the trade name Cytine. Samples of the Cytine tablets were enclosed with the application for consent. Smith Kline & French was the patentee in New Zealand for cimetidine. The cimetidine patent, at the time of the consent application, had about two years until expiry. The Court of Appeal held that the importation of a sample and its submission to a regulatory authority with a view to obtaining permission to market was a use of the patented compound and therefore constituted an infringement of the patent. This was the case even though there was no actual intention to market until the cimetidine patent had expired.

The amendment to the Patents Act reverses the position taken in Monsanto and Smith Kline. It does not go so far as to allow stockpiling of an otherwise infringing product but does allow commercial advantage to be gained during the existing term of a New Zealand patent. For example, a manufacturer of a generic drug will now be able to embark on trials prior to expiry of the patent covering the drug. This would enable the generic manufacturer to achieve marketing approval earlier than under the previous law.

Non-Controversial Amendment?

The Government is currently reviewing New Zealand’s rather outdated Patents Act. It is therefore surprising that the Government introduced this amendment by way of a Statutes Amendment Bill, rather than include the issue within the Patents Act review. A Statutes Amendment Bill is an omnibus bill consisting of amendments to several Acts. The rules of Parliament say that any amendments introduced in this way are to be non-controversial. The amendment to the Patents Act may have appeared non-controversial to Members of Parliament. However, most in the New Zealand intellectual property profession, and many proprietors of patent rights, do not regard this amendment as non-controversial.

The cynical view, held by few, is that making the amendment by way of a Statutes Amendment Bill has the feel of a backdoor mechanism to amend the Patents Act without full scrutiny or the opportunity for submissions to be made by industry representatives and the intellectual property profession. However, while the amendment does seem to have been fast-tracked, the Government has given reassurance that the issue has been considered fully. The notion of reducing public expenditure on pharmaceuticals does appear to be the impetus behind the amendment and the “non-controversial” factor was doubtless seen as easily satisfied.

The New Zealand Government’s drug purchasing body is the Pharmaceutical Management Agency of New Zealand (Pharmac). Pharmac has the difficult task of meeting the budget for pharmaceutical expenditure in New Zealand. It therefore encourages the distribution and use of cheaper generic pharmaceuticals following the expiry of relevant patents. Any delay in achieving marketing approval for a generic pharmaceutical is counter to Pharmac’s aims and contributes to the perception that the total cost of pharmaceuticals is ever increasing. It is not difficult then to see why an amendment to the Patents Act that would help alleviate this problem is considered to be non-controversial, at least in the House of Parliament.

Compliance with TRIPS?

There is an issue whether the amendment to the Patents Act means that the Act is no longer fully compliant with the TRIPS Agreement. There are differing views on this point. The Government says it has been careful to ensure that the amendment does not breach any WTO obligations and points to other countries including Canada, Argentina and Malaysia which have similar springboarding laws. No doubt the Government is confident in its position given the ruling of the WTO that found Canada’s equivalent provision was not a breach of the TRIPS agreement (World Trade Organisation, WT/DS114/R, 17 March 2000). However, it remains to be seen whether the amendment to the Patents Act will have an impact on any of New Zealand’s international trade negotiations, particularly a free trade agreement with the United States being sought by the New Zealand Government.

Extensions of Term?

The TRIPS agreement resulted in amendments to the Patents Act in 1994. The more significant of these amendments include increasing the maximum patent term from 16 years to 20 years and repealing the provisions allowing extensions of the term of a patent. Losing the ability to seek extensions of term was seen as a trade-off with the overnight increase to a 20 year maximum patent life. However, many in the pharmaceutical industry have advocated restoring extension of term provisions perhaps along similar lines to the European Supplementary Protection Certificate.

It is notable that springboarding legislation tends to be available only in those countries where patent terms for pharmaceuticals can be extended. The new springboarding law in New Zealand coupled with the absence of any extension of term provision is seen as a double hit for research based pharmaceuticals manufacturers. However, one consolation of the new amendment is that the Government Minister responsible for introducing the amendment now says that the issue of extending the term of pharmaceutical patents will be investigated as part of the review of the Patents Act.

Conclusion

Although the wording of the amendment to the Patents Act covers activities related to any industry sector where regulatory approval is needed, the amendment has clearly been driven by the desire to reduce Government expenditure on pharmaceuticals. The amendment is nevertheless an erosion of the rights of patent proprietors. Any such amendment introduced and passed without the opportunity for scrutiny and debate by interested parties is controversial. Extensions of patent terms may become possible once the Government has completed its review of the Patents Act. This would mitigate against the erosion of patent rights at least for a significant number in the pharmaceuticals industry sector.

New Zealand is at an interesting stage in the development of its intellectual property laws. The new Trade Marks Act 2002 has recently come into force and the Government appears increasingly interested in updating New Zealand’s patent law. A Government review of the Patents Act is in progress, although there is no indication when that review might be completed. The opportunity to ensure an even balance between the rights of the patentee and those of the public is presenting itself. With extensive consultation and cognisance of international patent laws the final outcome should be a stronger and more effective patent system in New Zealand.

This article was also published in Patent World, May 2003

Design law change cuts costs for exporters with designs on Europe

Wed, 26 Mar 2003 00:00:00 +1200

Jim Ribeiro and Oliver Dickie

Important changes to design law in Europe means exporters of innovative products have greater access to a powerful weapon in the intellectual property arsenal.

Exporters must often deal with the problem of cheap copycat products. One option for preventing rip-offs is to register a design for products where visual appearance is an important factor. Until now, the cost of covering the whole European Union (EU) has been extremely high. Recent changes to the design registration system in Europe have dramatically slashed costs to potentially 10% of previous costs to make design registration a more viable option.

From April 2003, it will be possible to file a single “Community Design” application covering the entire 15 nations of the EU. This will bring major cost advantages during both application and any later enforcement action.

What qualifies for design protection?

Design registration should be considered for any product in which visual appearance is an important factor. For example in New Zealand most readers will be familiar with Bodum® coffee plungers and Sony PlayStation® consoles, the Cadbury “glass and a half” ® logo and the Harley-Davidson ® logo.

What are the benefits?

In New Zealand and some other countries, registrable designs may also qualify for protection under copyright or trade mark legislation. So why bother to register your design?

Copyright protection is not available for industrial designs in some countries, or may be significantly limited.
It may be difficult to prove infringement under copyright as it must be shown that copying has taken place. If a similar design is created entirely independently of your design, you cannot claim protection under copyright. To prove infringement of a registered design, you only have to show that your design and the infringing product are substantially the same.
The existence of a registration number (which can be marked on the article) is likely to have a significant deterrent effect on potential infringers.
The registered design can be easier to obtain and enforce than a registered trade mark. For instance, the trade mark registration will be limited to a specific range of goods or services. A Community Design registration is not limited in this way. Trade mark protection and design protection are not mutually exclusive: it is possible to have trade mark and design protectionfor the same product.

What are the time limits?

Under the new Community Designs system, you can still apply for a design registration one year after the first public disclosure. This means that you can still apply even if the product is on the market, provided you do so within the first year of public release.

Costs slashed

Under the present national design systems, registration for a single design in a single European country typically costs around $2,000, or around $30,000 for the entire EU. Under the new system, the cost of registration for the entire EU will typically be in the range of $3,000 to $4,000 - approximately 10 % of the current cost.

The cost reduction is even more significant if you need protection for a range of designs. At present, you need a separate registration for each design, making the cost to register ten designs across the entire EU about $300,000. Under the community designs system, you will be able to register multiple designs in a single application. This brings the cost for 10 designs closer to $6,000 to $8,000 -- about 2%-3% percent of the present cost.

The cost of litigation will also be significantly reduced since it will no longer be necessary to sue an infringer separately in each country. A single court decision will apply to the entire EU.

With all these advantages and a potential market of 370 million people, taking out an EU design registration is worth careful consideration.

This article was also published in The Independent, 26 March 2003