AJPark

New Zealand legislation updates

Patents Bill
Matt Adams

The Commerce Select Committee reported back on the Patents Bill on 30 March 2010.  The report contained a suggested amendment that would exclude all computer programs from patent protection. For a full explanation of the main points in the Select Committee report, click here.

The Ministry of Economic Development is now looking at a wording amendment that would allow the patenting of some computer programs.  The amendment would bring the wording of the exclusion closer to the restriction contained in the European Patent Convention.

We expect that the amendment will be made in the next few months. The amended Bill will then proceed to a second reading.

Patent Attorneys Bill
Matt Adams

The Commerce Select Committee report on the Patents Bill recommended a separate Bill be created, called the Patent Attorneys Bill.  The Bill currently awaits its second reading.

The Patent Attorneys Bill covers the registration of patent attorneys and regulation of the patent attorney profession in New Zealand. 

The Commerce Select Committee report recommends changes to provide a single trans-Tasman framework for regulating patent attorneys.  The Patent Attorneys Bill was created so these changes would not slow the progress of the Patents Bill.

Designs Amendment Act 2010 passed into law
Michael Brown

The portion of the Regulatory Improvement Bill relating to restoration of designs has been enacted as the Designs Amendment Act 2010.  The Act will come into force on 19 April 2011 at the latest.  The Act may come into force at an earlier date appointed by the Governor-General. 

The Act introduces explicit provisions for restoration of a pending design application or registered design that has lapsed.  To succeed with restoration, the request for restoration must be made within a period that will be prescribed by regulations.  If the request is made after that period, the request for restoration must be made without undue delay.  In either case, the party requesting restoration must show that the lapse was unintentional.

The Act also clarifies that the Commissioner of Designs is entitled to publish bibliographic details of pending design applications; including the date of filing an application for registration, the number of the application for registration, and any details of a design that are included in the application form.  This is a return to the approach that was taken by the Commissioner until late 2007.  This change is being made to enable the Commissioner to publish requests for restoration of lapsed design applications for opposition purposes.  Requests for restoration of lapsed design registrations will also be published for opposition purposes.

The Act includes protective provisions for third parties who have made use of the design during the period when the design application or registration was lapsed.    

For a copy of the Act, click here.

Trade Marks Amendment Bill awaits second reading
Damian Broadley

The Trade Marks (International Treaties and Enforcement) Amendment Bill awaits its second reading in the House.  It is currently item 31 on Parliament’s order list.

The second reading follows the release of the Select Committee report in September last year.  Click here to read the Foreign Affairs, Defence and Trade Select Committee report.

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

Copyright (Infringing File Sharing) Amendment Bill
Ken Moon

The Copyright (Infringing File Sharing) Amendment Bill had its first reading in Parliament on 22 April.  The Bill repeals Section 92A of the Copyright Act and replaces it with a three-notice system to deter illegal file sharing.

The Bill was referred to the Commerce Select Committee and written public submissions closed on 17 June 2010.  The Committee will convene hearings for those submitters who also wish to make oral presentations.  Then the Committee will report back to Parliament, possibly including amendments to the Bill.

The Bill proposes the following process to deal with illegal file sharing.

• Copyright owners will contact account holders through internet service providers (ISPs) to report misuse of their copyright works. 
• Internet users caught illegally downloading copyright material will be given up to three infringement notices. 
• A detection notice will inform the user that they have downloaded copyright material and that their actions are illegal.
• A warning notice will be sent to a user if they infringe copyright again (and they have already received a detection notice).
• An enforcement notice will be sent to a user if they infringe copyright again (and they have already received a warning notice).
• After issuing an enforcement notice, the rights holder can seek reparation costs of up to $15,000 through the Copyright Tribunal. 
• Internet pirates who continue to download copyright material can also have their internet account suspended by order of the Copyright Tribunal for up to six months. 
• Account holders will have the right to challenge any notice, make submissions to the Copyright Tribunal refuting the claims, and request a hearing if they disagree with the claim that they have infringed copyright.

This New Zealand approach, although preserving a “graduated response” to illegal peer-to-peer (P2P) file sharing, differs from that in France, Ireland and as contained in Britain’s Digital Economy Bill.   The process set out in the New Zealand Bill minimises the involvement of ISPs and leaves decision making in the hands of the Copyright Tribunal.  That Tribunal will exercise a quasi-judicial function taking into account any defence offered by the alleged infringer before making any orders.

New Zealand has pursued its own style of graduated response (or “three strikes”) despite the provision requiring termination of a user’s ISP account after three strikes being withdrawn from the draft Anti Counterfeiting Trade Agreement (ACTA). 

To read the Bill click here.

UK Court of Appeal clarifies approach to “selection inventions”

Sue Rutledge

In its decision in Dr Reddy’s Laboratories (UK) Limited v Eli Lilly and Company Limited [2010] RPC 9], the UK Court of Appeal upheld the Patent Court decision finding Lilly’s patent for the antipsychotic compound olanzapine valid.

Dr Reddy’s had attacked the validity of the olanzapine patent on the grounds that it lacked novelty and inventive step over Lilly’s earlier patent (“235”), which broadly described a very large class of compounds that encompassed olanzapine.  Olanzapine itself was not specifically disclosed in 235. 

In the Court of Appeal, Lord Justice Jacob found the olanzapine patent to be both new and inventive over the disclosure in 235. 

Novelty

As to novelty, Jacob LJ held that the proposition that every chemical class disclosure disclosed each and every member of the class was wrong.  He followed settled European Patent Office (EPO) case law, which requires that for a prior art document to anticipate a compound it must contain an “individualised” description of the compound or class of compounds claimed.  The EPO approach was clear and consistent, and there was no reason not to follow it.

Obviousness

In considering whether the olanzapine patent was obvious over 235, Jacob LJ referred to the previous law relating to selection inventions, and specifically to the rules famously laid down in the old IG Farbenindustries’ Patents (1930) decision.  Those rules required that to be valid, a selection patent must be based on some substantial advantage to be secured by the use of the selected members, all of the selected members must have that advantage and the selection must be in respect of a quality of special character which can be fairly said to be peculiar to the selected group.

Jacob LJ stated that the IG rules are not part of EPO law.  He concluded that the best thing to do was to regard the rules as part of legal history, not part of the living law.  He said it was difficult to see how the IG rules could be complied with without carrying out an enormous range of experiments.  Jacob LJ observing that, “If you put in your thumb and pull out a plum, how are you to say that there are no other plums in the pudding?”  He stated that the better approach was to follow what the EPO Boards do when a patented product falls within a greater class.  In these situations, EPO Boards examine whether the patentee has made a non-obvious and technical advance or if it has made a mere arbitrary selection.

It could not be said that Lilly was making a mere arbitrary selection from 235 because of the unexpected and superior properties of olanzapine disclosed in Lilly’s patent compared with the closest prior art compound.  The invention was therefore not obvious.

Likely impact in New Zealand

The New Zealand Court of Appeal has commented that there is little difference between New Zealand and European patent law.  Given this position, and the logic and clarity of the novelty/obviousness test set out in the Dr Reddy’s decision, it is likely that the New Zealand Courts—when considering so-called selection inventions—will prefer this approach to the old and unrealistically strict IG rules.

Australian case provides warning on drafting improvements clauses

Scott Yorke

A recent Australian case highlights how important it is to think carefully about improvements provisions in IP licence and assignments.

In Fermiscan Pty & Ors v James, the New South Wales Court of Appeal ruled that a cancer detection method devised by Dr Veronica James was not an “Improvement” to Fermiscan’s patented invention.  The Court of Appeal said the new invention was not an “Improvement” because it was not an enhancement or replacement of Fermiscan’s invention.

Dr James had assigned two patents to Fermiscan. The assignment document included an assignment by Dr James of all “Improvements”. The document defined an “improvement” as:

“any invention, discovery, modification, adaptation or improvement, whether patentable or not, which can be used to…  create a wholly new product or component or process which replaces or is an enhancement of the subject matter of the Invention…”

The term “Invention” was defined by reference to the two patents assigned by Dr James to Fermiscan.

The question before the court was whether Dr James’ new invention was an “Improvement”. Fermiscan argued that the new invention was an Improvement because the new process was a “replacement”. But the court ruled that a “replacement” process must be a new process that encompassed the claims of the first invention and took the place of, or was a substitute for, those claims.  A “replacement” would be a new process with one or more further integers in addition to the claims of the first invention.

Because the new invention claimed different subject matter, it was not an “Improvement”.

The case turns largely on the specific wording of the assignment document. But it is a reminder to drafters of licences and assignments that they should use very precise language when drafting improvements provisions. It appears that, at least in Australia, the courts will narrowly define the scope of any improvements provision, and may look to define improvements by reference to the claims of particular patents.

So, if the parties intend for all new developments in a particular area of technology to be owned by the licensor or assignee, even if the improvements do not fall within the scope of a particular set of claims, that should be made very clear.

But as anyone with experience in international licensing will know, an improvements clause may still be undone by local laws, even if the wording of the provision is perfectly clear.  For example, European competition law provides that in many cases “severable improvements” cannot be owned by the licensor. A severable improvement is an improvement that that can be exploited without infringing the licensed technology. And in China, an improvements grant-back to the licensor will usually fail unless the licensor gives adequate consideration for the transfer.

Trying to deal contractually with something that does not yet exist can be a challenge, and some uncertainty will always remain about the scope of an improvements provision.  But contract drafters can reduce this uncertainty by being clear about what the parties intend, and by being aware of what the laws in the relevant countries will allow.

New advertising codes in New Zealand

Dan Winfield

The Advertising Standards Authority (ASA) has released three new codes of practice. 

The new codes relate to advertising to children, advertising food, and advertising food to children.  There are also further recommended changes for advertising foods high in fat, salt and/or sugar (HFSS).

New code for advertising of food

This code now applies to food advertising directed at people 14 years old and over, rather than all food advertising. 

But, your advertisement still needs to comply with the children’s codes even if it’s targeted at people over 20 years old.  Timeslots and placements are key factors—if kids will see or hear your ad, then the two new children’s codes also apply.

The food advertising code is more prescriptive than before, and it will be interesting to see how some of the rules work.  For example, food quantities depicted in an ad should not exceed appropriate serving sizes.  So, a KFC BIG BUCKET advertisement should comply if it features the right amount of people, but it may not comply if the ad features only one person with fine print explaining how many the BIG BUCKET feeds. 

Advertisements for foods high in sugar can no longer claim the food is ‘low fat or ‘fat free’.  And foods high in fat cannot have ads claiming them to be ‘low in sugar’ or ‘sugar free’. Both claims are now seen as leading consumers to believe the food is low in energy or beneficial to health.  This is a change of tack. 

There is now a broad ban on HFSS advertisements promoting a competition, premium or loyalty programme that encourage excessive repeat buying.  It will be interesting to see what the Complaints Board considers “excessive repeat purchases”.  It might pay to take some caution in this area.

New code for advertising to children

The Code applies to all advertising that influences children.  This is a subtle change from the wording of the previous code which regulated advertising to children.  While not a major change, it’s now clear you need to think about the impact your ad could have on children regardless of whether they are the target audience or not.

While not much has changed, it’s worth mentioning that children are still “under 14 years old”, despite a lot of submissions arguing the age should be increased to 18.

New children’s code for advertising food

Again, like the code for advertising to children, this code applies to all advertising that influences children.

Any real change is hard to find. If any exists, it may be in the application of the code to HFSS foods, like toasted muesli, and some diet supplement drinks. While the language of the new code is not significantly different from the old code on advertising food, it just feels like there’s a tightening of what’s acceptable in HFSS advertising.

More to come for HFSS foods

The ASA panel has also made other recommendations related to HFSS food advertisements. These include pre-vetting of HFSS ads, extending ‘Getting it Right for Children’ beyond TV, and extending the application of the codes in order to regulate product packaging and labelling.

Why offering goods ‘FOB China’ can still be regarded as infringement in the USA

Mike Biagio

In a recent decision in the Federal Circuit in the United States, (SEB(T-Fal) v Montgomery Ward &Co, 2010), the court held that a defendant was liable for wilful infringement of a US patent.  This ruling was despite the fact that the defendant had never even offered the product for sale in the USA!  At first glance, this seems strange, but it can be explained as follows.

Background

The defendant, Pentalpha, had copied the design of a deep fryer.

The deep fryer was protected by a US patent held by SEB.  The defendant had obtained a “right to use” study from a New York patent attorney, who had concluded that none of the clams of 26 patents read onto the copied deep fryer. However, the defendants had not told the patent attorney that they had directly copied the deep fryer.

Pentalpha sold its copied deep fryers to Montgomery Ward.  The goods were sold FOB (Free On Board) China (link to http://en.wikipedia.org/wiki/FOB_(shipping). SEB sued Pentalpha, Montgomery Ward and others for infringement of its patent. This means that title to the goods changes before the goods even entered the USA.

The court’s decision

The main issue was the question of “induced infringement”.  Under 35 U.S.C 271(b): “whoever actively induces infringement of a patent shall be liable as an infringer”.  The defendant argued that, since it had no knowledge of the patent, it could not have induced infringement of the patent.  However, the court dismissed this argument, saying that “deliberate indifference” to potential patent rights is sufficient to satisfy the knowledge requirement of inducement charges.

The standard held by the court relies on a more subjective determination of what the defendant knew, or should have known, and whether a reasonably likely risk was disregarded.

Why this case is significant

This case sends out a warning to manufacturers or importers intending to enter the US (even if they are only selling products offshore for distribution in the US).  The message is that business people nowadays are expected to be aware of, and to understand, the potential threats posed by intellectual property.  They are also expected to do their homework, and to go into the US market with their eyes open.  It seems the courts take a dim view of businesses that bury their head in the sand or plead ignorance.

If you have launched a product in the US, or are about to, we can advise you about any potential patent infringement.

Going barefoot in Australia

Matthew Hayes

A recent High Court of Australia decision in favour of E&J Gallo Winery (Gallo) is good news for trade mark owners in Australia.

Usually, a trade mark can be removed from the trade mark register if it hasn’t been used for three years.  For a trade mark owner, it’s basically—use it or lose it.  Now the High Court has ruled that a trade mark owner does not need to know whether its goods have been sold on the Australian market to establish its ‘use’ of a trade mark.

The Barefoot story

In 2008, Gallo, the world’s second largest wine producer, sued Lion for trade mark infringement because Lion was using the name ‘Barefoot’ for one of its beer brands. 

Gallo claimed that Lion’s use of Barefoot infringed its Australian trade mark registration for Barefoot, which covered wine.
In response, Lion applied to remove Gallo’s BAREFOOT trade mark on the basis that it had not been used in Australia during the relevant statutory non-use period of three years. 

Gallo was successful in its infringement claim before the full Federal Court, but was unsuccessful in preventing the removal of its BAREFOOT trade mark on the grounds of non-use.

Let’s take a look at the issue of use in the removal of an application.

Had Gallo used its BAREFOOT trade mark in Australia?

Back in 2005, Gallo acquired full rights to the BAREFOOT trade mark.  However, Gallo had not used its BAREFOOT trade mark in Australia before the beginning of legal proceedings against Lion in 2008.

To save its trade mark from removal through non-use, Gallo relied on use of the BAREFOOT trade mark by its previous owner.

The previous owner of the BAREFOOT trade mark had licensed a company he operated with the right to use the BAREFOOT trade mark.  Although the trade mark was registered in Australia, the business was based in the United States. 

In 2001, bottles of wine bearing the BAREFOOT trade mark were exported from the United States to a third party in Germany. 
A year later, an Australian company imported a small number of bottles of wine bearing the BAREFOOT trade mark from the German company and sold them in Australia during the relevant non-use period.

However, the previous owner of the BAREFOOT trade mark had no knowledge about the sale of that wine in Australia during the relevant non-use period.

Was this use by the registered owner?

Gallo argued, before the full Federal Court, that the registered trade mark was used in Australia because it was applied to goods with the authorisation of the registered owner.  Those goods entered the course of trade in Australia, and the registered trade mark remained fixed to the goods as a badge of origin.

The full Federal Court rejected Gallo’s argument. Gallo appealed to the High Court of Australia on the discreet issue of whether there had been any use of the BAREFOOT trade mark. 

Enter the High Court of Australia

Rejecting the approach of the full Federal Court, the High Court unanimously stated that the question of whether a registered owner has used its trade mark does not depend on whether the owner knowingly projects the goods into the Australian market. 

Rather, it depends on whether the goods are in the course of trade in Australia.  The Court said that as long as goods sold under the trade mark remain in the course of trade, each sale in Australia constitutes use for the purposes of the Australian Trade Marks Act 1995. 

What does this mean?

This is a good decision for foreign owners of trade marks in Australia.  The decision confirms that a foreign trade mark owner, who themselves or via an authorised user, puts their trade mark on goods that are then sold, for example, to a distributor outside of Australia, will be considered to have used their trade mark in Australia if, without their knowledge, the distributor sells those goods into Australia.

In doing so, the Australian Courts have recognised that it’s commonplace in international trade for goods to cross national boundaries before their end consumption.

Update on the trans-Tasman food labelling review

Kate McHaffie

The Council of Australian Governments (COAG) and the Australia and New Zealand Food Regulation Ministerial Council (Ministerial Council) are conducting a comprehensive trans-Tasman review of food labelling law and policy.

The review began in controversy, when the review panel was appointed without any New Zealand members.

There has been one round of public consultation on the labelling review.  A consultation paper summarising the issues raised in the first round of submissions was released on 5 March 2010.  Further submissions were invited by 14 May 2010. 

The New Zealand Government has made a submission on the consultation paper (click here to view). 

The submission indicates that the government favours a largely non-interventionist, self-regulatory approach to food labelling.  Some key points from the government’s submission are as follows:

• Mandatory food labelling should focus on food safety and public health.  Consumer demand for food information can be implemented through voluntary market-driven initiatives.
• Mandatory labelling requirements usually impose significant economic costs, and should only be considered when their effectiveness in remedying a defined problem is assured.
• Consumer demand and business self-interest are powerful drivers for providing information and, in most instances, will deliver the requisite outcomes without need for government intervention.
• The government deems issues such as defining ‘organic’, country of origin labelling, and carbon zero certification labelling to be ‘consumer related concerns’ that are not directly relevant to food safety and public health, and therefore not the appropriate focus for the food regulatory system.
• The government does not support mandatory front-of-package labelling.
• The government does not support mandatory country of origin labelling.
• The government is non-committal on how information on food labels can best be presented (eg, traffic light scheme or some other system), saying that further evidence is needed before making a recommendation.

The government’s support for a largely voluntary labelling scheme will be encouraging for industry, but will disappoint groups such as Fight the Obesity Epidemic (FOE), and the Green Party.  FOE supports mandatory front-of-pack labelling of all food, including food sold in restaurants, and advocates the traffic light food labelling system on labelling to encourage healthy eating.  The Green Party similarly supports a more heavily regulated food-labelling regime, and in particular considers mandatory country of original labelling to be essential.

It will remain to be seen how well the New Zealand position will be reflected in the final report written by the all-Australian panel.  The final report is due in December.

We will keep you updated.

A J Park’s international rankings consistently high

A J Park continues to achieve high rankings in international intellectual property directories.  Managing Intellectual Property recently stated the following about the firm.

“The largest specialist IP firm in New Zealand, A J Park, retains its place at the top of the IP rankings this year.  The firm employs a staff of highly qualified professionals … Such is the breadth of the firm's expertise that it provides IP solutions for nearly half of New Zealand's top 100 companies.”

Other A J Park rankings are listed in this table.