Foss Craig: Patents Bill — Second Reading 
Text is incorporated into the Bound Volume 
Foss Craig: Patents Bill — Second Reading 
[Sitting date: 12 September 2012. Volume:683;Page:5155. Text is incorporated into the Bound Volume.] 
Hon CRAIG FOSS (Minister of Commerce) 
: 
 I move  
That the Patents Bill be now read a second time 
. First I would like to thank the Commerce Committee for its consideration of the Patents Bill. The committee’s report includes many sensible recommendations that will assist in ensuring that New Zealand’s patents system meets the objective of the bill: to promote innovation and economic growth while providing an appropriate balance between the interests of inventors and patent owners and the interests of society as a whole. 
A patent is an intellectual property right granted for new inventions. The grant of a patent provides the patent owner with the right to prevent others from commercially exploiting the invention for the term of the patent. This is intended to provide an incentive for innovation and its dissemination that might not otherwise occur. Although patents can benefit society by providing an incentive for innovation they can also impose costs on society as they are effectively a form of monopoly right. It is therefore important that the patent system be structured so as to ensure as far as possible that the patent system provides sufficient to offset the costs so that there is a net benefit to society. 
The bill will replace the Patents Act 1953 other than provisions relating to patent attorneys. It is an important step in modernising 60-year-old patent legislation. The Patents Bill is intended to deal with the deficiencies of the Patents Act 1953 by introducing stricter criteria for granting a patent than those required by the Patents Act 1953. This will reduce the likelihood of overly broad patents being granted and avoid the economic costs imposed by such patents. This is of particular importance in New Zealand where most patents are granted to applicants from outside of New Zealand. 
The bill will also ensure New Zealand’s patents legislation reflects local and international developments in technology business and business practice by providing criteria for the grant of a patent that are more aligned with those of other countries. It continues to promote innovation and competition and encourages technology transfer to New Zealand by ensuring an appropriate balance between the interests of the patent owners and society as a whole so as to maximise the benefits to New Zealand of the patents system. 
 During its consideration of the bill the committee heard many submissions from groups opposed to the granting of patents for computer programs. The Patents Act 1953 does not mention computer programs. However computer programs can be patented under the existing Act of 1953 if they produce a commercially useful effect following a 1994 ruling of the Commissioner of Patents. Under this ruling most computer programs can be patented in New Zealand. 
Various submitters considered that the granting of patents for computer software can inhibit innovation and competition. The committee was also made aware that some New Zealand companies have made significant investments in embedded software. This is the sort of software that is used for example to control devices such as home appliances digital cameras and mobile phones. The committee accepted that although the patentability of computer programs themselves should be restricted patent protection should still be available where an invention includes embedded software. 
After considering the approaches taken in other jurisdictions the committee decided and recommended that the bill provide that computer programs should not be a patentable invention. It is clear in the commentary on the bill that the committee did not intend that an invention should be ineligible for patent protection merely because it makes use of or is implemented by a computer program. Rather the intention was that the granting of a patent should be prevented only where the novelty and inventive step lie in a computer program. 
In order to make the committee’s intention clear and to avoid any doubt as to what is intended I propose that the computer program provision be amended so as to provide that only computer programs as such are ineligible for patent protection. In addition I also propose that the provision be moved from clause 15 to new clause 10A which would provide that computer programs as such are not an invention for the purposes of the legislation. I acknowledge that there has been discussion around the changes that I have introduced through Supplementary Order Paper 120 but I reiterate that there has been no change to the select committee’s intention that computer programs should not be patentable. Let me be clear: a computer program as such is not patentable. Let me be clear: a computer program itself under the Supplementary Order Paper and this bill is not patentable. 
Another reason for this amendment is to ensure consistency with New Zealand’s obligations under the World Trade Organization Agreement on Trade-related Aspects of Intellectual Property Rights (TRIPS agreement). The amendments to this provision which reflect the legislative provisions in the United Kingdom and the European Patent Convention are contained in a Supplementary Order Paper that will be considered during the Committee stage. The proposed amendment also reduces the risk that the provisions could be challenged as inconsistent with our international obligations. 
The bill provides that patents can be refused for inventions whose commercial exploitation would be contrary to public order or morality. The committee has recommended that the bill be amended to include a list of examples of inventions where exploitation is considered contrary to public order or morality and hence are not patentable. This will provide guidance as to the type of inventions excluded from patent protection under that provision. 
The bill as introduced did not contain provisions for pre-grant opposition. Such provisions allow third parties to formally oppose the granting of a patent. Many submissions to the committee argued that pre-grant opposition be retained as it prevents patent owners from asserting invalid patent rights. This provision is contained in the current Act but was not retained in the bill as introduced as it was considered that the stricter criteria for granting a patent contained in the bill would largely remove the need for pre-grant opposition. The committee recommended that the bill be amended to include the provision for pre-grant opposition. 
Another recommendation of the committee is that the grounds for pre-grant opposition re-examination and post-grant revocation be aligned. The bill as reported back contains provisions that allow New Zealand to become an exporting member under the terms of the protocol amending the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS agreement) to implement the Doha declaration on the TRIPS agreement and public health. New Zealand lodged its instrument of acceptance of the protocol in October 2011. 
The effect of the provisions is that New Zealand will be able to issue compulsory licences for the export of patented pharmaceuticals to developing countries with little or no pharmaceutical manufacturing capacity of their own where the pharmaceutical is necessary to deal with a public health problem such as an epidemic. 
The bill as introduced also contained provisions updating the regulatory regime for patent attorneys in New Zealand. The provisions have been split out of the Patents Bill into a new Patent Attorneys Bill. This will allow the Patents Bill to continue to proceed while work continues on developing a new trans-Tasman regulatory regime for patent attorneys. This work is part of the single economic market agenda announced by New Zealand and Australian Prime Ministers in August 2009. 
I intend to move during the Committee stage the amendments contained in Supplementary Order Paper 120 in my name. The Supplementary Order Paper contains the amendments to the computer program provisions that I discussed earlier in this speech. The remaining amendments proposed in the Supplementary Order Paper are technical amendments intended merely to clarify drafting correct errors and update consequential amendments. Let me be clear: under this bill and the proposed amendments a computer program as such is not patentable. Under this bill and the proposed Supplementary Order Paper a computer program itself is not patentable. I commend this bill to the House.