Cunliffe David: Patents (Trans-Tasman Patent Attorneys and Other Matters) Amendment Bill — First ReadingText is incorporated into the Bound VolumeCunliffe David: Patents (Trans-Tasman Patent Attorneys and Other Matters) Amendment Bill — First Reading[Sitting date: 09 February 2016. Volume:711;Page:8820. Text is incorporated into the Bound Volume.]Hon DAVID CUNLIFFE (Labour—New Lynn): It is my first opportunity to contribute this year so can I offer a New Year greeting to all colleagues and particularly as it is the lunar New Year for the Year of the Fire Monkey: Kung hei fat choy. Xin nian kuai le.This is a very important bill as the member who has just resumed his seat Mr Bayly has quite correctly pointed out and I am passionate about intellectual property for exactly the reason that Mr Bayly has specified. We stand on the brink of what is called the second information revolution and the Labour Party has been thinking a great deal about the impact of that revolution on the future of work: the importance of having a resilient economy a well-trained workforce and adding value through productivity that lifts incomes and provides a good life for all New Zealanders. It is absolutely crucial that we get away from thinking of ourselves just as—well it is not bad in itself; it is a good first base—producers of world-class commodities and agricultural products. We must add value to that and the No. 1 way to do it is by adding information and protecting that sustainable competitive advantage requires intellectual property rights. This bill tweaks—it does not radically change but it tweaks—the system through which those rights are awarded and maintained.What I would like to do is divide my remarks into three sections: quickly touch base on the principles that drive this reform a quick summary of the provisions and some issues that the select committee may wish to consider and then a word at the end on the process as we sum up.The principles are that whatever we do in the area of intellectual property and patents must serve a higher order goal: the strategy of building a high-value information-rich highly productive economy in a very dynamic and rapidly changing world. This bill has got to play a small but positive part in that process. Drop it down a level and from the point of view of the individual company—and we are a nation of small businesses; 80 percent of our companies employ fewer than 20 people—we have got to reduce the costs to Kiwi companies of getting a patent. We have got to make it easier and we have got to make it more effective. That is the No. 2 test. The No. 3 test is that we have got to make those patents more effective. They have got to be easier not harder to enforce—certainly across the Tasman and globally if we can get it.How do the provisions shape up against those tests? Well the first provision the key one is the amendment of grounds. That is the removal of the opportunity for third parties—not say the New Zealand company taking the patent out but as my colleague Ms Curran said removing the possibility that offshore patent trolls can make an objection based on the fact that a singly accepted patent application applies to more than one invention. That is called the lack of unity of invention objection. It is often used in defensive patent objections and filings by patent trolls.It was very sobering to hear the statistics from Clare Curran: about two-thirds of all patent activity in the United States is defensive or trolling patents. I have heard from a very senior patent attorney in New Zealand that around 90—nine zero—percent of all patent activity in New Zealand is defensive patenting by international companies and only 10 percent is by New Zealand companies seeking to acquire intellectual property rights of their own. We have to turn that round we have to get that balance better and that is a key objective. As this goes to the select committee at first blush the removal of that trolling provision looks like a very good idea but let us get the select committee to test through the submission process how that is going to work in practice.The second major provision is the trans-Tasman patent protection process. It has two component parts both of which are voluntary under the framework called the single economic market patents programme which was agreed between Kevin Rudd and John Key on behalf of our two countries several years ago. The first is the single application process or SAP and the second is the single patent examination or SEP. That framework creates a single portal an online patent application process where a company applies only once and it feeds through to apply to both jurisdictions: Intellectual Property of New Zealand in New Zealand and IP Australia across the Ditch. There is a single examiner who works through the evidence and awards or does not award a patent that applies to both countries.That is really important. Potentially it saves cost it saves time and it saves duplication. But if we look through the lens that around four times as many patent attorneys reside in Australia as in New Zealand and at the fact that the average size of a Kiwi company is much smaller than the average size of an Australian company we have to ensure in the fine print how this will work so that it suits New Zealand companies because they are those we are elected to represent. We just want to make sure in detail that this is a step in the right direction.There are some issues the select committee can look at in that regard. The first is in the regulatory impact statement paragraph 4 where is says that the costs have not yet been quantified. It goes so far as to say that we do not know whether the cost of filing is going to go up or down. It should go down because there should be efficiency gains and the value should go up because it applies to both countries but it would be great to get some evidence from officials on whether that will in fact be the case—because we get paid for our results not our good intentions.Secondly the scale issues are really important and not least in the Trans-Pacific Partnership (TPP) context. I know that is a slight side issue but there was relevant debate earlier around the application of patents to software where around 94 percent of the ICT industry surveyed said that they did not want patents to apply to software and I believe that the Government took some heed of that. That is crucial because it shows that in the heart of the information revolution the patent system which was designed for the industrial age does not work so well in the information age. As part of the Commerce Committee now I want to make sure that this and other intellectual property legislation is futureproofed to take account of that second information revolution.There are some wonderful quotes by Ian Taylor the president of the largest IT-represented body the Institute of IT Professionals of New Zealand and of course the chief executive officer of the Dunedin firm Animation Research. He says: “We’re an export-driven sector so we love free trade. However this can’t come at the cost of the future of the technology industry and that’s what it will be if New Zealand’s current law banning software patents is traded away in the TPP.” I think that is a very interesting little vignette. It is a side issue to this bill but it goes to the heart of why we also need to take a very careful look at the TPP and it goes to the reasons why Labour opposes it.The third key provision is the joint Australia - New Zealand registration of patent attorneys. There are about 200 in New Zealand and about 800 in Australia. They are going to have a single representative body with a single registration process and a single disciplinary regime. Those clever patent attorneys also tighten up the loophole: you will not be able to provide patent attorney services at all unless you are registered through that joint trans-Tasman body which of course will ensure both minimum standards and no doubt minimum costs.The governance regime is a key issue the select committee is going to have to look at in that regard. What do we mean by that? Well who runs this thing? What rules will it be run by? Given that there is a little bit of a difference or disequilibrium between the average Aussie intellectual property - rich firm and the average Kiwi firm—we are smaller; we are more nimble—we need to ensure that the rules suit those Kiwi companies. We need to have a governance system that allows us to go to bat for our own. If it does not then we may see the benefits of this trade-creating measure occur disproportionately on the other side of the Ditch and that would not be our primary objective. We need to have a good relative level of influence based on a very important constitutional principle which is called sovereign equality. We are a sovereign State. Australia is a sovereign State. The rules have got to be equally fair to both. We are not a state of Australia; we never will be. The select committee will have to ensure that the fine print of these governance provisions reflects the principle of sovereign equality. In so doing we protect the interests of New Zealand businesses.I have done a quick romp through this—the principle the provisions and the process. The process simply is that the select committee needs the time and the due diligence to make sure we hear from the industry. I hope we will hear from the tech sector from the patent attorneys and from the lawyers and we will work through the detail from there. Labour supports this bill at its first reading. Thank you.