Parker David: Patents Bill — First ReadingText is incorporated into the Bound VolumeParker David: Patents Bill — First Reading[Sitting date: 05 May 2009. Volume:654;Page:2875. Text is incorporated into the Bound Volume.]Hon DAVID PARKER (Labour):First I say that I agree with everything the Attorney-General said. The bill of course is one that the National Government has taken over from the outgoing Labour Government. It is a matter of public policy that seeks to balance two interests. First is the interest of New Zealand to stimulate the creation of new inventions in New Zealand and to ensure that we readily have access to inventions that have been developed overseas. We do that by giving inventors who have developed something novel a right to exploit for commercial purpose that novel invention for a period of time and during that period of time they have monopoly rights. Those monopoly rights confer the right to extract monopoly rents. We all know that monopolists have a reputation for extracting monopoly rents and left uncontrolled they impose an inappropriate cost upon a society. This is the second public policy interest.Patent legislation tries to give an appropriate period of exclusivity to the patent holder to exploit his or her invention for commercial gain. This gives the person or the company that owns those rights the incentive to develop the invention in the first place for the betterment of society. But the quid pro quo of the granting of those rights is the societal right to limit the period over which the person or company can exploit those monopoly rights. Under the current patent legislation and as will be the case if this bill passes into law that period is 20 years from the date when the application for the patent is made. So through that time-limited grant of monopoly rights we attempt to strike a balance.I endorse some of the Attorney-General’s comments about the imperfections in the current patent law. It is now clear that New Zealand’s patent law is too generous to those people seeking patents. It confers patents and therefore monopoly rights on mainly corporations. In New Zealand’s case it is mainly multinational corporations outside of New Zealand that can gain patent rights to inventions in New Zealand that they would not be able to gain patent protection for overseas. As the New Zealand regime is more lenient than overseas regimes we are effectively allowing those patent holders in New Zealand to extract monopoly rents at the cost of the New Zealand economy and at the cost of New Zealand society in circumstances that would not be allowed in overseas jurisdictions. To remedy that ill—because it is wrong that the current law in New Zealand is more lax than overseas rules relating to granted patents—this bill tightens up the criteria upon which the Patent Office can grant a patent. Those criteria apply if the patent is novel and has its first patent application as a consequence of a New Zealand - based invention. But they also apply to inventions that come from overseas and are patented in New Zealand because when that happens the New Zealand economy is faced with that monopoly rent being extracted for the benefit of the overseas patent holder. There needs to be proper control on those overseas patents coming into New Zealand. They should not be given out too freely.How does the standard change? It changes in a number of ways. For a start—and I think this is a very important change—there are changes to the standard of proof that is required of the applicant for the patent. Previously where there was a doubt as to whether an invention was patentable or where there was a doubt as to whether the invention was novel as was claimed those doubts were resolved by the benefit of the doubt being given to the applicant. That meant that people were getting patents in New Zealand because they could say that there was a doubt as to whether it should be granted. New Zealand had to give the benefit of the doubt to the applicants. Hence they got their patents.That standard of proof is being changed. Now the patent applicant will have to show to the Patent Office that on the balance of probabilities the prerequisite tests for the grant of a patent are met. So rather than the benefit of the doubt being given to the applicant the applicant has to prove his or her claims on the balance of probabilities.The other main change is that now there are requirements that novelty an inventive step and usefulness must be proven. The standard of examination in New Zealand was relatively low on this issue compared with other countries. Until now there has not been an examination for an inventive step or usefulness as a prerequisite to the granting of the patent.Todd McClay: A bit like Labour Party selection.Hon DAVID PARKER: That was an irrelevant comment from Mr McClay.As a consequence New Zealand was granting patent rights that would not have been granted in overseas jurisdictions and again this was an abuse from a public policy sense of the monopoly rights that are given to patent holders.Another matter being made clear in New Zealand as well as in most overseas jurisdictions—but not in all overseas jurisdictions—is that it is not permissible to patent medical treatment or methods of medical treatment. In my opinion that is a very proper limitation on the right to grant patents. One should not be able to patent methods of medical treatment on humans. That is an area that has long been excluded in New Zealand and in similar jurisdictions. It is permissible in some other jurisdictions and indeed some fine points have been drawn in New Zealand patent jurisdictions. If my memory serves me correctly—it is a little while since I have looked at this area of law—I think “Swiss claims” is the professional jargon used to describe some of the close-to-prohibited methods of treatment of human ailments that are able to be patented. This legislation makes it clear for the first time in statute law as opposed to judge-made law that treatment methods of human disease etc. are not eligible for patent.One of the other major changes here which I think is important is that instead of the Patent Office looking only for prior instances of that which is claimed to be invented in New Zealand it is now looking internationally. The Patent Office will have to be satisfied that the applicant for the patent can show that it is novel and inventive. The Patent Office will not be looking just at what is called “prior art” in New Zealand but will be looking at what is prior art internationally. If for example the thing for which patent protection is sought in New Zealand has previously happened in the United States of America then that fact will be taken into account. If there was an identical discovery that had been published previously in America that would prevent a patent from being granted in New Zealand because it would not be novel. Again that is an appropriate change to the legislation and again this will benefit New Zealand economically because the monopoly rents will not be extracted by a patent holder for a patent that might have been granted otherwise when it should not have been.There is one other change that I think is worthy of note. That change relates to the instance where a disclosure has been made by someone who should not have made that disclosure and therefore the invention is no longer secret. When someone goes to the Patent Office and tries to establish that something is novel that person has to show that it has not been effectively published—that it is not out there known to other people already. The reason is that that person is meant to be patenting something that is novel. If it is already known then obviously it is not novel and that person should not get a patent for it and the monopoly protection and advantage that come with it.But if the disclosure was made by someone who had received that information confidentially and if that person had a duty not to disclose it but then did the dirty on the inventor by disclosing information that he or she had a duty to keep secret and should not have made public then it seems unfair that the inventor cannot claim patent protection for that. This situation can arise for inventors. For example they might be seeking capital funding for the invention they are trying to develop there is a confidentiality agreement and then the financier breaches the confidentiality agreement. Until now that vitiated the ability of the patent applicant to get the patent. This bill makes an exception and gives them a year to follow up and apply for a patent. I think that is a good change. Thank you.