A fresh look is patently overdue

New Zealand's intellectual property law is based on repealed British law, Nick Churchouse discovers.

A makeover of New Zealand's intellectual property law is long overdue, says an industry expert.

A legacy of old legislation has spawned a national mindset of outdated thinking on intellectual property, Grow Wellington innovation manager Penny Gibson says.

Dr Gibson, who has written a proposed strategy paper for the Intellectual Property Office of New Zealand, says New Zealand needs to rethink the way it uses and protects ideas.

Current patent law is based on British legislation which is nearly 60 years old, and has long since been repealed in Britain.

In New Zealand, the law was first reviewed in 2000 and the new bill arising from the review, was finally introduced this year.

A spokesman from Commerce Minister Simon Power's office said it had not yet decided whether the new Government would pick up the bill.

The bill admits that the current status quo, which is the mandate of the Intellectual Property Office, is old, substandard and ignores information available from patent offices overseas.

"New Zealand's current legislation, the Patents Act 1953, is out of date and no longer serves New Zealand's best interests, particularly given that most New Zealand patents are granted to foreign applicants," Intellectual Property Office spokeswoman Emilia Mazur says.

Giving most of New Zealand's patents to foreign companies shows that the inadequacy of the law is working against New Zealand companies, not for them, Dr Gibson says.

The low profile of the office, held down by its cobwebbed 1953 act, was a huge lost opportunity for businesses and she saw many skipping straight to overseas intellectual property agencies because of it.

"And you are missing the 150,000 smaller companies [in New Zealand] which cannot afford to even do that."

Intellectual property protection is a vastly complicated subject and advice from specialist lawyers is expensive, Dr Gibson says.

Small businesses are clued up about the need for intellectual property protection but are reluctant to throw money at an area which is so mysterious.

Dr Gibson says the number of national patent applications is a key Organisation for Economic Co-operation and Development indicator of innovation, and in New Zealand it is low compared with the world average.

"That has implications for New Zealand's innovation profile, and I think it is misleading. There is absolutely no lack of innovation and dynamism in New Zealand. There is a reluctance. They [businesses] hate wasting money," she says.

The patent world is a minefield that can swallow a lot of cash.

Though trademark or patent application costs were often less than $300, Dr Gibson says a company would spend about $10,000 to go through the process fully.

Too many firms look at the combined cost and archaic legislative foundation for New Zealand intellectual property protection and decide against it, she says.

The long-awaited repeal of the Patents Act 1953 is the right time to bolster the powers and profile of the Intellectual Property Office and arm companies with tools to make the most of their intellectual property strategies.

"Often raising awareness is touted as the solution, but there is no lack of information; there is a lack of good advice."

The traditional approach within the industry, headed by big specialist law firms, was to take an extremely broad sweep when looking at a first patent to maximise the effect.

"What generally happens is you'll never be granted that scope of patent, so [the patent office] will narrow it down to what is truly novel," Dr Gibson says.

"The problem is you pay for that, you pay for the amendments, you pay for each step and small business can't afford it.

"I've seen companies pay up to $250,000 plus before they have actually ascertained what they have got and what is of value to the company."

The global move toward free intellectual property advice is removing some of the "mysticism" about the industry and would have positive ramifications in New Zealand, she says.

Businesses were not making the most of the existing talent and skills in the New Zealand office, which could be an affordable first port of call for small firms seeking advice.

"To do that now, they'd have to go to an IP firm and it's a very expensive profession."

The office does not offer advice at present, but with government backing it could be brought into line with international peers, Dr Gibson says.

Institute of Patent Attorneys president Frank Callus says the concept has merit, but is riddled with problems.

As well as adding to a workload that it already struggles to manage, giving the office more power to execute elementary intellectual property protection is a worry, given the range of experience and high turnover of staff at the office.

"Who's going to do this, the most senior examiner or the most junior?" Mr Callus says.

Intellectual property lawyers pay indemnity insurance to mitigate the risk of wrong advice, a situation that could cause financial losses and devastate firms, he says.

"If someone invests millions of dollars and has to rely on a junior person [at the Intellectual Property Office] to make that advice, where's the comeback when it is wrong?"

The legal fraternity tried to make advice accessible to low-end start-ups, often offering initial advice for free. "We'd never charge them based on time."

The profile of the office is vital to New Zealand's international standing in the intellectual property arena, he says. Patents are "large red flags" to ward off potential copycats and the reputation and strength of the office are critical to that.

Mr Callus says the intellectual property system is a "cash cow" for most countries, but in New Zealand it is relatively cheap since the Government cut fees nearly 10 years ago.

But even the fees do not go to pay more examiners. They sink into a larger, more general pool of government revenue.

Wrapping more responsibilities and services into the office's mandate would stretch resources to breaking point, he says. "If there was a concern the new bill would require more examiners, I'd rather they raised the fees by $50 than the Government say we don't have enough examiners here."

He says small businesses might try to save money early on but when they were on the verge of serious investment to establish a product in a market, it was worth spending a few thousand dollars to go through their strategy properly.

Wellington designer Craig Bond agrees, but it took him some time to come around.

As partner in small startup design company Candywhistle, Mr Bond was initially unhappy with what patents represented, and believed the right way to stay ahead of competitors was to innovate faster and leave them behind.

"You should be constantly developing stuff anyway, rather than sitting on ideas."

He says most patents are never used, but sit in a drawer somewhere protecting an idea that is never intended to be made but stopping others making it.

Candywhistle initially did its own patent searches, using international databases and Google's patent search.

But Mr Bond says the whole process is messy and complicated, and professional help was clearly necessary.

"Doing it yourself saves you a little bit of cash, but they are a lot better at it than we are, they know all the tricks and the words to use."

Eventually, Candywhistle's export strategy meant that calling on expert advice was inevitable, but Mr Bond still maintains it is not a product-defensive strategy.

"It is to protect our markets, not our products," he says. "We've just got to ensure we are the ones that get that [export market] opportunity."

 

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