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Can and Should an Incorrect Owner Name be Corrected by Assignment in New Zealand?

…The best laid schemes o’ mice an’ men
Gang aft a-gley,
An’ lea’e us nought but grief an’ pain,
For promised joy!.. 1

Discovery of legacy errors in trade mark registration ownership can be the bane of the trade mark attorney as well as the trade mark owner.

Review of a robust portfolio can quickly descend into clammy realisation that action is needed to ensure the true and current owner can rely upon its register rights.

The usual way to update ownership in New Zealand is to record an assignment. However, sometimes the first owner on the Register should never have held the registration. This article considers whether an assignment of rights in this circumstance is an appropriate action.

Hornby Mall Ltd v Shopping Centre Investments Limited2

The 2020 decision of Hornby Mall Ltd v Shopping Centre Investments Limited (“Hornby Mall”) considered an update of owner through either assignment or alternatively a request for rectification of the register.

History of Hornby Mall

In 2005 Shopping Centre Investments Limited (SCIL) sought registration of Hornby Mall’s logo. The application was initially filed in the name of “Hornby Mall”. On request from the Intellectual Property Office to properly identify a legal entity as the owner, the attorney instructed that the owner should be Hornby Mall Limited.

Hornby Mall’s logo

This is where the wheels start to wobble.

Hornby Mall Limited (HML) was in fact an entirely separate legal entity in no way connected with SCIL or the mark. Entry of HML as the owner of the 2005 application was not noticed by SCIL.

In 2007, a replacement application was filed for THE HUB Logo. This fresh application was lodged in the name of HML. Again, SCIL did not notice entry of the wrong owner details. This application then matured to registration in the name of HML.

In 2017 on request for renewal instructions, SCIL noticed the owner name was wrong. By this time, HML was no longer in existence, having been struck off the Companies Register in 2015.

The two hurdles facing the attorneys were:

  • How to enter SCIL as the owner; and
  • How to ensure the registration is valid from the date of application.

The Legislation

New Zealand Trade Marks Act 2002, section 32, states the applicant for registration must be:

(1) A person claiming to be the owner of a trade mark …”

Section 76 of the New Zealand Trade Marks Act further provides for “rectification of an error or omission in the register” with the restriction that “an application for rectification of the register may not be made in respect of a matter that affects the validity of the registration of trade mark”.

Meanwhile in Australia – Pham Global Pty Ltd v Insight Clinical Imaging Pty Ltd3

In 2017 in Australia an opposition case Pham Global Pty Ltd v Insight Clinical Imaging Pty Ltd (“Pham Global”) was decided. One of the grounds of opposition was that the applicant for registration was not the true owner of the trade mark.

Australian Trade Mark Act 1995 section 27 is broadly equivalent to the New Zealand section noted above. Section 27 of the Australian Act states the applicant for registration “claims to be the owner of a trade mark…”.

The applicant, an individual named Mr Pham, sought to defeat the opposition grounds that the applicant was not the true owner by assigning the application to the company Pham Global Pty Limited.

On consideration of the assignment and the opposition ground the Court held that “Mr Pham did not have any legal or equitable interest in the IR composite mark. Mr Pham made the applicant claiming to be the owner when he is not4. Therefore, “Mr Pham could not assign that which he did not own5.

For this reason, an assignment could not be recorded to update the owner and the opposition succeeded.

Same-Same but Different

Like Pham Global, in Hornby Mall the attorneys were faced with a situation where the applicant on record, HML, had no legal or equitable claim to ownership of the trade mark. The issue to consider is whether an assignment to SCIL would ever be able to be effected.

However, there are a key difference in the cases. In Pham Global:

  • The applicant Mr Pham made an explicit claim around ownership by lodging the application.
  • Mr Pham knew the company who should have owned the application.

In Hornby Mall:

  • HML was not involved in the application and was in fact entirely ignorant of rights entered on the register in its name.
  • SCIL was able to demonstrate clear use rights in the trade mark as well as ownership of copyright in the logo.
  • Evidence clearly showed that entry of HML as owner was as a result of an error in 2005.

The Commissioner’s decision rested on the fact that “there is no evidence before me that HML had any substantive ownership rights … HML has never had any rights or interest in the name The Hub Hornby or the relevant mark”6.

The Commissioner stated that Hornby Mall is not “a case where SCIL should have sought an assignment from HML. First and foremost, by the time… the error was discovered, HML had been removed from the companies register. Secondly… HML appears to have had no ownership rights in the relevant mark that it could assign”7.

Therefore, while an assignment was briefly considered, the Commissioner agreed in this case rectification of the register was preferable.

Should an Assignment be considered as an option to update ownership in cases like Hornby Mall?

In the writer’s view where the applicant on record is a legal entity but has no legal or equitable interest in the trade mark, the position of the Court in Pham Global is correct and an assignment to update owner cannot be effected.

Intellectual Property is not the same as Real Property

The Torrens principle of indefeasibility of registered owner’s title for real property is confirmed in Frazer v Walker8. The Privy Council in that case confirmed that a registered owner will obtain an indefeasible title to an interest or estate upon the act of registration. While the Land Transfer Act 2017 confirmed judicial discretion exists to cancel an owner’s registration of title in cases of “manifest injustice”, as far as land law is concerned, the position reflected on the register is king.

The effects of incorrect register details parties with interests in land are therefore immense and correction of errors on the register not something easily achieved.

However, intellectual property is not real property.

One of the main differences is the acknowledgement that intellectual property rights can exist in purely equity. To then allow that an assignment could be possible from a party who has no equitable claim to ownership of a trade mark seems to mis-apply the Torrens real property principle to intellectual property and allocate the register a status potentially in conflict with common law ownership.

Take Home Lessons

In the writer’s view, where an applicant has no claim to a trade mark, the only proper avenue to ensure those trade mark rights can vest with the true owner is to seek a rectification of the register. Where rectification of the register is not possible, the registration must be fatally flawed.

The Commissioner in Hornby Mall raised concerns regarding the extreme delay in notice of errors in the application and the errors then made in the declarations supporting the request for rectification. While ultimately the decision went in the applicant’s favour, there is no guarantee the facts will always be so overwhelmingly supportive for rectification of the register.
Careful and diligent attention to detail is key:

  • Check and double-check ownership details at application, acceptance and registration.
  • Fully consider corporate structure and ownership of intellectual property including trade marks before lodging applications.
  • Advise your attorney immediately of any changes to corporate structure.

Trade mark attorneys and trade mark owners both should be alive to the potential for extreme loss of rights where errors in owner details remain on the register. Review of details at routine intervals can help avoid the worst-case scenario.

An International Comparison of Government Funding for R&D and IP Costs

Governments around the world are increasingly encouraging R&D, and particularly innovation, by supporting local companies as well as attracting foreign companies to invest locally in R&D. Equally there is a push for the IP generated from the R&D to be properly legislated for and protected. This article examines and compares ways that governments have been providing encouragement, for example the types and levels of direct support and tax relief offered by a number of key economies.

Direct support

Direct support in the form of grants or subsidies for R&D is very common in the jurisdictions listed. Direct support for resulting IP is less common in Europe and the US but is more widely available in a number of Asia Pacific countries as set out below. 

Direct support for R&D is often in the form of either research funding, (which may be done via collaboration with academia) or project type grants for a specified export product or market strategy. It will often partially cover such things as employing R&D technical staff, prototyping costs, market surveys and sometimes associated professional advice. For example In Singapore the direct funding support has been increased to 90% of IP costs for Covid-19 affected businesses.

As foreshadowed above, direct support for IP filings is less common than the direct support for R&D.  Sometimes funding may be available for capability development e.g. IP strategy work or FTO searching, but not IP filing per se. However, when it is available, it will usually be focused on the initial stage of filing a provisional followed by a PCT application. Usually by the end of the 30 Month PCT deadline, commercial arrangements should be in place and the project should be self-funding. China has long provided a comprehensive central policy for IP filing subsidies, which is then implemented by the provincial governments.

Tax relief

Tax relief is another tool used by governments to incentivise local innovation or investment. This support may be in the form of tax breaks (that may be refunded in cash for R&D or IP spending) or IP box regimes. 

Enhanced tax breaks on R&D and cash pay-outs for tax losses are often of most interest for start-ups who have a high burn rate and need to hoard every dollar they can. Increasingly for multinationals who are forum shopping for the most favourable regime to locate a R&D hub, the tax regime may be a deciding factor.

Tax relief on IP expenses, and more so on IP derived income, is also becoming a tool for encouraging innovation in some economies. 

Patent Boxes or IP Boxes are a developing tool used around the world and essentially prescribe a lower tax rate on income derived from patents (and in some cases from other forms of intellectual property).  The UK has a good example of a patent box, where the tax on patent derived income is prescribed at to 10% but it can go as low as 2.5% such as Cyprus.

Tax is obviously a more complex issue to describe and compare between different jurisdictions. The table below (and accompanying footnotes) is a snapshot of the different types of support available in several patent jurisdictions at the time of writing, but is subject to significant change in the current environment. 

Country IP direct support R&D direct support Tax Break IP box
NZ Yes1 Yes2 Yes3 No
Australia Yes4 Yes5 Yes6 No
Singapore Yes7 Yes8 Yes9 Yes10
China Yes11 Yes12 Yes13 No14
US No15 Yes16 Yes17 No
EU Yes18 Yes19 Yes20 Yes21

Conclusion

A wide range of subsidies and tax relief provisions are currently available, and in the predicted recession, countries are likely to offer even more generous schemes (for those that haven’t already). This is an important factor for corporate counsel or leadership teams considering where to base their R&D efforts. As always, expert advice will be necessary to assess this for individual circumstances.


1 Callaghan Innovation IP development programme up to $22,000 (40% subsidised). Co-investment of up to $900,000 available for international growth. https://www.callaghaninnovation.govt.nz/innovation-skills/innovation-ip and https://www.nzte.govt.nz/our-services/international-growth-fund.

2 Grants of 40% of eligible R&D costs. See https://www.callaghaninnovation.govt.nz/grants.

3 15% R&D tax credit, 28% cash-out of R&D losses. https://www.classic.ird.govt.nz/research-development/rdti/rdti-about/ and https://www.classic.ird.govt.nz/research-development/rdltc/overview/what-is-rdltc/what-is-rdltc.html.

4 15% R&D tax credit, 28% cash-out of R&D losses. https://www.classic.ird.govt.nz/research-development/rdti/rdti-about/ and https://www.classic.ird.govt.nz/research-development/rdltc/overview/what-is-rdltc/what-is-rdltc.html.

5 Up to $100,000 for research costs. https://www.business.gov.au/grants-and-programs/csiro-kickstart and https://www.business.gov.au/grants-and-programs/innovation-connections.

6 Up to 43.5% R&D tax offset. https://www.ato.gov.au/Business/Research-and-development-tax-incentive/.

7 Grant of up to 80% of product development costs. https://www.enterprisesg.gov.sg/financial-assistance/grants/for-local-companies/enterprise-development-grant/innovation-and-productivity/product-development.

8 Grant of up to 80% of product development costs and 70% of costs up to $100,000 SGD for entering new markets. https://www.enterprisesg.gov.sg/financial-assistance/grants/for-local-companies/enterprise-development-grant/innovation-and-productivity/product-development and https://www.enterprisesg.gov.sg/financial-assistance/grants/for-local-companies/market-readiness-assistance-grant.

9 Grant of up to 80% of product development costs and 70% of costs up to $100,000 SGD for entering new markets. https://www.enterprisesg.gov.sg/financial-assistance/grants/for-local-companies/enterprise-development-grant/innovation-and-productivity/product-development and https://www.enterprisesg.gov.sg/financial-assistance/grants/for-local-companies/market-readiness-assistance-grant.

10 IP income taxed at 5% or 10%. https://www.edb.gov.sg/en/how-we-help/incentives-and-schemes.html.

11 Up to $7100 USD per application. https://www.mondaq.com/china/patent/779124/patent-subsidy-in-china-a-reformation-from-quantity-to-quality.

12 Up to $7100 USD per application. https://www.mondaq.com/china/patent/779124/patent-subsidy-in-china-a-reformation-from-quantity-to-quality.

13 Tax credit up to 75% of R&D costs. Corporate tax rate reduction to 15% under High and New Technology Enterprise (HNTE) programme. https://www.oecd.org/sti/rd-tax-stats-china.pdf and https://www.pwccn.com/en/services/tax/china-rd-incentive-service/high-and-new-technology-enterprise.html.

14 Although see the HNTE programme above..

15 Although companies can benefit from IP developed using federal R&D funding. https://www.innovation.pitt.edu/resources/intellectual-property-overview/federal-funding-and-ip/.

16 Although companies can benefit from IP developed using federal R&D funding. https://www.innovation.pitt.edu/resources/intellectual-property-overview/federal-funding-and-ip/.

17 Tax credit up to 20% of R&D costs. https://squarmilner.com/rd-tax-credit/.

18 Tax credit up to 20% of R&D costs. https://squarmilner.com/rd-tax-credit/.

19 Funding awards of several million Euros at the EU level, grants or awards available in UK, France, Germany and others. https://ec.europa.eu/programmes/horizon2020/en/, https://www.gov.uk/guidance/innovation-apply-for-a-funding-award, https://www.callsforproposals.com/en/french-national-research-agency-anr.html, https://www.research-in-germany.org/en/research-funding/research-funding-system.html.

20 Funding awards of several million Euros at the EU level, grants or awards available in UK, France, Germany and others. https://ec.europa.eu/programmes/horizon2020/en/, https://www.gov.uk/guidance/innovation-apply-for-a-funding-award, https://www.callsforproposals.com/en/french-national-research-agency-anr.html, https://www.research-in-germany.org/en/research-funding/research-funding-system.html.

21 Patent box systems in UK, France, Italy and others. https://taxfoundation.org/patent-box-regimes-europe-2019/.

Fee Changes for NZ Patents and Trade Marks

IPONZ has announced new official fees for patents and trade marks in New Zealand. These will come into force on 13 February 2020.

Trade Marks

For trade marks, many fees are dropping.

The Good News

The fee reduction encourages applicants to use the IPONZ preliminary search and advice option and pre-approved specifications for goods and services.

This encourages small businesses to develop registrable trade marks in conjunction with IPONZ guidance, and there should be fewer applications on the register which are flawed at filing and have little prospect of success. The reduction in IPONZ’s workloads should in turn speed examination, meaning more registrations issue without objections.

The Not so Good News

There is a potential down-side to embracing these services.

IPONZ’s preliminary search and advice is not a comprehensive search. It does not guarantee that an approved application will not conflict with third party rights.

IPONZ does not consider rights in trade marks outside their limited search or any unregistered trade mark common law rights. This may give small businesses a false sense of security that trade marks are free to use without proper considering all potential risk areas.

The pre-approved list may also not provide protection necessary for a strong trade mark right or may result in applicants simply selecting all goods in a class without tailoring an application to fit their business plans.

The Potentially Bad News

We anticipate that the relatively cheap application process will result in an influx of applications that overclaim the area of interest or are simply speculative filings. Applicants will lodge to reserve a position on the register with no true interest in use.

Trade mark registers internationally are already seeing a dramatic increase in applications from fast-growing economies like China, and this is likely to increase even further when filing is cheap and easily done.

As the register becomes cluttered, trade mark owners will have to negotiate a larger number of trade marks when developing new brands. This can mean an increase in branding costs as oppositions, non-use and invalidity actions may be needed to clear the register of trade marks that aren’t used or that are filed without proper consideration of common law rights and existing reputations.

Overseas brand owners should also be wary of an influx of opportunistic applications endeavouring to trade off overseas reputation and take advantage of a cheap and easy filing process.

What Should You Do Now?

Filing now may save you costs in the long run.

For overseas companies, assess if New Zealand is a potential future market. Are you in Australia already and thinking about neighbouring markets?

If you are expanding or re-branding your business, think about whether you should file for your new trade mark now while others hold off waiting for cheap fees to come into effect. You may well avoid increased risk of citations by getting in early.

As always, the first step in deciding what do to is taking advice from the right person. Talk to our trade marks team today.

Patents

For patents, many fees are increasing.

2013 Act cases

Any application filed after 13 September 2014 is made under the 2013 Act. Almost all pending applications are 2013 Act cases.

For 2013 Act cases, there are two key changes.

The request for examination fee increases from $500 to $750. To avoid this increase, applicants should request examination before 13 February 2020.

IPONZ is also introducing an excess claims fee. This applies to each 5th claim from claim 30 onwards. It is due after acceptance, but is calculated based on the maximum number of claims at any point between requesting examination and acceptance. The excess claim fee can be avoided by having 29 or fewer claims during examination. Since other countries already charge excess claim fees (notably Australia and the United States), most applicants shouldn’t have too much difficulty avoiding this fee.

1953 Act cases

Divisionals of applications filed before 13 September 2014 are made under the 1953 Act.

The key change for 1953 Act cases is the doubling the filing fee to $500. IPONZ hopes this will dissuade further divisional from being filed.

Patent renewals

Patent renewal fees are increasing hugely. All the fees are at least doubled, and the 15th to 19th year fee is almost tripling to $1000 per year.

Unfortunately, there is no way to avoid this increase: renewal fees cannot be paid more than six months in advance.

The Effect

On their face, these fee changes do not seem good for New Zealand businesses. Who wants to pay more?

But, there may be a silver lining to this. Foreign competitors may avoid filing in New Zealand or may allow their patents to lapse earlier to avoid the increased costs. This is particularly likely with foreign entities who apply for patents in New Zealand purely to disrupt New Zealand-based competitors.

The fee changes could therefore actually benefit businesses in New Zealand in the long run.

What Should You Do Now?

Requesting examination now will help to minimise costs.

But the decision on when to request examination goes beyond simply saving a few dollars now. Talk to our patents team to decide how to best manage your patent portfolio.

Trade Marks Over the Breakfast Bowl

A recent application by Kellogg Company (“Kellogg”) to register its NUTRIGRAIN BOLT shape for cereal in New Zealand has been successfully opposed by Société des Produits Nestlé S.A. (“Nestle”) (“the Kellogg case”)1.

The Assistant Commissioner held that the evidence did not demonstrate on the balance of probabilities that this shape operated as a distinctive badge of origin for Kellogg.

Shape trade marks are one of a group of branding elements often referred to as “non-traditional trade marks”. This group also includes colours, smells and sounds. Nestle’s successful opposition and the comments made by the Assistant Commissioner in this decision highlight some of the difficulties faced when attempting to register shape trade marks.

What is Needed for a Shape to be Deemed Registrable as a Trade Mark?

The rule of thumb for all trade marks, including shapes, is that the trade mark must be capable of acting as a badge of origin for goods or services.

This means in practice that shape on its own must be sufficiently distinctive that consumers would connect the product to its source.

Registrability standards change overtime, however under current criteria a high level of recognition from consumers and independent traders can be required to support registration of a shape as a trade mark.

Some Shapes can be Quite Easy

Some product shapes can easily be seen to operate as trade marks. For example, specially shaped bottles and containers can be recognised as coming from certain suppliers long after all other identifying labels are removed.

As confirmed in the Kellogg case:2

While it is not necessary for the mark to be unusual or extraordinary, the more unusual the connotation or juxtaposition that the mark has in relation to the goods in question, the more likely it is that the mark has inherent distinctiveness.

But Functional Shapes and Common Shapes are Usually Hard

If a shape performs a function, for example coffee capsules that are designed to work with a particular coffee machine, then the applicant must be able to show that the same function can be performed by other shapes. The more common a shape is, the harder it will be to show that the shape connects to one trader to the exclusion of all others.

Similarly, if the Examiner can find that other traders are using the same or similar shape for goods or services, then immediately doubt is raised that this element can operate as a trade mark for a single trader.

The Assistant Commissioner in the Kellogg case confirms:3

the simple shape of the opposed mark, coupled with evidence of some actual use of a very similar shape by other traders, points towards other traders being likely to want to use a similar shape to the opposed mark for their own breakfast cereals.

Showing the Shape Operates as a Trade Mark can be Hard

The evidence necessary to secure acceptance must show that the shape operates to identify the trader. This identification must then relate to the goods covered by the application.

Bottles or other shaped packaging are usually easily able to have that connection because the consumer experiences the shape as part of the purchasing decision. But is much trickier to make this connection where product reaches the market in a cardboard box which also shows other brand elements like logos:

Following a wealth of precedent, the Assistant Commissioner in the Kellogg confirmed that it must be clear the shape alone acts as a badge of origin: “[the] manner in which the goods are presented for sale is relevant when assessing whether the shape mark is likely to be perceived as a badge of origin”4. The Assistant Commissioner acknowledges “[it] can be more challenging to establish that the public perceives a shape as a badge of origin when use of that shape has been accompanied by another distinctive and well-recognised mark”5.

Advertising which emphasises the shape can be vital, but evidence that shows the shape alongside other distinctive trade marks may not be enough to support registration.

But With The Right Evidence You Could Do It

J H Whittaker & Sons Limited successfully defended its accepted application to register the SANTE bar shape from attack by Empire Confectionery Limited (“the Whittaker case”)6.

The shape is undeniably simple, yet the Assistant Commissioner found it operated as a trade mark.

Some of the key points resulting in success in the Whittaker case were the evidence of exclusive use from the 1950s, factual evidence to show the shape was developed specially for Whittaker’s, and heightened recognition of the shape by consumers because of packaging which hugs the bar allowing the shape to operate as an immediate badge of origin.

Whittaker was able to point to its long use and established reputation to successfully argue that no other traders would have good reason to use the same or similar shape without necessarily taking advantage of Whittaker’s reputation.

Ultimately, evidence of market share and long-standing use overwhelmed any inherent lack of distinctiveness because of the simplicity of the shape.

What Should I do about my Shape Trade Marks?

If you are developing a specially shaped product that is not yet in the market place, think about design registration as an alternative to trade mark protection. Design registration will cover your shape for up to 15 years.

For other shapes which are already in use, we recommend a review of ways these shapes operate to distinguish your goods and services.

Some elements may be registrable as trade marks now. For others, a careful marketing strategy could set you up to support an application for registration of your shapes as trade marks and provide you with valuable exclusive rights to those shapes for your goods and/or services.

Careful review with an IP professional is the first step towards protecting valuable shapes for your goods. Talk to us today to see how we can help.


1 Kellogg Company v Société des Produits Nestlé S.A. [2019] NZIPOTM 17.

2 Ibid at p 24.

3 Ibid at p 29.

4 Ibid at p 35.

5 Ibid at p 36.

6 J H Whittaker & Sons Limited v Empire Confectionery Limited [2015] NZIPOTM 4.

New Zealand’s New Grace Period

On 30 December 2018, New Zealand will implement a grace period for disclosures by an inventor or applicant made in the year before a patent application is filed.

This follows from New Zealand ratifying the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) on 25 October 2018, and the CPTPP being scheduled to enter into force on the same day.

This article discusses how the new New Zealand grace period will work.

Current situation

Currently, any public disclosure of an invention could prevent an applicant obtaining a New Zealand patent for that invention. There are only very limited situations in which disclosure can be disregarded (such as being in breach of confidence). This change will align New Zealand with countries like Australia, the United States, and Japan.

Many jurisdictions (notably Europe and China) still have limited, or no, grace periods for disclosures. A disclosure before filing a patent application can therefore still be damaging, and should be avoided if possible.

The new law

From 30 December 2018, the Patents Act 2016 will have a new grace period provision in section 9(1)(f). This will provide:

(1) For the purposes of section 8, the disclosure of matter constituting an invention must be disregarded if 1 or more of the following applies:

(f) that disclosure occurred during the 1-year period immediately preceding the patent date and the disclosure was made by any of the following persons:
(i) the patentee or nominated person:
(ii) any person from whom the patentee or nominated person derives title:
(iii) any person with the consent of the patentee or nominated person:
(iv) any person with the consent of any person from whom the patentee or nominated person derives title.

Which patent applications can use the grace period?

A patent application must have a patent date within 1 year of the disclosure. The disclosure must have occurred on or after 30 December 2018 (future Schedule 1AA(4) of the Patents Act 2016).

The patent date is the date a complete specification was filed (s 103(1)(a)) or that the PCT application was filed (s 46). The filing date of a provisional specification, or any other priority date, is not the patent date.

The provision is not retrospective. Any disclosures that occur before 30 December 2018 are not covered by the grace period.

If you wish to take advantage of the grace period, a complete specification must therefore be filed within one year of the disclosure. It may be worth filing a PCT application in the first instance to use the grace period in multiple countries at once.

Who can disclose?

The new provision expressly covers disclosures made by the patentee (or nominated person who will receive the granted patent, if different) (s 9(1)(f)(i)), the inventors (or anyone else the patentee derives title from) (s 9(1)(f)(ii)), and anyone else with consent of these parties (s 9(1)(f)(iii)–(iv)). This seemingly covers anyone directly involved in a patent application.

This complements the existing provisions which provide a 1-year grace period for disclosures made unlawfully or in breach of confidence (s 9(1)(a)–(b)).

What about third parties?

If a third party receives the inventor’s public disclosure, then on-discloses the information they received, would this third party on-disclosure be covered by the grace period?

Maybe not. A strict reading of the provision would suggest third party on-disclosures are only covered if the third party has the consent of the patentee or inventor. How this works in practice is unclear. Can an unknown party in unknown circumstances receive consent? Does the act of making the information available to the public give implied consent to the public generally for on-disclosure? Would a copyright notice that the information is not to be copied be equivalent to an express lack of consent?

For example, a common scenario would be when an inventor discloses their invention publicly at a conference, and a third party (unknown to the inventor) then publishes a summary of the invention. It is unclear if the third party summary is covered by the grace period or whether it would be prior art.

This exposes a potential hole. Some disclosures may not have consent (and therefore cannot use the new s 9(1)(f) grace period) but are not in confidence or obtained unlawfully (and therefore cannot use the existing s 9(1)(a)–(b) grace period). These disclosures will therefore still be prior art.

Whether third party on-disclosures are covered by the grace period may need to be settled by the courts. Interestingly, the underlying text of the treaty contains no reference to consent being required for the grace period to apply. Instead, the treaty requires that disclosures by “a person who obtained the information directly or indirectly from the patent applicant” must be disregarded (Trans-Pacific Partnership Agreement art 18.38). Depending on the interpretation by the courts, it may therefore be that New Zealand law is not fully in compliance with this part of the treaty.

In the meantime, to mitigate the potential risk of third party on-disclosure, patent applications should be filed as soon as possible after a public disclosure.

How does this compare with Australia?

Australia has had a 1-year grace period since 2002.

The Australian grace period provision is worded differently. The Australian grace period covers information made publicly available by or with the consent of an inventor or applicant (Patents Act 1990 (AU) s 24(1)(b)). The Australian provision therefore focuses on the information disclosed, rather than who made the disclosure. This side-steps the issue of whether a third party needs consent for the grace period to apply to on-disclosure, as long as the initial disclosure was made with consent.

It appears the New Zealand provision was based on the Australian provision. But the change in wording to focus on the person disclosing rather than the information disclosed may be meaningful. It may suggest an intention from Parliament that unconsented third party on-disclosures are not covered by the grace period, and therefore should still be usable as prior art. It remains to be seen how this is applied by the courts in practice.