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New Zealand and Australia: Bypassing the PPH

Just as the world’s top five patent offices embark on an “IP5” patent prosecution highway (PPH) pilot programme from 6 January 2014, New Zealand and Australia decide to bypass the PPH concept entirely and move to a single application and examination process for patents.  A good move, or not?

Rugby is a sport with which many New Zealanders and Australians are not merely familiar, but are self-appointed experts.  On the side lines of a rugby match it is not uncommon to hear the cry “Don’t kick it, pass it!” when the certainty of retaining possession of the ball is thought to be more advantageous than a significant territorial gain and the probable loss of possession.  At other times in the match, “Don’t pass it, kick it!” might be heard.

The New Zealand and Australian governments have decided to “kick it” rather than “pass it” by implementing a single application and examination process for patents.  In attempting to achieve a significant territorial gain in the push for a single economic market between the two countries, they have chosen a path of greater uncertainty.  Introducing a PPH between the countries might have been the more controlled and safer “pass it” approach.

PPH explained

A PPH is a mechanism agreed between the patent offices of two or more countries which enables the fast-tracking of the patent examination procedure in one country based on examination of the corresponding patent application in another country.  Each patent office benefits from a reduction in its examination workload and from an improvement in examination quality.  More than 20 national patent offices (including IP Australia) are currently participating in PPHs, many of which are with the United States Patent and Trademark Office.  The IP5 PPH pilot programme refers to a PPH work sharing initiative between the patent offices of the United States, Europe, Japan, Korea and China.

SAP and SEP explained

What is this single application process (SAP) and this single examination process (SEP)?  And, when many of the major countries are expanding the reach and scope of PPH programmes, why do New Zealand and Australia consider that a SAP and a SEP for New Zealand and Australian patent applications will be better?

A recent report from the Office of the Minister of Commerce in New Zealand[1]outlined the following objectives of the Intellectual Property Office of New Zealand (IPONZ) and IP Australia in developing the SAP and SEP models:

  • Reduction of time and resources spent by New Zealand businesses applying for and obtaining patents in both New Zealand and Australia.

  • Minimising the administrative costs of running the patent regime.

  • Ensuring patents granted in Australia and New Zealand are of a similar, high quality standard.

  •  Ensuring examination approaches are consistent between Australia and New Zealand.

Pros and cons

These are commendable goals, but who really stands to benefit and who stands to lose on implementation of a SAP and a SEP, and does the level of uncertainty introduced justify this model rather than a PPH approach for example?

Under the proposed SAP, applicants wishing to file a patent application in both New Zealand and Australia will no longer be required to file a separate application in each country.  IPONZ and IP Australia will provide SAP “portals” on their websites, and either can be used to file in both countries upon payment of a combined fee.  Although significant responsibility attaches to the filing of a patent application, the process is largely an administrative process and it is not difficult to see that the SAP should simplify the administrative task.

It is the SEP that raises the more interesting questions.  Under the SEP, a single patent examiner will examine the New Zealand and Australian applications simultaneously.  The examiner may be an IPONZ examiner, or may be an IP Australia examiner.  Acceptance of patent applications, grant of patents, and any oppositions will be handled by the patent office in the country of that application or patent.  In other words, all processes beyond the examination stage will be handled by the local patent office.

In principle, the SEP concept seems admirable.  It ought to be efficient and therefore bring cost savings to applicants.  But what about examination quality?

Examination quality

Patent practitioners the world over are well-aware that the quality of examination at any patent office can be highly dependent on the particular examiner who examines a patent application.  Examination guidelines help with consistency of examination quality and standards, but there can be great variability between one examiner and the next in all patent offices.  Different people often have varying degrees of understanding of an invention, of the prior art, and of the details of local law and practice.  Patent practitioners know that how smoothly a patent application proceeds through the examination process depends very much on the examiner assigned to the application.

Under the SEP, that uncertainty is magnified.  If an applicant strikes a poorly trained or supervised examiner, or an underperforming examiner, the quality of examination may well be below an acceptable standard.  The outcome may be grant of an overly broad patent, or conversely grant of an unreasonably narrow patent, or even no grant of a patent at all.  Now, under the SEP, both eggs will be in one basket – if the New Zealand application is poorly examined, so too will the Australian application be poorly examined.  Since the particular examiner assigned to a patent application is a lottery, the stakes will now be higher.

Which office?

The current understanding is that a patent application filed under the SAP and SEP procedures will be forwarded to a single examiner at either IPONZ or IP Australia.  But who chooses?  Can the applicant elect whether the application is to be examined at IPONZ or IP Australia, or is this to be controlled by one or other patent office?  In theory, it shouldn’t matter.  However, because New Zealand patent examiners currently do not examine applications for inventiveness, examination quality may not be consistent between the two patent offices, at least until extensive training has been implemented and quality can be assured.

Patent law reform

New Zealand is also in the process of major patent law reform.  The new Patents Act 2013 was passed into law in September 2013 and will come into force in September 2014.  The associated regulations have been drafted and submissions from interested parties have been sought.  Many of the changes to be introduced will bring New Zealand patent law and practice in line with that of Australia, but there will remain a number of significant differences that will impact on examination of patent applications.  Under Australian law, inventiveness is assessed differently than in New Zealand.  Not everything patentable in Australia can be patented in New Zealand.  For example, Australia has a considerably more liberal approach to allowing software patents and patents for therapeutic and surgical methods of treating humans and animals.  The imminent changes in New Zealand, and ongoing significant differences, will add complexity to the effective operation of a SEP system.

Official fees

Will official fees increase for applicants as a consequence of implementation of the SAP and the SEP?  The above-mentioned report from the Office of the Minister of Commerce in New Zealand notes that there will be one-off costs for IT development and on-going costs for operating the processes.  Importantly, and perhaps surprisingly, the report states that the costs have yet to be quantified.  What is clear from the report, however, is that the costs incurred by IPONZ in implementing the SAP and SEP systems will be recovered through fees.  In other words, applicants will undoubtedly pay more.

The PPH option

According to a fact sheet[2] issued jointly by IPONZ and IP Australia, the benefits of “integration” of patent examination between New Zealand and Australia are:

  • Potential savings in professional fees and patent protection costs.

  • A faster examination process – which may help an innovator get their invention to market more quickly.

  • Consistent and high quality patent examination – which will result in more robust IP rights and give innovators and exporters greater confidence when seeking IP protection overseas.

But, there appears to be no analysis of whether the option of a PPH between Australia and New Zealand would also achieve these benefits.

The proposed SAP, being largely an administrative function, has merit.  But, the proposed SEP comes with great uncertainty for applicants.  If applicants are happy to “roll the dice” with IP rights, the planned SEP will present no issues.  However, those wishing to tread with caution and be more assured of patent quality should elect to have their New Zealand patent applications examined at IPONZ and their Australian patent applications examined at IP Australia.

The New Zealand and Australian governments should pass it, not kick it.

[A version of this article was first published on the Managing Intellectual Property blog.]

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