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The TPP and Patents in New Zealand

The Trans-Pacific Partnership agreement was recently concluded after long and involved negotiations.  The agreement is between Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and the United States.  Although the terms of the agreement have been agreed, each participating country will still need to ratify the agreement.

The negotiations have been controversial, not least because they were conducted in secret.  The details of the agreement have still not been officially released to the public, although the intellectual property chapter from the agreement has now been made available via WikiLeaks.

The most important negotiating point for New Zealand, and the cause of considerable disappointment to many people, has been in relation to access to markets for dairy products.  Most commentators agree that the gains are significant, but no where near to the extent they would have liked.

As the negotiations progressed, various intellectual property issues came to the fore and generated some controversy.  The most significant of these has been the extension of the copyright term from 50 to 70 years from the death of the author of the copyright work.  That extension will no doubt increase costs for New Zealanders in some measure in the future.

Section E of the Intellectual Property chapter of the agreement relates to patents and the protection of data relating to agricultural and pharmaceutical products.  These aspects too have caused concern in some quarters.  For many, a longer patent term or an increased period of protection for data submitted for regulatory approval purposes means an increase in costs, particularly for some pharmaceuticals, to the detriment of the New Zealand public and the benefit typically of overseas pharmaceutical companies.

But how drastic are the proposed changes to New Zealand’s patent laws?  New Zealand has only recently reformed its patent legislation.  The new Patents Act 2013 came into force in September 2014.  The old Patents Act 1953 had become increasingly non-aligned with the patent laws of most other countries.  The changes brought about under the new act were long overdue and elevated New Zealand’s patent law to international standards in many respects.

The maximum term of a patent is 20 years from the filing date of the application for the patent.  Following the 1994 TRIPS (Trade-Related Aspects of Intellectual Property Rights) Agreement, World Trade Organization member states were required to ensure they provided a 20 year patent term.  Until that time, the term of a patent provided under New Zealand law was 16 Years.  However, there was provision in the law at that time for the term of a patent relating to a pharmaceutical product to be extended by a maximum of 10 years.  The rationale for this provision was that the length of time taken to obtain marketing approval for a pharmaceutical product dramatically cuts into the lifetime of the patent covering the product such that a considerably shortened period was available for the patent owner to benefit from market exclusivity.  At the same time that the term of a patent in New Zealand was amended from 16 to 20 years, the ability to request an extension of the term of a pharmaceutical patent was abolished.

The United States, Europe, Australia, Israel, Japan, Korea and Singapore all provide extensions of patent term (typically up to 5 years) for pharmaceutical patents.  Notably, several Asian countries do not (including China), nor does Canada which has a strong generic pharmaceutical industry.

Now, under the Trans-Pacific Partnership agreement, all twelve countries are obligated to provide the ability for the term of a pharmaceutical patent to be extended.  The relevant clause of the agreement states:

With respect to a pharmaceutical product that is subject to a patent, each Party shall make available an adjustment of the patent term to compensate the patent owner for unreasonable curtailment of the effective patent term as a result of the marketing approval process.”

There is no stipulation of the period of extension that must be provided.  However, a maximum extension of five years is most likely.

There is little debate that this change will mean an increase in the cost of some pharmaceuticals for New Zealanders.  The flip side argued by proponents of a stronger patent system for pharmaceuticals is that a wider range of pharmaceutical products will be available to New Zealanders.  At present, there are medicines on the market in Australia that are not available to New Zealanders.  Whether that is due, at least in part, to the availability of patent term extensions in Australia, but not in New Zealand, is not so clear.  Empirical evidence that would help clarify this is hard to come by.

There are at least two other, less significant, changes that will be required to New Zealand’s patent law.  One relates to the adjustment of the term of a patent if there has been an unreasonable delay in the patent examination process at the patent office.  The other relates to wider circumstances under which a grace period (12 months) will apply for public disclosure by an inventor of an invention prior to filing a patent application.

A review of all clauses of the Intellectual Property chapter of the agreement that relate to patents shows that not many amendments to the Patents Act 2013 are needed.  Our patent law is, all things considered, in pretty good shape.

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