MOVING GOALPOSTS ON NEW ZEALAND PATENT “BEST PRACTICE”

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The notion of what constitutes “best practice” when it comes to prosecuting a patent application before the Intellectual Property Office of New Zealand (IPONZ) is equal parts subjective, dynamic – and now seemingly binary.  Indeed, our previous iteration of New Zealand best practice is only 9 months old.  However, IPONZ’s recent publication that examination timeframes (the wait time for a first report following a request for examination)  for the chem/bio arts have blown out to 32-35 months (as opposed to 14-18 months for the mech/elec arts) invites a slight tweak to what we had previously proposed as best practice before IPONZ.  The core message remains the same – request examination as soon as possible upon entering the New Zealand national phase.  However, for chem/bio inventions, “as soon as possible” really now means “at the time of filing”.  Here’s why.

Brief history

Best practice in New Zealand has varied greatly over the past 4-5 years with legislation, precedent law, IPONZ throughputs, examination protocols and international/bilateral obligations all remaining somewhat fluid.  This creates a real challenge for patent prosecutors to strike an appropriate balance between cost, scope and expediency, and this has remained a somewhat imperfect science. 

As readers may know, New Zealand patent law has changed relatively recently; on 14 September 2014, the Patents Act 1953 (the “old Act”) was replaced by the Patents Act 2013 (the “new Act”).  On the one hand, this creates a binary old Act/new Act distinction – and best practice differs appreciably depending upon which legislation applies.  However, with only a handful of old Act cases remaining and best practice largely self-governing, this article concentrates on new Act cases.   

The problem

Applications filed in the Intellectual Property Office of New Zealand (IPONZ) on or after 14 September 2014 are subject to law and practice governed by the new Act (divisional applications filed from old Act cases notwithstanding).  Under the new Act, divisional applications still have to be filed pre-acceptance, and in addition, a new 5-year statutory bar on requesting examination was introduced. 

Around 2016, for a variety of reasons, examination throughputs struggled to keep pace with demand and application pendency began to increase as a result.  Now, the unavoidable significance of the statutory bar was that the five years commenced at the filing date of the application (or antedated filing date, generally the PCT filing date, of the eldest parent application).  As IPONZ throughputs slowed, best practice moved from being largely self-governing (as it was in the early days of the new Act) to attorney-driven.

Fast forward to today.  The backlog at IPONZ is now so deep that directions to request examination are no longer issuing at all.  It now falls squarely on the shoulders of an attorney to keep an applicant apprised of the 5-year deadline and what is required of them within this period.  Exemplifying passive attorney work (let’s call it “worst” practice): An applicant, in the absence of a direction, instructs its attorney to request examination shortly before the 5-year deadline; and an examination report issues “X”-months later (14-35 months, based on present turnarounds) raising a unity of invention objection that could otherwise be addressed by filing a divisional application.  The applicant, unfortunately, has nowhere to go, as the 5-year bar has expired.  Alternatively, if an obviousness (or any other) objection cannot be overcome within the 12-month acceptance period, the facility to maintain pendency via a divisional application has again expired.  In such circumstances, an applicant really does rely on its attorney to actively look out for its best interests and come up with something a little more constructive than a passive prosecution strategy.

The problem, summarised   

In the absence of proactive case management by its attorney, time can be a New Zealand patent applicant’s worst enemy.  If the applicant finds itself backed into a corner from which the only escape is a divisional application, they had better hope that the 5-year statutory bar has not yet expired.  As readers will appreciate, slower, stricter examination in IPONZ only serves to heighten this possibility – and with it, the imperative that attorneys are proactive in managing the deadline.

Solution #1 – Mechanical/electrical/ICT arts

Even though examination timeframes for the mech/elec arts have increased recently at IPONZ, the alarm bells are not (yet) ringing and our previous prescription of best practice remains.  Applicants should request examination proactively (preferably, as soon as possible) upon entering the New Zealand national phase.

However, what is the perfect number?  When should attorneys be reaching out to clients encouraging them to request examination?  Of course, there is no right or wrong answer – only a very general “the sooner, the better”.  However, based on present IPONZ throughputs in the mech/elec arts, if an applicant requests examination, say, 3 months following national phase entry, then any downstream decision as to whether or not to file a divisional can be informed both by the substance of the examination report (e.g., unity issues) and by the relative ease of prosecution (i.e., if you run out of time to have the case accepted prior to the 12 month acceptance deadline, the divisional window remains open).  

In the appreciably-rare cases where more than two divisionals are required, the applicant of course has the option of filing several at once. 

Solution #2 – Chemical/life science arts

This is where things start to get interesting.  Based on the current 35-month turnaround for biotech inventions, if an applicant requests examination upon entering the New Zealand national phase, they will receive the first examination report only shortly before the divisional window (5-year bar) closes.  With reference to the timeline shown below, this means that the 5-year bar falls before the acceptance deadline and means that any decision to file/not to file a divisional application must be based on the substance of the examination report alone.  The “bail out” divisional option available to mech/elec applicants will generally be unavailable to chem/bio applicants, irrespective of how proactive they are in requesting examination.

What happens if examination timeframes blow out even further?

As difficult as the above scenario is, it is still infinitely preferable to that in which examination timeframes increase to 41 months or more.  Why 41?  Because this number represents the turnaround at which point the 5-year bar will have expired before such time as an examination report has even issued.  An applicant would need to inform any decision to file/not to file a divisional application by suspicion alone – what’s the eventual examination report likely to say?  Will it raise unity?  Will the rejections be surmountable within 12 months?  Of course, access to prosecution histories from international phase and counterpart national phase applications allows this to be somewhat of an “educated guess”, but the undesirability of this scenario is nonetheless palpable. It’s potentially a very significant problem given the inflexibility of the 5-year statutory bar.

Is there any way to expedite examination in New Zealand?

There is – in fact, there are two ways in which examination may be expedited under current New Zealand practice.  The first is via the GPPH, which may be invoked either at the time of requesting examination, or after the examination request has been filed on the condition that the examination process has not formally commenced.  Once the GPPH request has been allowed, IPONZ aims to produce a first report within 42 working days which, as per our previous article, opens up the 5-year window nicely.

The second method by which examination may be accelerated in New Zealand is by filing a request for expedited examination under Regulation 77.  However, sub-Regulation 77(2) goes on to require that any such request “must be accompanied by evidence in support of the request”.  In this respect, IPONZ sets a much higher bar than does IP Australia, where expedited examination is generally allowed of right, simply following the checking of a box in an online form.  IPONZ has never released a Practice Note on its interpretation of sub-Regulation 77(2).  However, anecdotally and from experience, if an applicant wishes to rely on, say, “commercial reasons” in support of its request, they had better be prepared to disclose such reasons.   Should requests for expedited examination increase in view of the increased turnarounds, it is unlikely that IPONZ’s attitude to sub-Regulation 77(2) will soften.

Whether IPONZ is now deluged with GPPH or expedited examination requests as a consequence of its slower turnarounds remains to be seen.  However, both platforms do provide some measure of relief from the limitations imposed by the current examination timeframes.     

Wouldn’t/shouldn’t an extension of time be available to file a divisional if an applicant is inconvenienced by the delays?

Possibly – but we wouldn’t go betting the house on it.  Section 230 is the relevant provision in the new Act and is intended to have relatively wide scope to account for delays by the Commissioner.  One the one hand, one could conceivably run an argument that missing the divisional deadline because a first report had not yet issued (and the applicant was therefore unaware that a divisional would be required) seems fair enough.  After all, extensions granted under section 230 are discretionary on the part of IPONZ.  However, absent a practice note (or IPONZ hearings decision) directed to this specific scenario, reliance upon section 230 remains a risky proposition.  Running strongly against an extension being granted under section 230 is a clear negative provision in the IPONZ Patent Examination Manual, which states that an extension will not be allowed “to address a new objection on a matter that the applicant should reasonably have been aware of previously, such as a new citation relating to novelty from an overseas IP office on a corresponding or equivalent application for substantially the same claimed subject matter”.  This appears consistent with the “educated guess” requirement mentioned above and moreover, is largely consistent with the overall intent of the 5-year bar in the first place, which was to place a time limit upon the filing of divisional applications so that the public was not inconvenienced by the commercial uncertainties associated with patent pendency.  Expectably, each case will stand or fall upon its own unique fact situation.  However, absent further guidance from IPONZ, reliance upon section 230 as a means of circumventing examination delays must be no more than a “maybe”.

Regulation 147 of the accompanying Patents Regulations 2014  is another discretionary provision offering relief from “exceptional circumstances”, which were defined somewhat generously in Merial Inc v Intervet International B.V. [2017] NZHC 2918 (27 November 2017) as “unusual, out of the common run”.  Helpfully, the IPONZ Patent Examination Manual lists Regulation 71 (the 5-year bar on requesting examination) as one of the circumstances to which Regulation 147 may apply.  The Manual goes on to provide some examples of when Regulation 147 may apply, however, there is a significant gap between the two examples given in respect of the 5-year bar: the first (refused) is that the applicant merely overlooked the deadline; the second (allowed) is that evidence establishes that missing the deadline was due to an error.  Whilst in theory, one would hope that Regulation 147 may apply in cases of late examination, there’s a clear counterpoint available to IPONZ in that late examination (set against a background where all cases are delayed) is hardly “unusual, out of the common run”.  As with section 230, it’s “possible” but by no means a given.

Is the 5-year statutory bar here to stay?

The New Zealand Government has foreshadowed that the 5-year statutory bar is not meeting its intended purpose and is mooted to be replaced with an alternative mechanism for restricting the filing of divisional applications.  However, the exposure draft of the forthcoming Intellectual Property Omnibus Bill is already well overdue.  Allowing for the usual timeframes in passing and commencing new legislation, it is likely that the 5-year statutory bar will be a feature of New Zealand patent law for at least the next 2-3 years. 

Any reasons why early examination might not be “best” practice?

Perhaps the most significant downside to early examination is that post-acceptance amendments in New Zealand are heavily restricted.  Aside from correcting obvious mistakes, an applicant can generally only amend down (i.e., narrow) an accepted claim – you cannot broaden, and you cannot move sideways should a killer piece of prior art emerge after an application has been accepted.

Although readers will appreciate that this is, of itself, a good reason to delay, rather than expedite examination, it should be tempered with the observation that the majority of New Zealand applications come by way of the US or Europe. This generally means that high-quality searching will have been completed well before the counterpart New Zealand case is due for acceptance – even if examination is brought forward, as suggested.

Why have examination timeframes (especially for chem/bio) blown out?

There are a number of factors that have conflated to create this perfect storm.  Examiner experience and retention, filing and requesting examination volumes (both fairly flat, but certainly not decreasing), and the relative labour-intensity of preparing an examination report under the new Act have all contributed, as have the challenges of recruiting in a relatively small labour market (and during a pandemic).  It’s certainly not an easy gig for IPONZ and none of this should come across as even the slightest criticism.  

With that said, we understand that IPONZ has recently recruited a number of new Examiners, and so hopefully the present timeframes are as slow as things are going to get.  In the meantime, it’s really just a matter of applicants and attorneys alike playing what’s in front of them.  Request examination ASAP, and you can’t go far wrong.

Conclusion – what is current New Zealand “best practice”?  

With so many moving pieces to consider, any suggestion that what follows is “best” practice is perhaps a little presumptuous.  Rather, we should only make the claim that we are suggesting “good” practice.  To this end, even though such practices will probably never synchronise – and there’s now a binary distinction between chem/bio and mech/elec art groups, a proactive attorney can effectively manage the 5-year statutory bar for requesting examination and with it, mitigate any attendant risk by:

  • Reviewing international phase/EPO/USPTO prosecution histories shortly upon national phase entry in order to foreshadow any clear need or desirability to file a divisional.
  • Incorporating any potential issues that may give an applicant cause to want/need to file a divisional into early advice following national phase entry.
  • Assuming it is in their best interests, counsel the applicant to request examination sooner rather than later, with the additional recommendation that for chem/bio applications, examination should be requested at the time of entering the New Zealand national phase.
  • Proactively manage IPONZ’s new response deadline (this action is largely self-regulating; IPONZ sets the deadline and attorneys/applicants need to comply).
  • Avoiding, to the extent possible, applications going down to the wire in terms of the 12-month acceptance deadline. 
  • Maintaining postponement of acceptance until such time as the applicant has made an informed decision regarding a divisional (remembering that acceptance of a New Zealand application triggers an unextendible bar on filing a divisional from it).
  • Being cognisant of the restrictions on post-acceptance amendments under New Zealand practice – what are the chances of close prior art surfacing after the case has been accepted?
  • Noting IPONZ’ softening approach regarding parent/divisional overlap.  Two recent decisions (Oracle and Ganymed) are notably patentee-friendly.
  • Whilst juggling each of these eight balls, keep the closest eye on the 5-year statutory bar – and remember it is not just for filing any divisional application/s, it’s for requesting examination. 

To conclude, if there is one thing to take away from this article, it is that these considerations are perfectly manageable – both individually and in sum.  However, it requires an attorney who is in sync with the requirements and their limitations working in combination with an applicant who is prepared to prioritise, at least during the initial stages, a filing in what is likely one of the smaller jurisdictions they have elected to file.  Whereas our personal preference is to request examination at the time of entering the New Zealand national phase (irrespective of technology), this must be offset against incurring costs that can always be deferred.  As always, it’s a case-by-case, client-by-client proposition – but it is eminently manageable.

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