New Zealand patents can now be challenged by any party in a re-examination procedure, but it is worth thinking carefully before using this procedure as the outcome could have some unwelcome consequences.
New Act, new opportunity
On 13 September 2014, the Patents Act 2013 came into force in New Zealand, replacing the Patents Act 1953. The overall effect of the new Act is to broadly harmonise New Zealand’s patent laws with those of its major trading partners.
Since this date a new mechanism has been available to challenge granted New Zealand patents. Whereas previously challenges were limited to pre-grant opposition and post-grant revocation proceedings, interested parties can now apply to the Intellectual Property Office of New Zealand (IPONZ) to have a granted NZ patent re-examined.
The new re-examination procedure applies to any granted NZ patent, including those granted under the old Patents Act 1953. It provides an extra option to the pre-grant opposition and post-grant revocation procedures that were available under the old Act and remain available under the new Act.
How re-examination works
The party wanting to challenge an NZ patent must submit a statement of the grounds on which it seeks to do so to IPONZ.
Those grounds differ slightly depending on which Act the patent was granted under, but will most commonly include that the invention the subject of the patent is not new or is obvious in view of technology that was in the public domain when the patent application was filed.
Once the challenging party has laid out the grounds on which it seeks re-examination, that party is unable to take any further part in the procedure. This makes it important for the challenger to fully set out a compelling case in the initial request.
IPONZ will consider the re-examination request and decide whether the grounds warrant re-examining the patent. If so, the patentee will be sent a copy of the challenger’s statement and will be given a limited period of time in which to satisfy IPONZ that the patent should be maintained, by challenging the grounds of re-examination, amending the patent, or both.
If the patentee cannot satisfy IPONZ that the grounds can be overcome, the patent may be fully or partially revoked.
On the face of it the re-examination process might be attractive to some parties as it presents an opportunity to challenge an NZ patent at a lower cost than revocation before the Commissioner or the Courts. However, there are some drawbacks that should be considered.
One-sided contest
Once the challenge has been launched, the challenger cannot contribute any further to the re-examination process. The patentee is left to argue with IPONZ or amend its patent to overcome the grounds of objection.
Importantly, the challenger has no opportunity to support its challenge by countering the submissions of the patentee in support of the patent.
This makes the re-examination procedure most suited to cases where there are clear reasons why a patent is invalid. Where validity is more contentious it may be advisable to use other options (eg, the revocation procedure).
No second chances
As well as having no ability to make any follow-up arguments to support the challenge, the challenger is not permitted to appeal IPONZ’s decision in the event it finds in favour of the patentee. The patentee, on the other hand, does have the right of appeal if the Commissioner finds against it.
Since the grounds for revoking a patent before the courts can be used to defend a claim of patent infringement, and those grounds are the same as the grounds on which re-examination can be requested, it may not be possible for the challenger to file separate proceedings in the Court to revoke the patent on the same grounds.
This is known as “issue estoppel”. Under issue estoppel the courts may refuse to hear a revocation case on grounds that have already been considered by IPONZ where the legislation says there is no right of appeal.
This means that an unsuccessful re-examination may have the undesirable effect of permanently barring the challenger from ever challenging the patent again on the same grounds, even in different proceedings / before a different court.
Consequently, serious consideration should be given before seeking to have a competitor’s patent re-examined, particularly when other options with a right of appeal are available (eg, revocation).
In summary, the combination of a patentee being able to address the grounds of re-examination without reply and the patentee having the sole right of appeal mean that, in a New Zealand patent re-examination procedure, the odds are firmly stacked in the patentee’s favour.
There are some strategies available for minimising the risk of issue estoppel arising from a re-examination procedure. We recommend you speak to a Registered Patent Attorney to talk you through your options, and the likely consequences, before embarking on any form of challenge to a granted patent.
Jonathan Lucas is a senior associate and Ian Finch a partner of James & Wells. Jonathan specialises in helping clients of all sizes to protect their innovative ideas using patents and registered designs. Ian specialises in the litigation and enforcement of intellectual property rights. For more information and advice phone (09) 914 6740 or 0800 INNOV8, or email ianf@jaws.co.nz or jonathanl@jaws.co.nz .