OFFICE OF THE MINISTER OF COMMERCE The Chair Cabinet Economic Growth and Infrastructure Committee Trans-Tasman Regulatory Framework for Patent Attorneys Proposal 1. This paper reports back on submissions received in response to the discussion paper entitled Single Trans-Tasman Regulatory Framework for Patent Attorneys and recommends that the patent attorney profession in Australia and New Zealand be regulated under a trans-tasman regulatory framework. Executive Summary 2. Patent attorneys make up a small profession who provide specialist advice to businesses on obtaining and protecting intellectual property, especially on obtaining patents and registering trade marks. There are currently 194 registered patent attorneys domiciled in New Zealand and 675 domiciled in Australia. Australia and New Zealand each maintain independent, but similar, registration regimes for patent attorneys. 3. The majority of New Zealand patent attorneys are registered to practice in Australia and vice versa. For the majority of patent attorneys there is, therefore, a substantial duplication of regulatory and business compliance costs that must be met in each country in order to practise on a trans-tasman basis. The two independent registration regimes may also be preventing an open and vibrant trans-tasman market for patent attorney services, leading to higher costs for businesses requiring patent attorney services. 4. In August 2009, Prime Ministers Key and Rudd issued a joint statement of intent in which outcomes for the Single Economic Market (SEM) between Australia and New Zealand were agreed. One of the outcomes for intellectual property endorsed by the Prime Ministers was the development of a single trans-tasman regulatory framework for patent attorneys. 5. In March 2011 Cabinet agreed to the joint release in Australia and New Zealand for public consultations of a discussion paper entitled Single Trans-Tasman Regulatory Framework for Patent Attorneys. The discussion paper outlined a proposal for how patent attorneys could be regulated by a trans-tasman framework. 6. Submissions from Australian stakeholders supported the introduction of a trans-tasman framework. The majority of submissions from New Zealand patent attorney, however, opposed the introduction of such a framework. A key concern was that a trans-tasman framework would facilitate over time Australian patent attorneys capturing work currently undertaken by New Zealand patent attorneys in New Zealand on behalf of international clients. Submitters were concerned that this would lead to a loss of income for New Zealand patent attorneys and an eventual decline in the number of patent attorneys available to support innovative New Zealand businesses. 7. There may be a risk that increased competition could have a short term effect on the distribution of patent attorneys between Australia and New Zealand. There is, however, no empirical ideal number of patent attorneys necessary to support economic development and generally competitive forces should be left to determine this. The impact, if any, is therefore likely to be negligible.
2 8. I recommend that the two registration regimes be replaced by a single trans-tasman registration regime for patent attorneys. The trans-tasman registration regime would provide, inter alia: a. a Governance Body responsible for education, registration and disciplining of Australian and New Zealand patent attorneys; b. a single definition of patent attorney services that only trans-tasman registered patent attorneys may provide in Australia and New Zealand; c. a single code of conduct for all patent attorneys and disciplinary regime to ensure all patent attorneys provide the same minimum standards of service; d. one register for all trans-tasman registered patent attorneys and managed by the Governance Body; e. one set of registration and renewal fees; and f. Secretariat services for the Governance Body principally supplied by IP Australia. 9. The trans-tasman framework would contribute to the strengthening of trans-tasman economic integration as part of the outcomes framework for the SEM agenda. It is consistent with the SEM principles, would foster international competitiveness of both patent attorneys and businesses using their services, and would improve the environment for doing business on both sides of the Tasman. 10. In order to implement the trans-tasman framework, it will be necessary to develop an overarching bilateral instrument between Australia and New Zealand. This instrument will be developed in close consultation with Australia and would require appropriate legislative changes to the New Zealand Patents Act 1953 and the Australian Patents Act 1990. 11. I also recommend that the Patent Attorneys Bill 2008 should be allowed to lapse and not be reinstated on the Order paper. Background What is a patent attorney? 12. The role of a patent attorney is to ensure that an inventor's idea is not in breach of anyone else's intellectual property rights and at the same time, to gain suitable protection for their client's intellectual and creative rights in the process. 13. There is potential for significant irrevocable financial harm to occur to a business from either not seeking specialist advice from a patent attorney or receiving advice from an unskilled person. There can be high costs for breaching another s intellectual property right and for not adequately protecting the investment made in developing new and innovative products and services. 14. To mitigate the financial risk to businesses of receiving advice from unskilled persons both Australia 1 and New Zealand 2 maintain independent, but similar, registration regimes for patent attorneys under which only a registered patent attorney may provide the following services for financial gain ( patent attorney services ): a. apply for or obtain patents; 1 Australian Patents Act 1990. 2 New Zealand Patents Act 1953.
3 b. prepare patent specifications or other documents for the purposes of the patent law; or c. give advice other than a scientific or technical nature as to the validity of patents or their infringement. 15. For businesses seeking to protect their intellectual property the cost of obtaining specialist advice from a patent attorney amounts to a substantial portion (sometimes up to and over 90%) of the total cost of protecting and exploiting IP. For example, the cost of using a patent attorney to obtain a patent for an invention typically falls within the range of $4,000- $100,000 and more. The cost will depend on the nature and complexity of the invention and on whether protection is required overseas. 16. The high cost of patent attorney services comes from a combination of the type of work a patent attorney performs in blending scientific knowledge with legal expertise and the registration regime. The small size of the profession and the limited competition between patent attorneys may also contribute to the high cost. There are currently 194 registered patent attorneys domiciled in New Zealand. In comparison, there are over 11,000 barristers and solicitors registered to practice in New Zealand. 17. In 2003 and in 2007 Cabinet agreed to amend the Patents Acts 1953 to implement a number of reforms to the regulation of patent attorneys in order to modernise and more closely align the regulatory framework with Australia [EDC Min (03) 5/6 and ECD Min (07) 14/4 refer]. Key reforms included providing a board to govern the profession, a code of conduct and disciplinary regime to address misconduct, and a subsequent increase in registration and renewal fees. The legislative changes required to implement these decisions are incorporated into the Patent Attorneys Bill 2008, which was reported back to the House by the Commerce Committee on 30 March 2010. Trans-Tasman market for patent attorney services 18. The Trans-Tasman Mutual Recognition Arrangements 1997 (TTMRA) allows, through respective implementing legislation, a patent attorney registered to practice in New Zealand to register to practice in Australia, and vice versa. The TTMRA has therefore created a trans-tasman market for patent attorney services. 19. There is now a substantial overlap between the Australian and New Zealand registers of patent attorneys. For example, of the 641 patent attorneys registered to practise in New Zealand, 413 are domiciled in Australia. Australia has 808 registered patent attorneys comprising 103 patent attorneys domiciled in New Zealand. 20. Despite the high number of cross-registrations for patent attorneys, the volume of trans- Tasman work being undertaken by Australian and New Zealand patent attorneys is small. Most businesses, whether local or foreign, prefer to use New Zealand patent attorneys in New Zealand and Australian patent attorneys in Australia. This local favouritism occurs because businesses believe the local patent attorneys are not qualified to represent them across the Tasman. Some businesses are, therefore, forgoing the potential cost savings that can be made by eliminating duplication of patent attorney services in each country, including price and exchange rate differentiations between Australian and New Zealand patent attorneys.
4 21. There are a number of administrative inefficiencies and inconsistencies between the Patent Attorneys Bill and the Australian Patents Act 1990 that are not addressed under the TTMRA. This adds unnecessary regulatory and business compliance costs to those patent attorneys providing trans-tasman patent attorney services. For example, a person has to complete registration formalities and meet registration requirements in one jurisdiction to be entitled to seek reciprocal registration in the other jurisdiction. This leads to a duplication of both registration and renewal fees 3 and documentation (added expense and effort for patent attorneys to practice). 22. Because the majority of Australian and New Zealand patent attorneys are now registered to practice in both countries, there is also significant duplication of effort and costs to IP Australia and the Intellectual Property Office of New Zealand (IPONZ) in maintaining two independent, but largely identical, registers of patent attorneys. The cost to IP Australia is around AU$620,000 per annum, whilst it is estimated that the cost to IPONZ is at least $250,000 per annum 4. These costs are fully recovered through the fees payable by patent attorneys. Rationalising the two registers into a single register would, therefore, realise significant savings in registration fees for patent attorneys. 23. The two countries have broadly similar registration criteria with the objective of ensuring that registered patent attorneys are sufficiently knowledgeable and competent to give advice about their respective country s IPR laws and practice. The registration criteria do not, however, have the objective of ensuring that a patent attorney has the knowledge and competent in each other s laws and practice. The registration criteria in each country may be directly contributing to the reluctance of businesses to use patent attorneys on a trans-tasman basis. 24. The independence of the two registration regimes gives rise to two different standards of service that patent attorneys providing trans-tasman services must adhere to, because each country has its own code of conduct and disciplinary regime. 25. This gives rise to additional business compliance costs for patent attorneys and may also create cost and uncertainty for businesses when choosing which patent attorney to use (based on price and expected standard of service). These differences may be another factor contributing to why businesses are not using patent attorneys on a trans-tasman basis. A single trans-tasman regulatory framework 26. In August 2009, Prime Ministers Key and Rudd endorsed the development of a single trans-tasman regulatory framework for patent attorneys as one of the intellectual property outcomes for the Single Economic Market (SEM) agenda. The joint regulatory framework proposal reflects the key SEM objective to improve the productivity and innovation of Australian and New Zealand businesses by providing a single trans-tasman market and improved institutions. Patent attorneys would become the first occupational group to be regulated under such a framework. 27. Given the significant legislative implications for New Zealand of this proposal, passage of the Patent Attorneys Bill was placed on hold pending the development of the trans- Tasman regulatory framework. 3 For Australia the registration fee is AU$200 and the annual renewal fee is AU$350. For New Zealand the registration fee under the Patent Attorneys Bill was estimated in 2003 to be $210 and the annual renewal fee was estimated to be at least $370. 4 The figures are based on 2003 estimates to implement the Patents Attorneys Bill. Given the passage of time, these estimates are now likely to substantially underestimate the actual costs of implementing the Bill.
5 28. In March 2011 Cabinet agreed to release a discussion paper entitled Single Trans- Tasman Regulatory Framework for Patent Attorneys, which was jointly prepared by the Ministry of Economic Development (MED) and IP Australia (EGI Min (11) 6/2 refers). The discussion paper was simultaneously released in Australia and New Zealand and sought public comment, especially from the Australian and New Zealand patent attorney professions, on a proposal for regulating the two professions under a single trans-tasman regulatory framework (the trans-tasman framework ). 29. Key features of the proposed trans-tasman framework included: a. Single trans-tasman Governance Body with responsibility for education, discipline and registration of patent attorneys in Australia and New Zealand; b. Single definition of patent attorney services which would only be performed by a registered patent attorney or legal practitioner; c. Single code of conduct that every patent attorney would be required to adhere to; d. Single disciplinary regime to address complaints about patent attorneys; e. Consistent patent attorney educational qualifications and continuing professional education requirements; f. Single registration process and register managed by the Governance Body; g. One set of registration and renewal fees, initially pegged to the existing fees payable in Australia; h. Flexible arrangements for patent attorneys to form multi-disciplinary practices and for partnerships to be incorporated; and i. Secretariat support unit largely supplied by IP Australia, with assistance from IPONZ. 30. A full outline of the proposed framework is included as Appendix B. Summary of Submissions on the trans-tasman framework 31. 18 submissions were received by IP Australia and MED in response to the discussion paper. Of the five received from Australian stakeholders, four were from Australian patent attorneys. Of the 13 received from New Zealand stakeholders, 11 were from New Zealand patent attorneys. Australian stakeholders comments 32. On the whole the Australian submissions were broadly supportive of the introduction of a trans-tasman regulatory framework for patent attorneys. This response was anticipated because the proposed trans-tasman framework largely reflected the existing framework in operation 5. Australian patent attorneys did not want to see any dilution of the existing standards to qualify for registration or in standards of service required from patent attorneys in Australia. No mention was made of the potential effects the framework might have on trans-tasman competition between Australian and New Zealand domiciled patent attorneys. 5 The Australian Office of Best Practice Regulation has assessed the changes that would be required to the Australian Patents Act to implement the proposed trans-tasman framework as minor and machinery in nature.
6 New Zealand stakeholders comments 33. In contrast the majority of submissions from New Zealand patent attorneys were not supportive of the introduction of a trans-tasman framework. Many considered that since the TTMRA already allowed reciprocal registration of patent attorneys between Australia and New Zealand and therefore allowed patent attorneys to practice in both countries, a single Trans-Tasman framework was not necessary. 34. Patent attorneys were concerned that costs to New Zealand s economy, businesses and patent attorney professions under the trans-tasman framework would become significant over time. It was alleged that the trans-tasman framework would cause the current work undertaken by New Zealand patent attorneys for international clients to gravitate over time to Australian patent attorneys firms, causing a reduction in revenue. They were concerned that a reduction in revenue would lead to reduction in the size of the New Zealand profession and erode the ability of New Zealand patent attorneys to support local innovative businesses. Also, a reduction in the size of the New Zealand profession could cause an increase in the cost local businesses pay for patent attorney services. 35. Submissions from New Zealand stakeholders also commented on the details of the proposed trans-tasman framework. A number of submissions expressed a clear preference for retaining the existing qualifications regime and registration criteria currently provided for under the Patents Act 1953. Some patent attorneys expressed concern at the proposed increase in registration and renewal fees under the trans-tasman framework. Patent attorneys also wanted to see more flexible arrangements provided under the Lawyers and Conveyancers Act 2006 (LAC), in line with Australian regulation, for lawyers and patent attorneys to form multi-disciplinary partnerships. 36. The submission from the New Zealand Law Society emphasised the need to retain the existing restrictions under the LAC preventing lawyers from forming multi-disciplinary practices. The submission from EverEdge IP Ltd 6 noted there was some tension between the technology commercialisation industry and the patent attorney profession over services each offers to innovative New Zealand businesses. EverEdgeIP Ltd called for the definition of patent attorney services to be clarified so that a person may provide advice about commercialising new technologies without needing to also be a registered patent attorney. 37. Submissions from patent attorneys also called for the introduction of a trade mark attorney registration regime in New Zealand so as to regulate those who may offer advice and assistance for registering trade marks. Submitters also considered it inequitable that the Australian trade mark attorney registration regime prevented them from marketing themselves in Australia as trade mark attorneys, when there was no restriction on Australians marketing themselves as trade mark attorneys in New Zealand. Comment 38. I recommend that patent attorneys in New Zealand be jointly regulated under a trans- Tasman regulatory framework with Australian patent attorneys as set out in Appendix B. The trans-tasman framework as set out in Appendix largely reflects the registration regime that would be implemented under the Patent Attorneys Bill. 6 EverEdgeIP Ltd describes itself as a technology commercialisation company that helps other private and public organisations (companies and research institutes) to actively commercialise technology.
7 39. The proposed trans-tasman framework is part of the outcomes framework for the SEM agenda and could further deepen trans-tasman economic integration. The framework would foster the international competitiveness of both patent attorneys and businesses which use their services and, thus, improve the environment for doing business on both sides of the Tasman. The trans-tasman framework would also be a more efficient and effective means for regulating patent attorneys on a trans-tasman basis compared to the mutual recognition regime provided for under the TTMRA. 40. Key SEM principles that would be achieved include: a. allowing patent attorneys, as a regulated occupation, to be able to operate seamlessly between each country; b. ensuring that patent attorneys services supplied in one jurisdiction are able to be supplied in the other; c. allowing both governments to achieve economies of scale in regulating patent attorney services; and d. optimising a net Trans-Tasman benefit. 41. The 105 New Zealand patent attorneys registered to practice in Australia and the 413 Australian patent attorneys registered to practice in New Zealand, as well as any future person seeking to practise as a patent attorney in both countries, are expected to benefit from the implementation of the trans-tasman framework. Their regulatory and business compliance costs to register and practise on a trans-tasman basis, as discussed above, would be approximately halved. 42. Importantly, the trans-tasman framework would ensure that all patent attorneys are equally qualified to provide patent attorney services in Australia and New Zealand. The qualifications regime would assist to break down perceptions within businesses that prevent them from using local patent attorneys to assist in obtaining IP protection across the Tasman. The trans-tasman framework would also ensure that businesses received the same standard of service irrespective of whether they used an Australian or New Zealand based patent attorney, because all patent attorneys whould be subject to the same code of conduct and disciplinary regime. 43. For those Australian patent attorneys practising only within Australia, their existing regulatory and business compliance costs would remain unchanged from what is currently required under the Australian Patents Act. While the annual registration renewal fee for New Zealand patent attorneys who choose to practise only in New Zealand would increase to AU$350, this fee would be comparable to the fee payable under the Patent Attorneys Bill. Impact of increased competition from Australian patent attorneys 44. There is no evidence to support the allegation that the trans-tasman framework will result in the patent attorney services currently provided by New Zealand patent attorneys in New Zealand, especially for international clients, being taken over by Australian patent attorneys. While the TTMRA already allows patent attorneys to practise on a trans- Tasman basis, the benefit of the trans-tasman framework is that it would provide a level playing field under which all patent attorneys would be equally qualified in both countries and be required to adhere to the same standards of service. This would leave three clear variables for patent attorneys to distinguish themselves in a competitive trans-tasman market: price, quality and their relationships with existing and potential clients.
8 45. In terms of price differences, New Zealand patent attorneys are estimated to be between 20-50% cheaper than their Australian counterparts. There appears to be no clear distinction between the quality of services currently provided between Australian and New Zealand patent attorneys or the value international clients place on the importance of their relationships with either Australian or New Zealand patent attorneys. Cost conscious businesses are expected to be more attracted towards using New Zealand patent attorneys, rather than Australian patent attorneys. 46. There is a risk that Australian patent attorneys may take advantage of the trans-tasman framework to more aggressively compete against New Zealand patent attorneys. The risk, however, equally applies to both countries. New Zealand patent attorneys are not prevented from competing more aggressively in Australia. 47. Increased competition may have a short term effect on the distribution of patent attorneys between Australia and New Zealand. There is, however, no empirically provable ideal size of the patent attorney profession to optimise support for local innovation. Even if some of the work currently undertaken by New Zealand patent attorneys on behalf of overseas clients was to move to Australia, the impact, if any, on availability of patent attorney services for New Zealand businesses may be negligible. Registration renewal fees for trans-tasman patent attorneys 48. Under the trans-tasman framework the annual registration renewal fee for New Zealand patent attorneys to practice solely in New Zealand will increase from NZ$65 currently payable under the Patents Act 1953 to AU$350 (approximately NZ$420). While this would be a significant increase for the minority of New Zealand patent attorneys not currently practising on a trans-tasman basis, it is important to note that the fee increase is in line with the original 2003 estimated fee ($370) that they would be required to pay if the Patent Attorneys Bill was implemented. The fee is, however, substantially less than the annual registration renewal fees associated with other similarly regulated professions in New Zealand, such as lawyers ($1,426) and Chartered Accountants ($880). 49. For the majority of New Zealand patent attorneys (those who wish to practise on a trans- Tasman basis), however, the proposed trans-tasman framework would provide significant savings. If the Patent Attorneys Bill was to be implemented, these patent attorneys would be required to pay a combined annual registration fee of at least $790. Costs associated with qualifying to become a registered patent attorney 50. Under the trans-tasman framework, the Australia Patents Act and the Patent Attorneys Bill, a person must complete an accredited course of study provided by a university in order to qualify and register as a patent attorney. There are currently no New Zealand universities providing suitable courses of study, because the Patents Act 1953 does not allow a candidate to qualify in this manner. A person may only qualify by passing the examinations largely run by the New Zealand Institute of Patent Attorneys, Inc. (NZIPA) on a pro bono basis. 51. New Zealand patent attorneys are concerned that New Zealand universities may not provide suitable courses of study; forcing New Zealand candidates to qualify through one of the Australian university run courses. This would create a high barrier for entry into the profession in New Zealand and be an expensive option for firms to sponsor their staff to qualify. This issue was covered by the Commerce Committee when it was considering the Patent Attorneys Bill.
9 52. The Australian experience is that candidates and firms prefer a professionally run course of study provided by a university, despite the costs involved, rather than relying on an examination regime administered by the profession. 53. Initial inquiries with several New Zealand universities have indicated a positive interest in providing suitable courses of study, but such courses could take a couple of years to develop and implement. Provision has been made in the trans-tasman framework for the NZIPA to continue with its current examination regime, but with oversight from the Governance Body, until such time as one or more New Zealand universities can offer suitable accredited courses of study. The onus would be on the Governance Body to encourage and work with New Zealand universities to make suitable accredited courses of study available in New Zealand. Multi-disciplinary partnerships 54. The trans-tasman framework allows patent attorneys to enter into multi-disciplinary partnerships (MDPs) with other regulated occupations, and for those partnerships to incorporate. This feature, whilst consistent with the current Australian regulatory framework, will allow New Zealand patent attorneys firms to evolve over time to offer a range of services to support New Zealand businesses to create, protect and commercialise innovations. 55. Many New Zealand patent attorneys are also lawyers and, therefore, their ability to form MDPs with members of other occupational groups, including other patent attorneys who are not also lawyers, will continue to be constrained by restrictions in the Lawyers and Conveyancers Act 2006 (the LAC ). In Australia, lawyers are regulated under State legislation, which provides greater flexibility for lawyers and patent attorneys to form MDPs. The historical differences between New Zealand and Australian restrictions on lawyers forming MDPs accounts for why most New Zealand patent attorneys are also lawyers, whereas most Australian patent attorneys are not lawyers. 56. It is not the aim of the trans-tasman framework for patent attorneys to regulate the circumstances under which lawyers may form MDPs and, therefore, I am not proposing amendments to the LAC. I do consider, however, that without closer alignment of the LAC to Australian regulation, New Zealand lawyers and patent attorneys will have less flexibility compared to their Australian counterparts to explore more efficient and effective business arrangements for the provision of advice to businesses on obtaining and protecting IP rights. Definition of patent attorney services 57. The submission from EverEdgeIP Ltd sought a change to the definition of patent attorney services to clarify that a person may provide advice on the commercialisation of new products or services without needing to be a registered patent attorney. The trans- Tasman framework does not, however, restrict a person s ability to provide commercialisation advice. The reserved area of work for patent attorneys is narrowly limited to applying for patents and providing advice on the infringement and validity of patents, and is based upon the existing definitions under the Australian and New Zealand Patents Acts. 58. Officials will monitor the implementation of the trans-tasman framework to ensure that services a person provides related to the commercialisation of new products and services is not unnecessarily constrained by the definition of patent attorney services. I also note that flexible arrangements for patent attorneys to enter into MDPs should encourage the technology commercialisation industry and patent attorney profession within New Zealand to work more closely together for the overall benefit of innovative businesses.
10 Registration of Trade Mark Attorneys 59. The risk of irreversible financial harm occurring to business in New Zealand from receiving poor or unskilled advice on the registration and protection of trade marks appears to be sufficiently low as to not justify the costs that would be imposed by introducing and maintaining a trade mark attorney registration regime in accordance with Cabinet Office Circular CO (99) 6. I also understand that the large majority of those providing trade mark attorney services in New Zealand are already regulated because they are either lawyers and/or patent attorneys. The existence of a trade mark attorney registration regime in Australian is not, on its own, sufficient justification for a similar regime to be introduced in New Zealand. Implementation of the trans-tasman framework 60. In recommending the trans-tasman framework I acknowledge that it may take some time for New Zealand patent attorneys to adjust to it, largely because the framework represents a significant change to the way the profession is currently regulated under the Patents Act 1953. The trans-tasman framework, however, contains only minimal changes to the regulatory framework that would be provided under the Patent Attorneys Bill. 61. Some form of an overarching bilateral instrument between Australia and New Zealand would be needed to implement the trans-tasman framework for regulating the patent attorney profession. 62. Because the trans-tasman framework would create a new joint institution, there are a number of complex implementation issues that are still to be determined, which would need to be addressed in such an instrument. These issues include: how the Governance Body and Disciplinary Tribunal will be constituted (and under which country s law), how to confer powers and rights on these bodies and, conversely, impose duties, responsibilities and hold them accountable; judicial reviews and appeal procedures in each country; the power to collect evidence during disciplinary proceedings; and the application of Official Information Act 1982 and Privacy Act 1993 (and the Australian equivalents). 63. The Ministry of Economic Development will work with the Ministry of Foreign Affairs and Trade, the Ministry of Justice and Treasury and their Australian counterparts to develop such an instrument to address these issues. 64. I anticipate that each country would then need to enact legislation to implement the agreement and repeal existing national legislation on the regulation of patent attorneys. This is discussed in further detail below. Consultation 65. The following have been consulted on this submission: Te Puni Kokiri; Ministry of Consumer Affairs; the New Zealand Customs Service; Ministry of Education; Ministry of Foreign Affairs and Trade; Ministry of Justice; Ministry of Science and Innovation; the New Zealand Qualifications Authority; and the Treasury. 66. The Department of Prime Minister and Cabinet has also been informed. Fiscal Implications 67. IPONZ is currently responsible for administering the register of patent attorneys. The fee for registering as a patent attorney ($65 excluding GST) and the annual practicing fee ($65 excluding GST) are set on a cost recover basis. IP Australia is responsible for administering the Australian register on a cost recover basis. The application fee in Australia is AU$200 and the annual practicing fee is AU$350.
11 68. Under the trans-tasman framework IP Australia would be primarily responsible for providing secretarial support to the Governance Body, including managing the financial arrangements necessary for the Governance Body to operate and carry out its activities, under existing Australian standards. IPONZ would assist IP Australia with the provision of secretarial support to the Governance Body and will investigate how it might carry out these functions. There would be no immediate increase in registration and renewal fees from the introduction of the trans-tasman framework from existing fees payable in Australia at the time of implementation. IP Australia, in providing the secretariat duties, would absorb any additional costs or shortfalls associated with the transition. 69. In the longer term, fees would need to be reviewed and set by MED and IP Australia, with approval from the relevant New Zealand and Australian Ministers. Revenue would be quarantined and the costs of administering the Governance Body and its activities met by fees paid by patent attorneys and those seeking registration. 70. The implementation of the trans-tasman framework will result in a change to the IPONZ baseline (Vote Commerce: Registration and Granting of Intellectual Property Rights) because IPONZ will no longer be administering the New Zealand register of patent attorneys. Until the role of IPONZ in supporting IP Australia to administer the trans- Tasman register and Governance Body is clarified, the actual change to the baseline cannot be determined. There would, however, be no overall impact on the government's operating balance because fees are currently required to be set at the appropriate level to ensure full cost recovery. On implementation, changes to the baselines will be sought. 71. IPONZ is reviewing the fees payable as part of the law reform process being undertaken across trade marks and patents. The timing of the fee investigation work and any subsequent changes that may be sought to the IPONZ baseline will coincide, therefore, with that reform process. Initial focus will be on trade marks following recent enactment of the Trade Marks Amendment Act 2011. Human Rights 72. The proposals in this Cabinet paper appear to be consistent with the New Zealand Bill of Rights Act 1990 and the Human Rights Act 1993. However, the requirement for a person to register before they can practice as a patent attorney would raise an apparent limit to freedom of association. This limit would be justified as meeting the objectives of a single register of patent attorneys, consistent qualification requirements and a single code of conduct, governance body and disciplinary regime. Officials from the Ministries of Justice and Economic Development will work to improve consistency with the Bill of Rights Act. Legislative Implications 73. Patent attorneys are currently regulated under the Patents Act 1953. Provisions to update and modernise the regulation of the profession that were originally included in the Patents Bill 2008 were divided out into a separate Patent Attorneys Bill by the Commerce Committee when considering the Patents Bill. The Patents Bill now makes provision for the existing regulation under the Patents Act 1953 to continue to apply after the Patents Bill is enacted. 74. Cabinet has agreed to place the Patent Attorneys Bill, which is currently waiting a second reading, on hold pending the development of the trans-tasman framework. Cabinet has also agreed to the development of a Trans-Tasman Patent Attorneys Bill to implement a trans-tasman framework and accorded it a priority of 5, drafting instruction to Parliament Counsel Office, for 2011. Enactment of the trans-tasman Patent Attorneys Bill will need to be coordinated with the necessary legislative changes to the Australian Patent Acts 1990.
12 75. I recommend that the Patent Attorneys Bill, which would become redundant under the trans-tasman framework, should be allowed to lapse and not be reinstated on the Order paper after the General Election. Regulatory Impact Analysis 76. A regulatory impact statement has been attached as Appendix A. Quality of the Impact Analysis 77. The Deputy Secretary, Organisational Development and Support Branch, Ministry of Economic Development and the Regulatory Impact Analysis Review Panel have reviewed the Regulatory Impact Statement (RIS) prepared by the Ministry of Economic Development and associated supporting material, and considers that the information and analysis summarised in the RIS meets the criteria necessary for Ministers to fairly compare the available policy options and take informed decisions on the proposals in this paper. Consistency with Government Statement on Regulation 78. I have considered the analysis and advice of my officials, as summarised in the attached Regulatory Impact Statement and I am satisfied that, aside from the risks, uncertainties and caveats already noted in this Cabinet paper, the regulatory proposals recommended in this paper: a. Are required in the public interest; b. Will deliver the highest net benefits of the practical options available, and c. Are consistent with our commitments in the Government Statement on Regulation. Publicity 79. The decision to provide a trans-tasman framework for regulating patent attorneys would be publicised through the release of a joint media statement by IP Australia and the Ministry of Economic Development. A copy of the Cabinet paper will also be published on the Ministry s website.
13 Recommendations 80. It is recommended that the Committee 1 Note that patent attorneys are regulated under the Patents Act 1953; 2 Note that the Patent Attorneys Bill 2008 would provide a modern regulatory framework for patent attorneys and repeal the provisions in the Patents Act 1953 related to the regulation of patent attorneys; 3 Note that in August 2009 the Prime Ministers of Australia and New Zealand endorsed Australian and New Zealand officials working together to develop a proposal for a single trans-tasman regulatory framework for patent attorneys, as part of the intellectual property outcomes for the Single Economic Market agenda; 4 Agree that patent attorneys in New Zealand and Australia should be regulated under a single trans-tasman regulatory framework, which in principle would comprise the following elements; Patent Attorney Services 4.1 Only registered patent attorneys and legal practitioners are to be allowed to offer the following services for financial gain: 4.1.1 apply for or obtain a patent, whether domestically or overseas; 4.1.2 prepare specifications or other documents for the purpose of patent law, in Australia, New Zealand or elsewhere; and 4.1.3 give advice (other than advice of a scientific or technical nature) about the validity, or infringement, of patents; 4.2 A legal practitioner, who is not also a registered patent attorney, is to be prevented from preparing or amending a patent specification unless the practitioner is acting under instruction of a registered patent attorney or the amendment has been directed by an order of the Court; Governance Body 4.3 A single trans-tasman Governance Body is to be responsible for educating, registering and disciplining patent attorneys in Australia and New Zealand; 4.4 The Governance Body is to comprise a Chair, the Director General of IP Australia as an ex-officio member from Australia, the General Manager of the Intellectual Property Office of New Zealand as an ex-officio member from New Zealand, and at least five subject matter experts; Single trans-tasman register of patent attorneys 4.5 The Governance Body would be responsible for maintaining a single trans-tasman register of patent attorneys;
14 Registration criteria 4.6 Applicants for registration as patent attorneys are to be required to have a science or technology qualification issued from the higher education sector in a field of patentable subject matter and approved by the Governance Body; 4.7 Applicants for registration as patent attorneys are to be required to have successfully completed accredited courses in a range of specified topic areas as determined by the Governance Body; 4.8 The New Zealand Institute of Patent Attorneys, Inc. would be able to seek accreditation from the Governance Body to continue to provide the existing examination regime under the Patents Act 1953 for the specified topic areas as determined by the Governance Body if there are no New Zealand tertiary institutions offering accredited courses of study; 4.9 The Governance Body is to be able to grant exemptions in certain topic areas where the Governance Body is satisfied that the applicant has successfully completed a comparable course of study from a nonaccredited tertiary institute; 4.10 Applicants for registration as patent attorneys are to be required to have been employed for at least two years by a trans-tasman registered patent attorney, IP Australia or the Intellectual Property Office of New Zealand and be able to demonstrate to the satisfaction of the Governance Body that they have acquired competency in prescribed practical skills; 4.11 Applicants for registration as patent attorneys are to be fit and proper persons to practise as patent attorneys, including being of good character and not having been convicted of an offence where such an offence would reflect adversely on the person s fitness to practice as a patent attorney; 4.12 Once registered, patent attorneys are to be required to undertake a prescribed level of continuing professional education each year to be eligible for renewal of their registration; Code of conduct and disciplinary matters 4.13 All registered patent attorneys are to be required to adhere to a single code of conduct meeting specified objectives; 4.14 The code of conduct is to be developed and maintained by the Governance Body; 4.15 The grounds on which a complaint can be made, the procedure for making a complaint and the orders following any breach of acceptable standards of service are to be specified; 4.16 The Governance Body is to be able to receive, investigate, including the ability to appoint an investigator to collect evidence in certain cases, and determine complaints received from third parties or on its own initiative;
15 4.17 The Governance Body is to be able to direct parties to certain complaints that do not involve disciplinary issues to undertake alternative dispute resolution or arbitration mechanisms to resolve the complaint; 4.18 The Governance Body is to be able to refer any complaint regarding serious misconduct to an appropriate Disciplinary Tribunal (the Tribunal ) to determine, and where appropriate, discipline, patent attorneys; 4.19 The Tribunal is to be chaired by an experienced barrister and include two advisers drawn from a panel of experienced current or former patent attorneys; Miscellaneous matters 4.20 Registered patent attorneys to be able to form multi-disciplinary practices where at least one partner is a registered patent attorney; 4.21 Patent attorney practices to be permitted to incorporate provided a manager or director of the company is registered as a patent attorney; 4.22 Registered patent attorneys to be provided with protection against disclosure of communications with their clients, including communication with overseas clients overseas; 4.23 A registered patent attorney to be required to maintain an address for service in either Australia or New Zealand; and Transitional arrangements 4.24 Transitional arrangements to be provided to ensure that people currently sitting the professional qualification examinations under the Patents Act 1953 are not disadvantaged and that patent attorneys registered under the Patents Act are deemed registered under the trans-tasman regulatory framework; 5 Direct officials to works with Australian officials to develop an overarching bilateral instrument, which would be the basis for implementing the decisions in paragraph 4; 6 Note that the overarching bilateral instrument will need to address a number of complex implementation issues that are still to be determined, such as how the Governance Body and Disciplinary Tribunal will be constituted (and under which country s law), how to confer powers and rights on these bodies and, conversely, impose duties, impose responsibilities and hold them accountable; judicial reviews and appeal procedures in each country; the power to collect evidence during disciplinary proceedings; and the application of Official Information Act 1982 and Privacy Act 1993 (and the Australian equivalents); 7 Agree that the Patent Attorneys Bill 2008 should be allowed to lapse and not be reinstated on the Order paper; and
16 8 Invite the Minister of Commerce to issue instructions to the Chief Parliamentary Counsel to give effect to decisions in paragraphs 4 and 5. Hon Simon Power Minister of Commerce / /
17 Appendix A: Regulatory Impact Statement STATUS QUO AND PROBLEM DEFINITION National registration regimes Patent attorneys are a small profession providing specialist advice on obtaining, protecting and exploiting intellectual property rights (IPRs), particularly for patents and trade marks. Patent attorneys are required to blend scientific knowledge with legal expertise. Many patent attorneys therefore hold, in addition to their patent attorney qualification, scientific and law qualifications. The small size of the profession and qualifications patent attorneys hold contribute to the high cost to business for receiving advice from patent attorneys. It can cost a business from $4,000 to $100,000 and more in patent attorney fees to protect an invention as a patent. The cost depends on the nature and complexity of the invention and on whether protection is required overseas. The New Zealand register of patent attorneys, which is maintained by the Intellectual Property Office of New Zealand (IPONZ) under the Patents Act 1953, comprises 194 New Zealanders and 413 Australians. There is potential for significant irrevocable financial harm to occur to a business from either not seeking specialist advice from a patent attorney or receiving advice from an unskilled person. There can be high costs for breaching another s intellectual property right and for not adequately protecting the investment made in developing new and innovative products and services. The principle beneficiaries of the registration regime are, therefore, intended to be businesses, not patent attorneys. The Patent Attorneys Bill 2008, currently before Parliament, will repeal and replace the existing framework under the Patents Act in order to provide a modern occupational regulatory framework for patent attorneys. The regulatory framework will be closely aligned with the existing registration regime in Australia. The Bill creates a Patent Attorneys Standards Board to be responsible for education and discipline for the profession. IPONZ is to be responsible for administering the register of patent attorneys and for providing secretarial services to the Board, including administering the Board s finances. The costs of the Board and IPONZ are to be fully recovered from fees payable for a person to register and practice as a patent attorney. The registration and renewal fees (currently each fee is $67 under the Patents Act) are expected to increase significantly under the Patent Attorneys Bill to at least $244 for registration and $427 7 to renew a registration. Patent attorneys are similarly regulated in Australia under the Patents Act 1990. The Australian register comprises 675 Australians and 105 New Zealanders. The Professional Standards Board (PSB) is responsible for education and discipline, whilst IP Australia administers the register of patent attorneys and provides secretarial services to the PSB, including administering its finances. The costs of the PSB and IP Australia are fully recovered from the fees payable for a person to register and practise as a patent attorney. The registration fee is AU$200 and the annual registration renewal fee is AU$350. While the two registration regimes are similar, there are a number of differences between the Patent Attorneys Bill and the Australian Patents Act that reflect different domestic approaches to occupational regulation. For example, patent attorneys in Australia must complete 10 hours per annum of continuing professional education in order to renew their registrations, whereas there are no continuing professional education requirements in New Zealand. 7 Based on 2003 estimates to implement the Patent Attorneys Bill and adjusted for CPI since then. The estimates assumed that there would be no change in number of Australian patent attorneys registering to practise in New Zealand.