IP lawyer: Re-examining New Zealand patents – proceed with caution

New Zealand patents can now be challenged by any party in a re-examination procedure. However, the outcome could have some unwelcome consequences

On September 13 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.

In particular, the new act has made available a new mechanism for challenging 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 New Zealand patent re-examined.

The new re-examination procedure applies to any granted New Zealand 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 previous act and remain available under the new act.

How re-examination works

The party wanting to challenge a New Zealand 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 most commonly include that the invention which is 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 is seeking re-examination, it cannot take any further part in the procedure. This makes it important for the challenger to set out a compelling case in the initial request.

IPONZ will consider the request and decide whether the grounds warrant a re-examination. If so, the patentee will be sent a copy of the challenger’s statement and given a limited period 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 a New Zealand patent at a lower cost than revocation before the commissioner or the courts. However, there are some drawbacks which should be considered carefully.

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 for objection. Crucially, the challenger has no opportunity to support its challenge by countering the patentee’s submissions in support of its 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 that it finds in favour of the patentee. The patentee, on the other hand, does have the right to 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 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 court to revoke the patent on the same grounds. This is known as ‘issue estoppel’; under it, 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 to appeal.

This means that an unsuccessful re-examination may have the undesirable effect of permanently barring the challenger from challenging the patent again on the same grounds, even in different proceedings or before a different court. It is unclear whether this effect was intended by the legislature and it is possible that the bar on the challenger’s right of appeal will be reviewed, given the potential implications.

Consequently, serious consideration should be given before seeking to have a competitor’s patent re-examined, particularly when other options with a right to appeal are available (eg, revocation).

Re-examination of old patents

As mentioned above, patents granted under the previous Patents Act may be re-examined under the new procedure. This led to speculation that there would be a flurry of requests to re-examine existing patents which may have been granted in a too-broad form as soon as the new law came into force. However, this does not appear to have been the case so far – possibly because of the implications discussed above.

In summary, the combination of a patentee being able to address the grounds for re-examination without reply and having the sole right to appeal means that in a New Zealand patent re-examination procedure, the odds are stacked firmly in the patentee’s favour.

Some strategies are available for minimising the risk of issue estoppel arising from a re-examination procedure. We recommend that you speak to a registered patent attorney who can 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 at James & Wells, Auckland, New Zealand.

Ian Finch is a partner at the firm in Hamilton, New Zealand

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