FISHER & PAYKEL APPLIANCES LIMITED TO THE COMMERCE COMMITTEE SUBMISSION ON THE PATENTS BILL 2009 TABLED

Transcription

1 z TABLED COMMERCE COMMITTEE SUBMISSION ON THE PATENTS BILL 2009 TO THE COMMERCE COMMITTEE BY FISHER & PAYKEL APPLIANCES LIMITED To: Clerk of the Committee Commerce Committee Select Committee Office Room Bowen House Parliament Buildings Wellington

2 PATENTS BILL 2009 SUBMISSION BY FISHER & PAYKEL APPLIANCES LIMITED A J Park, solicitors and patent attorneys have been instructed to make these submissions on behalf of Fisher & Paykel Appliances Limited (FPA). AJ Park has advised FPA on patent matters for over 50 years FPA through their appointed agents wish to appear before the Committee to speak to this submission. This submission has been prepared by Ken Moon who can be contacted at AJ Park, PO Box 565, Auckland 1140; Phone No ; Ken.Moon@ajpark.com Fisher & Paykel Appliances Limited wishes to express support for a number of provisions in the Bill relevant to its business and express concern about three aspects. Fisher & Paykel Appliances Limited and the Patents System Fisher & Paykel Appliances Limited (FPA) is a New Zealand headquartered multinational manufacturer of whiteware products, namely, clothes washers, clothes driers, dishwashers, refrigerators, freezers, and ranges and cookers. FPA has manufacturing plants in New Zealand; the United States, Mexico, Thailand and Italy. FPA exports its products to a number of countries and export sales considerably exceed sales in New Zealand. FPA became a manufacturer in At that time it manufactured products developed by US and UK manufacturers. It licensed in the technology it required from companies such as Kelvinator, Bendix, Hoover, Frigidaire, Leonard and Hot Point. While FPA had undertaken some development of its own products (for example a tumble drier which was designed and patented in 1956) it was not until the mid 1980s that it determined to design and develop all of its products. FPA is New Zealand's only whiteware manufacturer. FPA's main competitors are located in the United States, Japan, Europe, Korea, and China. Electrolux of Europe manufactures a limited range of products in Australia and imports the balance of its product range for that country. These competitors are all much larger than FPA (based on any criteria). Some of FPA's competitors are: USA Whirlpool, General Electric; Europe Electrolux (which also 2

3 owns AEG and Zanussi), Bosch, Miele, Arcelik; Japan Hitachi, Toshiba, Matsushita; Korea LG Electronics, Samsung. FPA now operates in an alliance with Haier of China, which holds a 20% shareholding in FPA. 4~ It is an essential and integral part of FPA's business strategy to make internationally marketable products using innovative, proprietary technology and to defend its proprietary technology using the patent system. In relation to the latter FPA does not shrink from embarking upon international patent infringement litigation. FPA competes successfully against its much larger foreign rivals by being innovative. It is only through innovation and the allocation of capital and resources to product development and its associated patent portfolio that FPA is able to conduct its business from New Zealand and survive on the international market. FPA strongly supports and is a large user of the international patent system. It relies on the patent system to protect its innovation. It primarily needs patents in the jurisdictions of its competitors and/or in the world's largest markets for whiteware. FPA therefore applies for and obtains patents in many countries other than New Zealand. Nevertheless it is company policy to also obtain New Zealand patents for its patentable inventions. FPA is a substantial user of the New Zealand patent system. It has a significant and legitimate interest in New Zealand patents legislation. Currently FPA holds a 98 granted and live New Zealand patents. As an indication of the degree of innovation and associated patenting in relation to FPA products the following statistics are cited. For the SMART DRIVE washer family there are at least 35 separate patentable inventions. Patents have been obtained for each of these in up to 18 countries, including New Zealand. FPA's DISHDRA WER dishwasher incorporates some 20 patentable inventions with patents filed in up to 27 countries, including New Zealand. Background to Submission on the Patents Bill FPA has long been concerned that the Patents Act 1953 allows or has the potential to allow its foreign competitors to obtain patents in New Zealand which they might not be able to obtain in their own or other countries. It believes patents have been too easy to obtain in 3

4 New Zealand and, further, those patents may not be challenged in the way that its own patents in other countries may be challenged. It seeks a level playing field on a worldwide basis. 2. It also wishes to see fewer patents granted to nuisance individuals for trivial inventions. Support for the Bill Granting Better Quality Patents 1. FPA especially welcomes and supports the following provisions in the Bill: (a) Clauses 3(a) and (b) as setting the objective of ensuring most granted patents should be valid on an absolute basis; (b) Clause 60(1)(b) when read with clause 13(b)(ii) requiring examiners to examine for inventive step; (c) The adoption of a "balance of probabilities" test in assessing patentability criteria in place of giving applicants the benefit of the doubt; (d) The adoption through clauses 6 and 8 of an absolute novelty standard in place of the long outdated requirernent of mere local novelty. Patentable Subject Matter Software FPA supports the retention (by clause 13) of the existing test for determining patentable subject matter, namely "manner of manufacture with in the meaning of clause 6 of the Statute of Monopolies" as interpreted by the considerable body of associated case law. In relation to the subject matter excluded from patentability under clause 15 it specifically supports the absence of "computer software related inventions" from the listed exclusions. 4

5 FPA is aware that there is a growing worldwide lobby against the patenting of software inventions. It anticipates the Committee will receive submissions from this lobby advocating the addition of software as an exclusion under clause 15. A significant proportion of FPA's inventions are software related inventions. Much of what it once achieved using dedicated hardware circuitry is achieved using software controlled microprocessors. Many FPA product development engineers are software engineers. FPA does not merely use programmed microprocessors to control the various operational phases of a clothes washer or a dishwasher, for example, but also the basic running of the electric motors used in such appliances. The motors in FPA's SMART DRIVE and DISHDRA WER products are electronically commutated motors. These are motors which will not rotate merely by connecting them to the electricity supply. Such motors are fed with voltage (usually three phase) from a controller which determines the speed, direction of rotation, acceleration, deceleration and torque. The heart of such controllers is a programmed microprocessor. The software required to operate such microprocessors is as extensive as software used with general purpose computers such as PCs. FPA has been seeking such software related patents since 1985 (see NZ Patent /213490). Concern about some Aspects of the Bill Pre Grant Opposition FPA is concerned, that one of the stated purposes of the Act, namely, to provide "procedures that allow the validity of a patent to be tested" (clause 3(a)(ii)) and "provide greater certainty for patent owners and the users of patented inventions that patents will be valid after they have been granted" (clause 3(b)) cannot be met so long as there is no provision for full pre grant opposition proceedings under the 1953 Act, section 21. as has been available While patents of dubious validity hopefully will be less likely to survive examination under the Bill when enacted, there may nevertheless be some that do emerge which are not patentable inventions (clause 13) or which have complete specifications which do not meet adequately all the requirements (clause 37). 5

6 o FPA believes it is essential that the current pre grant opposition proceedings be retained. Although it would prefer never to have to incur the expense and employee time in such proceedings it believes it is essential third parties with valid concerns should have the right to be heard before IPONZ grants patents. It is important that all of the grounds available for post grant revocation (clause106) should be available for third party involvement pre grant. It is better that patent applications can be challenged before a patent is granted rather than merely provide an opportunity for revocations after grant. This is even more the case now that there will be some presumption of validity in respect of granted patents. FPA is aware that fewer countries offer pre grant opposition proceedings than in the past although, significantly, Australia does do so. FPA would urge that such proceedings be retained in New Zealand. FPA has considerable experience with post grant opposition procedure in other jurisdictions especially the European Patent Office and is not convinced that post grant opponents' arguments receive equal weight to those of patentees by a patent office which has already decided an invention is patentable and seen fit to grant a patent. 10. Under the Bill post grant revocation proceedings are available in either the Court or before the Commissioner. The latter avenue is not available under the 1953 Act. One traditional advantage of proceedings before the Commissioner has been lower costs than would be faced in a Court. This would remain the case with pre grant opposition since the forum would be the Commissioner. It is doubted there will be a cost advantage in post grant revocation before the Commissioner because unless there are to be different standards of justice, revocation before the Commissioner is likely to become as complex and as expensive as in the Court. Furthermore, because revocation will often be sought as a defence to infringement proceedings (in the High Court), the predominant forum for challenging a dubious patent will usually be the Court. There is therefore a cost advantage to New Zealand businesses in allowing pre grant opposition. 11. FPA notes the provisions for third party assertions under clause 86. It frequently avails itself of the similar European Patent Office third party observation procedure. It also notes the procedure for re examination before grant available to third parties established by clauses 88 to 91. But neither of these procedures can be considered to fill the gap created by the Bill's removal of the current pre grant opposition available under the 1953 Act. 6

7 12. The grounds for re examination (clause 90) are limited to novelty and inventive step and a prior art base which is limited to prior publications and ignores prior use. These limited grounds are inadequate. Perhaps more importantly, pre grant re examination denies the opposing party any role in the proceeding once re examination has been requested. An adversarial process ensures a more stringent testing of the validity of patents and while more complex, the proceedings are funded by the parties and not the taxpayer. "Benefits may Flow Overseas" 13. While in favour of more stringent requirements for examination of patent applications filed by its foreign competitors, FPA does not see that the fact that foreign companies apply for and allegedly receive up to 90% of patents in New Zealand ("Statement of Policy Objective", page 51, Explanatory Note) should itself be a driver for reform provided they are granted for truly patentable inventions. Certainly, this statistical inevitability for all smaller but developed countries should not in itself shape New Zealand's patent legislation. New Zealand manufacturers need to import technology at various stages of their growth. FPA did so for many years as mentioned in paragraph 2 above. It is not unreasonable for foreign originators of that technology to seek the comfort of having patents in New Zealand in a fair and strong patent system before being prepared to transfer (license) their technology to New Zealand. Indeed, the growth of manufacturing in Japan after World War II was contingent on Japan establishing a strong patent system before the required technology transfer (largely from the USA) could take place. Now, as an exporter of technology, FPA is conscious of the negative impacts some countries' protectionist laws have on potential licensing or business arrangements. Brazil is such a country where FPA has experienced problems of this type. FPA would not like to think that the Bill itself reflects the counter productive protectionist expressed in parts of the Explanatory Note. 14. "Purposes " Clause 3 expresses the purposes of the Act in a rather negative manner especially the first purpose recited in sub clause (a). The purpose of any legislation codifying the granting of patents for inventions is surely to promote economic growth by encouraging technological innovation. Patents do this by providing temporary monopolies to inventors and for their investors to allow research and development expenditure to be recovered at a profit. This 7

8 would be far more difficult if competitors could simply copy expensive innovation by freeloading off the R&D of the innovator. FPA supports a proper patents system for this very reason. It is able to compete with far larger international competitors through being innovative and being able to control its innovations through its patents, whether by licensing or otherwise. This "incentive" purpose of patents is rightly set out in the Explanatory Note to the Bill (pages 1 and 51) as the essential rationale for patents and this policy statement should be reflected in clause 3 of the Bill itself. FISH1 APPLIANCES LIMITED By their authorised agents A J PARK 1 July