Out with the old? Possible changes to NZ divisional patent practice

In a recent article, we outlined problems associated with divisional applications filed under the Patents Act 2013 (“new Act”). The New Zealand Government has now sought feedback on proposed changes to how divisional applications derived from applications filed under the Patents Act 1953 (“old Act”) are dealt with.

The New Zealand Government has essentially advised that it proposes to retrospectively implement changes to the transitional provisions of the new Act so that divisional applications filed from old Act applications are examined and granted as new Act divisionals. It is reasonable that the New Zealand Government wishes to examine newly filed divisional applications for inventive step (currently not a ground of examination under the old Act) and to fully transition into its new Act. However, the impact on patent applicants will be significantly greater than merely an examination including inventive step (obviousness/predictability), notably because the applications will inherit the significant problems associated with new Act divisionals (e.g. 5 year REX bar, poisonous priority, double patenting at filing) along with other higher patentability requirements such as stricter support requirements.

The problems of new Act divisionals and options proposed by the New Zealand Government in its consultation document are discussed further below.

Old Act divisional practice (1953 Act)

Applications that were directly filed or entered the national phase in New Zealand prior to 13 September 2014 are examined under the old 1953 Act. Under the transitional provisions, any divisional application from old Act applications made after 13 September 2014 will also be examined under the old 1953 Act.

Old Act cases are examined under a lower patentability requirement that does not include inventive step (although inventive step is a ground of pre-grant opposition and post-grant re-examination and revocation before the Patent Office). There is also no limit on the number of divisional applications than can be filed within the 20-year term, and it is possible to continually maintain a divisional application pending by repeated filings in 18 month cycles (colloquially known as “daisy chaining”). This is in contrast to new Act divisional applications which must be filed with examination requested by 5 years from the complete filing date of the originating parent application. So oddly, a new Act divisional application can be filed after 5 years from its originating parent’s complete filing date, but its examination cannot be requested so the application exists as an unexaminable “zombie” application.

The problem

The consultation document outlines two problems arising from the transitional provisions. One problem is that divisional applications filed under the old Act are not examined for inventive step, which may result in patent applications being accepted that are potentially invalid, and mere “obvious” variations on what already exists. Under the new Act, such patent applications would unlikely be accepted for grant. This creates uncertainty for third parties on the scope of protection that might be granted on old 1953 Act divisional applications. Another problem arising from the transitional provisions is that the New Zealand Intellectual Property Office (IPONZ) must maintain the capacity to implement the examination of patent applications under both the old Act and new Act, potentially up until 2034, resulting in additional costs and complexity.

The proposed solution

The consultation document proposes three options for dealing with old 1953 Act divisional applications:

1. No change to the current transitional provisions
2. Amend the law so that after a specified date, no further divisional applications can be filed from a parent application proceeding under the old 1953 Act, and
3. Amend the law so that after a specified date, any divisional application filed thereon from a parent application proceeding under the old 1953 Act will be deemed applications made under the new 2013 Act.

The consultation document outlines that option 3 is the New Zealand Government’s preferred option.

Who is affected?

Option 1 will be favoured by patent applicants with current pending old Act applications. Arguably this results in continued uncertainty for third parties through having to oppose/re-examine/revoke applications that may have not been accepted under the new 2013 Act.

Option 2 is likely to be considered inconsistent with the Article 4G of the Paris Convention, as it would restrict the patent applicant’s ability to file divisional patent applications to overcome a lack of unity objection (i.e. more than one invention), which can arise under examination and the citing of new prior art.

Option 3 may provide more certainty for third parties on the scope of patent rights. However, patent applicants who prepared a patent specification to be examined under the old 1953 Act may be disadvantaged if any divisional application filed thereon is then subsequently examined under the stricter provisions of the new 2013 Act.

The consultation document appears to focus on the impact to third parties for applications accepted without examination for inventive step, over that of the impact to patent applicants. Of course the reality is that most patent applicants are also third parties. The impact to third parties is also arguably much less significant in view that less than 1% of all patent applications are challenged under opposition, and patent litigation is extremely rare in New Zealand.

Patent applicants will also inherit significant problems for new Act divisionals in addition to higher patentability requirements. For example, four significant problems associated with all new Act divisional applications are described as follows:

1. 5 year bar from the complete filing date of the originating parent for requesting examination under regulation 71 of the Patents Regulations 2014 unduly restricts the genuine practice of patent applicants
2. poisonous priority (whole of contents novelty self-collision between parent/divisional) exists in view of absence of any anti-collision provisions and allowance for partial/multiple priorities for individual claims (claims can have a single priority date only);
3. increased strictness of double patenting (any overlap in claim scope between parent/divisional) arising from “substantially the same matter” not permitted between claims of a parent and divisional application, and
4. perfection of double patenting at the time of filing a divisional application being a potential ground for a third party challenge.

It is hoped that the New Zealand Government will address the above problems before afflicting divisional applications filed from old Act applications with the same problems faced for new Act divisionals, which will occur if option 3 is implemented.

Final remarks

Should the New Zealand Government’s preferred option 3 be implemented, any divisional application filed thereon from a parent application proceeding under the old 1953 Act will be deemed an application made under the new 2013 Act. Any further divisional application must then be filed and have examination requested within 5 years from the complete filing date of the originating parent application, essentially putting an end to the “daisy chaining” of old Act divisional applications, while significantly increasing the problems and patentability requirements for obtaining grant of any remaining patentable subject matter on old Act cases.

We will provide a further update as soon as any new developments arise on the above divisional filing practice in New Zealand. If you have any questions about divisional filing practice in New Zealand, please contact FB Rice.