1.1 What are the principal sources of law and regulation relating to patents and patent litigation? (Briefly describe the role of international, federal or state laws and relevance of court decisions, list and briefly describe relevant statutes and international treaties)
New Zealand, like Great Britain, Australia and the United States, is a common law country. However, New Zealand’s patent law is entirely statutory. The Patents Act 1953 is the relevant legislation. This Act is closely based upon the UK’s Patents Act 1949. There are a number of regulations derived from the Patents Act. These are termed Patent Regulations. These mainly concern the running of affairs of the Intellectual Property Office of New Zealand.
New Zealand has a unicameral legislature so issues of federalism do not arise.
Court proceedings concerning patents initially take place in the High Court. The High Court Rules, which are regulations, govern High Court procedure. These Rules prescribe the procedure of Court proceedings. They contain a series of rules that apply to all litigation. Part 11A of the High Court Rules contains special rules for patent cases.
New Zealand has three levels of courts of record. At the apex is the Supreme Court, followed by the Court of Appeal and High Court. The first two mentioned courts have their own rules equivalent to the High Court Rules.
Parliament established the Supreme Court in 2004. Until then New Zealand’s final appellate court was the Judicial Committee of the Privy Council situated in London.
1.2 What is the order of priority of the relevant sources, ie which take precedence in the event of a conflict?
New Zealand has a system of stare decisis under which the ratio decidendi of higher courts bind lower courts. This means decisions of the Supreme Court bind both the Court of Appeal and High Court while decisions of the Court of Appeal bind the High Court. Obiter dicta of higher courts, while not binding on lower courts, are highly persuasive.
Until its abolition, decisions of the Privy Council in New Zealand matters bound the Court of Appeal and High Court. In patent matters this was not much of an issue as the Privy Council only ever heard two New Zealand patent cases.
It was never decided to what extent Privy Council decisions from other countries bound New Zealand courts. Again in patent law this was not an issue as the Privy Council heard very few patent cases.
New Zealand decisions of the Privy Council do not bind the Supreme Court. Rather the Supreme Court regards such decisions as persuasive but it has the ability to depart from them.
Hearings Office decisions
The Commissioner of Patents can hear oppositions to the grant of patents. The grounds of opposition are set out in s 21 of the Patents Act 1953. These take place in the Intellectual Property Office of New Zealand.
Under s 4 of the Patents Act 1953 Assistant Commissioners of Patents are appointed to hear such oppositions. These appointees are usually called Hearings Officers. They will issue written decisions with reasons. Such a decision determines whether the applicant’s patent will be granted.
Hearings Officers are not judicial officers. The Hearings Office is not a court. Rather the Hearings Office is an executive (or administrative) tribunal and its decision is an exercise of executive power.
While the Hearings Office determines an opposition, its decisions have no precedential value except as they apply to the parties. In other words its actions are in personam rather than in rem.
In its written decision, a Hearings Officer may make various statements about patent law. These have no precedential value on third parties or even on the Intellectual Property Office of New Zealand. As the Hearings Office is not a court of record, the concept of ratio decidendi has no effect. The doctrine of precedent is a legal rule requiring a court to apply the ratio of a decision of a court of record to any facts within the scope of the ratio – regardless of the merits. Precedent imposes a legal obligation on a court to make a particular finding.
For example, in 1994 a Hearings Officer in Hughes Application determined that computer software is patentable. The Intellectual Property Office of New Zealand accepted this and started granting computer software patents. Legally, however, the Intellectual Property Office did not have to accept this finding. Nor is a future Hearings Officer bound to accept the Hughes reasoning. Only a court of record can determine the issue and make a precedential decision.
Should a future Hearings Officer decide to depart from Hughes a court would make the definitive decision. Administrative law grounds such as like cases must be treated alike would not apply. The High Court would determine whether the initial Hughes Hearings Officer made an error of law in determining that computer software is patentable. In the end this is just a question of statutory interpretation.
There is an automatic right of appeal from a Hearings Officer’s opposition decision to the High Court. With leave there is a further and final appeal to the Court of Appeal.
2.1 In which courts are patents enforced? Are they specialised patent courts? If not, what level of expertise can a patent holder expect from the courts?
New Zealand court system
New Zealand has four levels in its court system. In ascending order these are:
The High Court also has appellate jurisdiction arising out of patent opposition proceedings before the Commissioner of Patents in the Intellectual Property Office of New Zealand. There is an appeal to the High Court as of right (Patents Act 1953, s 97). The High Court can also hear appeals or judicial reviews as a result of the Commissioner’s exercise of discretion in proceedings in the Intellectual Property Office of New Zealand.
There is a further appeal right to the Court of Appeal – but only with leave from either the High Court or Court of Appeal (Patents Act 1953, s 98). There is no right to appeal further to the Supreme Court. In other words the Court of Appeal is the final court in appeals arising from the Intellectual Property Office of New Zealand.
No specialised patent courts
New Zealand has no specialised patent courts. Any patent matter is heard by a High Court judge. Usually such a judge has no specialist expertise or experience in patent law. As of 2006 there has only been one judge appointed to the Bench who previously practised as a patent attorney (as well as a lawyer). However, counsel who have argued patent cases have been appointed to the Bench.
Under r 725B of the High Court Rules an independent scientific adviser may be appointed to assist the court. The scientific adviser does not decide the case – rather he or she assists the court in inquiring into and reporting upon any questions of fact or opinion, not involving questions of law or construction. (The Commissioner of Patents also has the power to appoint an adviser in proceedings in the Intellectual Property Office of New Zealand.)
The practice that has been followed is that the scientific adviser prepares a report which is made available to the judge and the parties before closing submissions. The parties then have the opportunity of commenting on the report in their closing submissions. They usually have the opportunity of also examining the scientific officer. The court can appoint a scientific adviser by itself or either party can request one. If all parties request a scientific adviser, the court must appoint one.
The scientific adviser can also be appointed in any Court of Appeal hearing. This will be the same adviser who was in the first instance hearing or appeal from the Intellectual Property Office of New Zealand in the High Court.
One example of the appointment of a scientific officer is in Beecham Group Ltd v Bristol-Myers Co [1980] 1 NZLR 185 involving an appeal from the Intellectual Property Office of New Zealand. The scientific adviser was a professor of organic chemistry. The professor was also appointed to assist the Court of Appeal: see: Beecham Group Ltd v Bristol-Myers Co [1981] 1 NZLR 600.
Another example is Smale v North Sails Ltd [1991] 3 NZLR 19. This was a first instance infringement/validity case involving yacht sails. There, a professor of mechanical engineering was appointed as scientific adviser. The adviser sat with the judge. The parties were able to formulate and tender any questions that they thought were appropriate to be referred to the adviser. The judge also framed a series of issues for the adviser’s comment. The judge gave these to the parties for comment. The adviser gave a report on the issues. The parties had the ability to challenge the report by evidence or cross-examination. Neither did.
2.2 To what extent are courts willing to consider, or are bound by, the opinions of other national or foreign courts that have handed down decision in similar cases?
Strictly speaking New Zealand courts are only bound by other New Zealand court decisions. However, as mentioned previously, New Zealand’s Patents Act 1953 is substantially identical to the UK Patents Act 1949. UK decisions under that Act are regarded as highly persuasive – if not de facto binding. Beecham Group Ltd v Bristol-Myers Co [1980] 1 NZLR 185 (HC) and Beecham Group Ltd v Bristol-Myers Co [1981] 1 NZLR 600 (CA) provide an example where the New Zealand courts adopted a deferential pose to decisions from Lord Wilberforce and Lord Diplock.
With the subsequent enactment of UK Patents Acts, UK decisions are no longer as persuasive, but in Peterson Portable Sawing Systems Ltd v Lucas [2006] NZSC 20, SC 14/2005,
30/3/06, the Supreme Court treated the House of Lords decision in Sabaf SpA v MFI Furniture Centres Ltd [2005] RPC 209 as de facto binding. Deference towards UK patent decisions is therefore still evident.
New Zealand courts are more open minded and receptive about overseas decisions than Australian courts (see Australian decisions in Pfizer Ireland Pharmaceuticals v Eli Lilly (FC:(2005) 64 IPR 506; FFC: FCAFC 224 31/10/05) – litigation where the UK decisions were virtually ignored).
In respect of Australia, New Zealand does not slavishly follow Australian decisions. For an example see Pfizer v Commissioner of Patents [2005] 1 NZLR 362 where the Court of Appeal continued the ban on patents for methods of medical treatment – despite such patents being allowed in Australia and despite similar provisions in the two countries’ Patents Acts.
2.3 Do the courts deal with infringement and invalidity simultaneously? Or must invalidity actions be brought in separate proceedings? If so, before which court or government agency (eg the Patent Office)?
Usually courts will hear infringement and invalidity issues simultaneously. The reason is that a defendant facing an infringement action will almost invariably counterclaim alleging invalidity of the patent. If so, infringement and invalidity will be part of the one proceeding. If infringement and invalidity actions are brought separately they will invariably be consolidated in one proceeding. The parties can agree to hear invalidity issues first as one hearing. The court will consent to this if the parties agree that the invalidity proceedings will determine the case. The ability to do this derives from r 418 of the High Court Rules. It is a discretionary decision of the court. Sometimes a r 418 order and hearing does not end the case. Peterson Portable Saving Systems Ltd v Lucas [2006] NZSC 20, SC 14/2005, 30/3/06, is an example. The parties agreed to a separate hearing on the validity of one claim. The Supreme Court held that the subject matter of that claim lacked novelty and was obvious. The Supreme Court sent the case back to the High Court to deal with the alleged invalidity of the other claims and with infringement.
If a party wants to bring an invalidity action by itself (ie not as a counterclaim) under r 725ZF of the High Court Rules it must do so by way of originating application in the High Court at Wellington. The Court can on application direct the originating application be filed at another court registry. In an invalidity action the patentee (as respondent) can call evidence first, if it wants to under r 725ZG of the High Court Rules. Under the same rule the patentee also has a right of reply if the applicant brings evidence impeaching the validity of the patent.
Revocation or invalidity proceedings are brought before the High Court. Section 42 of the Patents Act provides a limited alternative. If a party has not opposed the grant of a patent before the Commissioner of Patents, it can seek to revoke the patent at the Intellectual Property Office of New Zealand. It can only do so within 12 months after the sealing of the patent. Also the grounds of invalidity in such an application are narrower than those available in High Court proceedings.
Under s 76 of the Patents Act 1953 in all invalidity proceedings (ie counterclaim, originating application and at the Intellectual Property Office of New Zealand) the appellant for revocation must give notice of its application (including copies of all papers filed by all parties) to the Solicitor-General of New Zealand. The applicant for revocation must give such notice at least 21 days before the hearing. The Solicitor-General, on behalf of the Attorney-General, may intervene on behalf of any party. This power has yet to be exercised in New Zealand.
2.4 Who can represent parties before the courts handling patent litigation and/or the government agency dealing with patent validity issues?
Only admitted barristers and solicitors or barristers sole of the High Court of New Zealand can appear before the New Zealand courts. Occasionally Australian senior barristers (ie Queen’s Counsel or Senior Counsel) appear in New Zealand court proceedings involving patents. However, such counsel have to be admitted in New Zealand. This is simply an administrative matter. Patent attorneys, unless they are also admitted barristers and solicitors of the High Court of New Zealand, have no right to appear before the courts.
There are no limitations on who can appear before the Commissioner of Patents in the Intellectual Property Office of New Zealand.
2.5 What is the language of the proceedings? Is there a choice of language?
Proceedings are conducted in English. Theoretically as New Zealand has two official languages, English and Maori, proceedings could be conducted in Maori. This has never happened.
2.6 To what extent are courts willing to grant cross-border or extraterritorial injunctions?
The issue of whether a New Zealand court can grant an extra-territorial injunction has never arisen in a New Zealand patent case. However, in a copyright case (Atkinson Footwear Ltd v Hodgskin International Services Ltd (1994) 31 IPR 186) the High Court refused an injunction to prevent not only importation into New Zealand of footwear which allegedly breaches New Zealand copyright law but also to prevent importation of the footwear into Australia. The footwear also allegedly infringed a registered Australian design.
The High Court held New Zealand copyright law only applies to acts in New Zealand. It also held that an infringement of the copyright or design registration law of another country is not justiciable in New Zealand courts. This reasoning is equally applicable to New Zealand patent law – so New Zealand courts, as the law now stands, will not grant a cross-border injunction in a patent dispute. Given that the High Court judge in Atkinson is now a Supreme Court Justice, that law seems unlikely to change anytime soon.
2.7 To what extent do courts recognise the blocking effect of ‘torpedo’ actions abroad?
New Zealand courts do not recognise such actions.
3.1 How is patent infringement assessed? To what extent does the doctrine of equivalents apply in an infringement action?
New Zealand’s current patent legislation is based on the UK’s 1949 Patents Act. It contains no specific definition of infringement. Accordingly the test for infringement under the 1949 UK Act generally applies. If a defendant’s allegedly infringing article contains all the integers of a patent claim(s) there is infringement.
Some New Zealand Courts (Monsanto and Stauffer Chemical Co [1984] FSR 559; Lucas v Peterson Portable Saving Systems Ltd [2006] NZSC 20, SC 14/2005. 30/3/06) have accepted Lord Diplock’s statement in Catnic v Hill & Smith Ltd [1982] RPC 183 that one must give patents a purposive interpretation. None, however, in purporting to do so have ever applied Lord Diplock’s test. Furthermore no court has ever asked Hoffman J’s (as he then was) three questions in Improver Corp v Remington Consumer Products Ltd [1990] FSR 181. Presumably New Zealand courts would if the issue arose. It is also highly likely New Zealand courts would follow the House of Lords decision in Kirin-Amgen v Hoechst Marion Roussell Ltd [2005] RPC 169.
Accordingly, New Zealand has no doctrine of equivalents. The small number of infringement cases that reach the courts make definitive analysis difficult as the cited cases involved literal infringement and there was no need for purposive interpretation.
There are no separate defences to infringement. The defendant’s product either infringes or it does not. However, a defendant can counterclaim that a plaintiff’s patent is invalid. In New Zealand, the so-called Gillette defence, derived from English law (based on Gillette Safety Razor Co v Anglo-American Trading Co (1913) 30 RPC 465) is not a defence to infringement. Rather it is a counterclaim alleging that the claims of the patent lack novelty (NJ Phillips Pty Ltd v Maisey Ltd 3 February 2006, unreported, HC Hamilton, Faire AJ).
3.3 To what extent can enforcement of a patent expose the patent holder to liability for an antitrust violation?
A patentee who seeks to enforce its statutory patent right will not face antitrust liability. This exemption from antitrust liability is the result of New Zealand’s antitrust statute: Commerce Act 1986, s 36(3).
Section 41 of the Patents Act 1953 sets out the grounds on which a Court can invalidate a patent. These are:
3.5 Can a court only partially invalidate a patent? Can it transform the patent into a utility model?
A court can partially invalidate a patent in the sense that it can invalidate some claims and uphold others.
A patentee can apply to amend the claims of its patent during infringement or revocation proceedings. Any amendment requires leave of the court. The patentee must give notice of such an amendment application to the Commissioner of Patents. The Commissioner is entitled to appear and be heard. The court can direct the Commissioner to appear (Patents Act 1953, s 39).
Under s 40 of the Patents Act the court can amend if:
Under s 68(3) of the Patents Act 1953, a patentee cannot claim damages for infringement before the decision allowing amendment unless the court is satisfied that the specification as originally published was framed in good faith and with reasonable skill and knowledge.
Also under s 68(4) nothing about the amendment procedure affects the court’s power to grant an injunction for patent infringement.
The ability to amend during infringement and revocation proceedings under ss 39 and 40 of the Patents Act 1953 does not allow patentees the opportunity to support the validity of patents in alternative versions (Ancare New Zealand Ltd v Cyanamid of NZ Ltd [2000] 3 NZLR 299 at 307).
The court’s decision to amend or not is a discretionary one.
The patentee has the onus of establishing that an amendment should be allowed. The patentee must fully disclose all relevant matters. If it fails to do so the court will refuse amendment.
If the amendments are permitted under s 40 of the Patents Act 1953 and there are no circumstances that would lead the court to refuse the amendment, then the court will allow amendment.
It is in the public interest that a patentee seeks amendment promptly. Thus, if a patentee delays seeking amendment for an unreasonable period, the court will refuse amendment unless the patentee shows reasonable grounds for the delay. A patentee can show this if it believed amendment was unnecessary and had reasonable grounds for so believing.
A patentee who knows or should know that amendment is necessary and does not seek amendment, but rather seeks to obtain unfair advantage from the patent, will not be permitted to amend. An example is a patentee who knows its patent requires amendment but who still threatens an infringer with patent infringement of the unamended patent.
In amendment proceedings the court is concerned with the patentee’s conduct – not with the invention’s merit.
Merely seeking to amend to avoid prior art does not disentitle the patentee to an amendment. However, amending for the sole reason to catching an infringement would disentitle the patentee to amendment. Coory v Amcor Packaging (New Zealand Ltd) (2004) 62 IPR 446.
3.7 Are there any grounds on which an otherwise valid patent can be deemed unenforceable, owing to misconduct by the patent holder, or for some other reason (eg expiry of time limit)?
Under the Limitation Act 1950 the limitation period for patent infringement is six years from the patentee becoming aware of the infringement.
3.8 Can a patent holder bring a law suit claiming both patent infringement and unfair competition for the same set of facts?
New Zealand does not have a tort of unfair competition. Accordingly there is no such cause of action. However, a claim of copyright or design registration infringement can be concurrent with an action for patent infringement.
4.1 Who can sue for patent infringement (patent holder, exclusive licensee, non-exclusive licensee, distributor)? Does a licensee need to be registered to sue?
The patentee can sue for an infringement. Under s 72 of the Patents Act 1953 an exclusive licensee has the same rights as the patentee in respect of infringement. Section 72 is subject to s 85. Under s 85 the licensee must be registered before the limitation period expired and at least one month before proceedings commence. An unregistered licensee must give the proposed defendant written notice at least one month before the commencement of proceeding of its intention to institute infringement proceedings.
4.2 Under what conditions, if any, can an alleged infringer bring a law suit to obtain a declaratory judgment on non-infringement?
Under s 75 of the Patent Act 1953 any party can apply for a declaration of non-infringement. To obtain such a declaration that party must show it has written to the patentee or licensee for a written acknowledgment of non-infringement and has given the patentee or licensee full particulars in writing of its article or process. The party must also undertake to pay the patentee reasonable expenses in obtaining advice over the declaration of non-infringement. The patentee or licensee must also have refused or neglected to acknowledge non-infringement.
4.3 Who can be sued for patent infringement? Can the company directors be sued personally? Under what conditions, if any, can someone be sued for inducing or contributing to patent infringement by someone else?
The defendant company can be sued. Directors can also be sued if they personally infringed. In such cases they will be regarded as joint tortfeasors and liable (Winchester International (NZ) Ltd v Cropmark Seeds 5 December 2005, unreported, CA 226/04).
Unless a party constitutes a joint tortfeasor there is no ancillary liability for patent infringement.
A plaintiff can remove a defendant from proceedings. It does so by filing a notice of discontinuance. It may be liable for costs – but usually the parties agree on these.
Under r 97 of the High Court Rules a defendant or plaintiff may be joined if it should have been joined at the start or whose presence may be necessary to enable the court to adjudicate effectively and completely upon the matters in issue.
This can be done at any stage in the proceedings and on the application of any party or on the court’s own motion.
5.1 What options are open to a patent holder when seeking to enforce its rights in your country?
Patent infringement proceedings in the High Court are a patentee’s only enforcement option.
There are no criminal proceedings in respect of patent enforcement.
Nor are border measures available.
5.4 To what extent are alternative dispute resolution (ADR) methods (such as arbitration or mediation) available to resolve patent disputes? If arbitration is available to assess invalidity, will your Patent Office recognise and execute an arbitral award declaring a patent invalid?
The parties to a dispute can agree to undertake alternative dispute resolution of patent disputes. This includes arbitration or mediation. The Intellectual Property Office of New Zealand would not recognise and execute an arbitral award declaring a patent invalid. The patentee would either have to surrender the patent or consent to a revocation order from the High Court.
In court a plaintiff begins. It starts with an opening statement setting out the factual background, the issues, the plaintiff’s case on the issues and the witnesses it will be calling. It then calls its witnesses. Witnesses read out a brief of evidence. These briefs are prepared pretrial and given to the defendant some weeks before trial. The defendant upon receipt of the plaintiff’s briefs of evidence then prepares its briefs. It too has to file them pre-trial and give them to the plaintiff. The plaintiff usually can file reply briefs of evidence which it files and sends to the defendant.
Thus, at trial the parties know what the other side will say in its evidence in chief. Trial by ambush or surprise is not permitted.
Strictly speaking the judge should not read the briefs pre-trial and should wait for the witness to read them out in court. This rule, however, is more honoured in the breach than the observance.
Once a plaintiff’s witness has read his or her brief, he or she will be cross-examined by the defendant’s counsel. After cross-examination the plaintiff can re-examine the witness. This is limited to matters arising out of cross-examination and leading questions are prohibited.
Once the plaintiff has called all its witnesses the defendant will give its opening statement. This follows the form of the plaintiff’s. The defendant will then call its witnesses. They will read their briefs of evidence and the plaintiff’s counsel will cross-examine them. Re-examination is possible.
Once the defendant has finished with its witnesses it is time for closing submissions. These will usually contain extensive submissions on the law and facts of the case. As the vast majority of New Zealand judges have never dealt with patents, closing submissions on patent law are educative and lengthy.
The usual procedure for closing submissions is for the defendant to go first, followed by the plaintiff, with the defendant to end with reply submissions. The judge can change the order if he or she wants. The parties do not exchange closing submissions.
The judge decides all disputed issues. There are no juries in patent disputes in New Zealand.
6.3 To what extent are documents, affidavits, witnesses and/or (court-appointed or private) experts used? Is it possible to cross-examine witnesses?
Documents are used in court proceedings for infringement and invalidity. Usually before trial the parties agree on what documents will be used in trial. These will go into an agreed bundle of documents which the plaintiff prepares. As the parties have agreed on these documents a witness does not need to produce them formally. If the parties do not agree on a document then the party seeking to rely on it must formally produce it.
Affidavits
Apart from revocation applications involving the originating application, procedure evidence is not given by affidavit. Rather a witness will prepare a brief of evidence which he or she will read out on oath during the court hearing. Once a witness has read his or her evidence he or she will sign it.
Experts
New Zealand courts regard expert witnesses as vital in patent cases. It will be a brave or foolish party who does not have an expert witness in New Zealand patent litigation.
Expert witnesses in New Zealand are however not hired guns. Schedule 4 to the High Court Rules sets out a code of conduct for expert witnesses. Under this the expert must agree that his or her overriding duty is to assist the court impartially on relevant matters within his or her expertise. The expert must also agree that he or she is not an advocate for the party that engages him or her.
In evidence the expert must:
If an expert witness believes that his or her evidence or any part of it may be incomplete or inaccurate without some qualification, that qualification must be stated in his or her evidence.
If an expert witness believes that his or her opinion is not a concluded opinion because of insufficient research or data or for any other reason, this must be stated in his or her evidence.
The Code of Conduct encourages opposing experts to confer pre-trial to identify differences. The court can order the experts to confer. Usually after conferral the expert witness will only give evidence on the differences. They will be cross-examined on this. This procedure is called a hot tub.
Court-appointed expert
This is the scientific adviser whose role is discussed above.
Cross-examination
As discussed above cross-examination of witnesses is permissible.
6.4 To what extent is pre-trial discovery permitted? If it is permitted, how is discovery conducted? If it is not permitted, what other, if any, mechanisms are available for obtaining evidence from an adverse party or from third parties?
Pre-trial discovery
Pre-trial discovery is available. The High Court Rules govern the procedure. All New Zealand High Court cases are conducted by the court on a case management system. Once a statement of claim is filed the court will order a case management conference – usually about six weeks after filing. A defendant has 30 days to file a statement of defence after being served with the statement of claim. Accordingly the first case management conference will occur after the defendant has filed a statement of defence.
Under r 294 of the High Court Rules, the Court will make an order for discovery at the first case management conference. To complete discovery a party must file an affidavit listing all documents relevant to the case. Whether a document is relevant is determined by the pleadings, ie the statement of claim and statement of defence (Powerco Ltd v Commerce Commission (10 March 2006, unreported, HC Wellington, MacKenzie J). New Zealand courts apply the Compagnie Financiere et Commerciale du Pacifique v Pervuvian Guana Co (1882) 11 QBD 55 (CA) test for relevance.
The party’s list of documents must list the documents that are or have been in that party’s control and relate to a matter in question in the proceeding.
If a party claims confidentiality for a document or part of one it must state the restrictions that it proposes to apply to maintain confidentiality (rr 297 and 298(1)(b)). If documents are no longer in a party’s control it must state in whose control they now are and when they left the party’s control (r 298(1)(d)).
A party must list all privileged documents and state why privilege is claimed (r 298(1)(b)). Privileged documents include all communications between lawyer and client and prepared for the litigation or when litigation was in contemplation (legal professional privilege and litigation privilege). Despite the wording of s 34 of New Zealand’s Evidence Amendment (No 2) Act 1980 communications between a patent attorney and client are privileged (Frucor v Rio Beverages [2001] 2 NZLR 604). A party must also list all relevant documents that are not in the party’s control but are held by someone else. The party must identify that other person (r 298(1)(e)).
The lawyer acting for the party giving discovery must ensure the party understands its discovery obligation and faithfully fulfils those obligations (r 296).
A party cannot seek to delay a case by discovering huge quantities of irrelevant documents. Rule 305 provides for monetary sanctions against such a party. A party can only use discovered material for the case in question. It cannot use them to launch separate proceedings (r 305).
Generally the parties will agree a timetable for discovery before the first case management conference. If not, the court orders it after hearing from the parties.
Once the parties have completed affidavits of documents these are filed and exchanged. Inspection of documents then takes place.
Another form of pre-trial discovery is the exchange of questions and answers in the form of interrogatories. Rules 278–290 of the High Court Rules govern these. Usually one asks interrogatories after discovery and inspection has occurred.
A party files and serves on another party a notice requiring that party to answer specified interrogatories relating to any matter in question in the case. The applicant party may require the answer to be given on oath.
In patent cases interrogatories are permitted but confined to particularised instances of alleged infringement. A plaintiff must plead these in its statement of claim. A party can ask about the differences between the plaintiff’s and defendant’s product. However, interrogatories requiring answers that involve construing the patent specification are not permissible.
In some circumstances an intending plaintiff can apply for pre-trial discovery against a potential defendant (r 301). Only the court can grant an order and it only does so if it is impossible or impracticable for the intending plaintiff to formulate its claim without reference to the documents.
A party can also apply for third party discovery against a non-party. It must satisfy the court there are good grounds for believing the non-party has or had relevant documents in its control.
6.5 What level of proof is required for establishing infringement or invalidity?
A plaintiff must establish infringement on the balance of probabilities. The same standard applies to an applicant for revocation.
6.6 How long do patent infringement proceedings typically last? Is it possible to expedite this process?
New Zealand has not had enough patent infringement trials to enable one to give a meaningful answer to the question as to how long patent infringement proceedings take.
However, based on different matters of similar complexity it should be possible to have a trial between a year and 18 months from filing.
One can expedite matters by requesting urgency and placing the matter on the High Court’s swift track.
Another way to expedite matters is to apply for an interim injunction. Whether or not a court grants the injunction it will usually grant an urgent trial at the end of interim injunction. Usually the trials have been set down six months after the grant or denial of the interim injunction. However, all such cases have settled before the proposed trial took place.
6.7 What options, if any, are available to a defendant seeking to delay the proceedings? Under what conditions, if any, can proceedings be stayed? How can a plaintiff counter delaying tactics of a defendant?
A defendant can seek to delay matters by filing various interlocutory applications concerning the pre-trial steps. For example, it can object to the plaintiff's pleadings, discovery inspection and interrogatories.
Stays
Usually proceedings can be stayed if both parties agree. Examples include if both parties agree that an overseas decision concerning the same patent would determine the New Zealand litigation, or if both parties are in serious settlement negotiations.
Plaintiff’s counter to delaying tactics
Rule 425(a) of the High Court Rules enables the Court to give directions to secure the just, speedy and inexpensive determination of a proceeding.
A plaintiff must apply for such orders by way of interlocutory application. Such orders can prevent obstructive tactics and push the case to trial.
7.1 What remedies are available against a patent infringer (final injunction, delivery up or destruction of infringing goods, publication of the decision, recall-order, monetary remedies, etc)?
Final, permanent or perpetual injunctions are available against patent infringers following substantial trials. Delivery up, orders for destruction and recall orders are also available to a successful plaintiff.
7.2 To the extent it is possible to obtain a final injunction against future infringement, is it effective against the infringer’s suppliers or consumers?
It is possible to frame such an injunction against suppliers but not against customers. The latter is not necessary as the injunction will prevent the infringer supplying or selling the infringing item.
7.3 What monetary remedies are available against a patent infringer (reasonable royalty, lost profits, account of profits, or some other basis)? Are punitive damages available? If so, under what conditions?
Monetary damages are available in the form of either damages or an account of profits. A plaintiff must elect which option it chooses. Normally the plaintiff pleads both in the statement of claim and make its election after discovery. Usually patent infringement trials are split into liability and damages hearings. This means initial discovery is limited to infringement. If the plaintiff wins the liability phase further discovery occurs. The plaintiff makes its election after this further discovery.
For damages the measure is either reasonable royalty rate or lost profits. Again this is at the plaintiff’s option.
From Bottrill v A [2003] 2 NZLR 721, punitive or exemplary damages are available.
A defendant’s infringement must be so outrageous that payment of compensation is an inadequate response. Exemplary damages are to condemn and punish the defendant. It is an act of deterrence.
Outrageousness in patent infringement involves intentional wrongdoing with an element of flagrancy, cynicism or oppression. This extra element must make the infringement particularly appalling.
(See Winchester International (New Zealand) Ltd v Cropmark Seeds Ltd 5 December 2005, unreported, CA 226/04).)
8.1 Is preliminary relief available? If so, what preliminary measures are available (eg preliminary injunction) and under what conditions?
A patentee can obtain preliminary relief for patent infringement. It does so by filing for an interim or interlocutory injunction. Strictly speaking these are different; however the practice is and has been to use the terms interchangeably.
The purpose of an interim injunction is to provide temporary relief to a plaintiff to prevent harm to a plaintiff from injury pending a substantive hearing. The plaintiff’s harm must be such that damages cannot adequately compensate the plaintiff.
Other types of interim relief available are quia timet injunctions and Anton Piller orders. A quia timet injunction is an interim injunction that a plaintiff seeks to prevent a threatened infringement – which has not occurred.
An Anton Piller order is a mandatory injunction (ie an injunction which orders a person to do a positive act). It requires a defendant to allow a plaintiff to enter its place of business in order to establish whether certain items are present and to remove those items.
Interim injunctions
In patent matters only the High Court of New Zealand has jurisdiction. It is a temporary and discretionary remedy.
New Zealand courts adopt a three-stage test in determining whether to grant an interim injunction. It derives from the House of Lords decision in American Cyanamid Co v Ethicon Ltd [1975] AC 396. The leading case is the Court of Appeal decision Klissers Farmhouse Bakeries Ltd v Harvest Bakeries Ltd [1985] 2 NZLR 129.
First, a plaintiff must show that there is a serious issue to be tried. This threshold is not particularly high. A patentee need only show an arguable case of patent infringement. It does not need to establish patent infringement on the balance of probabilities.
Second, a plaintiff must show that the balance of convenience favours it over the defendant. This means the risk of harm to the plaintiff of an interim injunction not being granted and then prevailing at trial outweighs the risk of harm to the defendant of an interim injunction being granted and yet the defendant ultimately prevailing.
New Zealand courts have followed May LJ’s comments in Cayne v Global Natural Resources plc [1984] 1 All ER 225 that ‘the balance of the risk of doing an injustice’ best describes the process in assessing the balance of convenience.
Factors relevant to the balance of convenience in patent infringement cases include:
Third, a court finally steps back and assesses the overall justice of the case. If it favours the plaintiff, the court will grant an injunction. Factors include whether the plaintiff has delayed in seeking an interim injunction, or any other inequitable conduct. This could include acquiescence by the plaintiff.
8.2 Is ex parte relief available, where the defendant is given no notice at all? If so, under what conditions?
A plaintiff can obtain an ex parte interim injunction. However, a court only grants one if delay would deprive the plaintiff of any remedy. Giving notice must cause undue delay or other serious detriment to the applicant. Given this, it is highly unlikely that a New Zealand court would grant an ex parte interim injunction for straight forward patent infringement.
Under r 240 of the High Court Rules an applicant for an ex parte injunction has a duty to give full disclosure to the court. This includes any defence which a defendant might have. The applicant must put all material before the court so the court can determine whether the defendant might have a defence.
The solicitor or counsel acting for the applicant must give a statement certifying the documents comply with the High Court Rules, the order sought is the one that ought to be made and there is a proper basis for seeking an ex parte injunction.
8.3 Is plaintiff entitled to ask for an order that defendant’s premises are searched and a description of the infringing goods (and the accounting relating thereto) is made in order to establish proof of infringement (saisie-contrefaçon)? If not, what other mechanisms, if any, are available for seizing and preserving evidence for trial?
This occurs by a plaintiff applying for an Anton Piller order.
This is a mandatory interim injunction compelling a party on threat of contempt of court to allow access to premises, authorises the seizure of material (so as to preserve that material) and requires answers under oath to questions. As the Court of Appeal noted in Busby v Thorn EMI Video Programs Ltd [1984] 1 NZLR 461 at 467, it is ‘an extreme remedy for extreme cases’.
The New Zealand High Court has jurisdiction to grant such an order under its inherent jurisdiction and rr 9, 331 and 332 of the High Court Rules.
To obtain an Anton Piller order, a plaintiff must establish:
A court can make ancillary orders to the main Anton Piller order. These are related discovery and interrogation orders. In patent litigation such ancillary orders include:
The Court can also make gag orders preventing the defendant notifying others about the Anton Piller orders.
Documents
To obtain an Anton Piller order a plaintiff must file: a statement of claim; notice of proceedings; an interlocutory application for an Anton Piller and any ancillary orders; affidavits in support; draft order; an undertaking as to damages, costs and manner of execution; an undertaking from the plaintiff’s solicitors as to the manner of execution, advising the defendant as to the orders.
Although not compulsory, it is good practice to file a memorandum of counsel and a draft explanatory notice to the defendant. By their very nature applications for Anton Piller orders are ex parte.
8.4 Can the defendant put the validity of a patent in issue in preliminary injunction proceedings?
A defendant can put the validity of a patent in issue in interim injunction proceedings. The courts are inconsistent in how they assess the relevance of an invalidity attack.
In Eveready New Zealand Ltd v Gillette New Zealand Ltd 28 August 1998, unreported, HC Auckland, Elias J the High Court held that an invalidity attack would only prevent the grant of an interim injunction if the defendant provided evidence of an overwhelming case of invalidity. Subsequent courts followed this reasoning in trade mark and design cases.
However, recently cases have considered invalidity allegations and the strength of them as highly relevant in determining whether there is a serious issue or which party the balance of convenience favours.
The plaintiff begins by making its submissions with reference to its pleadings and the affidavits filed. The defendant then responds. The plaintiff invariably will have a right of reply.
8.6 To what extent are documents, affidavits, witnesses, and/or (court-appointed or private) experts used in preliminary injunction proceedings?
A plaintiff seeking an interim injunction must file: a statement of claim, notice of proceedings, notice of interlocutory application for interim injunction, undertaking for damages and affidavits in support.
In the undertaking for damages the plaintiff undertakes to pay damages to the defendant in the event the court grants an interim injunction but the defendant wins the substantive trial.
The interim injunction hearing is conducted on the documents. Witnesses do not appear.
A court can appoint a scientific adviser for an interim injunction – but this has never happened.
8.7 What level of proof is required for establishing infringement or invalidity in preliminary injunction proceedings?
As mentioned above, a plaintiff only needs to establish an arguable case of patent infringement. This is less than a balance of probabilities. For a defendant to show invalidity as a ground for denying the grant of an interim injunction, it has to establish an overwhelming case of invalidity.
A hearing of an interim injunction usually occurs within a month of filing. If the matter is urgent a plaintiff can apply for an earlier hearing.
A decision will either be given at the conclusion of the hearing or usually within a week.
8.9 Where a preliminary injunction is granted, is it necessary to start main proceedings to confirm the preliminary injunction?
Once a court has determined the interim injunction application it will make timetable orders for the substantive trial. The plaintiff does not have to file any new documents – the application for interim injunction, in essence, also begins the substantive or main proceedings.
9.1 What avenues of appeal are available for a defeated party to main proceedings or preliminary injunction proceedings?
There are automatic appeal rights from the High Court in interim injunction and main proceedings to the Court of Appeal. There is a further appeal to the Supreme Court. This requires leave from the Supreme Court. The Supreme Court will only grant leave if an important question of law is involved.
As an interim injunction is a discretionary remedy. The appellate courts will only grant an appeal if the appellant can show the court exercised its discretion wrongly – in essence if it abused its discretion.
9.2 How long do appeal proceedings typically last?
Appeals from interim injunctions are heard very quickly.
Appeals from main proceedings can take up to 18 months – although an appellant can obtain an urgent hearing if it has good grounds.
10. LITIGATION COSTS
10.1 What level of cost should one expect to incur to take a case through to a first instance decision, preliminary injunction proceedings and/or appeal proceedings?
It is virtually impossible to give an estimate of the costs of patent litigation as there are too many variable factors. Needless to say though that in New Zealand, as everywhere else in the world, patent litigation is ‘the sport of kings’. However, it is significantly cheaper than the United Kingdom, the United States and Australia.
10.2 Are costs recoverable from the losing party?
Costs are recoverable from the losing party. These are set by a scale in the High Court Rules which classifies cases according to their complexity. Patent litigation invariably falls in the top or most complex category. Such costs do not amount to anything like recovery of full actual costs.
In the Court of Appeal costs are presently awarded to the successful party at $8,000 a day for the length of the appeal.
11. FORTHCOMING LEGISLATION
11.1 What are the important developing and emerging trends in your country’s patent law?
The New Zealand Government has issued an exposure draft of the Patents Bill 2005. As the Bill is yet to be enacted, the following discussion is based on the current draft of the Bill. The most significant change is to the requirements for patentability. These are that the invention must be:
11.2 To the extent it relates to patent enforcement, outline any major patent legislation in the pipeline.
Relevant parts of the Patents Bill 2005 are:
Revocation and surrender of patents
Unlike the current legislation, the Bill contains no provision for pre-grant opposition. Instead, cl 104 provides that either the Commissioner or the High Court may, upon application, revoke a patent. If another relevant proceeding in relation to the patent is before the Court, any application for revocation to the Commissioner may only proceed with leave of the Court.
The grounds of revocation are:
Infringement
The Bill includes a definition of infringement, something not present in the existing legislation.
Clause 17 provides the patentee with the exclusive rights to exploit the invention (and to authorise others to do so). The term ‘exploit’ includes the rights to use or import, keep and make, hire, sell or otherwise dispose of (or offer to do the same) the invention or product of the invention. Clause 129 states that a person infringes a patent if he or she does any of these acts (unless the person is a licensee).
A person also infringes if he or she supplies or offers to supply to a third party any of the means for putting the invention into effect, and knows (or ought reasonably to know) that the means are suitable and intended by the third party for putting the invention into effect, and the third party would infringe the patent by putting the invention into effect.
This provision for contributory infringement is also a change from the current position. Currently, before a supplier can be found to have infringed a patent, the supplier and the third party must be found to have shared a common intention to act in an infringing manner and the supplier must have done something to assist that.
Relief for infringement
The Court may grant an injunction and, at the option of the plaintiff, damages or an account of profits. The commentary to the Bill states that this list is not exhaustive. Thus, the Court has a wide discretion in the type of relief it can grant to a plaintiff. This is probably the case under the old Act but the Bill removes any doubt.
Intellectual property legislation does not move with the utmost celerity in New Zealand so it is not known when the Bill will be enacted.
12.1 Please identify any useful works of reference relating to patent law and patent litigation in your country including useful websites.
Perhaps because of New Zealand’s size and lack of patent litigation there is and has been no specific text on patent litigation. The most recent general text on intellectual property, Frankel and McLay’s Intellectual Property in New Zealand, contains a useful but general introduction to New Zealand’s patent law.
McGeehan on Procedure is a looseleaf service that provides commentary on the High Court Rules, including the Patent Rules.
The most cited text in New Zealand patent cases is still TA Blanco White’s Patents for Inventions and Designs (4th edn). This is still a must for the shelf of any serious New Zealand patent practitioner.
