Cabinet Decision on Experimental Use Exception to Patents Act 1953

The New Zealand Government has decided to introduce an Experimental Use Exception (EUE) to the New Zealand patents legislation. It is proposed that the exception be incorporated into the draft Patents Bill which has already been prepared and is expected to be introduced into Parliament late in 2006.

The New Zealand Patents Act 1953 does not contain a specific exception for experimental use. The New Zealand courts have held that research on a patented invention of an experimental nature would not infringe a patent, while research carried out with a commercial advantage in mind would infringe (Monsanto Co v Stauffer Chemical Co (No. 1) (1984) 1 NZIPR 518). The uncertain scope of what amounts to “commercial advantage” is indicative of the problem.

Further, in the Monsanto case, Eichelbaum J specifically stated that he “need not decide the status of trials carried out in the privacy of a defendant’s own premises, which in any event could not be policed”. The fact that this issue is still left undecided in New Zealand is unsatisfactory - as is the argument that such uses could not be policed. The existence of trials conducted in the experimenter’s own premises may well disclosed to the patentee by a disgruntled former employee or a third party contractor. The absence of any case law guidance provided on this point provides an uncertain and unsatisfactory environment for investment in research in New Zealand.

In February 2006, MED released a paper An Experimental Use Exception for New Zealand Patent Legislation: Options Paper. This paper followed on from consideration of the same issues in Australia by the Australian Law Reform Commission and the Australian Advisory Council on Intellectual Property (ACIP). In particular the ACIP final paper in November 2005 proposed a single preferred option for an experimental use exception. Just as in Australia, the activities of the Australian public company, Genetic Technologies Limited, in seeking licences under various junk DNA patents have led to pressure in New Zealand for an experimental use exception.

The MED 2006 Paper attracted a range of submissions. All but one supported the adoption of an EUE. Cabinet has now decided that an experimental use exception will be incorporated. On balance New Zealand has decided that an exception based on the ACIP final proposal would seem to be the most appropriate. The ACIP final proposal reads:

“The rights of a patentee are not infringed by acts done for experimental purposes relating to the subject matter of the patent that do not unreasonably conflict with the normal exploitation of a patent. Acts done for experimental purposes relating to the subject matter of the patent:

• Determining how the invention works.
• Determining the scope of the invention.
• Determining the validity of the claims.
• Seeking an improvement to the invention”.

The MED Report notes that while this is not perfect - for example it does not define “acts done for experimental purposes” or what is meant by “unreasonably conflict with the normal exploitation of a patent” - it represents a considerable improvement on the current situation.