Agreement in Principle for NZ-UK Free Trade Agreement
New Zealand and the United Kingdom have reached an agreement in principle in their Free Trade Agreement negotiations.
Finalisation of the legal text of the more substantive free trade agreement underlying the agreement in principle is expected to happen within the next couple of weeks. Officials will then perform a national interest analysis of the agreement and Cabinet will use that report to decide whether to sign the agreement. Following signature the usual legislative process involving select committees and production of implementing regulations will occur with final ratification of the agreement occurring once both countries have enabled the agreed changes to take effect.
Intellectual property is specifically covered in section 16 of the agreement in principle. Notable changes that this will require to be made to New Zealand’s intellectual property laws are as follows:
- extending the copyright term by 20 years (from 50 years) for authors, performers and producers, with implementation required within 15 years of entry into force of the FTA;
- introducing an artist’s resale right scheme within 2 years of entry into force of the FTA and operate it on a reciprocal basis with the UK;
- extending the public performance right for performers to cover communication to the public of phonograms;
- making all reasonable efforts to join the Hague Agreement on Industrial Designs;
- No other commitments in the IP chapter will require changes to IP regulatory settings and will not affect the cost of medicine in New Zealand (or the UK).
The FTA also specifies a conditional commitment by New Zealand that if New Zealand’s geographical indications legislation is extended in a bespoke fashion to recognise agricultural products that this will also be done for the UK. This conditional provision is on account of the on-going negotiations for an EU-NZ FTA, and will be reviewed within two years of entry into force of the FTA if no such bespoke changes have been made.
Reflecting their importance to New Zealand, including Māori, the chapter will include provisions on genetic resources, traditional knowledge and traditional culture expression that:
- recognise the relevance of traditional knowledge associated with genetic resources to IP systems;
- provide for consideration of traditional knowledge associated with genetic resources in patent examination processes;
- commit both countries to working together to promote multilateral outcomes on these issues at the World Intellectual Property Office Inter-Governmental Committee (WIPO IGC); and provide for review of these provisions in the FTA (including within 2 years of entry into force if no international instrument has been adopted at WIPO).
Along with the agreed elimination or phased elimination of tariffs, other notable non-IP provision that both parties will commit to are:
- efficient low-cost rules of origin including setting weight based and value based thresholds for non-originating products and ensuring that sufficient production or processing occurs within the relevant exporting country;
- ensuring technical barriers to trade are non-discriminatory and do not create unnecessary obstacles to trade;
- liberalising cross-border trade in services by making it easier for services companies to trade and for professionals to operate in each other’s economies including by not having a physical presence requirement and providing efficient and transparent routes to recognition for professionals with qualifications obtained in the other country.
Unified Patent Court a Step Closer
Germany’s recent ratification of the Protocol on Provisional Application of the Unified Patent Court Agreement (Protocol) brings the establishment of the Unified Patent Court (UPC) another important step closer.
Following the UK’s decision to opt out of the UPC, the significant hurdles to the UPC entering into force were ratification by Germany, the re-allocation of the central division court that had originally been allotted to the UK and sufficient ratifications of the Protocol.
Following the German Constitutional Court ruling inadmissible two new constitutional challenges to Germany’s ratification of the UPC, Germany signed its instrument of ratification, but has yet to deposit it with the Council of the European Union. It is expected that Germany will deposit its instrument of ratification of the UPC Agreement once the other hurdles have been settled.
Italy qualifies as the third biggest EU Member State for UPC purposes following the UK’s withdrawal from the EU. It is expected that Italy will therefore replace the UK by hosting one of the sections of the central division of the UPC, with the others being in Germany and France. Initially the allocation of disputes to the three sections of the central division was according to the top level codes of the International Patent Classification. Paris was allocated (B) performing operations and transporting, (D) textiles and paper, (E) fixed constructions, (G) physics and (H) electricity, Munich was allocated (F) mechanical engineering, lighting, heating, weapons, blasting and the London was allocated (A) human necessities and (C) chemistry and metallurgy. It is not yet clear whether Italy will take over the UK’s allocation or whether the allocation of subject matter will be redistributed.
The Protocol allows specific provisions within the UPC Agreement to be provisionally applied before the rest of the UPC Agreement provisions enter into effect. There is no set period for provisional application, but it is currently expected to apply for around 6-8 months. The Protocol needs to be ratified by 13 signatory states to the UPC Agreement (including as above the three largest), and currently Austria looks likely to be the 13th signatory state with indications that it will do so during the first quarter of 2022.
Once it enters fully into force the UPC will have jurisdiction in relation to disputes concerning existing European patent applications and patents (EP) unless the patentee opts out. If the patentee opts out during the transitional period of 7 years national courts can have jurisdiction provided no action before the UPC has been brought. Where a patentee has opted out during that 7 year period they can also opt back in provided no action has been brought before a national court of a UPC Agreement member state. Eventually, the UPC will also have jurisdiction in relation to European unitary patents (UP), being an EP granted after entry into force of EU Unitary Patent Regulation 2012-1257 (which commences with the UPC Agreement) and for which the owner has opted in to the UP grant option within 1-month of the mention of grant. If the owner opts for grant as a UP the UP will be deemed to have effect from the date of publication of the mention of grant.
There are various considerations to take into account when deciding whether to opt out of the UPC for existing rights and whether to opt for grant as a UP when mention of grant for an EP is issued following the commencement of the UPC and UP legislation. The following are some notable considerations:
- If an existing bundle of national rights validated from an EP are in the names of different proprietors, then all of those proprietors would have to opt out of the UPC in order for an opt out application to be effective;
- Once opted in for a UP cannot be opted back out of;
- UPs have unitary effect in applicable jurisdictions and are only enforceable and revocable as a single patent;
- UPs cannot be partially assigned, but they can be partially licenced;
- UPs are likely to be more cost effective when the UP covers 4 or more member states;
- If a UP is unlikely to be renewed up to its full term, then renewal fee savings will be less significant;
- If a UP is granted before a new member state accedes to the UPC Agreement, the UP will not extend to that new member state;
- It is envisaged that translation from one of the EPC official languages will not be required for non-litigated patents. However, until machine translation significantly improves UPs granted in German or French must be translated into English and all UPs granted in English must be translated into German or French;
- Proceedings before a central division will be in the language the UP was granted in, while local or regional divisions use an official language of the hosting state unless discretion allows the language of grant to be used;
- Nullity actions for a UP can be anyone irrespective of whether they are effected by the UP.
Does EU Designs Law on Component Parts that are Invisible During Normal Use Need Cleaning Up?
In Miele Computer Cie KG v Green Label Manufacturing Europe Limited R 299/2021-3 an EUIPO Board of Appeal overturned a decision which had found that a vacuum cleaner bag is not eligible for design protection if it is not visible during normal use of the vacuum cleaner.
In August 2008 Miele obtained a Community design registration for a vacuum cleaner bag, some of the depictions of which are shown here and here. In August 2019 Green Label filed an application for a declaration of invalidity on the basis that the design was registered in contravention of Article 4(2) of the EU Designs Regulations 2002-6 (Regulations). In particular, the invalidity applicant argued that Article 4(2) applies as a vacuum cleaner bag is only a component part of a complex product – namely a vacuum cleaner – and that during normal use of the vacuum cleaner the vacuum cleaner bag is not visible.
Article 4(2) of the Regulations states:
(2) A design applied to or incorporated in a product which constitutes a component part of a complex product shall only be considered to be new and to have individual character:
(a) if the component part, once it has been incorporated into the complex product, remains visible during normal use of the latter; and
(b) to the extent that those visible features of the component part fulfil in themselves the requirements as to novelty and individual character.
Article 3(c) of the Regulations states: (c) “complex product” means a product which is composed of multiple components which can be replaced permitting disassembly and re-assembly of the product. The meaning of “normal use” in Article 4(2)(a) is given by Article 4(3), which states: (3) "Normal use" within the meaning of paragraph (2)(a) shall mean use by the end user, excluding maintenance, servicing or repair work.
The Cancellation Division of the EUIPO agreed with Green Label, finding the vacuum cleaner to be a complex product and that vacuum cleaner bags are consumables that are a necessary component for the proper functioning of the vacuum cleaners they were designed for. It found that the vacuum cleaner bags are not visible during normal use and that the changing or inspection of a vacuum cleaner bag is not part of normal use, but rather fell within the maintenance exception to normal use in Article 4(3).
On appeal Miele acknowledged that vacuum cleaners qualify as complex products, but argued that vacuum cleaner bags are not component parts of vacuum cleaners for Article 4(2) purposes on the basis that Article 4(2) applies to component parts that have a fixed, physical and lasting connection within the complex product. It was contended that the loose and temporary connection the vacuum cleaner bags make with the vacuum cleaner put them outside the scope of Article 4(2). Miele also classified vacuum cleaner bags as an accessory as bagless vacuum cleaners are known, and considered the fact that vacuum cleaner bags are sold separately as assisting their registrability.
The Board of Appeal noted that vacuum cleaner bags are listed in the Locarno classification and considered it would not make sense for there to be such a listing for something which is in general excluded from protection. The Board of Appeal both states that bags are required for the intended use of a vacuum cleaner, while also stating that the bags are not component parts for Article 4(2) purposes. Its way of making sense of this apparent contradiction is by emphasising that the bags are consumables that can be advertised and sold independently and at a wider range of locations than vacuum cleaners or their non-consumable component parts. It also states that a missing or full bag is not a reason to bring a vacuum cleaner in for repair. It was further considered that classifying the bags as a component part would make for an unusually high barrier to protection and have adverse design protection results for other consumables such as light bulbs, batteries, rolls of film or café capsules.
The Board of Appeal’s decision can be seen as trying to find a way within the confines of the Regulations of allowing design protection for consumable parts that are not visible during normal use of the complex product they are incorporated into. However, the interpretations required are somewhat strained. I think most people would say that a vacuum cleaner bag is a component part of a vacuum cleaner, and that replacing a full bag with a new bag is part of the maintenance of the vacuum cleaner – if it was not done then the vacuum cleaner would not function as intended. While the bags have a loose and temporary connection with the vacuum cleaner that does not mean they are not a component part thereof. That type of connection is dictated by practicality issues. It would be possible to make the bags have a stronger connection to the vacuum cleaner, but such bags or the vacuum cleaners that required them would not sell. Vacuum bags are not an accessory, they are required for the vacuum cleaner to work as intended. Bag type vacuum cleaners will still operate without a bag, but the efficiency will be reduced and the collected material will not be as easily disposed of. Although there are bagless vacuum cleaners, they are a different type of technology to bag type vacuum cleaners.
Although not stated therein, this decision can be seen as indicating that legislative changes are required to bring clarity to this area of EU Designs law. The decision indicates that design protection should be available for consumable parts that are marketed and sold separately to the complex products they are incorporated into whether or not they become invisible during normal use when so incorporated. Perhaps this could be achieved by inserting “non-consumable” before each instance of “component part” in Article 4(2).
4. Trade Marks
Did The Warehouse Get a Bargain from its Revocation Application?
In Haydn Brush Company Ltd v The Warehouse Limited  NZIPOTM 30 the Assistant Commissioner held that preparatory use had not been sufficiently evidenced from the use of a mark on letterhead.
In November 2010 Haydn achieved registration of its device mark consisting of a map of New Zealand composed of different sized koru devices in classes 2, 3, 8, 16, 21 and 37. It claimed to have used the mark since at least September 2011, although at the hearing it conceded that it had not used the mark in relation to the class 3 goods. The August 2014 applications by The Warehouse Limited (TWL) cover a wide range of goods and services in 26 of the 34 goods classes and 6 of the 11 services classes, including all of the classes in which Haydn’s mark was registered. Particular areas of overlap are for hand tools and implements in class 8 and paint brushes in class 16.
Haydn’s Registration / TWL Application / TWL Application
The claimed non-use period was for a period of 3 or more years up to 2nd March 2015. TWL considered Haydn had only established use of the device mark during that time on paint brushes, but contended that even that use was not use as a trade mark. While acknowledging that more than one mark can be used as a badge of origin in relation to particular goods or services, TWL considered Haydn’s device was not used as a trade mark as it was not used in close proximity to its primary trade marks of HAYDN and LEEDA. Instead, on account of the way the image is used, TWL considered that it merely communicates a New Zealand connection. However, the Assistant Commissioner found Haydn’s device mark to be inherently distinctive and unlikely to be seen by consumers as merely signifying New Zealand. Although the device appeared on the side of the paint brush packaging and not on the paint brushes themselves, this did not count against its ability to perform the trade mark function of communicating origin. While the HAYDN and LEEDA marks were each clearly used with the ® symbol, the evidence did not clearly establish any such use of the ® symbol with the device. However, the Assistant Commissioner observed that use of the ® symbol in not required. After likewise rejecting other arguments by TWL the Assistant Commissioner found the device mark to be genuinely used during the relevant period in relation to paint brushes.
Regarding the other goods and services (excluding class 3) Haydn claimed it had made preparations to extend use of the device mark to those goods and services and emphasised that integrating the new brand was being undertaken as a gradual process given the extent of Haydn’s goods and services. The Assistant Commissioner noted that preparatory use can constitute genuine use if the owner has committed to using the mark and there is objective evidence in the form of the mark being communicated to a third party as part of the preparations during the relevant period. Haydn’s own evidence showed that they had not committed the using the device mark in relation to the various cosmetic utensils constituting their class 21 goods.
However, Haydn’s letterhead contained the device mark and it was also on the reverse side as a watermark. Haydn asserted that it used the letterhead when corresponding with customers and industry partners regarding the various goods it trades in. Yet the Assistant Commissioner was not satisfied that this was sufficient to evidence preparatory use, despite Haydn trading in relevant goods covered by the class 2, 8 and 16 specifications. As justification for that finding the Assistant Commissioner stated that there were no examples of use of the letterhead on actual correspondence and it was unclear what the letterhead was used for during the relevant period. With respect, these justifications have little force. Haydn’s asserted use of the letterhead is highly plausible and so should not require examples of actual correspondence. Little in the way of inference is required to conclude in line with Haydn’s assertion that they used the letterhead to correspond with customers and industry partners regarding the goods they trade in. This appears to be another example where a pleading has been rejected on a tenuous basis that favours the possible over the probable.
While not mentioned, a more plausible and relevant basis for rejecting the preparatory use pleading could have been that the claimed period of preparatory use was too long to qualify as such. Haydn’s evidence was that the letterhead had been used since at least September 2011. While integrating a new brand can be a gradual process, if by March 2015 Haydn hadn’t integrated the device mark into some of their other goods or provided further evidence of their on-going preparations for such use, then that would be a strong basis for rejection of the preparatory use pleading. Being a well-established company Haydn should be aware of the 3-year non-use period and the onus being on the owner to evidence discretion being applied in their favour if they cannot establish use during that period.
Having found that genuine use was only established in respect of paint brushes, the Assistant Commissioner considered that a fair specification would not extend beyond that, and so rejected Haydn’s contention that the other painting related goods and services should be maintained. The Assistant Commissioner then found that there was no basis from TWL’s pleadings to revoke Haydn’s registration from a date earlier than the end of the 3-year non-use period, being 2nd March 2015. It was considered that to hold otherwise would go against the principles of natural justice as Haydn was effectively only put on notice that it had to establish use for the 3-year period ending on that date.