Intellectual Property in New Zealand and Australia

Thursday 24th April 2008

With increasing globalisation and the impact of FTAs, an IP strategy that fails to include New Zealand and Australia creates a serious gap which can be exploited by competitors.  

New Zealand and Australia have traditionally been countries which have not featured prominently in the intellectual property strategies of intellectual property owners. This has been to the benefit of New Zealand and Australia and to the detriment, over time, of intellectual property owners. With increasing globalisation and the impact of Free Trade Agreements between a variety of countries, any intellectual property strategy that does not include New Zealand and Australia has a serious gap which can be exploited by competitors.

New Zealand and Australia can in most respects be considered a single market which is governed by the Closer Economic Relationship (“CER”) agreement between the two countries. Australia is New Zealand’s most important economic partner, and New Zealand is Australia’s fourth largest market. The resulting close trade and legal relationship between the countries gives businesses duty free access to a population of over 27 million.

The Culture

New Zealand and Australia share a common British heritage. The intellectual property systems of both countries are based on the British model and both countries initially adopted intellectual property legislation that was essentially identical to that of Britain. Therefore, the intellectual property traditions of both countries have been based on the British model and the training of the intellectual property professions of both countries (the New Zealand Institute of Patent Attorneys (NZIPA) and the Institute of Patent and Trademark Attorneys of Australia (IPTA) is internationally based.

The countries themselves share a similar culture and legal system to that of the United States of America, Canada and Britain. Registered and unregistered intellectual property rights are respected and enforced. The registered intellectual property rights include patents, trade mark, and registered designs. Unregistered rights include copyright, trade secrets, passing off, and fair trading legislation.

In a general sense, New Zealand, Australia, the USA, Canada and Britain have a common culture and Western approach to consumer issues. New Zealand is particularly useful as a test market for consumer goods, as New Zealanders have traditionally been early adopters of technology and because the New Zealand market is relatively small and contained. Mistakes can therefore be made without large-scale implications.

With the common background and language, New Zealand, Australia, the USA, Canada and Britain have traditionally had strong trade relationships. The ties between the countries are long-standing and have been developed through defence relationships over many years. The ANZAC (Australia New Zealand Army Corps) relationship is particularly strong. The ANZUS (Australia New Zealand United States) defence relationship is also strong although New Zealand’s antinuclear stance and its refusal to allow US nuclear powered or armed ships access to its ports has strained this relationship in recent times. The development of a New Zealand market can readily be used as a stepping stone into the larger markets of Australia, the USA, and Britain.

Free Trade Agreements

New Zealand has a number of free trade relationships, including recent economic co-operation agreements with Singapore and Thailand. A Trans-Pacific Strategic Economic Partnership Agreement (Trans-Pacific SEP) between Brunei, Chile, New Zealand, and Singapore came into force on 1 May 2006. A New Zealand–Malaysia Free Trade Agreement is under discussion as is a Closer Economic Partnership (CEP) Agreement between New Zealand and the Hong Kong Special Administrative Region.

New Zealand also has world-first negotiations with the People’s Republic of China, which will significantly increase the size of the New Zealand consumer market. New Zealand’s exports of goods and services to China between 2007 and 2027 are expected to grow on average between NZ$260 million and NZ$400 million a year. Chinese exports of goods and services to New Zealand between 2007 and 2027 are expected to grow on average between NZ$55 million and NZ$100 million a year.

On 30 November 2004, New Zealand Prime Minister Helen Clark and Australia’s Prime Minister John Howard, announced that negotiations would commence on a free trade agreement (FTA) between Australia, ASEAN and New Zealand.

Australia has also concluded free trade agreements with Singapore, the United States and Thailand. Australia is also looking at free trade agreements with China, the UAE and Japan.
The number of free trade relationships that both New Zealand and Australia have completed, or are looking to complete, link both countries into trading relationships with large consumer markets. It is no longer sensible to treat countries such as Australia and New Zealand as individual, isolated, markets. Any intellectual property licensing agreements which do not include New Zealand and Australia, potentially create options for competition not only in those countries but also in other countries with which they have free trade agreements. This reduces the value of the intellectual property to potential licensees and, as a result, reduces the returns to the intellectual property owner.

The Internal Markets

New Zealand has a relatively small population of about 4 million people. Because of this there is a natural focus on the export of goods and services to other countries. New Zealand’s primary strength is in the agricultural sector which includes the dairy and sheep industries, as well as forestry, horticulture, and fisheries. Traditionally New Zealand has focused on export of quality products from these sectors (e.g. milk, wool, timber and fish) but more recently there has been an increasing focus on technology related aspects. There is an internationally recognised expertise in biotechnology related aspects of agriculture as well as electronics, food technology, wood pulp and paper processing technology.

New Zealand’s best known companies internationally would probably be Fonterra and Zespri. Fonterra is the world’s largest exporter of dairy products and now has research and development facilities in both New Zealand and Australia. Zespri is the world’s premier kiwifruit producer and exporter and has an internationally recognised branding regime which is based on the excellence of its product. Both companies are founded in New Zealand’s agricultural sector and are based around farmer/grower cooperative structures. For those interested in the pharmaceutical sectors, the “Glaxo” part of Glaxo SmithKline, began life as a small milk powder producing company in New Zealand. There is a strong agrichemical/veterinary medicine industry and market in New Zealand.

Australia has a larger population of around 24 million. While there is a focus on the export of goods and services to other countries it also has a larger internal market which local companies can focus on. Australia’s natural resources provide the basis for its strong economy. Its mining sector in particular is strong and its heavy industry is internationally competitive. It also has an increasing expertise in biotechnology, electronics, and industries that are related in particular to the mining and heavy industry sectors. Australia’s pharmaceutical sector is rapidly expanding and will be taking advantage of the Free Trade Agreement that Australia has with the USA.

As a combined internal market, New Zealand and Australia together provide a commercially attractive target consumer market for high-technology goods and services as well as a source of intellectual property rights which can be accessed by way of technology transfer. The internal markets are competitive and are able to quickly adapt to changing international opportunities.

For any intellectual property owner with an international growth strategy, it is becoming increasingly important to ensure that both New Zealand and Australia are an integral part of the intellectual property aspects of that strategy.

Chinese Involvement in the New Zealand Market

The New Zealand Herald on 14 February 2006 reported that a large Chinese technology company Huawei Technologies Ltd had entered into a partnership with South Africa based Econet to compete in New Zealand’s NZ$2 billion plus mobile telephone market. The partnership would be the third mobile phone network alongside Vodafone and Telecom New Zealand.

Huawei Australia managing director Rio Zhang was reported in the New Zealand Herald as saying that the Chinese telecommunications market was reaching maturity and it is in less developed nations - such as New Zealand - that the company is looking for growth. Huawei opened an East-Pacific headquarters in Sydney to serve as its nerve center for expansion into Australia, New Zealand, South Korea, Hong Kong and the Pacific islands. Huawei was reported as being seen as a major threat by multinationals. Swedish telecommunications giant Ericsson last year agreed to buy British equipment maker Marconi for £1.2 billion ($3.1 billion). The move was reported as being seen as strategic in nature, to keep Huawei from buying Marconi and establishing a foothold in Europe. The New Zealand/Australia option appears to have been seen to be an alternative route into the Western telecommunications markets for Huawei.

New Zealand and Australian companies are clearly looking at the Chinese market as a source of increasing consumer demand. Equally, the large Chinese companies are now looking outside of China for opportunities for investment and growth. The New Zealand and Australian markets will be increasingly attractive given their relatively strong economies and Western culture consumerism.

IP Tips for Entry into the New Zealand Market

  1. Check the Intellectual Property Office of New Zealand (IPONZ) records for the existence of registered intellectual property rights (patents, trademarks, registered designs) that could restrict your ability to enter the New Zealand market. These records can also serve as sources of intellectual property ownership information should you be looking to enter into business relationships in New Zealand.
     
  2. Ensure that your intellectual property rights are protected before entering the New Zealand market. New Zealand is often excluded from international patent filing strategies, and you should ensure that your rights have in fact been protected in New Zealand. New Zealand has “local novelty” requirements in its patent and registered design legislation at present and therefore, provided information about your product has not been received in New Zealand, it may be possible to obtain registered rights in New Zealand at a later stage.
     
  3. Investigate whether copyright may exist in the product you intend to release. New Zealand’s copyright legislation includes protection for three-dimensional articles. There is a “registered design/copyright overlap” which allows the copyright owner in New Zealand to have copyright protection for the actual product. In other countries, Australia for example, there is no such “overlap” and unless registered design protection is sought, there may be little or no copyright protection available for the actual article. In New Zealand, copying the actual product or the original copyright drawings can result in infringement. Therefore, if you are looking to export a product to New Zealand based on an existing New Zealand product, copyright issues may well arise. Of course, if you are the copyright owner, you may have rights in New Zealand which do not exist in other countries. The term of copyright protection in New Zealand runs for 16 years from the date of first commercial use (defined as 50 or more units) of the product in question anywhere in the world. 
     
  4. Investigate whether environmental legislation requirements are met. New Zealand’s environmental protection legislation is rigorous. The Hazardous Substances and New Organisms (HSNO) legislation has a number of mandatory requirements that must be met before any new organism or hazardous substance can be released in New Zealand. The threshold for what is “hazardous” is extremely low and therefore any new product that enters the New Zealand market is likely to need to get approval from the Environmental Risk Management Authority (ERMA) before the product can be released. ERMA is the body responsible for implementation of the HSNO legislation. Before release of a new product into New Zealand you should determine whether or not approval is required. A small change in the composition of a product (e.g. a pesticide, hand soap, paint etc) may require a new approval. 
     
  5. Investigate whether the “look” of your product is similar to the “look” of an existing product in New Zealand. New Zealand has well developed unfair competition rules based on both common law and legislation. If your product could create confusion with an existing product in the market, then you may experience difficulties. Your activities could be considered to be misleading, and therefore breach the Fair Trading Act 1986, or your activities may be seen to be passing off your product as someone else’s. 
     
  6. Do not assume that because the product can be released in Australia that it can also be released in New Zealand (or vice versa). It is important to ensure that you have freedom to operate in both countries individually.

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