VZCZCXRO4485
RR RUEHNZ
DE RUEHWL #0136/01 0530627
ZNR UUUUU ZZH
R 220627Z FEB 06
FM AMEMBASSY WELLINGTON
TO RUEHC/SECSTATE WASHDC 2416
INFO RUEHBY/AMEMBASSY CANBERRA 4304
RUEHNZ/AMCONSUL AUCKLAND 0654
RUEATRS/DEPT OF TREASURY WASHDC
RUCPDOC/USDOC WASHDC 0031

UNCLAS SECTION 01 OF 04 WELLINGTON 000136 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
STATE FOR EB/IPE-CLACROSSE AND EAP/ANP-DRICCI 
STATE PLEASE PASS TO USTR FOR JCHOE-GROVES 
STATE PLEASE PASS TO USPTO FOR JURBAN 
STATE PLEASE PASS TO LOC FOR STEPP 
COMMERCE FOR JBOGER AND ABENAISSA/4530/ITA/MAC/AP/OSAO 
 
E.O. 12958: N/A 
TAGS: KIPR ETRD ECON PREL NZ
SUBJECT: YEAR 2006 SPECIAL 301 REVIEW - NEW ZEALAND 
 
REF: A. STATE 14937 
 
     ¶B. WELLINGTON 40 
     ¶C. 05 WELLINGTON 334 
 
(U) Sensitive but unclassified -- for U.S. government 
channels only. 
 
Summary 
------- 
¶1. (SBU) Post recommends that New Zealand remain off the 
Special 301 List.  Although the government has been 
relatively slow in updating its intellectual property laws, 
it is moving in the right direction.  Moreover, New Zealand 
in general already provides adequate and effective protection 
of intellectual property rights. 
 
¶2. (SBU) While the pharmaceutical industry urges that New 
Zealand be placed on the list, post continues to believe that 
the industry's restricted access to New Zealand's market 
stems less from a failure to protect intellectual property 
and more from the government's anti-competitive 
drug-purchasing practices.  In addition, we believe a Watch 
Listing would not improve the industry's prospects.  And, 
while the music industry has legitimate concerns about New 
Zealand's proposed exceptions to copyright protection, the 
industry has noted that ongoing discussions with the 
government may yet yield some of the changes the industry 
seeks. 
 
IPR in general 
-------------- 
¶3. (U) Aside from a bill to establish a registration system 
for geographical indications for wines and spirits, no 
legislation related to intellectual property rights (IPR) was 
introduced in the New Zealand Parliament in 2005. However, 
New Zealand has several bills in the wings that would improve 
its IPR regime.  With few exceptions, the government is not 
rolling back its protections of intellectual property. 
 
¶4. (U) Proposed amendments to the Copyright Act 1994, 
announced in June 2003, are intended to ensure that the act 
reflects developments in digital technologies and 
international developments in copyright.  The amendments have 
not yet been introduced in Parliament, and the timetable for 
their submission is unknown.  A draft Patents Bill was 
released in December 2004.  It would replace the Patents Act 
1953 and is intended to bring New Zealand's patent law into 
closer conformity with international standards.  Public 
submissions have been received, and the bill is being 
revised. 
 
¶5. (U) The Geographical Indications (Wine and Spirits) 
Registration Bill would repeal and replace the Geographical 
Indications Act 1994, which never came into force.  The bill, 
introduced in Parliament in June 2005, would establish a 
registration system for geographical indications for wine and 
spirits.  It would put New Zealand in closer alignment with 
the TRIPS agreement by using the agreement's definition for a 
"geographical indication" and by clearly limiting 
registration to geographical indications for wine and spirits 
only. 
 
¶6. (U) The Trade Marks Amendment Act 2005, containing minor 
and technical changes to the Trade Marks Act 2002, came into 
force in December 2005.  The amendment act requires that the 
applicant for registering a trademark be the "owner" of the 
mark and clarifies provisions for revoking a trademark 
registration for non-use. 
 
¶7. (U) Meanwhile, New Zealand law continues to allow parallel 
imports of certain copyrighted goods, which some U.S. 
industries say complicates efforts to detect and combat 
piracy and erodes the value of their products in the New 
Zealand market.  A ban on the parallel importation of films, 
videos and DVDs for the initial nine months after a film's 
international release -- enacted in October 2003 -- is 
scheduled to sunset in 2008, unless extended. 
 
The pharmaceutical issue 
------------------------ 
¶8. (SBU) The pharmaceutical industry has a number of 
legitimate complaints about its treatment in the New Zealand 
market, and we continue to press for an improvement in this 
 
WELLINGTON 00000136  002 OF 004 
 
 
situation.  However, the industry's concerns are not, at 
heart, IPR problems.  Rather, they are related to the process 
by which the government decides which medicines are 
subsidized and to the government's limited budget for drug 
purchases (ref B).  Post believes this market-access barrier 
should be dealt with as such and not treated as a failure to 
protect intellectual property.  Even the industry's trade 
association, Researched Medicines Industry Association of New 
Zealand (RMI), concedes that the government's practices do 
not violate its TRIPS commitments. 
 
¶9. (SBU) The government also has mostly defined the issue as 
a matter of ensuring affordable pharmaceutical prices for all 
New Zealanders.  Listing the country on the Watch List would 
only enable the government to claim to the New Zealand public 
that its policies protect the population against an 
avaricious pharmaceutical industry.  RMI also believes that 
the likelihood of changes in the drug-purchasing system has 
increased over the past year, especially with the 
government's agreement after the September 17 elections to 
review its medicines policy (ref B). 
 
¶10. (SBU) It is true that the government's draft Patents Bill 
fails to meet two of the industry's objectives in New 
Zealand: (1) It does not allow patent protection for 
diagnostic, therapeutic and surgical methods involving the 
treatment of humans, as allowed under the TRIPS agreement, 
and (2) it fails to extend the effective patent life of 
drugs.  The effective patent life (the period following 
marketing approval, when patent holders have exclusive 
control of their inventions) averages seven years in New 
Zealand.  Moreover, the draft bill leaves in place an 
amendment to the Patents Act that allows competitors to begin 
the process required for regulatory approval of a generic 
product while a proprietary drug still is under patent. 
 
¶11. (SBU) Although the draft is unsatisfactory, we believe 
that listing New Zealand because of the draft legislation 
would reduce our ability to influence the bill's final 
provisions.  We continue to press New Zealand government 
officials with our concerns with the draft bill. 
 
Format- and time-shifting 
------------------------- 
¶12. (U) Proposed amendments to the Copyright Act 1994 include 
provisions that would allow format-shifting, or the 
duplication of sound recordings to another format for a 
purchaser's private use without the copyright owner's 
permission.  The amendments also would extend to all 
communication works a provision in the Copyright Act that 
permits time-shifting, or the recording of a broadcast or 
cable program for private use solely for the purpose of 
viewing or listening to the recording at a more convenient 
time or for making a complaint. 
 
¶13. (SBU) The industry contends that such exceptions to 
copyright protection send the wrong message to consumers, 
undermine efforts to curb unauthorized copying of CDs, 
discourage innovation and cost the industry in sales and 
profits.  The government and industry continue to discuss 
these exceptions, and the government has said it would be 
flexible on this issue and aim for a conclusion satisfactory 
to the industry, while also addressing the government's 
concerns regarding fairness to consumers.  We will continue 
to encourage this dialogue.  With such discussions ongoing, 
we believe a Special 301 listing over this issue would be 
premature and counterproductive. 
 
Optical media piracy 
-------------------- 
¶14. (U) While New Zealand does not have any regulations 
specifically addressing optical media manufacturing, the 
Copyright Act 1994 -- including protections and sanctions for 
copyright infringement -- applies to optical media.  We are 
not aware of significant problems with optical media piracy 
in New Zealand. 
 
Use/procurement of government software 
-------------------------------------- 
¶15. (U) New Zealand has no specific guidelines relating to 
government use or procurement of software, but it does have 
general rules pertaining to protection of intellectual 
property in the public sector. 
 
WELLINGTON 00000136  003 OF 004 
 
 
 
TRIPS compliance 
---------------- 
¶16. (U) The draft Patents Bill would help align New Zealand's 
patent law with that of other developed countries.  The draft 
would keep the maximum patent term at 20 years, but would 
tighten the criteria for issuing a patent, requiring that a 
patentable invention be new anywhere in the world (instead of 
new in New Zealand), involve an inventive step and be useful. 
 The proposed amendments to the Copyright Act 1994 aim to 
ensure the act encompasses developments in digital 
technology.  For example, the definition of "copying" would 
be clarified to include digital works.  A draft Plant Variety 
Rights Amendment Bill, released in August 2005, is intended 
to give rights owners enhanced exclusive rights over their 
protected plant varieties, in line with the 1991 revision of 
the International Convention for the Protection of New 
Varieties of Plants.  The amendment aims to address 
significant advances in plant breeding techniques, as well as 
international developments.  The Trade Marks Amendment Act 
2005, which came into force in December 2005, contains minor 
and technical changes to the Trade Marks Act 2002 (see 
Paragraph 5). 
 
¶17. (U) New legislation introduced in Parliament in 2005 
included the Geographical Indications (Wine and Spirits) 
Registration Bill (see Paragraph 5). 
 
¶18. (U) We are unaware of any new legislation related 
specifically to domestic protection of traditional knowledge 
or expressions of folklore.  However, the proposed changes to 
the Patents Act 1953 include a provision to set up a Maori 
consultative committee that would advise the patents 
commissioner on whether a patent application pertains to an 
invention that is derived from Maori traditional knowledge, 
indigenous plants or animals and whether the commercial 
exploitation of such an invention would be contrary to Maori 
values. 
 
¶19. (U) Under the Medicines Amendment Act 1994, New Zealand 
provides data exclusivity -- a period during which government 
officials respect the confidentiality of data submitted to 
them in applications for marketing approval for medicines -- 
for five years.  Such data exclusivity does not extend to new 
uses or formulations of old active ingredients. 
 
¶20. (U) New Zealand Customs can confiscate and destroy 
pirated products if the holder of the trademark or copyright 
has requested that Customs detain the goods.  That request is 
valid for five years and can be renewed.  However, Customs 
does not have the power to prosecute.  Rights holders can 
pursue relief through civil lawsuits and have 10 working days 
to do so.  Otherwise, the goods are released or, at the 
importer's request, destroyed.  The provisions apply only to 
trademarks and copyright registered in New Zealand.  Customs 
has no authority to detain infringing IP goods from being 
exported.  Customs detained 101,734 goods for bearing 
infringing marks or signs in 2005, down from a 10-year high 
of 142,055 in 2001.  However, the number of shipments 
investigated by Customs has risen steadily over the last 
decade, from one in 1995 to 683 in 2005.  Almost all the 
infringing goods originated in Asia, particularly China, and 
most of the intercepted and investigated goods were clothing, 
footwear and headwear.  The number of pirated CDs and DVDs 
intercepted by Customs has declined sharply, after peaking in 
early 2005.  It appears that CDs and DVDs increasingly are 
being copied to order within New Zealand, making detection of 
local production difficult.  The New Zealand Department of 
Internal Affairs has had some success, however, in stemming 
domestic sales of pirated and counterfeit products by closing 
down e-auction sites.  In January, 97 sites were shut down. 
 
Enforcement 
----------- 
¶21. (U) The New Zealand government is committed to adequately 
and effectively enforcing its IPR-related laws, as reflected 
by the creation of new criminal offenses for trademark 
infringements and the increases in penalties for copyright 
infringements under the Trade Marks Act 2002, which entered 
into force in August 2003.  In most instances, the government 
responds to complaints raised by rights holders rather than 
initiating action against IP infringers.  Those complaints 
have been relatively few, and so the government does not 
 
WELLINGTON 00000136  004 OF 004 
 
 
track enforcement-related statistics, such as civil and 
criminal penalties.  The government lacks a central body to 
coordinate the sharing of information on illegal IP 
activities and enforcement efforts. 
 
WCT/WPPT 
-------- 
¶22. (U) Amendments to the Copyright Act 1994, proposed in 
June 2003, would make the act more consistent with the World 
Intellectual Property Organization Copyright Treaty (WCT) and 
Performances and Phonograms Treaty (WPPT).  If the proposed 
amendments are passed, the government would decide whether to 
accede to the WCT and WPPT. 
 
Training 
-------- 
¶23. (U) New Zealand has close relations with the Pacific 
Islands, providing them with disaster relief, development aid 
and, in a few cases, peacekeeping assistance.  It could play 
a larger role in helping the Pacific Islands strengthen their 
IPR regimes.  At least one New Zealand program aims to combat 
piracy in Pacific Island nations (ref C).  New Zealand might 
benefit from "training the trainer"-type programs, equipping 
New Zealanders to help the islands improve IPR enforcement. 
McCormick