VZCZCXRO2693
RR RUEHNZ
DE RUEHWL #0158/01 0520537
ZNR UUUUU ZZH
R 210537Z FEB 07
FM AMEMBASSY WELLINGTON
TO RUEHC/SECSTATE WASHDC 3902
INFO RUEHNZ/AMCONSUL AUCKLAND 1187
RUEHBY/AMEMBASSY CANBERRA 4746
RUEATRS/DEPT OF TREASURY WASHDC
RUCPDOC/USDOC WASHDC 0115

UNCLAS SECTION 01 OF 03 WELLINGTON 000158 
 
SIPDIS 
 
SIPDIS 
 
SENSITIVE 
 
STATE FOR EB/IPE - JENNIFER BOGER and EAP/ANP - DAN RICCI 
STATE PLEASE PASS TO USTR FOR JENNIFER CHOE GROVES 
STATE PLEASE PASS TO USPTO 
COMMERCE FOR CASSIE PETERS ITA/MAC/OIPR 
 
E.O. 12985:  N/A 
TAGS: KIPR ETRD ECON PREL NZ
SUBJECT:  YEAR 2007 SPECIAL 301 REVIEW - NEW ZEALAND 
 
REF:  A. STATE 07944 
      ¶B. WELLINGTON 138 
 
 
¶1. (SBU) Summary: Post recommends that New Zealand (GNZ) not/not be 
placed on the Special 301 List in 2007.  The country's overall 
commitment to the protection of intellectual property (IPR) is 
relatively high as compared to most countries cited in the Special 
301 review. The government continues to move ahead in updating its 
intellectual property laws in compliance with international 
standards, with major revisions to the Patents Bill and the 
Copyright Amendments Bill ("New Technologies and Performers' Rights 
Bill") expected to be finalized in 2007. Moreover, New Zealand 
generally provides adequate and effective protection of intellectual 
property rights under current legislation.  Post remains in contact 
with local IP industry representatives and the Ministry of Economic 
Development to help ensure that the pending legislation reflect 
industry's concerns and are passed as scheduled.  Placing New 
Zealand on the Special 301 list at this stage could backfire, as the 
GNZ will see it as punishment even though NZ is doing the right 
thing.  End summary. 
 
IPR Overview 
------------- 
 
¶2. (U) Post remains engaged in an ongoing dialogue with both IP 
industry representatives and government agencies to help improve IPR 
laws and strengthen GNZ's commitment to enforcement. The proposed 
amendments to the Copyright Act 1994 now before a Parliamentary 
Committee are intended to ensure that the act reflects current 
developments in digital technologies and international developments 
in copyright law. Post has made the GNZ aware 
of industry's concern that portions of the new law dealing with the 
treatment of Technological Protection Measures (TPM); exception for 
incidental copying; ISP liability limitation; library digital 
dissemination; time shifting; and computer program exceptions will 
need to better address international minimum standards. Regarding 
patent protection, the GNZ released a draft Patents Bill in 2005 
which is expected to be given its first reading in the early part of 
¶2007. While this revision to the patent regime is expected to bring 
NZ's level of protection up to international standards, Post has 
seconded industry's recommendation that the current bill should 
include provision for patent term restoration that are in keeping 
with international best practices. These developments, though 
notwithstanding the need for technical adjustments, are a positive 
indication that the GNZ is committed to moving forward on enhancing 
the level of intellectual property protection. The following 
comments are keyed to topics in ref. A. 
 
PhRMA's PWL recommendation 
-------------------------- 
 
¶3. (SBU) While the pharmaceutical industry urges that New Zealand be 
placed on the priority watch list (PWL), post continues to believe 
that the industry's restricted access to New Zealand's market stems 
primarily from the cost containment strategies for subsidized drugs. 
 The government affiliated Pharmaceutical Management Agency 
(PHARMAC) is mandated to spend less than its budget allows, and the 
pharmaceutical industry has a number of legitimate complaints about 
its treatment in the purchasing process. However, these industry 
concerns are not IPR problems. While Post will continue to work to 
improve access for US pharmaceuticals in New Zealand, we believe 
this should be dealt with as a market-access barrier and not as a 
failure to protect intellectual property. Even the pharmaceutical 
industry trade association here, Researched Medicines Industry 
Association of New Zealand (RMI - affiliated with PhRMA), assesses 
that the government's practices do not violate its TRIPS 
commitments. 
 
¶4. (SBU) The national medicines policy is currently under review by 
the Ministry of Health, and a parliamentary notice and comment 
period will take place through the first quarter of 2007. If 
successful, changes to the national medicines purchasing strategy 
would be implemented in early 2008. This process would fulfill a 
promise to the Labor government's coalition partner, the United 
Future Party, to improve NZ public access to medicines; to extend 
the use of quality medicines; and to use medicines more rationally. 
There is currently a well publicized public debate, for example, 
about access to Herceptin for the treatment of breast cancer. This 
debate continues to bring pressure on PHARMAC to review/improve its 
funding policies in order to allow wider access to innovative 
medicines. This pressure is not likely to subside over the coming 
year as a number of patients have already filed law suites 
 
WELLINGTON 00000158  002 OF 003 
 
 
challenging PHARMAC's policies. Meanwhile, the press continues to 
give the matter extensive coverage. 
 
¶5.  (SBU) While the level of IP protection for pharmaceuticals is 
adequate, Post agrees that it is in New Zealand's and our best 
interests to complete work on the draft Patents Bill this year in 
order to ensure that New Zealand's patent regime reflects enhanced 
standards in international patent protection. We believe the better 
course of action is to continue to work/consult with the GNZ to 
ensure industry's concerns are reflected in pending legislation. 
Designation of PWL at this time with the threat of possible trade 
sanctions may not yield the changes the pharmaceutical industry 
seeks but may embolden the government to claim its current policies 
are protecting the population against an avaricious pharmaceutical 
industry. It is equally difficult to make the case for an IP 
violation when PhRMA has not been able to estimate the amount of 
damages for 2006 attributable to a lack of IPR or restricted market 
access. 
 
IIPA's Special Mention of New Zealand's IP Regime 
--------------------------------------------- ---- 
 
¶6. (U) As IIPA noted in its submission, New Zealand's government in 
December 2006 unveiled the long-anticipated Copyright (New 
Technologies and Performer's Rights) Amendment Bill. This extensive 
amendment to New Zealand's copyright law contains many valuable 
improvements but some provisions remain problematic for industry. 
Post agrees with IIPA's recommendation that a more effective course 
of action would be to continue to engage the government in order to 
ensure that the draft legislation provides more useful tools for 
dealing with piracy. Post has already presented the list of noted 
shortfalls in the draft legislation to the Ministry of Economic 
Development, the agency primarily responsible for drafting 
legislation and monitoring IP enforcement. Post has engaged Bronwyn 
Turley, Senior Policy Advisor to the GNZ for intellectual property 
issues to begin a dialogue to address the needed technical 
corrections. 
 
Prior Years' Special 301 Issues 
------------------------------- 
 
¶7. (U) Ref B is the formal response by the government of New Zealand 
to issues raised in prior years' Special 301 submissions by 
industry. As noted previously, New Zealand law continues to allow 
parallel importation in certain defined circumstances. In 2003, a 
partial ban on parallel importation of films (including VHS, VCD and 
DVDs) was introduced. The Copyright (Parallel Importation of Films 
and Onus of Proof) Amendment Act amended provisions of the Copyright 
Act relating to infringement by importation. The ban bars parallel 
import of any film within nine months of it first being made 
available to the public, whether in New Zealand or elsewhere. The 
only exceptions are parallel imports of films for the importer's 
private and domestic use.  The partial ban contains a five year 
sunset clause and will be reviewed again in 2008. 
 
¶8. (U) In conversations with local film industry representatives 
W.J. Hood of Film and Video Labeling Body (FVLB) and Tony Eaton of 
New Zealand Federation Against Copyright Theft (NZFACT - affiliated 
with MPAA), Post Econoff learned that industry and government 
Ministers whose portfolios deal with copyright issues are discussing 
ways to further strengthen New Zealand's IPR enforcement. Both 
Judith Tizard, Assoc. Minister of Commerce and Trevor Mallard, 
Minister of Economic Development are positively inclined to extent 
the partial ban beyond 2008. According to industry, an increasing 
number of GNZ Ministers are now aware of the positive benefits of a 
strong IP regime for both New Zealand's economic development and 
increased tax revenues, especially as New Zealand's domestic film 
industry plays a more pronounced role on the international stage. 
 
¶9. (U) Post is 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. New Zealand continues to express a right to avail 
itself of the various exclusions and exceptions contained in the 
TRIPS Agreement. 
 
Enforcement 
----------- 
 
WELLINGTON 00000158  003 OF 003 
 
 
 
¶10. (U) The New Zealand government says it is committed to enforcing 
its IPR-related laws adequately and effectively, and created new 
criminal offenses for trademark infringements and increased 
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 
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. There is an effort underway to set-up a new office within 
New Zealand Customs by mid 2007 that will be exclusively dedicated 
to IP enforcement issues.  We are not aware of any industry 
complaints related to Trade Mark enforcement in New Zealand. 
 
¶11. (U) Currently, 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.  Customs does not have the power to 
prosecute, but rights holders can pursue relief through civil 
lawsuits and have 10 working days to do so after the goods are 
detained.  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. Almost all the 
infringing goods imported into New Zealand 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. While it appears that CDs and DVDs are 
increasingly being copied to order within New Zealand, making 
detection of local production increasingly difficult, industry has 
an ongoing cooperative dialogue with local authorities to better 
police IPR as new forms of piracy are detected. 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. 
 
Conclusion 
---------- 
¶12. (U) Post maintains that, despite certain technical deficiencies 
in the pending revisions to the intellectual property laws now 
before Parliament, there remains a strong commitment on the part of 
the GNZ to continue to improve its IPR regime and bring it into 
conformance with international standards. GNZ's enforcement of 
current IP laws also reflects the government's proactive stance as 
they learn and adapt to help stem new forms of piracy. While there 
is additional work to be done to strengthen the law and enhance 
enforcement, Post recommends the better course of action is to 
engage the GNZ and monitor the progress of IP legislation rather 
than place New Zealand on this year's watch list. 
 
McComick