Intellectual property and competition law have historically been uneasy bed fellows. Where IP generally looks to reward creativity and innovation by granting limited statutory monopolies, competition law ensures effective competition within markets by prohibiting monopolistic behaviour and activities.

New Zealand’s primary competition legislation, the Commerce Act, currently includes a carve out for commercialisation of statutory intellectual property. For example, classes of IP governed by statute, such as patents and trade marks. Section 45 provides a broad statutory safe harbour from allegations of anti-competitive conduct for the commercialisation of IP, by excluding certain intellectual property arrangements or transactions.  

Some of our significant trading partners, such as Australia, have repealed similar statutory IP safe harbours. The move in Australia was relatively controversial at the time but, so far, doesn’t appear to have had a material chilling effect on innovation.

New Zealand appears set to follow Australia’s lead, with the Government recently introducing a new Commerce Amendment Bill. The two primary purposes of the Bill are to amend the provisions relating to misuse of market power (section 36) and repeal the IP safe harbour (section 45). The Bill was introduced to Parliament in mid-March and is currently with the Select Committee, with submissions to the select committee closing on 30 April.

The impact is likely to mean that IP owners will need to be more careful when looking to commercialise or enforce their IP.

The issue appears to have slipped under the radar so far, with the majority of coverage on the Bill to date focusing on the proposed changes to section 36. However, given the experience in Australia, it will be interesting to see what submissions are made to the select committee regarding the IP safe harbour issue.

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‍Image credit: Frederick Medina