Part 1 contains amendments to the Trade Marks Act to give effect to the Government’s decision to ratify the Singapore Treaty on the Law of Trademarks and to accede to the Nice Agreement Concerning the International Classification of Goods and Services for the Purposes of the Registration of Marks, and the Protocol Relating to the Madrid Agreement Concerning the International Registration of Marks. Look, effectively, the aim of these international treaties is to reduce the business compliance burden for businesses registering trademarks, especially where businesses are seeking to register their trademarks overseas.
Part 1 also amends the Trade Marks Act to augment police enforcement of the criminal offence provisions relating to, and dealing with, counterfeit trademarks and counterfeit goods—something members will, no doubt, be turning their minds to for the Rugby World Cup, as part of that particular incentive. It does this by empowering the Ministry of Economic Development and the Customs Service to enforce those offences. Enforcement officers of the Ministry of Economic Development are being provided with a warrantless ability to enter places that are open to the public and to search and seize counterfeit goods where they have reasonable grounds to believe that those goods are evidence of a criminal offence under the Trade Marks Act. Customs officers are being provided with a warrantless ability to seize counterfeit goods under their control at the border as evidence of an offence. These investigative powers for customs officers will augment their existing powers available under the Customs and Excise Act 1996.
My memory is that all parties in the House supported this legislation through its first and second readings, so I imagine that we will be dealing with a swift and well-clipped Committee stage on this bill.
Finally, Part 1 introduces a number of minor amendments to the Trade Marks Act to clarify the intent or effectiveness of particular provisions, to include a small change to border protection measures for preventing the importation of trademark-infringing goods, and to increase the efficiency and effectiveness of administration by customs. Included is an amendment to allow customs to temporarily suspend enforcement of a border protection notice from a trademark owner under certain conditions.
I would like to acknowledge the accuracy of the remarks of the Minister of Commerce but regret they were not delivered with more passion. The main challenge facing the Committee this evening is to not fall asleep.
The Trade Marks (International Treaties and Enforcement) Amendment bill is important. It is important legislation, but it is, in the eyes of many, not as interesting as watching paint dry, as the saying goes. The reason it is important—well, all of the legislation is important—is that we are talking to Part 1, which is about trademarks. The legislation, by the way, was introduced under the previous Government, and I do not know whether I introduced it; it might have been Lianne Dalziel. I cannot remember. Is she here? She is not. One of us introduced it, it went off to a select committee, and it took 3 years to come back. But there you go!
The short of it is that we need to update our trademarks legislation simply because it is a bit of a moving feast. We need to keep up with changes in international treaties, etc. In the case of trademarks, I am just trying to remember the names of the treaties. I think it is the Protocol Relating to the Madrid Agreement Concerning the International Registration of Marks (Madrid Protocol). Is it not the Singapore Treaty on the Law of Trademarks, as well?
It is? Oh well, good on me. So the Madrid Protocol and the Singapore treaty make up the international trademark registration system. If I am correct, the role of the Singapore treaty is to reduce some of the compliance costs and make things a little simpler for trademark registration offshore. It is for the defence of trademarks offshore, for indeed there is no point in having one’s trademark well known if it is going to be dicked over by some counterfeiter in an offshore market. But we will get to the idea of the importance of strengthened enforcement in due course.
For the moment we say to the Government, straightforwardly, that we will be voting in favour of this legislation, and that we will be seeing its passage through this House in a timely, but not necessarily speedy, manner. My instructions are yet to arrive in that regard—
Keep going? But we do know that unless trademarks legislation is maintained to be roughly consistent with the legislation where international conventions, treaties, and agreements get to, then sooner or later law falls behind practice. We are, of course, following these treaties already; it is in the nature of the beast that they are agreed to by parties, that they are put into place, and that the law follows, rather than the other way round, as I understand it. None the less, failure to keep up with the changes by laws means that a certain amount of dissonance arises between what is practice and what is New Zealand law.
I will now get to some detail. We have changed the powers of the police. I think that what we have done with the cops is that we have said in new section 134X, inserted by clause 17—this is a very large piece of legislation; it runs to about 80 pages—that the police have all of the powers that are currently accorded people like customs officers. I see that the officials are looking at me in a bemused sort of a way, which is what officials do when they disagree. But I think the police have been given the powers to exercise all of the rights that customs officers have. In other words, we have a standing army that is made bigger by this legislation when it comes to the point of enforcing trademark miscreant behaviour.
Three and a half weeks to go—no problems! So that is helpful, because it means that we will have more people able to do the enforcing.
It is a matter of fact that the Ministry of Economic Development, which is responsible for this legislation, is also responsible for a thing called the regulatory impact statement. There is a little rule in this little country, which is that when we have a piece of legislation we have to add to the back of it the regulatory impact statement. The Ministry of Economic Development folk go around and they beat up on other departments for having insufficient or inadequate regulatory impact statements. And they do it rather well in a jocular and pleasant way, and they offer to assist other agencies to make sure their regulatory impact statements are up to scratch. The reason for having regulatory impact statements is that we—ordinary members of the public here representing the people of New Zealand—are able to work out whether this legislation is, in a regulatory sense, a bit of an impost. That is very, very important to the ACT Party, because that party does not like heavy-handed regulation and it is committed to getting rid of heavy-handed regulation, but so far it has made precisely no progress. It does not matter, however, because the regulatory impact statements are part and parcel of our legislation these days.
So when we have a regulatory impact statement that has been written by the authors of the standards of regulatory impact statements, the question is how good they are at meeting their own standards. Answer—pretty damn good! I had a good old look at that regulatory impact statement, and looked at the options about doing it this way or doing it that way. There is a certain formulaic way in which they have put it together, because that is what officials do, but I would just like to note in passing that the Ministry of Economic Development has managed to put together a reasonable regulatory impact statement; I have seen a lot worse. So I say good on the ministry and I wish it well.
There are, apparently, some Supplementary Order Papers in respect of Part 1. I do not quite know what they do, but when I sit down I shall read them and see whether I can work it out. I see they are about commencement clauses, and so forth. One is completely nonsensical to me, but I will try to work it out. I therefore intend to resume my seat presently, and I hope that we will be able to hear further from members on the Government benches, especially from Dr Paul Hutchison, known affectionately as “Dr Paul”, which is why I said that in a low voice. We hope that he might be able to get to his feet and tell us a little more about trademarks, so that we can all be engrossed by the matter.
I am pleased to take a call on this important bill, the Trade Marks (International Treaties and Enforcement) Amendment Bill. As my colleague Pete Hodgson quite eloquently put it, this is actually very important legislation. We support it, as we support important pieces of legislation, primarily because, as he pointed out, this bill was brought into the House while Labour was still in Government. Here we are 3 years later and it is back in the House.
I do not think there have been massive problems in not having this legislation in place, but the importance of this bill is that it protects much of New Zealand’s intellectual property. When we look at New Zealand today and where it is going, we see that much of New Zealand’s wealth is derived from intellectual property. That is both in the agricultural sector and, more important in some ways, in the way the high-tech and telecommunications sector is going. New Zealand companies in this sector add about $6.5 billion worth of revenue to the country, and nearly 80 percent of that is exported in the form of ideas and pieces of property. It creates enormous wealth per the individual who is involved in constructing this intellectual property, whether a product, a piece of software, or an idea. The figure is nearly $300,000 per person in the high-tech sector. It is of great value to New Zealand. Therefore, protecting our intellectual property and ensuring that is reflected in our legislation is extremely important.
I will move on to the purposes of this bill. The purposes are obviously in relation to the three treaties the bill brings into effect. The Protocol Relating to the Madrid Agreement Concerning the International Registration of Marks (Madrid Protocol), first of all, is a protocol that provides a system that simplifies the procedures required for a trademark owner to protect their trademarks overseas. Obviously that is important. Joining that protocol will provide New Zealand trademark owners with the possibility of having their trademark protected overseas by filing one application for registration of a trademark with the Intellectual Property Office of New Zealand, and designating one or more overseas countries that are also members of the Madrid Protocol where protection is sought. So it is a reciprocal arrangement between New Zealand and other important countries where we would like protection as well.
The second of the agreements is the Nice Agreement Concerning the International Classification of Goods and Services for the Purposes of the Registration of Marks, which provides a classification system for goods and services for the purposes of registering trademarks. The Nice classification is widely known and widely acknowledged. Those countries that are party to the Nice agreement must apply the Nice classification to registered trademarks, although those countries not party to it may still apply the Nice classification. New Zealand has applied the Nice classification to registered trademarks for many, many years, so we have acknowledged it. It is updated on a five-yearly cycle, and parties to the Nice agreement meet on a semi-regular basis to consider whether there need to be or should be amendments to that classification. By becoming part of the Nice agreement, New Zealand would be permitted to participate in those meetings where amendments are considered and influence the future development of the Nice classification so that it best meets the needs of New Zealand businesses. In this context the bill will clarify the latest edition of the Nice classification that must be used with all new applications for the registration of a trademark.
Once again, it is New Zealand coming into the context of a series of treaties—the last one I will talk about is the Singapore Treaty on the Law of Trademarks—so that New Zealand is covered under international law. Lastly, as I said, there is the Singapore treaty, which aims to make national trademark registration systems more user-friendly and to reduce business compliance costs for trademark owners.
Part 1 of the Trade Marks (International Treaties and Enforcement) Amendment Bill refers to amendments to the Trade Marks Act 2002, and specifically allows New Zealand to become a party to a number of treaties, as has been outlined by previous speakers.
Clause 5 deals with the classification of trademarks by repealing section 31(1) and substituting the following subsection (1): “Goods and services must be classified, for the purpose of registration of a trade mark, according to the edition of the Nice Classification in effect at the time of application for registration of the trade mark.” The Nice Agreement Concerning the International Classification of Goods and Services for the Purposes of the Registration of Marks resulted from the Nice Diplomatic Conference of 1957. As my colleague David Shearer said, the Nice classification is updated every 5 years. Given that it has been around for quite some time, New Zealand has been applying the principles of the Nice classification, and this bill will codify and formalise it in the legislation.
The Nice classification is an authoritative classification of goods and services for use in registering trademarks and service marks. It is a list of 45 classes of goods and services, thousands of specific types in each class—which I will not be tempted to list—and has detailed descriptions of most of those. [Interruption] It is good to hear that Rahui Katene is listening; somebody is. The Nice classification is currently in use in 148 countries. The advantages of using the classification system are that national trademark offices have the ability to apply trademark applications in a coordinated manner with reference to that single classification system. Filing of trademarks is thereby greatly simplified, as the goods and services to which a given mark applies will be classified in the same way in all countries that have adopted the system. That the Nice classification system exists in several languages also saves applicants a considerable amount of time in filing their work internationally.
In January 2009 there were 83 signatories to the Nice agreement. These countries have officially adopted the classification system and apply it in the registration of trademarks. In addition, 65 non-member countries, four organisations, and the international bureau of the World Intellectual Property Organization also use the Nice classification. I am guessing, not having been a member of the Foreign Affairs, Defence and Trade Committee, that we fall into one of those 65 non-member countries and this bill will allow us to become one of the member countries. Therefore, when the classification system is next reviewed, we will have a much greater opportunity to have a say in the way that the classification system takes place.
One of the other protocols that has been codified in Part 1 of the bill is the Protocol Relating to the Madrid Agreement Concerning the International Registration of Marks (Madrid Protocol). It provides a system that simplifies the procedures required for trademark owners to protect their trademarks overseas. Joining the Madrid Protocol will provide New Zealand trademark owners with the possibility of having their trademarks protected overseas by filing one single application for registration of a trademark with the Intellectual Property Office of New Zealand, and designating one or more overseas countries who are also members of the Madrid Protocol where protection is sought. Overseas trademark owners would also be able to use the Madrid Protocol to protect their trademarks here in New Zealand, so it is a two-way process. Joining the Madrid Protocol would also simplify the subsequent management of overseas-registered trademarks. It is possible to renew or record subsequent changes to the trademarks registration in each country using the Madrid Protocol through a single procedural step, rather than making a request directly in each country.
The bill introduces amendments to the Trade Marks Act to facilitate the implementation of the international registration regime for trademarks under the Madrid Protocol, including providing for regulations to be made for the purposes of giving effect to New Zealand’s obligations under the Madrid Protocol.
The third treaty that is being ratified is the Singapore Treaty on the Law of Trade Marks, which other members have referred to. It aims to make national trademarks registration systems more user-friendly and to reduce business compliance costs for trademark owners. It does this through the simplification and international harmonisation of national registration procedures.
Thank you for the opportunity to speak on Part 1 of the Trade Marks (International Treaties and Enforcement) Amendment Bill. As we have heard, Labour supports this bill, and, as my colleague the very esteemed Hon Pete Hodgson has said, it is a moving feast and it is important. It is important for a range of reasons.
I would like to make a couple of points about this bill. The first is that it is interesting that the bill was first introduced into the House in, I think, September 2008, and had its first reading at the beginning of 2009. I was just flicking through some information about it and noted that an article in an esteemed publication, I think it was the Independent, talked about how the bill was going to be passed in 2009, and I note that it has taken a while to come back and finish its hearing in the House.
The bill has not had a lot of public discussion. There has been a bit of public discussion on it, but when we actually contrast it with another piece of legislation that dealt with copyright issues that has been before this House and was recently passed, earlier this year, which certainly did have a lot of public discussion on it, it is quite interesting to make that contrast. The contrast I make is essentially a positive one in the sense that this bill is about harmonising our laws with international standards, which makes a lot of good sense. It is about New Zealand playing its part and leading some areas of standards development in this area. It is about enabling innovative New Zealand companies to more easily protect their trademarks in multiple jurisdictions. Those are really important things.
The key to that—and the thing that I am trying to point out here—is that it is what we should have been doing with the other controversial legislation that came before the House in this term and, admittedly, in the previous term, particularly around harmonising and playing a part in leading the way, enabling innovation to occur, and encouraging our own business community. That legislation is still surrounded by controversy, because it has not been dealt with or acknowledged as being part of a much bigger issue, which is about how to deal with a very fast-changing environment, how to deal with private sector involvement in it, and how to deal with the role that the Government should play. Those are really important points, because, essentially, we are still confronted with that issue in this country. We have passed legislation that is essentially propping up failed business models.
I am making that point in relation to Part 1 of this bill, because there is a growing problem around the world relating to the manufacture, distribution, and sale of counterfeited goods and pirated works for the purpose of selling them—not for the purpose of downloading them and then sharing them with our mates or watching them ourselves, but accessing them and then selling them. The World Customs Organization estimates that counterfeiting and piracy accounts for 5 percent to 7 percent of global merchandise trade, which I think was estimated as being up to US$500 billion. This comes from the Ministry of Economic Development regulatory impact statement on this bill. The World Health Organization estimates that up to 10 percent of medicines sold worldwide are counterfeit, which is extraordinary when we think about it. Goods typically targeted by counterfeiters are those items sold at premium prices and well in excess of the cost to manufacture.
That was an outrageous contribution! I think it is time for the Committee to become more aware of the import of this legislation and of the issue of counterfeiting as it affects New Zealand.
How does it relate to the Trade Marks (International Treaties and Enforcement) Amendment Bill? The whole idea of copyright and trademarks is to deter counterfeiting and to enable people to enforce action against those who would counterfeit. How many infringing items were detained by customs officers in 2004-05, I ask the member opposite. Answer: 185,000—185,000. How many a day is that? It is 500 counterfeit items seized at the border in any one day by our enforcement agencies. And the member thinks that this legislation should be passed through without due comment on their efforts to sustain the truth and honesty of our merchandising system by ensuring that we have good enforcement of copyright and trademark laws!
However, the problem is not getting any easier. By the following year—2005-06—that figure of 185,000 had risen to 260,000. Members get the idea that this is a serious issue. What did the Retailers Association have to say? These are the people who hock off this stuff, you know. They do not make it; they are at the other end of it. They are the people hocking it off, and so that they can lie straight in bed at night, they want to hock off only the real McCoy. No counterfeits for them. They want a tough approach to counterfeiting, do the retailers. That is a little surprising. I would have thought that the manufacturers and owners and so on were the people who want it to be really tough. I would have thought that the retailers really could not care as long as they get cash for goods, if members see what I mean. But, no, they care all right.
The association said to the Foreign Affairs, Defence and Trade Committee that it had “increasing concerns about the growth in counterfeit merchandise …”. It went on to say, a little surprisingly, I thought: “We are … continually concerned at the personal health and safety risks [that] New Zealanders are subjected to by a vast range of poor quality counterfeit goods …”—this is exploding pyjamas and stuff like that. In fact, it went on to say that “these can range from car parts to pharmaceuticals and perfumes”. It did not mention exploding pyjamas, but it might have. It did say that it thought that the national enforcement unit, the people who are our counterfeit cops and our trademark cops, should be given a greater role—indeed, this legislation does that—to enable the enforcement of criminal offences, and on it goes.
Interestingly, a press statement from 2009 that was mentioned by my colleague Clare Curran has an alternative point of view. Let me tell members what patent attorney Elspeth Buchanan has to say about these matters. “Patent attorney Elspeth Buchanan”—the newspaper tells us breathlessly—“knows how hard it is to tell knock-offs from the real thing.” It then quotes her as saying this: “ ‘I’ve been judging trademark infringements for 40 years professionally,’ ”—so Elspeth Buchanan is in her later years—“ ‘and I often can’t tell between the genuine and the fake,’ she said.” That is a pity, because that is what she is paid for. It is a bit of a shame, but anyway, there we are. She said that she has devoted her entire life to telling one from the other and she cannot, so I just wish her a really happy retirement, I do. It is just a shame that she has spent her life not being able to do what she is being paid to do. She said, however, that sometimes the right-holders cannot achieve that either, like the people who own the stuff. The people who made the Rolex could not tell the real Rolex from the other Rolex—
“Just drop it on the concrete”, said Steve Chadwick, who obviously knows a thing or two about this. Elspeth Buchanan’s point of view is the opposite of that of the retailers, even though she is involved in enforcement, as well. She said she is worried that “the proposed new enforcers”—this is the national enforcement unit, I think—“of trademark and copyright laws”, customs officers and Ministry of Economic Development officials, “won’t be able to judge the real from the rip-off …”. After all, she cannot, after 40 years of trying, so probably officials will not be able to either—they being mere officials—“but they’ll be thwarting legitimate business while they try.”
In other words, the retailers cannot get on with hocking off the counterfeits, because the counterfeits have been seized. They will be some of those 260,000 items that are seized every year, or at least that was the 2005-06 figure. The article states: “These Government agencies under the new legislation will be able to search for, seize and investigate suspected trademark offences. Buchanan”—this is patent attorney Elspeth Buchanan, who has been doing this for 40 years—“says that the proposed changes are ‘spectacular’.” I do not know whether she means spectacularly good or spectacularly bad. I think she means spectacularly bad, because she goes on to say: “The hit squad”—this is Elspeth Buchanan, patent attorney—“from the Ministry of Economy Development will be raiding warehouses for hot copyright infringers, leading to criminal prosecution for infringing T-shirts,”. She is clearly pretty unhappy.
She said she had a client who imported exercise gear and missed last year’s Christmas market because a customs officer was unable to make a formal determination on whether the products were counterfeit. It turned out that they were not, she said, although she said earlier that she had not been able to tell one from the other. The customs officer was unable to make a formal determination because of staffing issues.
The point is that this patent attorney, Elspeth Buchanan, is of the view that we might be making too much of a meal about this copyright and trademark stuff, and that maybe it is better to let it go through. After all, she says, we cannot tell one from the other, so who gives a damn. She has been trying to do so for 40 years and still she cannot, so I say good on her for her frankness. She holds the view that this legislation will hold up business, and that there will too much of an impost on the honest trader who wants to flog off a few counterfeit goods because no one can tell one from another. Well, not on this side of the Chamber—we do not agree with that. We think Elspeth Buchanan is wrong, with a capital “R”. We think that Elspeth Buchanan should stand in favour of action against counterfeiters and people who are cheats and liars and stuff like that. She is a lawyer! She went to a law school, and she is letting these cheats and liars off. It is a disgrace.
We stand with the Government on this bill. We think it is excellent legislation.
Because we introduced it—which leads me to make another point. I said that I was unsure whether I or Lianne Dalziel had introduced it. Well, guess what? Silly old me; neither of us did.
Tau Henare has said that I am nobody. I have been called a nobody by Tau Henare—that is wonderful.
My colleague was not going to correct me; he should have. That is why I was unsure whether it was me or Lianne, because it was neither of us. My honourable colleague Judith Tizard, who I believe is within the precincts of the building tonight—I am not sure—
I cannot hear what Rodney Hide says, but it does not matter, because he will not be here much longer. I think Judith Tizard is within the precincts of the building. In any case, she introduced this legislation, which is now, I think, in the name of the Hon Simon Power, who is going the same way as me, and not before too long. I now think that, in very short order, I will resume my seat.
I felt compelled to take a call after hearing Tau Henare interjecting across the Chamber. This was his moment to rise and take a call on what is an important bill. It is an important bill, and I would have thought that the member would stand up and talk about the Toi Iho brand, and about the counterfeiting of Māori products that we are seeing infiltrating into the market.
This bill gives the powers of enforcement to the Ministry of Economic Development, the Customs Service, and the Police, and strengthens their powers. The member opposite should be fighting to say that these powers are absolutely significant for us. This bill is incredibly important, but of course Mr Henare belongs to a Government that, as one of its first moves when it came into Government, said that the Toi Iho brand was no longer significant—and that is the brand that marks genuine Māori product.
The Government cut funding in its first Budget for maintaining and spreading the marketing of the value of the brand of Toi Iho. We in Labour stood up and said that the Ministry of Economic Development must have strengthened capacity to sell that brand, so that we could pick up counterfeit models. We shamed the Government into bringing back the Toi Iho brand and saving it in time for our incredibly important cultural products in New Zealand.
There is another aspect to this bill that will give protection to the departments, and I am pleased they have these reinforced powers, and that we have some alignment across the ministries. In Rotorua we have been particularly concerned that products are being brought into the country from offshore, and sold as pounamu. We would like to see stronger enforcement on that, because we in New Zealand are very proud of our greenstone, our pounamu, and we are not happy when we see cheaper products coming into the market—having copied our taonga—and being sold in our souvenir shops as genuine New Zealand souvenirs and artefacts. That is a very important aspect of this Trade Marks (International Treaties and Enforcement) Amendment Bill. Tau Henare has gone very quiet now, because he realises that he could have been constructive in this debate.
Part 1 is a very significant part, and it is about strengthening those powers. Goodness me, we need more of them. Our officers will not be rushing through retail outlets and saying that they will ping this or that person. It is about the public eyes and ears bringing to the attention of customs officers, police, and Ministry of Economic Development officials that there is an influx of product that is causing us concern. As a small island country we should be supporting our own manufacturers and our own products for export to international markets.
This is a very good bill. I congratulate Judith Tizard on bringing in the bill. She understands the value of New Zealand’s products and that is one reason why she brought in this bill. The problem that we have—
We should not take lightly the issue of counterfeit goods. I have travelled overseas with the member who is laughing opposite, and we all rather enjoyed seeing the “Gucci” sunglasses that were not Gucci sunglasses. I think the member knows what I am talking about. Those are the sorts of cheap products that we do not want to come into our country and clutter the market when we are trying to encourage our own producers of exports to produce products that are second to none, to sell on the world stage.
Unfortunately it has taken too long for this bill to get to the Committee stage. It is one that is very significant and important for New Zealand as we are trying to strengthen our role as a trading partner on the world stage. I congratulate the members of the Foreign Affairs, Defence and Trade Committee on getting the bill back to the House, and we are able to have the Committee stage today.
The question was put that the amendments set out on Supplementary Order Paper 268 in the name of the Hon Simon Power to Part 1 be agreed to.
I am not sure how I would feel if I was Elspeth Buchanan, after the debate on Part 1, but we are on to Part 2 now. Of course, Part 2 is a much smaller, more focused part than Part 1, which I am very pleased about. It means that debate will be constrained to the very specific clauses contained in Part 2, and I guess the Committee is the poorer for not having the Hon Judith Tizard to guide this particular part through the Committee, given her somewhat chequered association with copyright legislation, because of course Part 2 amends the Copyright Act 1994.
Part 2 has three broad purposes. The first is to amend sections 87 and 188 of the Copyright Act to restore an exception to copyright infringement that was unintentionally removed by way of a drafting error in the Copyright (New Technologies) Amendment Act 2008. It also contains amendments to that Act to strengthen the enforcement of criminal offences for copyright piracy, in the same manner that Part 1 introduces amendments to the Trade Marks Act to do the same. Finally, Part 2 includes amendments to the Copyright Act to make a small change to the border protection measures against the importation of pirated copyright works. To increase the efficiency and effectiveness of the Customs Service in administering these measures, an amendment is being made to allow the service to temporarily suspend enforcement of a border protection notice under certain conditions.
That is really all I have to say about Part 2, because, as I say, if members look at the structure of this bill they will see that Part 2 is a much smaller part than Part 1, with a far more specific focus.
Part 2 is to copyright what Part 1 was to trademark. In any case, it is intellectual property regulation—it is IPR—it is how we ensure that innovations that derive from our fair shores can make it across, and that we can export those innovations and protect them. It also means that we are protecting the New Zealand consumer from counterfeit goods arriving on our shores from somewhere else.
Let me give the Committee a couple of examples, so that we can now begin to understand the strident import of this sort of legislation. The first example I offer up will be the golden kiwifruit, which has a trademark called Zespri. It has a bunch of intellectual property around it that one can buy and sell—in fact, that has been bought and sold in the last 10 years—and that needs to be protected. If one goes to Italy, one will see Zespri Gold being grown there. If one goes to an island off the mainland of South Korea, one will see quite a lot of Zespri Gold being grown there. Some Zespri Gold is also being grown in South America, but all of it has to be branded—whether that is by a copyright, trademark, or whatever other type of intellectual property protection it enjoys—in a way that consumers can believe they are buying the real thing.
What is more, Zespri set aside a certain proportion of its budget to defend a certain proportion of the counterfeits that come along. In this case, the counterfeit is in the form of plant material that is derived from sources other than New Zealand. The end result is that the kiwifruit industry is able to extract a premium, because it controls not only those who grow the stuff but also the science of it and, really importantly, its quality. That is why the industry wants to protect its trademark or copyright to the extent that it does.
A more serious example concerns pharmaceuticals. The reason it is more serious is that a pharmaceutical will be counterfeit not only in the sense that Johnson and Johnson might be getting done in the eye—you know, being put out of pocket by someone who is selling one of that company’s products in a counterfeit manner—but also in the sense that its bioactivity might be different. At that point, human health and safety come into play, and that is why the management of counterfeit pharmaceuticals—we are not talking here of generic pharmaceuticals; that is not what I am talking about, at all—is really important. The World Health Organization estimates that 10 percent of pharmaceuticals are counterfeit, and they are largely sold and traded in Third World nations but not entirely so.
In New Zealand we have to maintain a level of vigilance, which we do through Medsafe and other organisations, including the Pharmacovigilance Centre that happens to operate out of the very fine electorate of Dunedin North, which I have the privilege of representing. We maintain an eye on that stuff—a very, very close eye. It is actually very close to a closed system, notwithstanding the internet and people being able to buy and sell as they will, in small quantities. So the idea of getting on top of any counterfeit pharmaceuticals becomes terribly important, because that deals much more with human health and safety as well as the loss of cash. Those are a couple of examples, then, when it becomes immediately apparent that intellectual property rights are of consequence.
I will make one other comment before I resume my seat. The use of intellectual property rights in New Zealand is growing, reliably and quite encouragingly, off a really, really low base. This goes back to an old saw about how New Zealand science is good but how the New Zealand commercialisation ability of science is not good. That has gone on as an argument or debate for yonks, so I shall not go on about that. But I will make the point that more and more New Zealand innovators—he said broadly—are realising the importance of getting good intellectual property rights.
Some quite interesting dilemmas are raised in clause 30, in which new sections 87 to 87B are substituted in the Copyright Act. We are talking here about what infringes copyright and what does not infringe copyright, and there are some interesting precedents around that. New section 87 is headed “Free public playing or showing of communication work”. For example, if someone plays something that is free—that is, if people have not come to see a movie or hear a soundtrack—then it states in this provision that that “does not infringe any copyright in—(a) the communication work;”. For example, one could have a fire truck with a stereo on the top of that fire truck. If one drove around the streets and played music, then that is not an infringement of copyright in any way, shape, or form, because no one has paid to come out specifically to hear a concert or has been led to believe that they are paying to hear any song for that matter.
But there are some interesting precedents in relation to that, and one I remember—and Mr Chair himself might remember—is that there was a National Party conference where a Muttonbirds song was played. I think it might have been Nature—
“Mr 40”! I think a good nickname for “Mr 40” might be “Rip Van Winkle”, because he slept for 40 years, came back, and found that things had changed. Nothing has changed about “Mr 40” over there.
Anyway, I go back to my example. At a National Party conference, the song Nature by the Muttonbirds was played. The lead singer, Don McGlashan, of the Muttonbirds came out and said—and I quote—that he would rather have sex with an ugly crayfish than have one of his songs played at a National Party conference. There was a big debate about that—about what constituted copyright. Had the National Party infringed a copyright by playing someone’s song without his permission at a gathering where people had actually paid to attend that gathering?
I must admit that that same case came to mind when I was watching the news and saw a 3-second snippet about the last National Party conference, when I think all the members were quizzing the Minister of Finance about asset sales, and were disagreeing with him. A Feelers song was played, and I happen to know that the Feelers were huge supporters of Helen Clark when she was Minister for Arts, Culture and Heritage. I said to myself “Goodness me, I wonder if the National Party stole that song or actually paid money or got permission to play it in an area where people had gathered for a specific purpose. Does that infringe copyright?”.
I am looking through this bill but I am not too sure whether that does infringe copyright, because it states in new section 87(2), inserted by clause 30: “For the purposes of this section, the public playing or showing of a communication work is not free if—(a) the audience has paid for admission to—(i) the place where the communication work is played or shown … or (b) goods or services are supplied at the venue or a place of which it forms part at prices … or (c) the venue is a hotel, motel, camping ground, … that admits persons for a fee for purposes of temporary accommodation, and the audience is made up of persons residing at that hotel, motel, camping ground, or other place.” So I was reading this and I was very unsure—perhaps the Minister of Commerce could answer—whether, for example, at a National Party conference the broadcasting of a song infringed copyright if the National Party had not got specific authorisation to play such a song.
The other thing this brings up is, for example, if I went to a hotel to see a concert by a certain band and I paid money to get in, and on a jukebox they were playing Rolling Stones songs but I had paid money to go in to hear a song played, would that infringe copyright? Maybe it would not for a jukebox. I am sure there are rules around that, because one puts money into it. If they had put in a CD, for example, and that is counted as broadcasting the Rolling Stones in a public place where people have paid to hear music, does that infringe copyright? This bill is a little unclear in that area. Maybe I am not reading it correctly. That is probably the case. The Minister, no doubt, will be able to stand up and clarify that. The implications for this are that pubs, bars, hotels, camping grounds, etc. will need to be very, very careful.
Let me give members one example. A school in Napier does not have a bell that rings to denote the end of interval or the beginning of lunchtime; it has music. It plays music.
I would like to say that the speech from the previous member, Stuart Nash, was very relevant to the discussion, generally, about copyright and about the problematic nature of infringement and alleged infringement. I will return to the seriousness of counterfeiting and copyright infringements that happen with large-scale copyright and counterfeiting breaches and breaches of trademarks, which my colleague Pete Hodgson referred to. With reference to Part 2 of the Trade Marks (International Treaties and Enforcement) Amendment Bill I will return to what was considered to be the public policy objective of this bill. The public policy objective of this bill was about reducing the trade in New Zealand of counterfeits and about deterring people from becoming involved in that trade, through increased prosecution by a Government agency for the criminal offences that are provided under the Trade Marks Act and the Copyright Act. This bill is providing for more provision for enforcement.
I think the ministry talked about prosecution by Government agencies for those criminal offences as being infrequent and ad hoc, which was contributing to the growth of counterfeits being offered for sale in New Zealand. Greater volumes of counterfeits being offered for sale could lead to reduced profits by the trademark owners and the copyright holders. They are otherwise known as the rights-holders. This bill is about being on the side of the rights-holders and trying to ensure that there can be updated and harmonised legislation—which has taken several years to come back before the House to be passed—that can provide more protection and entrenchment in society, so that there is not an acceptance of counterfeits and so that people cannot get away with doing that and making a lot of money out of it while ignoring the law. There are also health risks, which have been alluded to, and the wider impacts on the economy as a whole.
All those things are very important. I think that across the House we all agree on those fundamental principles, but, unfortunately, we have taken nearly 3 years, or whatever it is, for the legislation to get back to the House to be passed. There has been virtually no debate on the importance of the scope of the issue, yet there has been an enormous amount of discussion and legislation passed in the House on putting a penalty on people who are doing it for their own benefit because, generally, they cannot get access to the material elsewhere.
I think one of the most important things about this bill is that it is about the importance of brands. Virtually all my colleagues have alluded to that. In the spirit of the importance of brands I will make reference to some breaking news that is sort of relevant. I hope that the Chair, Lindsay Tisch, and the Committee would consider it to be relevant. There has been a lot of discussion in New Zealand in the last few weeks about brands, particularly about rugby jerseys and controversies about them. The Highlanders have made a decision tonight—
—the Highlanders—to keep the original colours of their brand in the home games. If Eric Roy was in the Chair, he might be interested in that piece of news, and a few other people in the House might be, too. The Highlanders may keep that new green strip for the away games, but the original colours will be kept in Otago and Southland for the home games. That is a piece of good news. I thank the Chair for his indulgence in allowing me to announce that. I wish I had the aforesaid Highlanders jersey here tonight—which I certainly would not be wearing in the Chamber—as a significant symbol of the importance of a brand and what it means.
She did, she was. She wanted to announce the news about the Otago strip and then she wanted to sit down. That was the climax. Her piece was coming to that climax. I will talk about—
Let us not go there. I will talk about enforcement. A lot of Part 2 of the Trade Marks (International Treaties and Enforcement) Amendment Bill is about the powers of enforcement in the bill—in particular, the powers of enforcement of customs officials in being able to ensure that the trademark and copyright parts of this bill are upheld. Obviously, with the growing problem of the manufacture, distribution, and sale of counterfeits we are seeing a steady stream of these goods coming into New Zealand. Pete Hodgson mentioned the number—more than 500,000, I think—of goods in 2007. Clearly, the flood of these fakes, effectively, undermines the profitability of businesses dealing in the genuine article—that is, as Steve Chadwick talked about, our own goods themselves. Our Māori artefacts, for example, are sometimes manufactured overseas and are sold as the real thing when in fact they are not, at all.
New Zealand’s international obligations require us to include a criminal offence for cases of wilful counterfeiting, piracy, or commercial sale. The penalty for a person convicted of that is a fine of $150,000 or imprisonment of up to 5 years, so it is quite a serious thing to be caught for. The bill will empower the Ministry of Economic Development and the Customs Service to play an active role in enforcing those criminal offences under the Trade Marks Act and the Copyright Act alongside the cooperation with other enforcement agencies and rights-holders.
If we look at clause 31 of Part 2—we are looking at the enforcement officer’s power of entry—we see that the powers are quite widespread. When I look at new section 134E, I see it is entitled: “What enforcement officer and person assisting may do when exercising power of entry”—in this case, an examination—“and examination without warrant”. So these are the powers they can apply without a warrant. Enforcement officers can examine the place and all things, including any document; seize anything that he or she has reasonable grounds to believe is evidence; bring and use in or on the place equipment for the purposes of carrying out the examination; take photographs, sound, or video recordings; or take any person to the place to assist him or her with the examination. In other words, they are quite wide-ranging powers that these officials have in trying to combat the infringements of both trademarks and copyright.
I wanted to highlight that because the places where enforcement officers can carry this out without a warrant include mainly public places. New section 134D(1) is about an enforcement officer’s power of entry and examination without warrant for the purpose of carrying out his or her functions, and it says that an enforcement officer may enter and examine any place where goods are being offered for sale, exposed for sale, or publicly displayed in a public place. An enforcement officer can do that and go into that under this new legislation without the need for a warrant. So it certainly extends the powers of these enforcements officers, the people able to do this, quite considerably.
This is extremely important, because when I was glancing through some of the past work on this I saw that there were no prosecutions, as I understand, in 2002 under the Trade Marks Act. Customs officials say they are determined to make a public example of importers of patented goods.
The question was put that the amendments set out on Supplementary Order Paper 268 in the name of the Hon Simon Power to Part 2 be agreed to.
I wish to advise that in the course of this debate, I have been offered some counterfeit goods. I will just find them here. It is pretty serious, but it is what happens with modern technology. It is very straightforward. It says “Buy cheap, pirated software here”.
Well, I will tell the member: “http://”—is the member taking this down?
—“cheapestsoftinc.com/”. Shall I do that again or did the member get it the first time? OK. The Hon Rodney Hide, sharp as a knife, got the website stuff down the first time. The point is that even as we have been debating the ubiquitous nature of counterfeiting and its omnipresence, it came up on my phone. Unbelievable! Who would have thought? I do not know whether anyone else has checked their phone to see whether they have been tempted with counterfeit goods, but I have in the course of this debate. If necessary—and the officials could indicate this to me—I would be happy to forward this email on to them for further investigation, should they wish. The point is that with modern technology, any form of counterfeiting is pretty straightforward, and all of us know all the spam we have to clear off our little phones, laptops, or whatever they may be. Every morning from the night before, there will be some counterfeit goods on the market. That is why legislation like this matters.
It matters for another reason—that is, that this country will not get there on cows and tourism alone. We will have to look to the innovative components of our economy and the innovative nature of our people and our ability to protect the intellectual property that New Zealanders devise if we are to have an economic future that will have a broader base than exists at the moment. That is why we need to be reasonably staunch on intellectual property matters.
Last year I was in Geneva. I went up to the World International Property Organization—I dropped in; I rang first. I dropped into the World International Property Organization for an afternoon and I asked a few questions. The World International Property Organization is one of the bodies of the United Nations. It is headed up by an Aussie guy, quite a smart guy. Pretty much, my question was that now that the world economy is changing from the dominance of so-called developed nations to the greater hegemony of China and India, in particular, but also in due course Brazil, Russia, Indonesia, and so on, are we seeing a change in the average approach around the world to intellectual property, or is the white man’s approach to intellectual property, which is to defend it staunchly, still in the ascendancy? Answer: we are seeing a change. It is not a big change, said this guy, but it is there. As there are now more and more developing countries joining the world economy, and some of them with spectacular pace, their attitudes to intellectual property, which is not as defensive or protective as ours, are starting to infuse the debate globally a little.
He made the second point that as those countries make more money from their intellectual property, so the value that they place on intellectual property will rise. Let us take India as an example. It is a massive producer of generic pharmaceuticals. It is a huge producer. Dr Reddy’s Laboratories recently sold out—one of the world’s largest pharmaceutical companies. A massive export for India had been these generics. Well, not any more. More and more, India’s pharmaceutical effort is going into original molecules. More and more, India is not the one waiting for the patent to drop away or for the time-limited patent to come to an end. More and more, India is the one that is trying to get the product to market in a timely way, because that country is moving from being, if you will, a copycat to an originator.
So too, to an extent, is China. It may be to a lesser extent, and it may also be that in China it is a lot more variable. But China now has an extraordinary effort going into its scientific endeavours that did not exist even 10 years ago. In parts of Beijing, the north-east quadrant of Beijing, there are more universities than Australia and New Zealand put together in that one city. The intellectual capacity of some of those centres is now bewildering, at least to a New Zealander. China is famously good at counterfeiting and ripping people off. TheLord of the Rings was launched in Wellington one day and could be seen in Beijing the following day. Those days are still with us, but they are in retreat a little. I suppose that as things move on and as the next and last continent—which is, of course, Africa—goes through that process of development, we will see the whole thing play out again, perhaps not in my lifetime but certainly in my children’s lifetime.
I think that our approach to intellectual property will probably remain in the ascendancy foreseeably, but it is true that it does change as new, big, bulky countries join the international trading arena, as China and India have done so spectacularly in recent times.
I would like to take another call on the Trade Marks (International Treaties and Enforcement) Amendment Bill. One of the most important things about the impact of this bill, apart from stamping down on the illegal trafficking of materials and counterfeit merchandise into New Zealand, is that it is about encouraging innovation. It is about taking legislation and trying to update and modernise it. That is a really important thing to do. I commend the Government on doing that and hope that all other legislation is treated in that vein.
It is important that all Governments take the view that they do not know everything and that they can move with the times and learn a few things along the way. I note that the Minister in the chair, the Minister of Commerce, is shaking his head, so I guess that means he disagrees with me and that he thinks he does know everything, which is a pity because he does not and it would be a good thing to acknowledge that.
The important thing about this bill is the extent of the problem. I think Pete Hodgson talked about the 260,000 items that are being detained each year. I do not know when that figure was last updated, but that is a lot of items. It could be that there are many, many more items out there that could be detained. Prosecutions could be brought, and the national enforcement unit could exercise its powers and become much more efficient. There would be the effect of stamping down on the illegal counterfeiting of goods and pirated works, which is ultimately the intent of this bill.
I would just like to say, I guess from the industry’s point of view, just exactly how industry is likely to benefit from the enforcement that will occur across the nation, hopefully, as a result of the bill. I think it is difficult to quantify the benefits, which was acknowledged during the development of the bill. It was said that enforcement action by the national enforcement unit is expected to lead to a significant reduction in the manufacture, importation, and sale of counterfeits in New Zealand through that deterrent effect. We are talking about large numbers of items and the significant ability for people to make money out of them. That deterrent effect is really important.
The reduction in the sale of counterfeits is likely to result in increased sales for rights-holders, an increase in their profits from the New Zealand market, and an increase in the reputation of the quality of the rights-holders’ goods. That is that important brand I was talking about. As Pete Hodgson has rightly said, there can be a difficulty in determining the difference between the real bona fide brand and the counterfeit brand. It is extremely important that the manufacturers of those bona fide brands have the ability to reap the rewards and the profits from them, rather than having to compete against those knock-off items, as they have been described.
Although the knock-off items might not look a lot different, generally they are different and are of much poorer quality. We have also heard that in some cases there are personal health and safety risks associated with them. One of the memorable phrases from tonight is “exploding pyjamas”. I am not quite sure whether that was what was meant, but it has certainly left an enduring visual memory, in terms of the impact of those exploding pyjamas.
Like a bill we were debating earlier on in the evening that dealt with the tracing of animals, the Trade Marks (International Treaties and Enforcement) Amendment Bill assists New Zealand in developing our position in the 21st century global economy. It assists with dealing with both the opportunities and the threats that our existence as part of a global economy presents to us. The opportunities of developing our own intellectual property and our own particular niche goods and services and being able to export them to markets around the world is a very important opportunity for New Zealand. Trademarks and copyrights of that intellectual property and of those goods are important for New Zealand’s ability to express our high-value brands around the world—the likes of Zespri, Fonterra, and Beef and Lamb New Zealand, for instance. These are known as high-quality products around the world, and we need to be able to protect them.
We also need to be able to protect our own consumers here in New Zealand to ensure that they know when they are purchasing a product that has been imported into New Zealand whether they are purchasing the genuine article or something that is a knock-off of the genuine brand. As has been discussed, it is sometimes quite difficult to determine whether a product is the real thing. As our economy develops and grows, it will be about not just protecting our well-known agricultural brands but also being able to develop new technologies and new ideas, and being able to send those into niche markets around the world as well.
For those reasons, although the material in this bill is reasonably dry—and there has been some amusement about the debate this evening—it is hugely important and it does warrant discussion in the House. Although these things do tend to get a little bit overlooked, and it is not the sort of thing we expect to read on the front page of the Dominion Post, the functionality of a bill like this and of New Zealand signing up to the treaties that are ratified in this bill is actually hugely important for our ability as a nation to deal with some of the trade deficits that we are dealing with in this country—the fact that we are still importing more than we export—and our ability to go out there on the world stage and make some money. That is all embedded deeply in this legislation and, indeed, in the animal tracing legislation that we dealt with earlier on in the night.
Labour is very much in favour of this bill. It is our pleasure to continue to support it. We hope that its commencement occurs in as timely a fashion as possible and that its progress through the House is able to continue. I do not have too much more to add to the debate at this point, so I shall take my seat.
I remind members that we are on clauses 1 and 2, which are the title and commencement clauses. You must bring those into the debate.
I want to start on the commencement clause because, as has been pointed out by a number of the speakers tonight, the Trade Marks (International Treaties and Enforcement) Amendment Bill was first brought to the House in 2008. Now, in 2011—3 years later—it is certainly our wish that the bill passes as quickly as possible and gets through to its third reading—
—and is able to move into law before Parliament goes into recess. The interjection of Mr Hide makes me reflect on the fact that in this Chamber tonight there are a number of people whom we will not be seeing after that time: Mr Locke, Mr Hide, Mr Hodgson, Mr Power, and Mr Henare, who is at No. 40. The House will be a sadder place for their not being here.
Mr Hide does not have to worry about that wherever he goes.
Let us get on to the bill. This is the Trade Marks (International Treaties and Enforcement) Amendment Bill. As has been said, this bill is more of an omnibus bill. It will amend both the Trade Marks Act 2002 and the Copyright Act 1994. These two Acts—again, as has been said during the course of the debate—are extremely important for New Zealand. The idea of us protecting our intellectual property is something that perhaps we do not take as seriously as we possibly could. I am thinking about trademarks. Somebody mentioned Adidas, but we could easily also mention Canterbury Apparel and the Kathmandu clothing range, for example. These are all New Zealand products that could be copied or changed in some way. They are certainly identifiable as New Zealand products. Making the cheaper rip-offs, or rip-offs that do not involve the research and the marketing behind the products but just use the symbol or the actual product itself without all of that investment, is unfair. It certainly disadvantages those designers and manufacturers who have put that effort in.
This bill also gives effect to the Government’s decision to accede to the Protocol Relating to the Madrid Agreement Concerning the International Registration of Marks. It enables us to accede to the Nice Agreement Concerning the International Classification of Goods and Services for the Purposes of the Registration of Marks, which is known as the Nice agreement. As we said before, it will give us the ability to sit at the Nice classification, which is updated on a 5-yearly cycle. Parties to the Nice agreement consider amendments to it, and we will be able to consider amendments that will be advantageous to our manufacturers and our businesses here in New Zealand. Finally, it ratifies the Singapore Treaty on the Law of Trademarks, which, as was mentioned earlier in the debate, aims to make national trademark registration systems much more user-friendly and reduce business compliance costs for trademark owners. That is obviously not only important for our businesses but also important for those out there who may be tempted to flout the law of both copyright and trademarks and try to produce goods that infringe that law. That treaty enables them to at least understand exactly their position under law.
It would also, as I mentioned before in the debate on Part 2, empower the three agencies that relate to this bill: the Ministry of Economic Development, the Customs Service, and the police.
I raise a point of order, Mr Chairperson. I just point out that debate on clauses 1 and 2, which is the conclusion of the Committee stage of the debate, is often wide ranging, and it is a surprise to me—
I know what the member is saying. I have listened intently. There have been more calls on clauses 1 and 2 than on Part 2. I brought to the Committee’s attention that although this is a peroration, a tying-in, the title and commencement must be mentioned because in previous speeches they have not been mentioned. I feel that at this stage we have run the course of time and there is no new material. I have accepted the closure motion.
I am certainly not. I seek leave to give a contribution of no longer than 5 minutes, strictly around matters to do with commencement.
Leave is sought for that purpose. Is there any objection? There is no objection.
I thank the Committee; I thank the Committee indeed—
I will put the leave again; my apologies. Leave is sought for the Hon Pete Hodgson to speak briefly on the commencement. Leave is sought for that purpose. Is there any objection? There is objection.
The question was put that the amendments set out on Supplementary Order Paper 83 in the name of the Hon Simon Power to clause 2 be agreed to.
The Committee divided the bill into the Trade Marks Amendment Bill and the Copyright Amendment Bill (No 2), pursuant to Supplementary Order Paper85.