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
-----------
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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