Intellectual property

Many New Zealand companies are adept at developing valuable intellectual property and often seek out offshore capital to enable them to deploy the intellectual property, both domestically and for sale or licence overseas. The robust intellectual property regulatory system in New Zealand is attractive to foreign investors, as it establishes the framework for protecting their investment in new products, brands and ideas while allowing firms to drive innovation and productive uses of these assets.

Trade marks can be registered in New Zealand under the Trade Marks Act 2002. A trade mark grants the owner the exclusive right to use that trade mark in New Zealand in relation to the goods or services for which it was registered, as long as the registration is renewed every 10 years. Trade marks that qualify for registration can include signs, symbols, words, logos, shapes, colours, sounds, and smells. New Zealand is a signatory to the Madrid Protocol, which facilitates trade mark applications internationally and into New Zealand. 

Both registered and unregistered trade marks are protected under the common law tort of passing off and the Fair Trading Act 1986 (FTA). A passing off action can be used to prevent use of an identical or similar trade mark by third parties where that use is likely to lead the public to believe that the third party is the same as or related to the trade mark owner.

The FTA prohibits misleading and deceptive conduct in the course of trade, which includes misleading use of someone else’s trade mark. The scope of protection under passing off and the FTA will depend on the use and reputation of the trade mark, and generally registration of your trade mark provides better protection.

Copyright applies automatically on the creation of certain original works, including writing (literary works), artistic works, music, sound and video recordings, designs, and software code.¹ Copyright duration depends on the category of work, but is generally the life of the author plus 50 years (the Government has announced it has intentions to increase it to 70 years by 1 May 2028). The Copyright Act 1994 also provides protection for industrial designs for a period of 16 years from the date of first mass production.

There are a number of key tax considerations for foreign investors that develop, acquire, or commercialise intellectual property in New Zealand. During the early research and development stages, research expenditure is generally deductible in the year incurred, and this can include expenditure recognised as an expense for financial reporting purposes. Conversely, a tax depreciation deduction may be available where depreciable intangible property expenditure is capitalised and amortised over the life of the asset. Subject to specific criteria, it is also possible to claim a deduction for unsuccessful software development costs. At the commercialisation stage, effective structuring will be important where intellectual property is deployed offshore. Royalties paid by a New Zealand business to a non-resident for the use of intellectual property in New Zealand are generally subject to non-resident withholding tax, subject to any applicable double tax agreement. Cross-border related party licensing arrangements and other intellectual property arrangements must also comply with New Zealand’s transfer pricing rules.  

Tax considerations will also apply on the acquisition or sale of intellectual property and will depend on the types of intellectual property involved.

New Zealand offers a Research and Development (R&D) Tax Incentive to encourage businesses to invest in innovation in New Zealand. The tax incentive provides a tax credit at a rate of 15% of eligible R&D spend, up to NZ$120 million a year, which is broadly refundable as cash. Subject to certain restrictions, entities may be eligible for the incentive even when the R&D is performed on behalf of a related party or the IP generated is held internationally within the group, or if being performed in New Zealand through a permanent establishment.

The Designs Act 1953 governs the registration of ‘designs’ applied to an article (by an industrial process or means) that are new or original features of shape, configuration, pattern or ornament. Protection through registration can last up to 15 years, subject to the payment of renewal fees.

Patents grant the owner the exclusive right to exploit their inventions and licence them to others for a period of up to 20 years, subject to the payment of annual renewal fees after the first four years. The invention must be novel, inventive, and useful. Novelty is assessed on an absolute (or worldwide) basis. It also means that your invention must remain confidential (and not be in use or widely known) until you seek patent protection.

In New Zealand, patents are examined for patentability prior to grant. There are pre-grant opposition processes available should third parties wish to challenge a patent, and re-examination and revocation processes post-grant.

New Zealand legislation also provides protection for:

• Plant varieties
• Geographical indications, including registered New Zealand wine and spirit geographical indications and protected EU geographical indications for a wider range of products, mostly foods and beverages, under the New Zealand–European Union Free Trade Agreement 
• Layout designs for integrated circuits
• Ambush marketing in connection with designated major events
• Moral rights