01 March 2011

Is IP Australia the Envy of the Patent World?


USPTO Director David Kappos
turns green with envy at IP
Australia's successful reduction
of the examination backlog!

How many Patent Offices in the world’s major economies can say that since 2009 they have reduced the time spent by an application waiting for examination by 30%?

We do not know for sure, but we suspect that it may be only one – the Australian Patent Office.

(For those that doubt the claim that Australia qualifies as a ‘major economy’, we note that as at the time of writing the most recent rankings, by GDP, produced by the International Monetary Fund, the World Bank, and the CIA World Factbook, all place Australia at number 13, ahead of Mexico and South Korea, and not very far behind Spain, India, Russia and Canada.)

In any event, IP Australia proudly announced last week – in a news item modestly titled ‘Patents examination time slashed!’ – that:

The impact of a number of strategies has helped IP Australia to significantly reduce the average examination time for patents from an average of 16 months in 2009 to 11 months.

This is undoubtedly an impressive achievement, and a closer look confirms that the reduction in the backlog of pending applications (from over 75,000 in 2009 to 59,482 last week) has been achieved almost across the full range of technologies.  As the table below – taken from IP Australia’s response time statistics (available here) – shows, all applicants except those with applications allocated to biotechnology subsection A2 should have cause to be pleased with the performance of the Patent Office.

Technology (Subsection)
Time between request for examination and issue of first examination report (3 Month Rolling Average time in months)
Plant Breeders Rights & Biotech (A1)
12
Biotechnology (A2)
22
Chemical/ Biotechnology (B2)
9
Chemical Engineering (B1)
8
Chemical (C2)
14
Electrical/ Medical (B4)
11
Electronics (C3)
11
Electronics (C4)
9
Mechanical (A4)
12
Mechanical (C5)
13
Pharmaceuticals (B3)
11
Physics (A3)
13
Melbourne Patent Examination Centre (A5)
11

And if this is not impressive enough, IP Australia’s goal is to reduce the average examination time further by the end of 2011 – to a mere nine months.

DOES IP AUSTRALIA DESERVE ALL THE CREDIT?

While not wishing to take anything away from IP Australia – or the examiners who are no doubt working hard to reduce the backlog of applications awaiting examination – we do not think that IP Australia is entitled to take all of the credit for this outcome.

It seems to us that one of the ‘strategies’ that IP Australia credits for the reduction in the backlog is the use of foreign examination reports, or FER’s.  Section 2.13.10.1 of the Examiners Manual sets out the current guidelines for use of FER’s by Australian patent examiners.  These guidelines are designed, quite rightly, to avoid duplication of work by the Australian Patent Office.  For example, one of the directives is:

If there are granted family members, for example US, GB or EP family equivalents, and the Australian claims are identical to those in the granted family equivalent and appear to be prima facie valid, accept the application.

Putting aside the implication that an Australian examiner could not possibly conduct a more thorough search and examination than a counterpart in the USPTO, UKIPO or EPO, this represents a huge potential time and work saving strategy for the Australian Patent Office. 

When a FER is adverse, the guidelines include the following advice:
  1. Use FER as first report if FER includes discussion or explanation of issues raised and issues are relevant and sustainable under Australian law.
  2. If a FER cannot be used because the issues raised are not sustainable and relevant under Australian law follow the clear FER instructions…
This implies that the search conducted by the foreign patent office can be relied upon, even if the resulting rejections are not applicable under Australian law.  Overall, if there have been any prior search or examination reports ‘prepared by the International Authorities and other foreign offices whose work is recognised by IP Australia to meet appropriate quality standards’ (as the guidelines describe it), the workload of the Australian examiner is substantially reduced.  Searching and interpretation of identified prior art is surely the most time-consuming aspect of examination.  Applying the relevant law, and preparing the examination report, is then largely a matter of routine.

It is therefore enormously beneficial to IP Australia that the Australian patent law comprises a requirement for an applicant to expressly request examination, and that this can be delayed, in most cases, for more than four years from the effective filing date of the application.  Even the chronically underfunded and overburdened USPTO is still managing to issue first office actions within this timeframe, so Australian patent examiners are rarely faced with cases having foreign equivalents, but no FER.

SO WHY SHOULD DAVID KAPPOS BE GREEN WITH ENVY?

If USPTO Director David Kappos is indeed envious of IP Australia, then it should not be merely because the Australian backlog is significantly shorter than his own.

Rather, Mr Kappos might quite rightly be envious because Australian examiners frequently have the benefit of work performed (and paid for) by the USPTO, whereas the converse is rarely true.  Indeed, we doubt very much that we shall live to see the day on which US patent examiners are instructed that if the Australian Patent Office has granted a patent, and the US claims are identical and prima facie valid, the US application should be allowed.  This is tantamount to ceding sovereignty over the patent system to another nation!

Let us be clear – we are not suggesting that IP Australia’s practice in relation to FER’s is wrong, nor are we suggesting that any of this has an adverse impact on patent quality in Australia.  Quite the opposite, in fact.  We have the greatest respect for the USPTO and EPO examining corps, and do not doubt for one moment that their skills and resources are at least the equal of those of Australia’s examiners.  But the simple fact is that the benefit gained by IP Australia from the work product of its foreign counterparts is far from reciprocal.

IP Australia deserves credit for implementing strategies that benefit patent applicants in Australia.  However, in terms of actual substantive examination work carried out, the credit for subsequent reduction in the backlog in Australia should, we think, be shared with the foreign patent offices that are, in effect, providing search and examination services to the Australian Patent Office.

Ultimately, we think that patent applicants operating in a global market would be better served by agreements between national patent offices, and harmonisation of laws and practices, that result in genuine work-sharing.  For an applicant with a substantial market in the US, for example, the ultimate efficiency of examination of its Australian application is of minor significance compared to the delay in examination of its corresponding US application.

2 comments:

Guest_examiner said...

Although the Manual does state that examiners can prima facie accept an application which has the same claims as a granted patent overseas (EP, US etc) it is often quite rare that such an instance occurs, as far as I am aware.  Instead more often than not, the original claims will be the same and usually the foreign office will have completed a search (and examination) of said claims.  The Australian examiner would then rely on this as part of their work on AU national phase applications.  

I'm sure many examiners may overly rely on such FERs, however, the procedure is to actually check each document and a comment under AU law should be made.  However with higher internal quality and quantity standards to meet it is no surprise that the Australian examiners will be looking to 'take shortcuts'.

It must also be noted that fees for search and examination in Australia are very low in comparison to other jurisdictions.  It would be wasteful of resources (examiner time and monetary) if each application in Australia was subject to a search if a search covering the same or substantially the same claims has already been performed by an examiner at the USPTO or the EPO.  

Patentology (Mark Summerfield) said...

Thanks for your comment 'Guest_examiner'!

If indeed you have some 'inside information', your comment is interesting, although it is not necessarily consistent with my experience.  I cannot recall the last time I saw an Australian examination report that included any comment, or raised any objection, where there was a clear US or EP report (or IPRP) issued on corresponding claims.  Of course, in the absence of any actual comments, there is no way to know whether or not the examiner has reviewed the prior art for her/himself, and reached the same conclusion as the foreign examiner, and so this may well be happening.

I have to take issue, however, with your suggestion that Australian fees are comparatively 'very low'.  In the US, for example, the filing fee is US$330 (US$165 for small entities, i.e. individuals or companies with fewer than 500 employees).  The search fee is US$340 (US$270), and the examination fee is US$220 ($110).

At current exchange rates, the Australian filing fee is almost identical to the US 'large entity' fee, at A$340.  The Australian examination fee is A$450, which is not that much less than the combined US search and exam fees for large entities, but a bit more than the small entity fees.  On average, the USPTO is probably not collecting any more than IP Australia per application (and the USPTO does not even get to keep all of its fees).

When you consider how much more comprehensive a US Office Action is, compared to an Australian examination report, the US is not only comparable in price, it is vastly better value for money.

European fees are, of course, higher.  But when you divide them by the number of countries covered by the examination process, they are a bargain!

As you are no doubt aware, examination is, in any event, subsidised by annuity fees, which serve a policy purpose (i.e. discouraging patentees from maintaining underperforming patents) rather than representing any real cost of 'maintenance'.  So comparing search and examination fees is probably not the best way to assess relative cost and performance of national patent offices.

Regards,

Mark

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