In some (very limited) good news for Australia, patent filings by domestic residents increased by 2.6%, while the number of provisional applications increased by 5%. Unfortunately, however, two thirds of the additional provisional applications in 2023 were filed without the professional assistance of a patent attorney. (I say ‘unfortunately’ because, as I have shown previously, the outcomes for self-represented applicants are generally abysmal, so for the most part they are wasting their time and what little money they are expending on fees to IP Australia.)
The top 10 countries of origin of applications filed in 2023 were the United States, Australia, China, Japan, the UK, Germany, Switzerland, South Korea, France and Canada. There were substantial drops in the numbers of applications filed by applicants from the US (-6.0%), South Korea (-10.5%) and Canada (-14%). The largest growths in filings were from China (12.1%) and Japan (5.2%). China is once again snapping at the heels of Australia from second position on the league table. This happened previously in 2020, when I (mistakenly) predicted that Chinese filings might surpass domestic filings as early as 2021. But while it is taking longer than appeared likely a few years ago, it seems inevitable that Australians will soon fall behind Chinese applicants as users of the Australian patent system.
Given that the innovation patent system is being phased out, it should come as no surprise that just 106 innovation patent applications were filed in 2023 (down from 191 in 2022), all of which were necessarily derived from existing applications filed prior to 26 August 2021. Around two-thirds of applicants still filing for innovation patents are Australian (120 in 2022 and 67 in 2023). Furthermore, a larger proportion of innovation patents are now being certified and made enforceable than has historically been the case, with 75 of those filed in 2022, and 31 of those filed in 2023, so far having been certified. But with innovation patents now being a small, and shrinking, part of the Australian patent system, I shall have nothing more to say about them in this article, and I will drop the distinguishing term ‘standard’ when talking about ‘regular’ patent applications.
Total Patent Application Filings
In 2023, a total of 31,497 patent applications were filed, which is 2.4% below 2022, 2.8% below the record high of 2021. Even with the declines, however, 2023 was the third straight year in which Australian patent filing numbers exceeded 30,000. In contrast to the previous year, the number of PCT NPE applications fell by 3.2%, while the total number of direct filings remained steady.
Direct filings are made up of divisional applications (which may be derived from either PCT NPE or directly-filed parent applications) and ‘original’ Australian applications (which may claim the benefit of earlier provisional filings, foreign priority filings – i.e. ‘Convention applications’ – or may be new filings with no earlier claim to priority). The following chart shows the breakdown of direct filings between divisional and original applications.
As can be seen, direct filings remained stable in 2023 because a significant decline in divisional applications was offset by an almost identical increase in original applications. In fact, 2023 was the first year since 2013 that the number of divisional applications has exceeded the number of original application by fewer than 2,000 filings. Although not shown on the above chart, in the more distant past the situation was very much reversed. In the year 2000, for example, 5,105 original direct applications were filed, compared with just 1,385 divisional applications. While the decline in original direct applications is probably due to increasing availability and popularity of the PCT system, it is not clear why divisional applications have become so much more prevalent since 2015. It could be related to the Raising the Bar patent law reforms that commenced in 2013, but there was a general upward trend in divisional filings even prior to that event. Feel free to share any insights or theories in the comments below.
Countries of Origin
The chart below compares annual filings since 2012 by Australian residents against applicants from the rest of the world (RoW). Take note of the different axes for the two traces. In a reversal of last year’s deltas, foreign applicants filed 827 fewer applications in 2023 than in 2022 (, while Australian applicants filed 66 more applications. Australian residents therefore slightly increased their share of filings, from 7.8% in 2022 to 8.2% in 2023. However, this remains well below the peak of 10.3% in 2013, and also below the average of 8.8% across the period shown.
Any increase in Australian resident filings is arguably a good sign for domestic innovation, but the variations over the past 15 years have been far more heavily influenced by legal and regulatory changes – i.e. the Raising the Bar reforms in 2013, and the abolition of the innovation patent system commencing in 2021 – than by any underlying trends in Australian innovation. In this context, growth of just 66 applications may be nothing more than a statistical fluctuation. The decline of 2.8% in applications filed by foreign residents is, however, the largest relative fall since the disruption caused by the Raising the Bar reforms in 2013-14.
The top 10 countries of origin, and their respective rankings, remained the same as in 2022 despite, in a number of cases, significant changes in filing numbers. As shown in the table below, there were substantial drops in the numbers of applications filed by applicants from the US, South Korea and Canada (-14%), while Japan and (especially) China showed significant growth.
| Country | Filings | YOY Change |
|---|---|---|
| United States (US) | 13840 | -6.0% |
| Australia (AU) | 2574 | 2.6% |
| China (CN) | 2448 | 12.1% |
| Japan (JP) | 1671 | 5.2% |
| United Kingdom (GB) | 1546 | -0.4% |
| Germany (DE) | 1399 | 1.2% |
| Switzerland (CH) | 1250 | 0.7% |
| South Korea (KR) | 812 | -10.5% |
| France (FR) | 803 | -3.0% |
| Canada (CA) | 676 | -14.0% |
As the chart below illustrates, Chinese applicants are once again threatening to surpass domestic residents as the second largest users of the Australian patent system.
Provisional Applications
Australian provisional applications are almost all filed by applicants resident in Australia, and are the most common ‘entry point’ to the patent system for these applicants. The chart below shows annual provisional filings since 2012, in total and broken down into those filed with the assistance of a registered patent attorney or firm and those that were either self-filed (i.e. by an applicant or inventor) or filed by another non-registered agent. For the first time in many years, the total number of provisional filings increased in 2023, but still remains well below 5,000, and significantly lower than historical highs. Slightly offsetting the positive news of growth in provisional filings is the fact that only a third of the additional applications were made with the assistance of a registered patent attorney. Experience suggests that most of these self-filed applications are of low quality, and are unlikely to result in any granted patent rights.
Is the PCT Becoming Less Popular?
The World Intellectual Property Organization (WIPO) loves to spruik the growth and popularity of the International Patent System. Its Patent Cooperation Treaty Yearly Review – 2023 reported that ‘PCT filings grew by 0.3% to reach 278,100 in 2022’. But, as the following graph from that report clearly shows, the rate of growth in new PCT filings has generally been declining in recent years.
Furthermore, while Chinese applicants have, in recent years, become the largest users of the International Patent System, filings from the US may be in decline. This is illustrated by the following chart, also taken from the 2023 WIPO PCT report.
I was interested to see whether these changes are reflected in Australian filing data. The table below summarises the number of original direct applications (i.e. excluding divisionals) along with the number of NPE applications originating in each of the top 10 filing countries in both 2022 and 2023. Obviously a comparison over just two consecutive years tells us little about any long-term trends but, along with the WIPO data, it may provide some indication of what to watch for in the future.
| Country | Direct 2022 | NPE 2022 | Direct 2023 | NPE 2023 | Direct Change | NPE Change |
|---|---|---|---|---|---|---|
| US | 926 | 10411 | 956 | 9821 | 3.2% | -5.7% |
| AU | 743 | 1200 | 870 | 1163 | 17.1% | -3.1% |
| CN | 279 | 1787 | 448 | 1829 | 60.6% | 2.4% |
| JP | 120 | 1264 | 191 | 1241 | 59.2% | -1.8% |
| GB | 64 | 1286 | 56 | 1306 | -12.5% | 1.6% |
| DE | 116 | 1158 | 134 | 1166 | 15.5% | 0.7% |
| CH | 49 | 1054 | 51 | 1084 | 4.1% | 2.8% |
| KR | 52 | 699 | 42 | 628 | -19.2% | -10.2% |
| FR | 91 | 690 | 76 | 679 | -16.5% | -1.6% |
| CA | 76 | 562 | 53 | 519 | -30.3% | -7.7% |
Perhaps most notably, while US-originating filings were down overall in 2023, the number of direct applications made by US applicants was slightly up. The decline in new, non-divisional, filings by US applicants was therefore entirely due to a decline in PCT NPE applications. Australian and Japanese applicants also made greater use of direct filings, and less use of NPE filings, in 2023 than in 2022. Chinese applicants filed more applications through both routes in 2023, but with proportionally greater growth in direct filings.
For the other countries making up the top 10, I would suggest that the direct filing numbers and/or the year-on-year variations are so small as to be indistinguishable from typical annual fluctuations in filing numbers. It is therefore not really possible to make any meaningful observations about the relative popularity of direct versus PCT filing routes in these cases.
Clearly, the PCT route remains overwhelmingly the most popular mechanism for filing new patent applications in Australia. But direct filing can provide advantages, in terms of timing and cost, particularly when protection is being sought in only a small number of jurisdictions. Australian applicants, for example, make proportionately the greatest use of direct filings, and many of these could be seeking protection only in Australia, or may be filing PCT applications in parallel to keep foreign filing options open. Applicants from other countries, such as the US, China and Japan, might be becoming more focused and selective in their foreign filing programs, and thus seeing the PCT route as less of a ‘default’ option for international application strategy.
My guess is that while international applications under the PCT will remain the more popular option, we are seeing in Australia the effects of a flattening in the annual numbers of PCT applications being filed, and we may see some growth in direct filings – which have remained relatively steady since 2015.
Conclusion – Will China be Number Two in 2024?
In concluding, I would like to make three observations about the rise of Chinese applicants in Australia.
First, Australians have long been the second largest users of the Australian patent system. US applicants have been number one in every year since 1947. There was a period between 1954 and 1978 when UK applicants also out-filed Australian residents, pushing domestic applicants back to third place. But Australians have held the number two position for the last four-and-a-half decades. That position first appeared to be under threat from Chinese applicants in 2019 and, following a reprieve, is once again at risk.
Second, the rapid growth in filings by Chinese applicants up until 2020 was influenced partly by financial incentives offered by provincial authorities, which were intended to encourage companies to file applications and obtain patents in order to bolster regional innovation metrics. The Chinese government put a stop to many of these distorting patent subsidies in 2021. In particular, all funding for patent applications was prohibited from the end of June 2021, while funding for patent grants (which would be relevant to applications already filed) was permitted to continue until 2025. It is no surprise, then, that any artificially-generated component of Chinese application growth should have come to an abrupt end in 2021. It is likely that what we are now seeing is more truly representative of genuine commercial interest by Chinese applicants in obtaining patent protection in Australia.
Third, and finally, from the beginning of 2024 up to 7 February Chinese applicants had filed 253 new applications, compared with 203 filed by Australian applicants.
I have been wrong before, but I am going to go out on a limb and predict that Chinese applicants will take second place from Australians in 2024.
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