21 May 2018

New Data Released by IP Australia Provides Fascinating Insights Into Patent History

Fascinating insights from dataIn the first year of operation of the Australian national patent system – 1904 – just over 1,200 patent applications were filed, more than 85% of which were lodged in the names of individual inventors, rather than companies.  In 2017, by contrast, around 28,600 Australian standard patent applications were filed, of which just 10% named personal applicants – nowadays, 90% of all patent applications are filed by companies and other collective organisations.  This observation naturally prompts the question: when did invention cease to be a predominantly individual activity, and become principally the product of corporate research and development?

With the release by IP Australia last week of the first stage of the 2018 Intellectual Property Government Open Data (IPGOD) it becomes possible to directly answer this question for Australian patent filings.  For the first time, thanks to machine learning technology, every applicant on every application for all four registered IP rights (patents, trade marks, registered designs and plant breeder’s rights) is flagged as either an individual, or a corporate entity.  In past years this information was only consistently available for patent records from around 1980, due to the more limited data that could be extracted from earlier record-keeping systems.  By the 1980’s, over 80% of all patent applications were being filed each year by corporations rather than individuals.

In fact, the transition from consistently 80% or more personal filings to consistently over 80% corporate filings took place over a period of nearly four decades, starting in 1920.  The final year in which more patent applications were filed by individuals than by corporations was 1933, and by the start of the second World War over two-thirds of patent applicants were corporations.

Historical records also clearly show the impact of international conflicts, and global and domestic economic events, on patent filing behaviour.  A comparison using US patent data as a benchmark also shows that filings of Australian patent applications have historically tended towards strong growth, but relatively high volatility.  In the 21st century, however, growth in Australian patent filings has clearly slowed relative to the US benchmark.

12 May 2018

Trials, Tribulations & Settlements – an Analysis of Patent Litigation Data from the Federal Court of Australia

JusticeThis is a guest contribution from Kelvin Tran of Litimetrics.  Further details about the author can be found at the end of the article.

Since 2010, there have been 472 patent proceedings filed in the Federal Court of Australia.  During the same period, there were over 160,000 standard patents granted, and over 1,400 innovation patents certified.  On those numbers alone, the chance that an applicant or even opponent will be involved in Federal Court litigation is therefore rare.  It’s obvious why - litigation is expensive and lengthy, and litigants, for the most part, are sensible.

Most rights-holders know that litigation only makes sense when the commercial value of the rights to be enforced exceeds the costs of litigation.  But rights-holders often can’t accurately estimate the true costs of litigation.  Litigation therefore also occurs because the parties lack information to make fully informed decisions about whether the value of the rights to be protected outweigh the costs to protect them (i.e. the costs of litigation).  This cuts both ways – those who underestimate the cost and length of litigation might litigate where alternatives make better economic sense, while those who overestimate fail to litigate when it is the optimal strategy.

The source of uncertainty is clear – comprehensive and comprehensible data is not readily available. In this piece, I use data compiled by Litimetrics to look at trends associated with Federal Court patent litigation. I rely on data:
  1. that Litimetrics collects about Federal Court patent litigation from electronic court dockets;
  2. from IP Australia itself (e.g. via IPGOD and AusPat); and
  3. from the published judgments, mined by Litimetrics.
I’ll look at numbers related to the typical duration of proceedings and trials, the various stages that they go through and the proportion of cases that proceed to a final judgment (as opposed to settling). Briefly, the data shows that:
  1. 2013 and 2014 were the busiest recent years for patent litigation in Australia;
  2. the median duration of patent litigation that proceeds to a trial and final judgment is over three years;
  3. cases that settle prior to trial, however, have a median duration of 210 days;
  4. many events punctuate typical patent proceedings – directions hearings alone, for example, average over 16 per proceeding; and
  5. once the trial is over, litigants can expect to wait a number of months for a decision in a patent case.
All of this is useful information for rights-holders who may be considering the commencement of patent proceedings.

08 May 2018

Australian Patent Performance is the Victim of a Vortex of Negativity, and Education (Alone) is Not the Solution

Vortices of negativityIn my previous article, I wrote about low patent-filing rates by Australian innovators, and lamented that this is the continuation of the country’s long history of giving intellectual property away for free.  And while occasionally this has been done intentionally, with good (if misguided) intentions, more often it is the result of a failure, through ignorance or inadvertence, to recognise and protect IP where suitable forms of protection are, in fact, available.  I speculated that there may be some fairly persistent cultural biases that keep IP protection generally, and patents in particular, off the radar of many Australian innovators, and I suggested that lifting Australians’ use of the patent system may require little more than some effort at self-education, and a change in mindset.

Thinking about this further, however, I have realised that it is mindset-change that represents the real challenge here.  There already exist many resources to assist Australian innovators in improving their IP awareness and knowledge.  IP Australia provides a range of educational materials, including videos published via its YouTube channel, and (in a very welcome change from its reticence just a few years ago) is active on both Facebook and Twitter.  It also does a lot of outreach and educational work through email lists, seminars/webinars and other events.  Another major source of information is the Australian IP profession – patent attorneys, trade marks attorneys, and IP lawyers.  Most patent attorneys, for example, do not charge for initial consultations, and between phone enquiries and initial meetings often provide over an hour of free education and general advice before a potential client makes a decision on whether to proceed or not.  And for every such enquiry that leads to paid work, there may be half-a-dozen or more that go nowhere.  IP Australia’s recently-developed ‘Engaging an Attorney Toolkit’ is yet another good educational resource, which assists innovators in getting the most out of their initial contact with a patent attorney.

However, there is nothing new about the availability of many of these types of educational materials.  Furthermore, while they have been growing in number and quality over recent years, there has been – as the charts in my previous article show – absolutely no real growth in the numbers of patents being filed by Australians, in Australia and elsewhere, over this period.  Just today, I attended IP Australia’s first ever IP Summit, ‘Launch to Export’, where rooms of interested members of the public heard about various aspects of IP protection, government assistance programs, and the experiences of successful entrepreneurs.  My guess, however, is that this event will also have no impact on patent filings.

What I realised, as I looked around the room, is that all of these educational events, efforts and materials have one thing in common – the people who engage with them have already made the decision that they need to find out more about IP.  The information may now be more readily-available, and of higher quality, than in the past, but what has not changed is that the subset of innovators and entrepreneurs actually motivated to seek IP knowledge has not fundamentally changed.  Unlike the schooling of children, neither the government, nor anybody else, has the power to make IP education compulsory!  Nor is it a question of leading the horse to water in the hope that it may decide to drink – the horse has refused the bridle, cantered across the paddock, jumped the fence, and decided to forego all aqueous opportunities in favour of pursuing its own interests elsewhere!

So the educational content is available, but we need to get Australian innovators and entrepreneurs to want to consume it.  To make that happen, we are going to have to figure out why there is so little interest in IP in general, and patents in particular.  I maintain that this is largely a cultural issue, and I hypothesise here that there is a reinforcing feedback system operating, that I will call the ‘vortex of negativity’!  To drag the mindset of Australians caught in this vortex back into the light, where they can evaluate the potential value of patenting their innovation with clear and unbiased vision (and I am not, of course, suggesting that patents are always the right choice), I suggest that we may need to appeal to their basest economic instincts, by providing clear financial incentives or rewards to businesses that patent their new technology.  And I have a few modest proposals as to how this might be done!

01 May 2018

Australians Must Step-Up On Patents, Stop Giving Away Free IP!

Step UpThere is a famous story about how the insect repellent Aerogard® became a household name in Australia.  It involves a visit to Australia in 1963 by Queen Elizabeth II, in the course of which Her Majesty was sprayed with a formulation developed by CSIRO entomologist Doug Waterhouse, containing the chemical N, N-diethyl-meta-toluamide (DEET), to ward off the country’s numerous and persistent flies.  (Apparently, clouds of the insects had interfered with the famous Royal Wave on a previous visit.)  Within days, the Mortein company requested the formula from Waterhouse, who obligingly handed it over gratis, as was CSIRO policy at the time – three cheers for the great generosity of the Australian taxpayer!  The rest, as they say, is history … including the inevitable 1969 acquisition of the Australian Aerogard product and brand by British company Reckitt & Colman (now the massive multinational conglomerate Reckitt Benckiser).  Other innovations commonly touted as having originated in Australia, but capitalised upon elsewhere, include the black box flight recorder, heart pacemaker, photovoltaic cells, and X-ray crystallography.

While CSIRO is no longer in the game of giving away valuable intellectual property for free, sadly it seems the same cannot be said for Australian innovators more generally.  Otherwise, how are we to explain a stagnation in patent filings by Australian residents?  Over eight years, from 2009 to 2016 – the most recent year for which numbers are available at the World Intellectual Property Organization (WIPO) IP Statistics Data Center – the number of Australian patent applications filed by Australians barely varied from around 2500 per year.  Australians actually file more US patent applications than they do Australian applications, however these numbers are also stagnant, fluctuating around 3700 applications over the same eight-year period.  In 2016, the rate of US patent filings by Australian applicants was 152 applications per million population.  In the same year, US applications by US applicants ran at 913 per million population.

Surely the reason for the low filing rates, and lack of growth in filings, cannot be a lack of Australian innovation?  According to the 2017 Global Innovation Index (GII) Report, Australia ranks 23rd out of 127 countries for innovation performance, which is not great.  Significantly, however, Australia fares much better on ‘input’ metrics than on ‘output’ metrics.  Input metrics capture elements of the national economy that enable innovative activities, and encompass institutions, human capital and research, infrastructure, market sophistication, and business sophistication.  Australia ranks 12th on the innovation inputs sub-index, and performs particularly well on infrastructure (ranked 7th), human capital and research (9th) and market sophistication (9th). 

But even though Australia is (mostly) well-placed to generate positive innovation outcomes, it has long lacked the ability to follow-through.  On the GII outputs sub-index Australia ranks a lowly 30th, while on the innovation efficiency ratio (outputs divided by inputs) the country ranks an abysmal 76th.

Furthermore, on the input side Australian businesses lack sophistication, with the country ranking 27th on this group of metrics.  Tellingly, the business sophistication group of metrics includes ‘patent families filed in two or more national offices’ (relative to GDP by Purchasing Power Parity), in which Australia performs appallingly, by any standard.  Australia’s score on this metric is just 1.0, which compares to the USA on 5.0, Japan on 15.5, Korea on 16.3, and New Zealand on 4.7.  It is hardly any comfort that the UK (2.5) and Canada (2.9) are not great performers on this metric, either – they are still doing a lot better than Australia.

In my experience, ‘lack of sophistication’ pretty much sums it up when it comes to many Australians’ attitudes towards intellectual property generally, and patents in particular.  Too many Australian innovators and businesses simply do not understand intellectual property.  They ignore it, put it in the ‘too hard’ basket, are ignorant about it, or are sceptical or even actively hostile towards it.  Certainly they do not value it highly, and many are extremely reluctant to spend any money on it.  But in choosing not to protect their intellectual property, these businesses are, in effect, just giving it away for free, as surely as CSIRO once did as a matter of policy.

24 April 2018

IP Australia’s 2018 Annual Statistics – a ‘Damning Report Card’ on Australian Patent Filing?

The patient needs more analysisLast week, IP Australia published its Australian Intellectual Property Report 2018 (‘IP Report’).  This annual report is largely a summary of filing numbers and other statistics, along with additional analysis on selected areas in which IP Australia has ongoing research interests.  Last year’s report, for example, looked at Australia’s performance in collaborations between industry and public research institutes based upon the evidence of jointly-filed patent applications.  This theme is continued in the 2018 report, with a chapter reporting on economic analysis indicating that research grants targeting industry/public research collaborations result in better IP outcomes.  Despite this relatively positive news, with its useful insights and analysis, some media outlets have predictably chosen to focus primarily on raw numbers in order to talk down Australia’s efforts.

For example, InnovationAus reporter Stuart Kennedy has called the 2018 IP Report a ‘damning report card on patent filing’ which (Kennedy says) has caused CSIRO chief Larry Marshall to admit that ‘Australia needs to lift its game’.  Kennedy also wrote (somewhat disparagingly, I felt) last week about the fact that Australia’s top patent applicant for 2017 was ‘poker machine king Aristocrat Technologies’, under the headline ‘a shocking punt on patent filings’.

The numbers in the IP Report do indeed tell us that the number one Australian-based applicant for Australian standard patents in 2017 was Aristocrat Technologies Australia, with 157 filings, followed by CSIRO (45), the University of Queensland (18), Bluescope Steel (15) and Monash University (also 15).  But so what?  Aristocrat is a commercial operation, with its own business justifications for seeking patent protection for its innovations, which are no doubt driven by the market in which it operates and its ability to secure a competitive advantage from its patents.  In this context, each individual patent filing may represent a relatively minor innovation, in technical terms, while still making a commercially useful contribution to the overall portfolio. 

Research organisations, such as CSIRO and universities, on the other hand, are expected to invest in substantial and longer-term scientific and technological advances, often at a pre-commercial stage of development.  We would hardly praise them for squandering precious funds on hundreds of individually trivial patent applications, merely for the sake of making their filing numbers look better.

It has to be said, however, that IP Australia does not exactly help the situation in the way it has presented some of the numbers.  It would be very easy (though wrong) to take the following messages away from the patents chapter of the 2018 IP Report (these are all direct quotes, and each appears in the first sentence of a paragraph in the report):
  1. ‘While applications grew overall in 2017, applications for standard patents by Australian residents decreased by about five per cent’;
  2. ‘Non-resident filings increased by two per cent in 2017 to 26 403, which was 91 per cent of all filings’;
  3. ‘World patent filings have been growing strongly since 2010, averaging around eight per cent annual growth to 2016, while Australia's growth has averaged about three per cent over the same period’;
  4. ‘Patent grants to Australian residents in 2017 fell by 17 per cent compared to 2016 and now make up just five per cent of the total.’
If this were all there is to the numbers, the description ‘damning report card’ might indeed be apropos.  Fortunately, the situation is not nearly as bad as these figures suggest.

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