22 January 2020

Samsung Tops Australian Patent Grants for 2019, with Local Innovators Nowhere to be Seen

BinocularsIn my previous two articles I looked at entries to the Australian patent system in 2019, i.e. who filed new applications last year, and which patent attorney firms were the ‘winners’ and ‘losers’ in the filing stakes.  These numbers tell us something about the current state of the market, and which companies are innovating – and seeking to protect their innovations – right now.  Many people, however, are more interested in who has been obtaining granted patent rights, rather than who might obtain granted rights in a few years’ time.  Indeed, the unveiling of the top recipients of US patents by IFI Claims Patent Services has become something of an annual event, generating considerable media interest, and the now-familiar sight of IBM sitting at the top of the list (for 27 consecutive years).

According to IFI Claims, there were 333,530 new US patents issued in 2019.  Patently-O’s Dennis Crouch, on the other hand, puts the number at 354,507, while a search on the USPTO’s own database (using the query string ‘ISD/20190101->20191231 and APT/1’) returns a count of 354,446.  Who to believe?!  Whichever number is correct, 2019 established a new all-time high, at about 10% above the previous record set in 2017.

I do not expect there to be quite as much interest in the fact that 17,007 Australian standard patents were granted in 2019.  This was not a new record.  In fact, it was slightly lower than 2018, when 17,065 standard patents were granted, and well below the 2016 peak of 23,774.  It should be kept in mind, however, that a surge in patent grants between 2014 and 2017 was driven largely by the behaviour of applicants bringing forward requests for examination prior to commencement of the Raising the Bar reforms on 15 April 2013, so the past couple of years should represent a more normal rate of patent issuance based on the underlying filings and examination requests.

Samsung topped the list of patent recipients in Australia with 203 patents, followed by Covidien (150), Apple (137), LG Electronics (132), and Huawei (119).  Not one Australian patentee appeared in the top 50, although New Zealand’s Fisher & Paykel Healthcare just squeezed in at number 48, albeit with just 35 patents.  By way of comparison, in 2019 Samsung obtained 6,469 US patents (ranked 2nd), Covidien 92 (68th), Apple 2,490 (7th), LG 2,805 (6th), and Huawei 2,418 (10th).

A notable absence from the top end of the rankings is Aristocrat which, despite filing a total of 722 standard patent applications between 2015 and 2018 received only 13 granted patents in 2019, in second place among Australian patentees behind national research organisation CSIRO with 25.  In fact, the top 30 Australian patentees combined received only 162 patents in 2019, or 31 fewer than Samsung.

Overall, despite being consistently the second largest filing group (after US residents) Australians were only the fifth most numerous recipients of Australian patents in 2019, with just 908 patents, behind Germans (937), Chinese (1,035), Japanese (1,257), and US residents (8,139).  So it seems that Australians are shunning our own patent system, which might not be such bad news if there were any sign that Australian applicants were securing patent protection in major export markets.  This does not, however, appear to be the case.  IFI Claims lists only the top nine countries in its public summary of US patent trends, from which Australia is absent, placing the country somewhere behind ninth-placed Canada, which received 4,651 US patents in 2019.

21 January 2020

Winners & Losers in Patent Filings – Why 2019 Was a Bad Year for Many Major Attorney Firms, and for Australia

You win, you loseIn my previous article, I looked at the top applicants for Australian patents in 2019.  In this article, I turn the spotlight on the Australian patent attorney firms that were responsible for handling many of those filings.  Having identified a 1% decline overall in standard patent filings, a nearly 20% decline in innovation patent filings, and essentially no change in provisional applications, it stands to reason that the Australian patent attorney profession as a whole has not experienced any growth in patent filing work over 2019.  However, as we shall see, the pain has not been shared equally across the profession.

Based on total patent filing numbers alone (which is, of course, not the whole story – although for many firms it is a significant part of it) the big winners in 2019 were, by and large, smaller independent firms, which appear to have beaten out a number of larger firms in acquiring new filing work.  Among the bigger and better-known brands, however, there is little evidence that ownership status – i.e. whether a firm is privately-held, or a member of either of one the listed IPH (ASX:IPH) or QANTM IP (ASX:QIP) groups – was a significant factor in securing filing work.  Size, rather than ownership, appears to correlate more closely with whether filing numbers grew or declined in 2019.

Comparing with my analysis for the 2018 calendar year, the top 10 firms for overall patent filings in 2019 remained unchanged, with Spruson & Ferguson, Davies Collison Cave (DCC), Griffith Hack, FB Rice, Phillips Ormonde Fitzpatrick (POF), Pizzeys, Shelston IP, FPA Patent Attorneys, Watermark (soon to be merged into Griffith Hack), and Madderns all taking their places in the same order as the previous year.  However, all but DCC experienced a decline in overall filings, and in standard application filings.

Aside from DCC’s gain in standard application filings, and a strong showing from Spruson & Ferguson on innovation patent filings, listed-group firms generally went backwards in 2019, with the winners across all application types (i.e. standard, provisional, and innovation) being privately-held firms.  However, this seems to have had less to do with ownership structure than size, and a general trend in favour of smaller firms over larger ones (which I have previously noted with respect to Australian SME clients, but which appears to be true more broadly).  With the notable exception of a significant growth in provisional application filings by FB Rice, the larger privately-held firms (which also include POF, Wrays and Madderns in Australia, and New Zealand based James & Wells) also failed to make gains in filing numbers in 2019.

While most people outside the profession probably care little for the business challenges faced by patent attorneys, I would argue that a bad year for attorney firms is also a bad year for Australia.  It is well-established that innovation underpins improvements in productivity and a rise in the standard of living (preferably with a reduced environmental impact), and demand for patent attorney services is (or should be) linked to levels of innovative activity.  Logically, then, stagnation in demand for such services is not good news for the nation.

17 January 2020

Chinese Mobile Tech Company OPPO Comes from Nowhere to Top Australian Patent Filing Table for 2019

2019Last calendar year, the number of standard patent filings in Australia fell by 1%, from 29,957 in 2018 to 29,666 in 2019.  While this represents only a small decline, it follows two years of growth, by 1.8% for 2016-2017 and 3.6% for 2017-2018, and thus represents a reversal of the recent upwards trend.  While international data on 2019 patent filings is not yet available, I think it doubtful that when IP Australia releases the 2020 edition of its annual Australian IP Report later this year it will be able to claim a high ranking for Australia among the Organisation for Economic Co-operation and Development (OECD) countries in terms of patent growth, as it did in last year’s report.  The 2019 result reflects a decline in both direct filings, and filings resulting from national phase entry of international applications previously filed under the Patent Cooperation Treaty (PCT).

Demand for Australia’s second-tier patent right, the innovation patent, also fell in 2019, with 1702 applications for innovation patents being filed, compared with 2121 in 2018.  Legislation to phase out the innovation patent system passed in the Senate late last year, and now merely awaits the formality of passage through the House of Representatives before becoming law, although it seems unlikely that the decline in filings is in any way related.

Provisional filings – mostly by Australian residents – remained steady, with 4,947 provisional applications filed in 2019, compared with 4,943 in 2018.  This is mildly positive news, following as it does a fall of 5.2% between 2017 and 2018. 

It is also encouraging to see that self-filing of new patent applications declined yet again in 2019.  The number of originating applications (i.e. those that claim no earlier priority date, and are thus in most cases freshly-drafted) filed without the assistance of a patent attorney or other agent dropped to 1,702 from 1,870 in 2018.  This is now less than half of the nearly 3,500 originating applications that were self-filed each year between 2002 and 2007.  I regard this as a positive trend because the available data establishes, beyond any doubt, that outcomes for self-represented applicants are consistently far inferior to those of applicants that engage professional assistance.

As in previous years, the list of top applicants for Australian standard patents is dominated by foreign companies, with Aristocrat Technologies once again the only Australian company to appear in the top 30.  Aristocrat fell two places, to number four in the rankings, despite filing 238 standard patent applications (only just shy of the 252 it filed in 2018), and a significant decline in filings (from 314 to 244) by last year’s top applicant, Qualcomm, which now stands third.  LG Electronics was a big mover, increasing its filings from 175 to 245 to grab second spot.

The big surprise in the rankings is first-time entrant Guangdong OPPO Mobile Telecommunications Ltd (‘OPPO’), which leapt straight to number one with 314 standard patent applications.  OPPO had never filed more than 19 Australian applications in any previous year (that was in 2017), and had filed a grand total of just 47 applications up until the end of 2018.

Among Australian residents, universities and public research institutions once again feature prominently, taking half of the top 20 places in the local rankings of standard patent applicants, and 12 of the top 20 in the provisional filing chart.

For all the numbers, and further commentary, please read on.

16 December 2019

Abstract Ideas and ‘Software Patents’ – Two Sides to the Story

SoftwareI recently wrote about the decision of the Federal Court of Australia in Repipe Pty Ltd v Commissioner of Patents [2019] FCA 1956, in which two innovation patents owned by RePipe were found to be invalid, and thus liable to be revoked, on the ground that neither was for a patent-eligible ‘manner of manufacture’ under Australian law.  In that article, I noted that even when software innovators, like RePipe, make substantial investments and incur significant business risks in devising, developing, and bringing an invention to market, they may find themselves unable to access the same protection under the Australian patent system that is available to innovators in other fields of technology.  I observed that while some relatively trivial, low-social-impact, and low-risk innovations, such as a ‘packing box for shuffled playing cards’, enjoy uncontroversial patent protection, RePipe’s sophisticated, high-impact, high-risk, development of a networked system for improving workplace health and safety, is denied protection on the basis that it is a ‘mere scheme’ implemented using ‘standard’ or ‘generic’ hardware and software.

I questioned the policy basis for this distinction, in view of the classical economic rationale for having a patent system, viz., to provide an incentive for individuals and businesses to engage in the risky process of invention, development, and marketing of new products and services.  Which is all very well when this process of commercialisation actually takes place, and there is a genuine investment to be protected.  But that is not always the case.  Sometimes, the only ‘investment’ is in the preparation and filing of a patent application.  And where the claimed invention is software-implemented, a suspicion may arise that the real ‘work’ of innovation, which would justify the grant of exclusive patent rights under the classical rationale, can be avoided. 

I believe it is this suspicion that has caused courts and patent offices – along with legislators, in those jurisdictions that have chosen to impose statutory restrictions on patenting of ‘computer programs’ – so much angst.  This has led, in turn, to confusion and inconsistency in decision-making, such that the patent system can appear capricious, unpredictable, and discriminatory when applied to software innovations. This is bad for innovative businesses that can add confusion and uncertainty around the availability of patent protection, for themselves and their competitors, to all of the other risks and unknowns that they already face in developing and commercialising new products and services.

The patent system is supposed to be ‘technology neutral’, and capable of adapting to new developments and the emergence of new technologies.  However, it plainly is not.  The primary legal tests for determining what is, and is not, deserving of patent protection – novelty, inventive step, and the provision of a sufficient disclosure of the invention – are proving inadequate to deal fairly and consistently with computer-implemented innovations.  As a result, the blunt instrument of subject matter eligibility has become the tool of choice for striking down claims that are deemed to be unworthy of protection.

14 December 2019

Transformation of the Australian Patent Attorney Profession Turns Ugly with Firms Fighting in Federal Court

BoxingA dispute between the firm of Pizzeys Patent and Trade Mark Attorneys – owned by listed entity IPH Limited (ASX:IPH) – and a firm established by two former Pizzeys principals, has gained public exposure through a decision of Justice Jagot in the Federal Court of Australia: Pizzeys Patent and Trade Mark Attorneys Pty Limited v Bennett [2019] FCA 2084.  The court has determined that Pizzeys is entitled to an order for preliminary discovery, which will compel patent attorneys William Bennett and Martin Richardson, and their new firm RnB IP Pty Ltd, to produce a range of documents that Pizzeys hopes will enable it to determine whether Bennett and Richardson have breached terms of their contracts with, and other obligations to, their former employer, including ‘non-dealing’ and ‘non-solicitation’ restraints.

The basic facts underlying the dispute are straightforward, and uncontested.  As noted, both Bennett and Richardson were principals of Pizzeys, where Bennett was also the managing principal and a patent attorney director.  Both were employed under contracts of employment which included confidentiality and post-employment non-competition, non-solicitation and non-dealing provisions.  On 19 March 2018 and 1 April 2018 respectively, Bennett and Richardson resigned from Pizzeys.  It appears that both were subject to substantial notice periods, and did not actually leave Pizzeys officially until the end of September 2018.  They subsequently established RnB IP, which first filed Australian patent applications on behalf of clients in April 2019.  Additionally, at around the same time, Pizzeys began to receive requests from existing clients to transfer patent files to RnB IP.

According to Pizzeys (although I imagine that this is disputed, given the date at which RnB IP seems to have commenced operations) the non-compete restraint expired on 30 September 2019, while the non-dealing and non-solicitation restraints expire on 30 September 2020.  The non-dealing restraint bars Bennett and Richardson from ‘performing work or providing services of the kind performed or provided by Pizzeys to actual or prospective customers or clients of Pizzeys or the IPH Group with whom [they] had dealings in the period two years preceding the termination of employment’.  The non-solicitation restraint bars them from ‘soliciting or interfering with clients or customers of Pizzeys or the IPH Group.’

In addition to possible breach of these specific restraints, Pizzeys is also concerned that Bennett and Richardson may have breached obligations in relation to use of Pizzeys confidential information, obligations under the Corporations Act 2001, other contractual and equitable obligations, and that Bennett, Richardson and RnB IP may have engaged in an ‘unlawful conspiracy’ to engage in these various breaches.

After reading the court’s decision, I had a look at filing data for Pizzeys and the IPH Group over the past two years, and of RnB IP since it commenced operations.  Based on what I see, I would frankly be surprised if the additional competition from RnB IP is having a significant impact on Pizzeys’ business.  It has experienced no apparent downturn in filings since April 2019.  Almost all of the business in question comprises ‘agency work’, i.e. filing and prosecution of patent applications on behalf of foreign applicants, on instructions from patent attorney associate firms in other jurisdictions.  Most of these associates spread work around multiple Australian firms anyway based on a variety of considerations, including technical expertise, reciprocity, and personal (as distinct from firm-level) relationships.  Unsurprisingly, filings by RnB IP are dwarfed by those of the IPH Group as a whole, particularly following IPH’s acquisition of the former Xenith IP firms (Griffith Hack, Shelston IP, and Watermark) in August 2019.

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