12 September 2021

It’s Farewell to Shelston IP, as IPH Executes Another ‘Integration’

IntegrationThe corporate behemoth that is IPH Limited (ASX:IPH) – which at close on 10 September 2021 had a market capitalisation of A$2.00 billion, and was trading at a near-all-time-high of A$9.270 – has, through a series of acquisitions and ‘integrations’, brought about the demise of a number of well-known names in the Australasian IP firmament.  Fisher Adams Kelly, Callinans, Cullens, Watermark and Baldwins are all brands that, until not so long ago, were familiar to anyone with an interest in the IP services market, but which no longer exist.  And on 8 September 2021, IPH announced [PDF, 98kB] that Shelston IP is next in line.  Shelston IP will be integrated with Spruson & Ferguson Australia, with the combined firm operating under the Spruson & Ferguson brand from 1 November 2021, at which time the Shelston IP brand will be retired.  Full systems integration is expected to occur in December 2021.

Ironically, at the time of writing, the ‘About us’ page (Wayback Machine archive, for posterity) on the Shelston IP web site summarises the firm’s history as follows:

Shelston IP has provided excellence in intellectual property for over 160 years. Throughout this time we have developed deep relationships with our clients including with some of the world’s most recognisable companies; relationships that span more than fifty years. Like our clients we never stand still and have innovated, grown and aligned our business for success ensuring we will still be here in another 100 years.

Sadly, this is not to be, and many (me included) will be sad to see the demise of yet another firm with such a long history.  But IPH – unlike Xenith IP Group Limited, the listed entity that Shelston IP itself established and which went on to own Watermark and Griffith Hack before being acquired by IPH – has been uncompromising in its determination to generate greater efficiencies and profitability from its stable of firms.  And while IPH is not without critics, both within and outside the profession, it is no mean feat to build a A$2 billion company.  By my estimation, this now makes IPH large enough for inclusion in the ASX 200 index.  Love it or hate it, according to established financial metrics, IPH is a hugely successful enterprise.

I have taken a look at some of the data on changes in the number of patent attorneys at firms within the IPH group over the past 18 months or so, as well as the group’s patent filing numbers over the past financial year, to try to get a sense of where the IPH businesses may be heading.  I was also fortunate to have the opportunity to speak with IPH CEO, Dr Andrew Blattman, on Friday 10 September 2021.  In what follows, I will present a few of my observations, along with relevant comments from my discussion with Dr Blattman.

Dr Blattman is, of course, the CEO of a listed company, and he has obligations to shareholders and the market that may limit what he can say publicly, and which at the same time constrain him from misleading the market in any way.  Not everyone (including me) will agree with everything he says.  However, I have done my best to accurately report his comments without distorting or misrepresenting his views.  (I have used the blockquote style when reporting Dr Blattman’s comments to clearly differentiate them from my opinions and commentary, although it will be obvious from the context that they are not exact quotes.)  I am not trying to engage in hard-hitting journalism here, just to be a source of information and opinion.  And please keep in mind, if you choose to engage through the comments section at the end, that the High Court has just confirmed that I am legally responsible for any defamatory content you may post!

07 September 2021

Did the Pandemic Affect 2020 Australian PCT Filings?

International CooperationAs I reported back in January, there were some indications of weakening patent filings by Australian applicants in 2020.  Domestic applicants filed 10% fewer Australian standard applications than in 2019.  And while provisional filings overall fell by only 2%, those prepared with professional assistance – which involve greater expense, but are also far more likely to provide a sound basis for valuable future patent rights – fell by nearly 5%.  While perhaps not the sole factor, it is logical to assume that the business impact of the COVID-19 pandemic was somewhat influential in this decline.  Of course, Australian application numbers are not the only indicator of filing activity.  Each year, Australian residents file over 1,500 international applications under the Patent Cooperation Treaty (PCT), representing potential future filings not only in Australia, but also in any of the other 152 (as at the time of writing) contracting states.  So it is also interesting to know whether there was a corresponding decline in PCT filings by Australian residents in 2020.

The short answer is, possibly, but not as large as the decline in standard application filings.  While it is almost certain that some PCT applications filed in 2020 have yet to be published, and are therefore not visible, the worst-case decline in international filings by Australian residents is around 6%.  However, once all applications are published and available to be counted, there may be closer to 2% fewer PCT applications filed by Australians in 2020 as compared with 2019.  This would be consistent with a similar decline in the previous year, and with the recent trend in provisional filings, which predate the pandemic.

Furthermore, the pattern of PCT filings across 2020 was much the same as in previous years, with no indication of applicant behaviour being influenced by the progress of the pandemic.

18 August 2021

Chinese, Indian Applicants Go Mad for Innovation Patents as System Gets Set to Close on a (Dubious) High

Soaring numbersOver 1,000 Australian innovation patent applications were filed in July – an all-time record, ahead of 768 applications in June and 692 in May.  Between 2010 and early 2020, there were typically between 100 and 200 innovation patent applications filed each month.  But with the system set to close to new applications from 26 August 2021, filings have surged over the past year, with over 600 applications every month since October 2020 (with the exception of February 2021, when ‘only’ 482 applications were filed).  China remains the most prevalent country of origin for these applications, accounting for nearly 45% of new innovation patent filings in July.  However applications received from India have grown significantly since June 2020, with Indian applicants filing a third of applications in July.  Applications by Australian applicants have increased modestly over the past couple of months, rising to 175 in July.  Applicants from other jurisdictions seem (so far) nonplussed by the imminent demise of the innovation patent system, with no apparent recent surge in filing numbers.

It is well-known that the motivation for Chinese applicants seeking Australian innovation patents – which are subject only to a formalities examination before being granted – is to obtain government incentive payments without the delay and expense associated with substantive examination.  While these subsidy schemes are supposed to be coming to an end, clearly there are still sufficient incentives available for Chinese entities to keep filing for as long as it remains possible to do so.  It is less clear why innovation patents have recently become so popular with Indian applicants, however I have noted that many of the applications appear to be filed in the names of academic or research institutes, and/or individuals or teams including people with academic titles.  I therefore suspect that being an inventor or applicant on a granted patent may have benefits for people pursuing academic or research careers in India.

In any event, it is clear that the vast majority of innovation patent applications are currently being filed by non-resident applicants for reasons that have nothing to do with any genuine desire to obtain or commercialise intellectual property rights in Australia, and few are filed by the Australia small and medium enterprises (SMEs) that the system was intended to benefit.  Surging demand for innovation patents in the lead-up to the system being closed to new applications is overwhelmingly being driven by Chinese and Indian applicants, with Australian residents showing relatively little interest in taking advantage of the final opportunity to file new innovation patent applications.

Of course, genuine users of the patent system – including Australian applicants – are continuing to file standard applications and international (PCT) applications, and these may be converted to innovation patents in the future, or form the basis for divisional innovation patent applications, where the filing date is earlier than 26 August 2021.  While these types of applications have been a minority in the past, they will necessarily become the only sources of ‘new’ innovation patents as the system is phased out over the coming eight years.

01 August 2021

In Becoming the First Country to Recognise Non-Human Inventors, is Australia a Hero of Progress, or a Chump?

Menacing cyborgAs I recently (tentatively) predicted, on Friday 30 July 2021 Justice Beach in the Federal Court of Australia handed down a judgment giving Australia the dubious honour of becoming the first country in the world to legally recognise a non-human as a valid inventor on a patent application: Thaler v Commissioner of Patents [2021] FCA 879.  I would suggest that the remarkable speed with which this unnecessarily lengthy (228 paragraphs) decision was rendered, after being heard on 2 July 2021, may reflect the judge’s enthusiasm for issuing such a ground-breaking ruling.  Unfortunately, I do not share that enthusiasm, and I am confident that there are many others who are equally uncomfortable with the outcome.  My hope is that this includes officials within IP Australia and the Department of Industry, Science, Energy and Resources, and that the decision will be duly appealed to a Full Bench of the court.  It is, in my view, deeply regrettable that the Commissioner of Patents did not put on a stronger defence in the first instance because, even though an appeal was probably inevitable either way, the worldwide publicity that this decision is now generating is not necessarily beneficial for Australia.

The judge summarised his reasoning (at [10]) that:

…in my view an artificial intelligence system can be an inventor for the purposes of the Act. First, an inventor is an agent noun; an agent can be a person or thing that invents. Second, so to hold reflects the reality in terms of many otherwise patentable inventions where it cannot sensibly be said that a human is the inventor. Third, nothing in the Act dictates the contrary conclusion.

The patent system faces many challenges, but right now a need to grant more patents in a wider range of circumstances in not one of them.  We are in the grip of a global pandemic, and very serious questions are being asked about whether patents deliver a net benefit to the people of the world by incentivising the development of new vaccines and treatments, or whether they have the detrimental effect of denying affordable access to vital care and protection in poor and developing nations.  While I am firmly in the former camp, it only becomes harder to defend the patent system when opponents see the law expanding access to allow inventions generated by machines – potentially including those owned and controlled by giant corporations.

The standing and reputation of Australia and our patent laws are also at risk.  The country is already the target of criticism – rightly or wrongly – for declining to support calls for a waiver of IP provisions of the WTO Agreement on Trade-Related Aspects of Intellectual Property (TRIPS).  The Federal Court’s decision in Thaler is receiving global attention, and not all of it is positive.  One tweet (in Spanish) compares Australia’s patent-friendly approach unfavourably with the infamous incident of an early innovation patent being granted for a ‘circular transportation facilitation device’, a.k.a. the wheel.

Just because patents are (or, at least, can be) good, it does not follow that more patents, generated in more ways, by more entities, must be better.  Australia should not think that we will necessarily come across as a socially and technologically progressive nation by ‘leading the way’ on allowing patents to be granted for inventions generated by non-humans.  On the contrary, we risk being left out on our own and looking like chumps.  The United States will not follow our lead – there are Constitutional, statutory and procedural barriers to permitting US patent applications naming non-human inventors.  The European Patent Office will not follow in the foreseeable future – it has already established its position via an academic study and discussions with member states of the European Patent Convention.  The UK has so far rejected any expansion of inventorship to non-humans.  And, contrary to recent reports (and the claims of the Artificial Inventor Project’s Ryan Abbott), the recent grant of a patent in South Africa naming DABUS as inventor indicates nothing about that country’s law or position on the issue.  As South African patent attorney Pieter Visagie has explained, the application effectively avoided any scrutiny of the legitimacy of the inventor by virtue of being filed via the international (PCT) system.

So what does Australia gain by being the first – and possibly only – country in the world to legally recognise non-human inventors?  Nothing, as far as I can see, other than a whole lot of unneeded publicity and global scrutiny of our patent laws.  If we are lucky, we will not receive many serious patent applications for inventions generated by machine inventors, and little practical harm will be done.  At worst, however, we could become the only country in the world to grant patents on such inventions, mostly filed by foreign applicants, creating exclusive rights that are enforceable only in Australia to the relative detriment of Australian innovators and consumers.

25 July 2021

The Leading Firms for Australian Patent Filings in Financial Year 2021

Top of the chartIt is common to summarise patent filing numbers over calendar years – back in January I reported on various filing statistics for 2020, and IP Australia did likewise in April.  For most Australian businesses, however – including patent attorney firms – the more important reporting period is the financial year ending on the 30th of June.  It is therefore interesting to look at patent filing numbers over the 12 month period commencing at the beginning of July, overall and for individual firms.  In this article I will report on filing performance in the 2021 financial year (‘FY21’), which ran from 1 July 2020 to 30 June 2021, as compared with the previous (and, to some extent, earlier) financial year.

Surprisingly, despite the global pandemic, and a decline in filings over the 2020 calendar year, the number of Australian standard patent applications filed in FY21 grew by 3.6% over FY20, largely due to a very strong first six months of 2021.  Innovation patent applications surged ridiculously, to more than three times their numbers in FY20, for reasons that have nothing to do with either the pandemic, or a genuine interest by most applicants in obtaining enforceable rights.  Unfortunately for the health of the Australian innovation ecosystem (and the patent attorneys that support it), filings of new provisional applications declined by nearly 5% in FY21.

The leading firms for patent filings in FY21 were mostly the well-known names you would expect to see, although a couple of smaller firms have slipped into the top 20 on the strength of large numbers of innovation patent filings, primarily made on behalf of Chinese applicants.  The benefit of the growth in standard applications has not been shared equally, with a couple of big name firms experiencing a decline in new filings, while others did much better than the overall 3.6% growth rate.

I have also looked at the numbers of some key prosecution events – namely new examination requests, responses to examination reports, and acceptances – over the past few financial years.  These indicate that the overall prosecution workload increased slightly in FY21, ensuring that patent attorneys (and examiners) were kept busy with the examination of earlier-filed applications, despite the ongoing pandemic.  Strong numbers of examination requests filed in FY21 suggest that this work will continue to flow into, and beyond, the current financial year.


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