Microsoft Once Again Heads Australian Patent Recipient List

The chart to the left shows the total numbers of patents granted in Australia on an annual basis between 1992 and 2011. While there have always been fluctuations over time, the number of patents granted in the past two years has reached unprecedentedly high levels.

As we did around this time last year, we have once again taken advantage of our helpful colleagues in the Information Services Department at Watermark Intellectual Asset Management to obtain statistics on patents granted in Australia during the 2011 calendar year.  And again, it is interesting to compare the results with the corresponding data for US patents issued during the year, as compiled by patent research company IFI CLAIMS Patent Services.

First and second places in Australia once again went to Microsoft and LG Electronics, although the total number of patents granted to both companies fell by nearly 40%.  Pharmaceuticals and healthcare company Novartis gained two spots to come in at number three, only one patent behind LG!

However, both Microsoft and LG bucked the overall trend in Australia, with the total number of patents granted moving to 19471, up from 15877 (+22.6%) in 2010.  This makes 2011 the fifth consecutive year of growth in patent grants.  The increase over 2010 is the largest year-on-year gain since 1998.  By contrast, the US Patent and Trademark Office (USPTO) issued only 2% more patents in 2011 than in 2010.

WHAT DOES THE GROWTH IN PATENTS MEAN?

Generally speaking, a growth in the number of patents granted means only that more applications passed examination over the course of the year.  The Australian Patent Office, like most of its overseas counterparts, has a large backlog of applications to process, and so granting more patents is really a matter of increasing the resources (i.e. people and productivity tools) available for examination.

At the same time, however, resourcing is subject to budgetary constraints, and modelling of future demand based on more recent filing rates.

Applicants also have some influence on grant rates, particularly in Australia, where there are various strategies that can be employed to delay examination and grant.

In short, therefore, the ‘meaning’ of changing rates of patent grants is a complex function of a number of factors, both amongst applicants and the examining authorities.

While the number of new applications in a given year might be thought to be a better indicator of innovation and economic activity, it is problematic for two reasons.  First, delays in publication of applications, as well as the use of international treaties (such as the Paris Convention and the Patent Cooperation Treaty), mean that it can be up to three years before an initial application becomes visible as an ‘Australian filing’. 

Secondly, many applications lapse, either because they are no longer of interest to the applicant, or because they turn out to be directed to something that is not new and inventive.

So counting granted patents is the only reasonable approach for obtaining some indication of the quality, quantity and commercial relevance of innovation.  Unfortunately, it is a lagging indicator, since many of the patents granted in the past year result from applications originally filed at least four years ago.

TOP PATENTEES IN AUSTRALIA AND THE U.S.

The top 10 patent recipients in Australia are set out in the table below, side-by-side with their US equivalents from IFI CLAIMS’ data.  As noted above, Microsoft once again heads the Australian list, although it has slipped by three places (and 783 patents) in the US.

	United States of America		Australia
Rank	Company	Patents	Company	Patents
1	IBM (US)	6180	Microsoft	178
2	Samsung (KR)	4894	LG Electronics	149
3	Canon (JP)	2821	Novartis	148
4	Panasonic (JP)	2559	Shell	133
5	Toshiba (JP)	2483	Daikin	132
6	Microsoft (US)	2311	BASF	123
7	Sony (JP)	2286	Kimberly Clark	113
8	Seiko Epson (JP)	1533	Qualcomm	105
9	Hon Hai Precision Industry Co (TW)	1514	Colgate Palmolive	103
10	Hitachi (JP)	1465	Bayer	95

Looking at the above list of US patent recipients, some readers may be wondering who – or what – is the Taiwanese company Hon Hai Precision Industry Co, and why have you never heard of them, considering that every other company in the US top ten is basically a household name?

In fact, you may well have heard of them, albeit by a more-common trading name.  The company has had a great deal of not-entirely-favourable press recently, along with one of its biggest customers, Apple, Inc.  You probably know Hon Hai as Foxconn, the world’s largest contract electronics manufacturer, now famous – for all the wrong reasons – on account of alleged worker abuse in its mainland Chinese workshops, as reported in an investigation published initially by the New York Times last month.

AUSTRALIA: YEAR-ON-YEAR CHANGES

The table below compares the top 20 patent recipients in Australia across 2010 and 2011.

	2011		2010
Company	Rank	Patents	Rank (change)	Patents (% change)
Microsoft	1	178	1 (0)	282 (-37%)
LG Electronics	2	149	2 (0)	246 (-39%)
Novartis	3	148	5 (+2)	114 (+23%)
Shell	4	133	6 (+2)	88 (+51%)
Daikin	5	132	3 (-2)	138 (-4%)
BASF	6	123	8 (+2)	82 (+50%)
Kimberly Clark	7	113	13 (+6)	64 (+77%)
Qualcomm	8	105	4 (-4)	136 (-23%)
Colgate Palmolive	9	103	-	58 (+78%)
Bayer	10	95	12 (+2)	65 (+46%)
3M	11	93	18 (+7)	54 (+72%)
Google	12	85	-	17 (+400%)
Hoffman La Roche	13	81	14 (+1)	62 (+31%)
Fuji Xerox	14	79	-	38 (+108%)
Merck Sharp & Dohme	15	78	-	42 (+86%)
IGT Reno NEV	16	77	7 (-9)	83 (-7%)
Apple	17	76	-	34 (+124%)
Ethicon Endo Surgery	18	70	-	33 (+112%)
Honda	19	69	15 (-4)	59 (+17%)
Tyco	20	69	-	53 (+30%)

While Microsoft and LG retained their first and second places in the rankings, they did so with significantly diminished numbers of patent grants. The other notable entry, in terms of reduced patent grants, is Qualcomm, dropping by four places, and 23% in actual number of patents.

However, most other movements in the rankings are the result of growth by previously lower-ranked companies. Particularly notable gains (by 50% or more) have been made by Shell, BASF, Kimberly Clark, Colgate Palmolive, 3M, Fuji Xerox, Ethicon Endo Surgery, and (especially) Apple (up 124%) and Google (up 400%, from an admittedly low baseline).  This is a very interesting mix of companies, covering a range of industries, technologies, and businesses both very old (BASF, for example, was founded in 1865) and relatively young (Google is just barely a teenager, having been incorporated in September 1998).

The biggest falls from last year’s top 10 – dropping out of the top 20 entirely, to make room for some new entrants – were gaming machine developer Aristocrat, with 50 patents in 2011 (compared with 79 in 2010) and inkjet printer technology developer Silverbrook Research, with only 15 Australian patents granted in 2011 (compared with 69 in 2010).

Notably, both of these companies are based substantially in Australia, although of course this does not necessarily mean that this is their main market.  And while Aristocrat did not make the top 50 US patent recipients in either 2010 or 2011, Silverbrook in fact increased its US ranking from 34 to 31, and its number of US grants from 752 to 812 during this period.  (Meanwhile, it seems that Silverbrook’s MemJet™ print-head technology has been ‘coming soon’ to a printer near you for as long as anyone can remember!)

IMPACT OF INNOVATION PATENTS

There is potential for Australian patent grant figures to be skewed by innovation patents, which are ‘sealed’ (i.e. granted) within a few weeks of filing, without substantive examination.  The patentee must, however, have the patent examined and certified before it is enforceable

An innovation patent therefore shows up in the numbers for granted patents, even though it may not represent any enforceable right.  To determine whether an innovation patent is actually of any ‘value’, it is necessary also to check its status to see whether it has been certified.

Fortunately, less than 10% of all patents granted in Australia in 2010-2011 are uncertified innovation patents.  In 2010, 1321 of the granted patents were innovation patents, of which 270 are now certified.  In 2011, 1597 of the granted patents were innovation patents, of which 176 are now certified.

Furthermore, innovation patents are rarely employed by ‘top-tier’ patenting companies, and when they are it is most common that they are also examined and certified.  It appears that significant IP owners have little interest in obtaining and maintaining unenforceable rights!  Neither Microsoft nor LG, for example, obtained a single innovation patent in 2011.

We are therefore confident that innovation patents are having little impact on the composition of the top 20 patentees in Australia.

CONCLUSION

There have been some significant movements in the Australian patent rankings in 2011.  Overall, however, there is a continuing growth in patenting activity targeting Australia, which suggests that this remains a significant market for many global companies, and one in which they therefore wish to ensure that their IP is protected.

Coupled with Apple’s high-profile selection of Australia as a venue for litigation against Samsung last year – which looks likely to continue throughout 2012 – we can only imagine further growth in interest in Australia as a patenting destination.

Tags: Australia, News, Statistics, US