01 October 2017

Users of the Australian Pre-Grant Patent Opposition System

SparringAustralia has a pre-grant patent opposition system, meaning that an opportunity is provided after a standard patent application has been approved by an examiner, but before a patent is actually granted, for third parties to raise objections.  Specifically, once an application has be accepted for grant, the accepted specification is published and there is then a three-month period during which anybody who believes that the granted patent would be invalid (wholly, or in-part) may file a notice of opposition.  The filing of such a notice commences the formal opposition procedures defined in the Australian Patents Act 1990 and Patents Regulations 1991, which are described in greater detail in this earlier article.  It is also possible to oppose an Australian innovation patent, via a similar procedure.  However, since innovation patents are initially granted quickly, without substantive examination, and can only be opposed after examination and certification, the corresponding opposition proceedings are necessarily initiated post-grant.

The World Intellectual Property Origanization (WIPO) web site includes a handy primer on opposition systems, which suggests that pre-grant systems are relatively uncommon in the developed world, with Australia being counted among such IP luminaries as Costa Rica, Honduras, Mongolia, Pakistan, and Zambia in providing for pre-grant opposition proceedings.  Although the completeness of the WIPO summary is questionable – it does not, for example, include New Zealand, which has a pre-grant system similar to Australia’s – it is certainly true that none of the so-called ‘IP5’ offices (i.e. the European Patent Office, Japan Patent Office, Korean Intellectual Property Office, State Intellectual Property Office of the People's Republic of China. and the United States Patent and Trademark Office) has such a system.  Other than Australia and New Zealand, it appears that the most significant countries having pre-grant opposition systems are India, Spain, and Portugal.

So, who uses the Australian pre-grant patent opposition system?  Using data available in the 2017 edition of IP Australia’s IP Government Open Data (IPGOD) set, I have analysed information on oppositions to standard and innovation patents commenced since 2004 (when the IPGOD opposition records commence).  This analysis shows that:
  1. Australians are overwhelmingly the most common participants in opposition proceedings, with Australian-resident companies or individuals having filed 771 oppositions, and Australians being applicant and/or opponent in two-thirds of all oppositions filed;
  2. Australians are almost equally likely to oppose applications by other Australians (261 oppositions filed) and by US residents (262 oppositions filed);
  3. the US is the second most common origin of opponents (258 oppositions filed), and US-resident companies or individuals are involved, as applicant and/or opponent, in around one-third of all oppositions;
  4. in terms of absolute numbers, US-resident applicants are the most common targets of opposition proceedings (453 cases), however this largely reflects the fact that US residents are by far the largest users of the Australian patent system – in relative terms, Australians are the most likely to be opposed, with oppositions being filed against just over 2% of all accepted applications naming Australian applicants;
  5. the Australian opposition system is rarely used by residents of countries other than Australia and the US, with the next most common origins of opponents being New Zealand (45 cases), Germany (34 cases), and the UK and Denmark (tied on 21 cases each);
  6. even accounting for the generally low usage of the Australian opposition system other than by Australians and US residents, Japan is a notable anomaly – while Japanese applicants were the second largest beneficiaries of the Australian patent system between 2004 and 2016, receiving over 17,500 patents, Japanese applications were opposed only 22 times, and Japanese residents were responsible for only nine oppositions during this period; and
  7. other than relatively high usage by Australians and New Zealanders, and the notably low usage by Japanese, residents of other countries tend to use the Australian opposition system in fairly consistent proportion with their use of the Australian patent system.

Who Opposes Australian Patents?

A total of 1,234 substantive patent oppositions were filed against the grant of standard patents (under section 59 of the Patents Act) or against certified innovation patents (under section 101M) between 2004 and the end of 2016.  The vast majority of oppositions do not proceed all the way through to a final decision, with most being settled or otherwise abandoned by one or both parties.  The status information for oppositions in the IPGOD data set is a little patchy, however it confirms that at least 631 oppositions (51%) ended with the opponent withdrawing, and at least 142 (12%) with the application being withdrawn.  As at the end of 2016, 218 oppositions (18%) remained in-progress.

The chart below summarises the number of oppositions filed by residents of the top 12 countries of origin.  Australians are far-and-away the most prolific opponents (771 cases), followed by Americans (258) and New Zealanders.
Oppositions filed

Who Gets Opposed?

The chart below shows the number of oppositions filed against applications naming residents of different countries as applicants.  Although not common, where an opposed application names multiple applicants having different countries of residence. this is counted multiple times – for example, an opposition to an application naming US and British co-applicants contributes to both the US and GB counts.  It is most common that applications by US applicants are opposed (453 cases), followed by Australian applicants (329), Germans (82) and British (72).
Applicant origins
Of course, the large number of US-originating applications that are opposed reflects the very large number of such applications that are filed and accepted.  US applicants are by far the largest users of the Australian patent system, as the following chart illustrates.  The chart shows the total number of accepted applications over the 2004-2016 period, with US applicants successfully passing examination in 95,012 cases, followed (distantly) by Japanese (17,756), Australians (15,803), Germans (14,083), Swiss (11,238), and British (10,436).
Total applications accepted
If instead of absolute numbers we compute a ‘rate’ of opposition, defined as the number of oppositions filed against applications from a particular country of origin divided by the number of applications from that country that are accepted (i.e. roughly the fraction of accepted applications that get opposed), the result is as shown in the chart below.  On this measure, if you are an Australian applicant, there is about a 2% chance that your accepted application will be opposed.  Applications by New Zealanders are the next most likely to be opposed, at 1.3%.  This is followed by applications from Ireland and Norway, although these are off a comparatively low base of accepted applications and are influenced by a small number of applicants from these countries with a greater than average tendency to attract oppositions.  Relatively speaking, applications by US applicants are not especially likely to be opposed.
Opposition rates

Who Opposes Whom?

The table below summarises the origins of applicants and opponents for all 1,234 oppositions within the data set.  As a result of the small number of cases having multiple applicants from different countries, the total opposition count in this table is slightly higher (1,280) than the actual number of distinct oppositions filed.
From the above table, it is possible to determine a wide range of statistics about the countries of origin of applicants and opponents in Australia patent oppositions.  For example, the number of US opponents that have opposed applications by US applicants is 119.  Australians opposed Germans on 36 occasions, while the converse occurred on only three occasions.  Australians were involved in patent oppositions, as either applicant or opponent, in 839 cases (obtained by adding the row and column totals 771 and 329, and subtracting 261 to avoid double-counting the cases in which Australians were both applicant and opponent).

Relative Use of the Australian Patent and Opposition Systems

It is plainly apparent from the charts above that, relatively speaking, Australians are the largest users of the Australian patent opposition system.  This will probably come as no surprise.  It is less clear, however, how use by residents of other countries compares in quantitative terms.

In order to obtain a comparative measure of use of the opposition system, I divided the number of oppositions filed by residents of each country by the total number of applications prosecuted through to acceptance by residents of the same country.  The thinking here is that if residents of a particular country (say, the US) make extensive use of the Australian patent system to protect their innovations in the Australian market place, then they ought to be proportionally concerned with monitoring the patent rights of their competitors in Australia, and in preventing the grant of rights that may impact upon their Australian business.

The results of this calculation are shown in the chart below, which confirms that Australians are far more likely than other users of the system to oppose patent grant, relative to their own use of the system to protect their IP rights.  This is followed by New Zealanders, who have about half the rate of usage of the system compared to Australians.
Relative opposition use
Interestingly, most of the other top users of the Australian patent system make very similar use of the opposition system relative to their use of patents, with opposition rates generally between about 0.2% and 0.3%.  This is so despite the large disparity between the number of Australian applications prosecuted by residents of the different countries, from the US (95,012) at the high end, and Canada (4,322) at the bottom.  The hypothesis that the rate of use of the opposition system should be in proportion to the rate of use of the patent system itself thus appears to hold up fairly well across most foreign residents.  The higher usage by Australians and New Zealanders might be explained by greater awareness of the opposition system, easier access, closer proximity, and relatively greater importance of the Australian market to their businesses.

The clear outlier, however, is Japan.  Despite being the second largest users of the Australian patent system for protection of their innovations, Japanese residents almost never initiate opposition proceedings.

Conclusion – What Does It All Mean?

It should not come as any great surprise that Australian residents are, by any measure, the largest users of the Australian patent opposition system.  Australian businesses, by and large, have the greatest interest in matters that might affect their freedom-to-operate in the Australian marketplace.  They also have the easiest access to advice on how the system works, through their Australian patent attorneys, and more direct and cost-effective access to the procedures themselves than many foreign residents.  To some degree, these considerations also apply to New Zealanders, in view of the minimal barriers to trade between the two countries.

The relatively low usage of the opposition system by foreign residents is a little surprising.  I would have expected that where businesses are concerned enough with the Australian market to pursue patent rights here, they would be similarly concerned to ensure ongoing freedom-to-operate in the market – perhaps not to the same degree as Australian businesses, but more so than appears to be the case.  Relative to their use of the patent system for protection of rights, Australian residents are about 20 times more likely to file an opposition than residents of the US, UK, Germany, France, Canada, Switzerland or the Netherlands, even though all of these countries are in the top 10 non-Australian users of the Australian patent system.  Lack of awareness of the Australian opposition system could be a factor.  Alternatively, perhaps the Australian market is just not as important to residents of these countries as their patent filings might suggest?  The Japanese stand out, in particular, as high users of the patent system, but almost non-users of the opposition system.

I am not sure whether there is any deeper insight to be gained from this into the operation or effectiveness of the Australian patent opposition system.  I have long wondered whether pre-grant opposition is the best approach, or if a post-grant system along the lines of the European Patent Office might be better – and more widely used.  Although the reference is a few years old, it has been estimated that around 6% of European patents are opposed, which is certainly much higher than the current rate of opposition in Australia.  However, it is also fair to say, based on the size of the market, that there is more at stake in Europe than in Australia, which is doubtless a bigger factor than the different forms of the opposition system in each jurisdiction.


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