30 January 2019

Top Patent Filers of 2018 – Software, Gaming and FinTech Companies Prominent Despite Questions Over Eligibility

2018 In the 2018 calendar year, the number of standard patent filings in Australia in grew modestly, by 3.6%, to 29,960.  This growth was reflected in both direct national filings, up from 9,007 to 9,046, and National Phase filings under the Patent Cooperation Treaty (PCT), up from 19,898 to 20,914.  Meanwhile, the number of provisional applications filed fell once again, by 5.2% from 5,182 to 4,943.  Applications for the condemned innovation patent, however, increased from 1,816 in 2017 to 2,121 in 2018, although abuse of the system by Chinese applicants seeking government subsidies at home remains rife, probably accounting for nearly a quarter of all innovation patent filings.

Interestingly, despite continuing uncertainty amid rejections by IP Australia of applications directed to so-called computer-implemented business methods, companies with significant interests in software, gaming/gambling, and financial technology (‘fintech’) feature strongly among the top applicants for Australian patents in 2018.  These companies include Qualcomm, Aristocrat Technologies Australia, Apple, LG Electronics, Huawei, Accenture Global Solutions, Samsung, Visa International, Mastercard International, Facebook, and Google.

The fall in provisional filings is disturbing, and continues a trend that has been virtually unbroken since the start of the millennium – in 2000, the number of provisional applications filed hit a peak of 7,434, and has declined almost every year since then.  As far as I can tell, the number of provisional applications filed in Australia has not been below 5,000 since at least as far back as the mid-1980s.  The overwhelming majority of provisional applications are filed by Australian resident companies and individuals, and the number of filings thus reflects a combination of the amount of innovation taking place in the Australian economy, and the level of interest from Australians in protecting their ideas through the patent system.

Sadly, the decline in provisional filings does not surprise me, and is symptomatic of the malaise in the Australian market that I wrote about most recently in relation to the proposed merger of QANTM IP Ltd and Xenith IP Group Ltd.  Before this, I had written about Australians’ lack of business sophistication when it comes to IP, about the poor appreciation in this country of the value of IP and corresponding decline in per capita patent filings, and about the particular failures of small and medium enterprises (SMEs) to identify, manage and protect their IP assets.  The situation is certainly not improving.

The top Australian applicant for standard patents in 2018 was, once again, Aristocrat Technologies, with 252 applications – up from 157 applications in 2017.  No other Australian resident company featured in the top 30 applicants, with the next most prolific Australian filer being CSIRO with 55 applications – encouragingly up from 45 in 2017.

Public research institutions also featured strongly among the top filers of provisional applications, with Monash University (44), the University of NSW (44), The University of Sydney (40), CSIRO (39), the University of Queensland (27), the University of Melbourne (21), the University of Western Australia (17), and the Queensland University of Technology (16) occupying eight of the top 10 spots.

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

22 January 2019

Commissioner of Patents Files Appeal in Case On Patent-Eligibility of Computer-Implemented Invention

Christmas briefsThere may have been little rest and relaxation over the Christmas and New Year period for lawyers working on behalf of the Australian Patent Office because, as I predicted back in December, on 16 January 2019 the Commissioner of Patents filed an application in the Federal Court of Australia for leave to appeal the decision of a single judge in Rokt Pte Ltd v Commissioner of Patents [2018] FCA 1988.  In that judgment, Justice Alan Robertson found that a claimed method and system for providing ‘a dynamic, context-based advertising system, introducing a distinction between an engagement offer, without a direct advertising benefit, and an advertisement designed to lead directly to the sale of the product’ is patent-eligible subject matter under the Australian ‘manner of manufacture’ test.  In doing so, he reversed the decision of a Patent Office Hearing Officer, who had found that ‘the substance of the invention in this case amounts to business innovation’, which was not patentable, and therefore refused Rokt’s patent application: Rokt Pte Ltd [2017] APO 34.

There is no great surprise in this move by the Commissioner.  As I have previously noted, judgment is pending in the appeal from Encompass Corporation Pty Ltd v InfoTrack Pty Ltd [2018] FCA 421 – a case that has been heard by an expanded bench of five judges, and which concerns similar issues to those which arose in RoktThe Commissioner of Patents intervened in the Encompass appeal, and the Institute of Patent and Trade Mark Attorneys of Australia (IPTA) also sought to intervene, and filed written submissions.  The outcome in Encompass could well change the understanding of the law relied upon by the judge in Rokt.  The Commissioner will therefore want to ensure that the opportunity to have the facts in Rokt reconsidered under the law to be explained in Encompass is not lost.

The Encompass and Rokt cases are not the only appeals currently before the Federal Court in respect of Patent Office decisions refusing applications for patents on computer-implemented inventions.  The other ongoing cases are:
  1. Aristocrat Technologies Australia Pty Ltd v Commissioner of Patents (NSD1343/2018), which is an appeal from Aristocrat Technologies Australia Pty Limited [2018] APO 45, and is scheduled to be heard on 2-4 September 2019; and
  2. Repipe Pty Ltd v Commissioner of Patents (WAD323/2018), which is an appeal from Repipe Pty Ltd [2018] APO 42, and is scheduled to be heard on 25-27 June 2019.
With the Encompass judgment expected in the first half of the year, and the Rokt, Aristocrat and Repipe appeals likely to be heard subsequently (assuming they are not resolved between the parties in the wake of the Encompass decision), 2019 could be the year – at last – that we get some clarity around what is, and is not, patent-eligible when dealing with computer-implemented inventions.

Australian Competition Regulator Conducting Public Review of Proposed Merger of Listed IP Groups

Maybe On 10 January 2019, the Australian Competition and Consumer Commission (ACCC) commenced a public review of the proposed merger of QANTM IP Limited (ASX:QIP) and Xenith IP Group Limited (ASX:XIP).  As I wrote back in December, the proposed merger was announced on 27 November 2018 and, should it proceed, would see each Xenith share exchanged for 1.22 QANTM shares, with existing QANTM and Xenith shareholders ultimately owning 55% and 45%, respectively, of the merged group.  The group would bring together five Australian specialist IP firms (Davies Collison Cave, FPA Patent Attorneys, Griffith Hack, Shelston IP and Watermark), along with IP valuation, innovation and advisory service provider Glasshouse Advisory (currently owned by Xenith IP) and Malaysian IP firm Advanz Fidelis (which was acquired by QANTM IP in June 2018).

Section 50 of the Australian Competition and Consumer Act 2010 (‘CCA’) prohibits those mergers that ‘would have the effect, or be likely to have the effect, of substantially lessening competition in any market.’  The ACCC thus has a role to play in conducting ‘informal’ reviews of proposed mergers, providing authorisation for proposed mergers, and acting to block mergers from proceeding where it considers that the merger would breach the ‘substantial lessening of competition’ test.  Although merger parties are not legally required to notify the ACCC of a merger, and may proceed without seeking any regulatory consideration, this does not prevent the ACCC from investigating the merger, making public inquiries and/or taking legal action.

The fact that the ACCC is undertaking a public review of the proposed QANTM/Xenith merger does not imply that it has any particular competition concerns.  Over the five years between 2014 and 2018, inclusive, an average of 34 such reviews were commenced each year, and in the overwhelming majority of cases the ACCC concluded that it was not opposed to the mergers proceeding.  As noted by the ACCC: ‘Mergers and acquisitions are important for the efficient functioning of the economy.  They allow firms to achieve efficiencies and diversify risk across a range of activities.’

The ACCC is seeking public input, and information on the review of the proposed QANTM/Xenith merger can be found on the ACCC web site.  A ‘market inquiries letter’ sets out the focus of the review, along with a range of issues that respondents may wish to address in their submissions.  In particular, the letter explains that:

The ACCC’s investigation is focused on the impact on competition in the supply of services relating to Australian IP rights including patents, trade marks, designs and plant breeder’s rights (Australian IP related services). In particular, we are seeking your views on:
  • the extent of competition between QANTM and Xenith
  • the likely impact of the proposed merger on prices and quality of Australian IP related services
  • the extent of future competitive constraints (such as other competitors or new entrant competitors) for the supply of Australian IP related services.

Submissions are due by no later than 5 pm on 31 January 2019.

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