World Intellectual Property Day is celebrated each year on the 26th of April. This year, the theme is ‘Reach for Gold: IP and Sports’. To read more about World IP Day 2019, and to explore how ‘innovation, creativity and the IP rights that encourage and protect them support the development of sport and its enjoyment around the world’, feel free to head on over to the website of the World Intellectual Property Organization (WIPO). Because this article is not about World IP Day, or the role of IP in sports. It is about how IP Australia is marking the occasion – with the launch of its Australian Intellectual Property Report 2019.As I reported at around this time last year, the 2018 annual report attracted a fairly negative response in certain circles, with InnovationAus reporter Stuart Kennedy calling it a ‘damning report card on patent filing’, after earlier writing disparagingly about the allegedly ‘shocking’ revelation that ‘poker machine king Aristocrat Technologies’ had been the top Australian-resident patent applicant for 2017 which, in its ‘quest to find fresh ways to relieve pokie players of their dough, crushed the patent application efforts of CSIRO by a factor of more than three.’
In light of last year’s experience, it is perhaps unsurprising that the ‘patents’ section of the 2019 IP Report avoids mention of the fact that Aristocrat was once again the top Australian filer. As I reported back in January, in 2018 the company increased its haul of new standard patent applications by 60% over 2017, to 252 – reaching almost five times the number of applications (55) filed by CSIRO. If the ratio of the number of applications filed by a leading commercial entity in the gaming industry to the number filed by Australia’s flagship public research organisation is any kind of measure of research output – which it emphatically is not – then this would be a far worse result than the previous year. Of course, not all patents are created equal, and the truth is that there is no conflict in celebrating the international successes of both Aristocrat – a great Australian company in its field, setting aside personal views on the merits, or otherwise, of gambling – and CSIRO – which has generated globally-significant outcomes including influenza drug Relenza, polymer banknote technology, and key technologies underlying high-speed Wi-Fi, among many others.
Surprising Growth in Australian Resident Patent Filings
The truth, of course, is that patent filing numbers, in and of themselves and without evaluating the scope and value of any resulting granted rights, are a crude measure of innovation output. The question is not whether CSIRO should be filing more patent applications, or Aristocrat fewer (and the answer is ‘probably not’ in both cases, given that they would each have their respective processes and considerations for determining what – and what not – to file, and I would not dream of second-guessing them). The real question is whether we should be seeing more filings from other Australian companies and institutions. There certainly does not appear to be any Australian organisation that is generating an IP portfolio at even a fraction of the scale of well-known innovative companies such as Apple, Samsung, Sony, Google, BASF, Huawei, Colgate-Palmolive, Boeing, Facebook, and Siemens – all of which appeared in the top-30 patent filers in Australia in 2018, but have far larger portfolios in other parts of the world. Why is Australia seemingly incapable of producing such companies? It is not purely a matter of population size, since there are plenty of other ‘small’ countries – Sweden, Switzerland, Ireland, and Israel spring immediately to mind – that have generated innovative companies with world-leading IP portfolios.In this context, then, it is also not surprising to see that IP Australia has managed to unearth a morsel of good news for Australian patent filings in its 2018 data – and it is one that certainly took me by surprise. While non-residents continue to account for just over 90% of new standard patent applications, it turns out that the year-on-year growth in standard patent application filings by Australian applicants was 9%. This is above the overall growth rate of 3%. Of the top five applicant countries – the US, Australia, Japan, Germany, and the UK – only Germany showed higher growth (10%), and the US showed no growth at all, going from 13,399 applications in 2017 to 13,385 in 2018.
Total standard patent application filings. Source: IP Australia
This is an interesting result, and it was surprising to me given that the data over recent years shows a steady decline in provisional filings by Australian applicants (a trend that the IP Report confirms to have continued in 2018). My own analysis back in February indicated that most of this decline has been in self-filed applications, that are potentially of very little value, with originating applications prepared and filed with the assistance of Australian patent attorneys having flat-lined for at least a decade. For most applicants, a provisional application provides the entry point to the patent system, with a corresponding standard application being filed up to 12 months later, or entering the national phase in Australia via the international (Patent Cooperation Treaty) system up to 30 months later.
So with no recent growth in provisional filings, and no evidence of which I am currently aware of any increase in filing activity by Australians in overseas jurisdictions (the IP Report also includes a chart showing that Australian-originating applications filed overseas has been steady for a decade), where did this sudden surge of 9% in standard application filings suddenly come from? At this time, I do not have an answer. Hopefully, however, the upcoming release of the 2019 IP Government Open Data (IPGOD), which should enable a more detailed investigation of national filing patterns, will provide some insights.
The IP Report goes on to show that the growth in Australian patent filings is not evenly distributed across states and territories. New South Wales shows the strongest growth at 16%, with Victoria and Western Australia on 10% apiece. Growth in applications from Queensland was notably lower, at 5%, while South Australia actually experienced a decline of 9%.
Innovation Patents’ Last Hurrah?
Demand for innovation patents also grew in 2018, with 2,257 innovation patent applications filed – the highest ever, following a dip in 2017. While Australian residents remain the top users of the innovation patent system, the majority is now very slim, at 51%. The growth in 2018 is attributed mainly to a growth of 34% in the number of applications filed by foreign applicants. The growth in resident applications was just one per cent. Much of the growth in foreign-originating innovation patent applicants can probably be attributed to abuse of the system by Chinese applicants seeking government subsidies at home. I recently estimated that such applicants probably now account for around a quarter of all innovation patent applications filed.
Total innovation patent and provisional application filings. Source: IP Australia
This growth could be something of a ‘last hurrah’ for the innovation patent. As the IP Report points out:
Innovation patents were introduced in 2001 to encourage innovation among Australian small-to-medium-sized enterprises (SMEs). Research by [IP Australia’s Office of the Chief Economist] has found that the innovation patent system has not fulfilled that policy goal. The Government has accepted the recommendation of the Productivity Commission to phase out the innovation patent.
Special Reports on Trade Marks and Designs
There is also plenty in the IP Report for fans of trade marks, registered designs, and plant breeder’s rights. For trade marks and designs aficionados, in particular, the report includes summaries of the results of two specific studies by IP Australia’s Office of the Chief Economist (OCE).The first of these two studies examined whether the trade marks register is ‘cluttered’ with unused, or overly broad, registrations that block the same, or similar, marks from being registered. This situation can arise because unlike some countries, such as the US, Australia has no requirement for trade mark owners to demonstrate ongoing use of their marks in order to maintain registration. Registrations can therefore only be removed, or restricted in scope, due to non-renewal at ten-year intervals, or as a result on non-use actions initiated by third parties. Non-use actions are rare – the report includes data showing that the rate of removal has remained steady for at least a decade, at less than 0.1% of the total registrations in force each year.
However, the study also shows that the number of registrations that are not being renewed after the initial ten-year term has been steadily increasing, from around 30% in the 1980s to around 50% in the 2000s. Assuming that many of these trade marks were unused for at least part of the relevant ten-year period, this suggests that there has likely been an increase in trade mark cluttering in Australia over recent decades. Even so, the report concludes that the overall level of trade mark cluttering ‘is not unduly hindering the system’.
In the second study, the OCE, in conjunction with the Intellectual Property Research Institute of Australian (IPRIA) at the University of Melbourne, explored how Australia’s ‘design economy’ compares with those of other countries. The study concludes that Australia’s design labour force is small, relative to the country’s size as an industrial economy, and that while it is productive in design IP generation, it lags international peers in growth both of the labour force, and in numbers of new design registrations.
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