27 November 2019

Another Venerable Brand to Vanish, as IPH Folds Watermark into Griffith Hack

Merger AheadOn 20 November 2019 IPH Limited (ASX:IPH) announced its intention to ‘integrate’ Watermark into Griffith Hack, to create one firm that will operate under the Griffith Hack brand from April 2020.  This is the second time that IPH has merged long-established brands out of existence, following its absorption of Fisher Adams Kelly Callinans and Cullens into Spruson & Ferguson last year.  The latest move will, sadly, spell the end of the oldest continuously-operating specialist IP firm in Australia – Watermark can directly trace its history over 160 years, back to 1859 when Edward Waters co-founded the firm of Hart and Waters in Melbourne, later to become Edward Waters and Sons, and eventually adopting the Watermark branding.  (Although I would be remiss not to mention that Watermark’s IPH stablemate, Shelston IP, also has a claim to this lineage, being descended from Edward Waters’ Sydney branch office, which was established in 1882.)  As many readers will be aware, I worked at Watermark for nearly 15 years, and I will be very sorry to see the brand disappear from the Australian market, as will many others who have passed through the firm over the years, along with those who work there still, clients past and present, and members of the wider profession for whom Watermark has always been part of the firmament.

Since the acquisition of Xenith IP Group Limited (formerly ASX:XIP) back in August, IPH’s portfolio has included Spruson & Ferguson, Pizzeys, A J Park, Shelston IP, Griffith Hack, and Watermark.  It was to be expected that IPH would review this portfolio, with an eye to improving the overall performance and productivity of the group.  Clearly, the conclusion from this review is that Watermark does not stack up as an independent operation.  Certainly, it covers much of the same territory as Griffith Hack – both have offices in Melbourne, Sydney, and Perth (with Griffith Hack also having a presence in Brisbane); both operate IP law firms alongside their patent and trade marks attorney businesses; and both have a similar mix of domestic and foreign-based clients.  But Griffith Hack is significantly larger than Watermark – for example, it employs about two-and-a-half times as many patent and trade mark attorneys, and files a correspondingly larger number of patent applications each year.  From a business perspective, operating two firms with comparable profiles, but such different scales, does not make a lot of sense.

Sad as it is, Watermark’s passing serves as a timely reminder that nothing lasts forever, and change is inevitable and unavoidable.  And while IPH may regard Watermark – no doubt rightly, in the context of its portfolio of firms – as a ‘sub-scale’ business, it remains, at the very end, a profitable business, with a strong reputation commensurate with its long history of service to clients, which is something of which its people can continue to be proud.  There are certainly many less auspicious ways to bow out than by merging into what will become, in all likelihood, the second largest IP services firm in Australia after Spruson & Ferguson.  Indeed, I have little doubt that in the years to come we will witness the demise of other firms in more unpleasant circumstances.

05 November 2019

Australian Senate Condemns the Innovation Patent, but Grants an Extra Six Months on Death Row

Sad GravestoneOn 16 October 2019 the Intellectual Property Laws Amendment (Productivity Commission Response Part 2 and Other Measures) Bill 2019 was passed by the Australian Senate. Among other purposes, this bill includes long-anticipated provisions to phase out Australia’s second-tier patent right, the innovation patent – despite concerted last-ditch efforts by opponents of the move to persuade non-government senators, in particular, to vote against the legislation. This lobbying did not fall entirely upon deaf ears, with Centre Alliance Senator Rex Patrick speaking passionately on behalf of Australian companies that wanted to see the innovation patent retained and unsuccessfully moving an amendment removing the phase-out provisions from the bill.

In the end, however, the Labor opposition voted with the government, thus ensuring passage of the bill, albeit on condition that the legislation be amended to provide for a statutory review to be undertaken to assess the impact on Australian small to medium enterprises of abolishing the innovation patent system, and make recommendations to facilitate access to standard patent protection for small business in Australia. The review is required to commence within three months of the legislation coming into effect, and must be completed within 12 months.

To allow time for the review, the period before the phase-out begins is to be extended from 12 to 18 months. During this period, it will remain possible to file new innovation patent applications. Once the phase-out commences, however, new innovation patents will only be available where they are based on existing applications filed prior to the phase-out date, e.g. as divisional applications or via conversion of pending standard patent applications.

To become law, the bill must still pass through the House of Representatives. However, its passage there is certain, since the government has a majority. The House will sit for the final time in 2019 between 25 November and 5 December, and I anticipate that the bill will pass during this period, and then be sent on to the Governor General for ‘Royal Assent’ (i.e. to be signed into law) before the end of the year. On this timetable, the statutory review will have to commence no later than March 2020, and be completed no later than March 2021. The phase-out will then begin by June 2021.

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