Winners & Losers in Patent Filings – Why 2019 Was a Bad Year for Many Major Attorney Firms, and for Australia

In my previous article, I looked at the top applicants for Australian patents in 2019.  In this article, I turn the spotlight on the Australian patent attorney firms that were responsible for handling many of those filings.  Having identified a 1% decline overall in standard patent filings, a nearly 20% decline in innovation patent filings, and essentially no change in provisional applications, it stands to reason that the Australian patent attorney profession as a whole has not experienced any growth in patent filing work over 2019.  However, as we shall see, the pain has not been shared equally across the profession.

Based on total patent filing numbers alone (which is, of course, not the whole story – although for many firms it is a significant part of it) the big winners in 2019 were, by and large, smaller independent firms, which appear to have beaten out a number of larger firms in acquiring new filing work.  Among the bigger and better-known brands, however, there is little evidence that ownership status – i.e. whether a firm is privately-held, or a member of either of one the listed IPH (ASX:IPH) or QANTM IP (ASX:QIP) groups – was a significant factor in securing filing work.  Size, rather than ownership, appears to correlate more closely with whether filing numbers grew or declined in 2019.

Comparing with my analysis for the 2018 calendar year, the top 10 firms for overall patent filings in 2019 remained unchanged, with Spruson & Ferguson, Davies Collison Cave (DCC), Griffith Hack, FB Rice, Phillips Ormonde Fitzpatrick (POF), Pizzeys, Shelston IP, FPA Patent Attorneys, Watermark (soon to be merged into Griffith Hack), and Madderns all taking their places in the same order as the previous year.  However, all but DCC experienced a decline in overall filings, and in standard application filings.

Aside from DCC’s gain in standard application filings, and a strong showing from Spruson & Ferguson on innovation patent filings, listed-group firms generally went backwards in 2019, with the winners across all application types (i.e. standard, provisional, and innovation) being privately-held firms.  However, this seems to have had less to do with ownership structure than size, and a general trend in favour of smaller firms over larger ones (which I have previously noted with respect to Australian SME clients, but which appears to be true more broadly).  With the notable exception of a significant growth in provisional application filings by FB Rice, the larger privately-held firms (which also include POF, Wrays and Madderns in Australia, and New Zealand based James & Wells) also failed to make gains in filing numbers in 2019.

While most people outside the profession probably care little for the business challenges faced by patent attorneys, I would argue that a bad year for attorney firms is also a bad year for Australia.  It is well-established that innovation underpins improvements in productivity and a rise in the standard of living (preferably with a reduced environmental impact), and demand for patent attorney services is (or should be) linked to levels of innovative activity.  Logically, then, stagnation in demand for such services is not good news for the nation.

Data Source

As with last week’s applicant analysis, the data used for this article has been obtained from IP Australia’s online AusPat system, based on tables of results from various searches downloaded in CSV format using the ‘My List’ feature.  These tables are of limited size, and do not include full application details, however they do identify applicants, inventors, and the agents responsible for filing of each application.  I have processed this data offline to identify and link filings to operating patent attorney firms, as reflected by the registers maintained by the Trans-Tasman IP Attorneys Board (TTIPAB).  I retrieved the data progressively across the year, on a roughly monthly basis, and thus the numbers are broadly contemporaneous with filings, i.e. they reflect the firm recorded as agent at the time of filing, regardless of any changes in responsibility that may subsequently have occurred and may now be reflected in the AusPat records.

The caveat remains that all of the following data should be considered preliminary and highly unofficial!

Total Filings

The table below lists the top ten attorney firms for 2019 according to total numbers of Australian patent filings, across all application types.  It also indicates, in each case, whether the firm is a privately-held independent (‘IND’), or a member of one of the two listed groups IPH Limited (‘IPH’) and QANTM IP Limited (‘QIP’).  (Note that due to the acquisition of the Xenith IP group by IPH in mid 2019, all of the former Xenith firms’ filings have been attributed to IPH.)  The table also shows the change in filing numbers for each firm relative to 2018.

Firm Name	Group	Total	Change
SPRUSON & FERGUSON	IPH	5183	-331
DAVIES COLLISON CAVE	QIP	3444	107
GRIFFITH HACK	IPH	2881	-84
FB RICE	IND	2529	-19
PHILLIPS ORMONDE FITZPATRICK	IND	2218	-76
PIZZEYS	IPH	2118	-69
SHELSTON IP	IPH	1882	-97
FPA PATENT ATTORNEYS	QIP	1681	-45
WATERMARK	IPH	1098	-107
MADDERNS	IND	971	-116

As I have already noted, the top 10 remains unchanged from the previous year in terms of both composition and order, however all of the leading firms, except for DCC, experienced a decline in overall filing numbers.

Standard Patent Applications (Including PCT NPE)

The vast majority of applications filed in Australia are standard applications, either filed directly or as the National Phase Entry of an international application filed under the Patent Cooperation Treaty (‘PCT NPE’).  Notably, most of these applications originate overseas – projecting from the numbers I presently have available, I predict that over 91% of Australian standard patent applications were of foreign origin in 2019.

The table below lists the top firms for filing of standard patent applications (which also include divisional applications, and applications for patents of addition), along with the corresponding numbers and changes from 2018.  Unsurprisingly, given the dominance of these applications in the overall filing numbers, the make up of this top ten closely reflects that of the total filings table above.

Firm Name	Group	Total	Change
SPRUSON & FERGUSON	IPH	4780	-294
DAVIES COLLISON CAVE	QIP	3086	127
GRIFFITH HACK	IPH	2573	-76
FB RICE	IND	2268	-35
PHILLIPS ORMONDE FITZPATRICK	IND	2042	-39
PIZZEYS	IPH	2113	-64
SHELSTON IP	IPH	1772	-38
FPA PATENT ATTORNEYS	QIP	1508	-35
WATERMARK	IPH	1033	-91
MADDERNS	IND	792	-137

The ‘winners’, as measured by gains in the number of standard application filings in 2019, are listed in the following table.  Aside from DCC, and New Zealand based Baldwins – which has no physical presence in Australia – none of the firms in this list employs more than nine registered patent attorneys, according to the TTIPAB Register (as at the start of January 2020).  The very strong showing by Golja Haines & Friend is largely a result of the amount of filing work the firm acquired on behalf of Australia’s surprise new number one patent applicant, China’s Guangdong OPPO Mobile Telecommunications Ltd (‘OPPO’), as discussed in my previous article.

Firm Name	Group	Total	Change
GOLJA HAINES & FRIEND	IND	252	144
DAVIES COLLISON CAVE	QIP	3086	127
MICHAEL BUCK IP	IND	172	54
BAXTER IP	IND	128	35
FOUNDRY INTELLECTUAL PROPERTY	IND	65	32
JONES TULLOCH	IND	49	31
HALFORDS IP	IND	185	31
BALDWINS	IND	313	27
PIPERS PATENT ATTORNEYS	IND	110	25
FRANKE HYLAND	IND	64	24

On the flip side, the following table lists the ‘losers’, as measured by decline in the number of standard application filings in 2019.  With the exception of the non-specialist firm K&L Gates, none of the firms on this list employs fewer than 10 registered patent attorneys, according to the TTIPAB Register.

Firm Name	Group	Total	Change
SPRUSON & FERGUSON	IPH	4780	-294
MADDERNS	IND	792	-137
WATERMARK	IPH	1033	-91
GRIFFITH HACK	IPH	2573	-76
K&L GATES	IND	68	-72
PIZZEYS	IPH	2113	-64
A J PARK	IPH	536	-51
PHILLIPS ORMONDE FITZPATRICK	IND	2042	-39
SHELSTON IP	IPH	1772	-38
FPA PATENT ATTORNEYS	QIP	1508	-35

Provisional Applications

Almost all provisional applications are prepared and filed on behalf of Australian companies and individuals, and provisional filings are therefore a strong indicator of the extent to which a firm provides services to domestic clients.  The table below lists the top ten attorney firms by provisional filings, along with the gain/loss in each case relative to 2018.  While the rankings are similar to the previous year, DCC and Spruson & Ferguson have swapped places at the top (due to DCC experiencing a lesser decline in filings), while Perth-based Armour IP (which comprises only two registered patent attorneys) has displaced Shelston IP at number 10.

Firm Name	Group	Total	Change
DAVIES COLLISON CAVE	QIP	331	-10
SPRUSON & FERGUSON	IPH	327	-52
GRIFFITH HACK	IPH	250	-6
FB RICE	IND	233	34
PHILLIPS ORMONDE FITZPATRICK	IND	156	-8
WRAYS	IND	134	-9
FPA PATENT ATTORNEYS	QIP	120	-13
MICHAEL BUCK IP	IND	103	2
MADDERNS	IND	99	7
ARMOUR IP PATENT & TRADE MARK ATTORNEYS	IND	76	3

The biggest gains in provisional filings have been made exclusively by independent firms, as the following table of the top 10 ‘winners’ demonstrates.

Firm Name	Group	Total	Change
FB RICE	IND	233	34
BAXTER IP	IND	75	29
JAMES & WELLS	IND	27	25
MINTERELLISON	IND	16	14
HALFORDS IP	IND	32	12
MEYER WEST IP	IND	31	10
GOLJA HAINES & FRIEND	IND	16	9
MADDERNS	IND	99	7
SANDERCOCK & COWIE	IND	25	7
JONES TULLOCH	IND	14	7

At the opposite end of the scale, the corresponding list of the largest declines in provisional filings includes both large listed-group firms, and small privately-held firms.

Firm Name	Group	Total	Change
SPRUSON & FERGUSON	IPH	327	-52
SHELSTON IP	IPH	67	-24
WADESON	IND	16	-18
K&L GATES	IND	21	-16
ADAMS PLUCK	IND	29	-14
WALLINGTON-DUMMER	IND	19	-13
FPA PATENT ATTORNEYS	QIP	120	-13
SMOORENBURG PATENT & TRADE MARK ATTORNEYS	IND	2	-13
PINI IP	IND	3	-12
DAVIES COLLISON CAVE	QIP	331	-10

It must be said that some of the largest gains and losses in provisional filings, as reflected in the two tables above, are not really that large, and in a number of cases they are also relative to fairly low base numbers.  This reflects, I think, the generally weak and fragmented market for the supply of patent attorney services in Australia (a topic about which I have written previously).

Innovation Patent Applications

It is almost certain that legislation phasing out the innovation patent system will pass in the House of Representatives, and become law, in February.  If so, then from October 2021 (i.e. 18 months later) it will no longer be possible to file new (non-divisional) innovation patent applications.  In the meantime, however, the preparation and filing of innovation patents remains an important part of many patent attorneys’ practices.  In 2019, there were 520 innovation patent applications filed by registered patent attorneys on behalf of Australian and New Zealand applicants, of which 233 claimed no earlier priority date (i.e. the patent specifications were, presumably, drafted for the purpose of obtaining an innovation patent).  This is a significant amount of work that will disappear along with the innovation patent system, unless it is replaced by equivalent provisional and/or standard application filings.

The table below lists the top ten attorney firms of 2019 for innovation patent filings, along with the gain/loss in each case relative to 2018.

Firm Name	Group	Total	Change
MADDERNS	IND	80	14
SPRUSON & FERGUSON	IPH	76	15
GRIFFITH HACK	IPH	58	-2
FPA PATENT ATTORNEYS	QIP	53	3
SHELSTON IP	IPH	43	-35
BAXTER IP	IND	38	11
APT PATENT & TRADE MARK ATTORNEYS	IND	35	5
MICHAEL BUCK IP	IND	30	10
FB RICE	IND	28	-18
DAVIES COLLISON CAVE	QIP	27	-10

The above list includes the two biggest ‘winners’ for innovation patent filings in 2019, namely Spruson & Ferguson and Madderns with gains of 15 and 14 respectively, as well as the biggest ‘loser’, namely Shelston IP with a decline of 35.  Other firms that had significant gains in innovation patent filings were generally small practices, including protectmyidea.com.au (+12), Lesicar Maynard Andrews (+11), Baxter IP (+11), Houlihan² (+10), and Michael Buck IP (+10).  Other firms that declined significantly in innovation patent filings included POF (-29), Meyer West IP (-15), AJ Park (-15), and Watermark (-14).

Performance vs Firm Size and Ownership Structure

Of all the registered patent attorneys who filed at least one Australian patent application during 2019 (or worked for a firm that did so) approximately one-third are employed by firms within the two listed groups, while the remaining two-thirds operate, or are employed by, privately-held firms.  This represents a slight decrease in the proportion of ‘actively-filing’ attorneys within the listed groups compared with this time last year.  However, this is due to an increase in the number of active attorneys within the privately-held sector, while the total number of attorneys employed by the listed-group firms has remained steady (which is not to say that there has not been movement of attorneys between firms and sectors, however I will look at that phenomenon another time).

The table below summarises the aggregated shares of filings in 2019 of various categories of filings by firms in listed groups versus privately-held firms.  In general, it can be observed that firms within the two listed groups – which comprise many of the country’s larger practices – handle more than half of the filing work of standard patent applications claiming some form of earlier priority (including via the PCT system).  This segment of the market is dominated by the foreign-resident applicants that file more than 90% of Australian standard patent applications.  On the other hand, attorneys within the ‘privately-held’ sector handle more than half of the remaining categories of filings – provisional applications, innovation patent applications, and standard patent applications without earlier priority claims – which is work predominantly conducted on behalf of domestic clients.

Quantity	Privately Held	IPH	QANTM IP
Total filings	14668	13733	5125
Provisional	2383	731	451
Innovation (w/o priority)	301	52	8
Standard (w/o priority)	139	84	20
Innovation (with priority)	435	143	72
Standard (with priority)	3020	3847	1238
PCT NPE	8390	8876	3336

While there has been much speculation about listed group firms losing market share to privately-held firms, the data actually suggests that any shift in preferences relates to firm size rather than ownership structure.  The scatter-plot below shows the percentage gain or loss in total filings relative to firm size (as measured by number of registered patent attorneys, according to the TTIPAB Register) for all firms that filed at least 100 applications in 2019.

As the chart shows, only two firms with more than 20 registered attorneys (Wrays and DCC) experienced overall gains in filings.  All of the other larger firms declined, regardless of whether they are members of listed groups, or privately held.  Furthermore, only a third (i.e. two out of six) of firms with between 10 and 20 registered patent attorneys gained filings in 2019.  All of the significant gains were achieved by firms having fewer than 10 patent attorneys.

Conclusion – Bad News for the Profession… and the Country?

I am happy for the smaller firms, and associated patent attorneys, that had a good year in 2019, I really am.  But I am concerned for the health of the profession as a whole.

If 2019 is anything to go by, there are serious challenges ahead.  Filings of standard patent applications are down.  Furthermore, on my estimates the proportion of those filings made by domestic applicants also continues to decline, and is now below 9%.  Work preparing and filing provisional and other originating applications is, at best, holding steady.  There was an overall increase of around 10% in the total number of innovation patents filed using the services of patent attorneys, but the innovation patent system is set to be phased out, with most of this work drying up by October 2021.

Gains by small firms are all very well, but overall there is no growth in the market for patent procurement services in Australia, i.e. no additional work per attorney, regardless of the size of the firms in which they work.  At the same time, the profession remains small, with under 700 patent attorneys having been associated with filings in 2019, and much of the expertise and capacity to provide a range of training and experience to junior members of the profession is concentrated in a few larger firms.  Yet it is these firms that appear to be facing the toughest challenges in the current market conditions.

My concerns for the profession are not self-serving – I am not competing for any of the business that I am talking about here.  I believe that the patent attorney profession is an important component of Australia’s innovation ecosystem, holding as it does a huge amount of experience and expertise in not only the domestic IP system, but the wider global systems that innovative Australian businesses should be seeking to access. 

But I fear that the profession is also the ‘canary in the coalmine’ of the innovation system.  A lack of growth in the market reflects the facts that Australian businesses are not making effective use of IP systems or the available legal protections that they provide, and that foreign companies may be downgrading Australia as a jurisdiction in which they will prioritise protecting and exploiting their innovative products and services.  There is very little that the Australian patent attorney profession can do about this, being far too small to have a significant impact on policy.  So unless the government suddenly finds some other motivation to address years of moribund and inconsistent policy on innovation, it seems unlikely that things will improve. 

I cannot say that I am hopeful – the country already lacks a minister with the word ‘innovation’ in their title, and under changes announced late last year the word will also disappear from departmental titles, with the current Department of Industry, Innovation and Science to be merged into a new Department of Industry, Science, Energy and Resources.  The last thing this government wants, it seems, is to remind voters that ‘innovation’ is an actual thing!

Tags: Australia, Innovation policy, Patent analytics, Patent attorney profession