Countdown to the End of the Innovation Patent: Abolition Legislation Signed into Law

On 26 February 2020, the Intellectual Property Laws Amendment (Productivity Commission Response Part 2 and Other Measures) Bill 2019 received Royal Assent (i.e. was signed into law by the Governor General of Australia), becoming Act No. 9 of 2020.  I reported passing of this Bill in the Senate, with amendments, in November last year, noting that its passage through the House of Representatives (which eventually occurred on 5 February 2020) was a mere formality.  The full text of the Bill, as passed, can be found on the Parliament of Australia website, and should soon be available as the Intellectual Property Laws Amendment (Productivity Commission Response Part 2 and Other Measures) Act 2020 on the Federal Register of Legislation.

The main feature of the Act, about which I have written a number of times over the past few years, with varying degrees of ambivalence, is the abolition of Australia’s second-tier innovation patent system.  I briefly reviewed the history of the innovation patent’s downfall when reporting passage of the Bill through the Senate, and will not rehash this here.  The key point to note, however, is that the legislation provides for an 18 month window, commencing on the date of Royal Assent, before the phase-out of the innovation patent begins.  The following timeline has therefore now been established:

1. 26 February 2020 – Act receives Royal Assent;
2. 26 August 2021 – no longer possible to file new innovation patent applications, other than divisional applications based on applications filed on or before 25 August 2021; and
3. 25 August 2029 – final expiry date of all innovation patents (i.e. eight years after the last possible filing date of 25 August 2021).

The Bill originally provided a 12-month sunset period, however this was extended to 18 months by amendments in the Senate proposed by the Labor opposition, along with provisions requiring that a statutory review 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 must commence within three months (i.e. by 26 May 2020), and provide a written report to the Minister for Industry, Science and Technology (currently the Hon Karen Andrews MP) within 12 months of commencement (i.e. no later than 26 May 2021).

To assist people with keeping track of the time remaining to file new innovation patents, I have added a countdown timer to the sidebar of this blog.  (You’re welcome!)  Notably, because 2020 is a leap year, and the Act received Royal Assent prior to 29 February and during daylight savings time, everyone has 25 hours more than would otherwise have been the case to file their final innovation patent applications!

While abolition of the innovation patent is, for most people, the big ticket item in the Act, it introduces a few other changes to Australia’s IP laws.  Read on for a brief summary of these.

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Tags: Australia, Compulsory license, Crown use, Innovation patent, Law reform, Omnibus claims

New Practices Arise, as Over 20% of Australian and New Zealand Patent Attorneys Change Jobs in Just Two Years

I have been writing about upheavals in the trans-Tasman patent attorney profession for a number of years now, including: the public listing of IP firms; the acquisition of firms by the listed groups; regulation of the profession in response to changes in ownership structures; the demise of long-standing brands such as Fisher Adams Kelly Callinans, Cullens and Watermark; mergers and acquisitions among the listed groups; shifts in market preferences in favour of smaller, privately-held firms; and a legal stoush over the alleged breach of restraint clauses by two former partners of a listed group firm.  It has certainly been an eventful period for the profession!

For the most part, my analysis has focused on developments at corporate and firm level, such as how listed group firms are faring compared to privately-held firms, or how larger firms are performing relative to smaller firms.  And while there is no lack of upheaval among IP firms in the Australian and New Zealand markets, when I drill down to the level of individual attorneys, the rate of staff turnover seems quite remarkable. 

I have performed an analysis of the movements of individual registered trans-Tasman patent attorneys over a 25-month period, and found that during this time just over 200 attorneys have changed jobs.  This may not sound like many, but because the patent attorney profession is small, it actually represents nearly 22% of all attorneys.  To put this in perspective, the most recent National Profile of Solicitors, published by the Law Society of NSW, put the number of members of the legal profession in Australia at 76,303 in October 2018.  Thus if lawyers had been churning over at the same rate as patent attorneys over the past two years, that would be over 16,500 people moving to new jobs!  By way of further comparison, a recent long-term study of a cohort of US lawyers found that 35% had changed jobs over the decade between 2006 and 2016, i.e. a period five times as long as that covered by my data.

A significant proportion of the turnover of attorneys has been into new practices.  There are now 47 pre-existing attorneys, and five recently-registered entrants to the profession, working in patent practices that did not exist in January 2018.  A few of these are practices that have been established within existing legal or other advisory firms.  The majority, however, are new micro practices comprising three attorneys or fewer.  In particular, there are now 22 more solo practitioners than there were at the start of 2018.  Whether you regard this as a strengthening of competition, or a worrying fragmentation of the profession, probably depends upon your point of view.  (I am pessimistically inclined to the latter interpretation.)

A number of the newly-emerging practices have made a solid start in terms of Australian patent filings, with four making it in to the top 50 firms for total filings over calendar year 2019.

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Tags: Australia, New Zealand, Patent attorney profession

IP Australia Proposes Minor Fee Changes, Major Changes to Opposition and Other Hearing Costs Awards

Just prior to Christmas, IP Australia announced that it is seeking feedback on its draft Cost Recovery Implementation Statement (CRIS), which outlines proposed fee changes that would take effect from October 2020.  It is also taking the opportunity to review the hearing costs that may be awarded for Patents, Trade Marks and Designs.  The public consultation process closes this Sunday, 16 February 2020.  In this article I will look briefly at proposed fee changes in relation to patents, none of which strike me as unreasonable or contentious.  I am, however, more concerned about proposed increases in the costs that may be awarded in relation to contested hearings, and most particularly patent oppositions.

IP Australia conducts its regulatory role in administering Australia’s system of registered rights (patents, trade marks, designs, and plant breeder’s rights) on a cost recovery basis, i.e. it seeks to cover the costs of these aspects of its activities from the fees charged to users of the system (which these days, for better or worse, it calls ‘customers’).  To do this, it uses various financial and economic systems and models to forecast expected demand and cost of service delivery, and reviews and adjusts fees on this basis every few years.  IP Australia last undertook a fee review in the 2015-16 financial year.

Cost recovery does not require each individual fee to reflect the cost of the nominally associated service.  The fee for requesting examination of a standard patent, for example, is (and will remain, under the proposed fee structure) A$490, which doubtless falls far short of the actual cost of examining an application.  Patent maintenance fees, on the other hand, correspond with minimal and highly automated administrative tasks, and currently rise as high as A$2550 annually, for pharmaceutical patents extended beyond the standard 20 year term.  This reflects the fact that fee setting can serve broader policy purposes, such as providing an incentive for patentees not to maintain patents that no longer hold corresponding commercial value, thus freeing up the patented technology for public use.

Costs in contested hearings, on the other hand, have nothing to do with the operations of IP Australia.  They are amounts, set by regulation, that can be awarded by designated officers of IP Australia against unsuccessful parties in administrative proceedings such as patent oppositions.  They are paid directly by the ‘loser’ to the ‘winner’, and are intended to offset the actual costs of the proceedings incurred by the successful party.  IP Australia is proposing to increase the costs that may be awarded significantly (by more than four times in some cases), on the basis that this will ‘better reflect the actual costs incurred’, and that the proposed costs ‘are based on the practice of the Federal Court’.  Both of these justifications may be true, though that does not automatically make them relevant!

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Tags: Australia, Costs, Fees, Maintenance fees, Opposition, Patent Office, Public consultation

Universities and Research Institutes Dominate Australian and New Zealand PCT Filings

In earlier articles I have looked at data on Australian patent filings and grants, as well as associated attorney firm performance.  While these numbers give us a good picture of application activity in Australia, they provide no information on the filing activities of Australian applicants in other jurisdictions.  Many innovators that are ultimately interested in securing patent protection in multiple countries choose to do so by first filing an international application (IA) under the Patent Cooperation Treaty (PCT).  In this article, therefore, I examine some recent PCT filing data for applicants, and patent attorney firms, resident in Australia and New Zealand.

As most readers will be aware, the PCT is an international treaty administered by the World Intellectual Property Organization (WIPO) that enables residents of any member country (of which there are currently 153, illustrated by the map at the top of this article) to file a single IA that has the effect of establishing a corresponding filing date in all of those countries, and associated regional patent systems.  While the PCT system is sometimes presented as a mechanism for improving efficiency and/or saving money, whether or not it achieves such benefits depends very much on each individual case, and the extent to which its centralised search, ‘preliminary examination’, and amendment processes enable subsequent national applications to be streamlined.  In practice, it remains necessary to file further applications in all countries of interest within 30 (or, for some countries, 31) months of the initial priority date, which must then each be examined under the corresponding national patent laws and procedures before any patent is actually granted.  All else being equal, therefore, a PCT application represents an additional cost, incurred prior to the various national costs, and may delay the examination and grant of national patents by up to two and a half years.

Despite this, the PCT system is popular with many Australian and New Zealand applicants.  In 2018, for example, Australian residents were named as applicants on over 1,700 IA’s, which compares favourably with the 2,756 domestic standard patent applications filed by Australian applicants in that same year.  The reason for this popularity is clear – even though it represents an additional cost, an IA defers a final decision on the jurisdictions in which patents will be pursued, along with the substantial further costs of filing and examination in multiple national and/or regional patent offices, for up to an additional 18 months.

This benefit of the international application system is clearly reflected in the most enthusiastic users of the system.  Of the top 20 Australian and New Zealand applicants named in PCT applications published over the three years between the beginning of 2017 and the end of 2019, 14 are universities or other public research institutions.  Of the remaining six, three are medical device manufacturers.  All of these are organisations that can particularly benefit for the deferral of further filing decisions and costs that the PCT system provides.

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Tags: Australia, New Zealand, Patent analytics, PCT