01 June 2020

Case Transfers Show No Preference for Privately Held vs Publicly Listed Firms

File arrowPatent attorney clients are notoriously ‘sticky’ – it is well-known that they rarely change service providers.  Indeed, out of a sample of 279,035 live applications and patents managed by Australian and New Zealand patent attorneys as of early 2019, only 3,854 (1.4%) were transferred away from those attorneys over the past 16 months or so.  Of these. the overwhelming majority (3,813) were transferred to a different attorney/firm, with responsibility for the remainder (230) being taken over by non-attorneys – mostly the owners of the patents/applications.  (In the remainder of this article I am going to use the term ‘cases’ to refer collectively to both pending applications and granted patents.)

Within my sample of active cases, 62% are handled by firms in listed groups, 34% by privately-held practices, and 4% by non-attorneys.  Taking into account the fact that listed group firms have nearly twice as many cases to ‘lose’, I found no evidence that clients are any more likely to transfer work from firms in listed groups to privately-held firms than they are to transfer in the other direction.  The flow in both directions was approximately 0.6% of the size of the respective available pools of cases.  Looking at domestic (i.e. Australian and New Zealand owned) cases in isolation, there was a net flow from listed group firms to privately held firms.  At the same time, however, clients of listed group firms were less likely to transfer their cases away than clients of privately held firms.

Overall, privately-held firms appear to be the most likely to lose clients, collectively seeing around one in 50 cases transferred away during the period that I have analysed.  In comparison, publicly-listed firms saw just under one in 100 cases transferred away over the same time.  However, the largest source of ‘churn’ was transfers between firms within the privately-held sector, with 1,344 cases in this category.  This resulted in privately-held firms also being the most likely to win clients away from their competitors, collectively acquiring nearly one in 40 active cases from other firms.  Publicly-listed firms acquired just one in every 140 of the active cases in their care from competitors over the period analysed.

Patent attorneys generally seem to have a fractious relationship with the kinds of applicants that are inclined to ‘go it alone’.  This is perhaps not surprising, given that a major reason for applicants to choose self-representation is to save on costs, and that fees are a leading cause of disputes between patent attorneys and clients.  Frankly, most of these clients are best avoided, since they are often more trouble than they are worth (the clients might well say the same of the patent attorneys to whose fees they object).  Privately-held firms (which include all the smaller practices) are the most likely to acquire cases from self-represented applicants (220 over the period analysed), and they are also the most likely to part ways with clients in favour of self-representation (185 cases).  Listed-group firms (which include many of the largest practices) appear to have far less contact with these types of clients, collectively gaining and losing just 67 and 45 cases, respectively, over the same period.

Looking at individual firms, big ‘winners’ from transfers of cases include RnB IP, Wrays, and FPA Patent Attorneys, while the greatest net losses were experienced by firms including Cotters Patent & Trade Mark Attorneys, Pizzeys, FB Rice, Griffith Hack.  For the major firms, however, gains and losses due to transfers of existing cases represent a very small proportion of overall business.

Sampling Active Cases and Changes of Agent

The difficulty with analysing changes of agent (also known as changes of ‘address for service’) is that IP Australia does not maintain historical records of agents on patent cases.  When a change of agent is requested, the live records are simply updated.  There is no ‘trail’ maintained of past agents and dates of change as there is, for example, when a change of applicant is recorded.  Correspondence relating to a change of agent is retained in the electronic file (a.k.a. ‘eDossier’) for the case, but this is not readily accessible or readable by any automated system, and it is not always available, e.g. on unpublished applications.

The only practical way to identify changes of agent, therefore, is by comparing records extracted from IP Australia’s database at different times.  Fortunately, a number of data sources with different extraction dates are available.  My starting point for this analysis was the IP Government Open Data (IPGOD) 2019 release, which contains records for all patents and applications filed up until the end of 2018, as extracted in early 2019.  On top of this, I have data obtained on a monthly basis for all new applications filed from January 2019 onwards

From these data sources, I retrieved records of all cases filed on or after 1 January 2010 that remained live (i.e. not lapsed, refused, revoked, ceased, withdrawn, or expired) at the respective times of extraction as my sample set.  (There seemed no point in looking at inactive/dead cases, since there is no reason why anyone would record a change of agent of such cases or, if they did, why that should be regarded as meaningful given that there are no further services that could be provided.)  Obviously there are patents with filing dates earlier than 2010 that are still alive – the maximum term of a patent is 20 years – but there are fewer of these, they are less likely to be transferred many years after grant, and I wanted to limit the size of the data set by focusing on cases with more recent substantive activity, i.e. filed and/or granted within the past 5-10 years.

I then obtained the current agent (as at 27 May 2020) for all cases in the sample from IP Australia’s online records.  Generally speaking, the resulting data identifies all of the cases in the sample for which a recent change of agent has occurred, i.e. between early 2019 and 27 May 2020.  This includes cases filed since 1 January 2019 for which there has already been a subsequent change of agent.

Sharp readers will recognise that this method of data acquisition is imperfect.  Firstly, I do not know the exact date of the IPGOD extract, and thus the precise period over which changes of agent are identifiable is not known.  Secondly, since my data for 2019 onwards is gathered only on a monthly basis, I will miss any cases for which a transfer may have occurred very shortly after filing – this is rare, but it does happen, e.g. in cases where the initial filing firm identifies a conflict with a prior client.  Thirdly, I cannot pick up cases that may have been transferred more than once during the period since the original data extraction.  Any such cases will count as only a single transfer (or as no transfer at all, if they happen to have found their way back to the original agent).  This is unavoidable, and is presumably a rare event.

All Transfers Between Listed, Private & Non-Attorney Sectors

The diagram below summarises, collectively, transfers of cases between firms in listed groups, privately-held firms, and non-attorney agents (who are mostly the inventors and/or applicants themselves).  It also shows ‘internal’ transfers in the two attorney firm sectors, i.e. transfers from one listed group firm to another, and from one privately-held firm to another.  (Note that the count of ‘internal’ transfers excludes 189 cases transferred from IP Sentinels to Golja Haines & Friend as a result of a merger of these two firms.)

Transfers between sectors

The ‘blue bubbles’ overlaying each of three sectors indicate the total numbers of cases in the sample for which members of the corresponding sector were agents at the end of the period analysed (i.e. as at 27 May 2020).  The ‘white bubbles’ over each arrow indicate the actual number of cases within the sample that were transferred between sectors, in the direction shown, during the period analysed.  Finally, the percentages in the circles attached to each sector correspond to the net change in cases within the sector relative to the final totals.  A black circle indicates a net gain, while a red circle indicates a net deficit.

The first point to note is that even though listed group firms recorded a deficit, and privately held firms a gain, this is purely an artefact of the listed group firms being responsible for nearly twice as many active cases.  As a proportion of the number of cases managed within each of the two sectors, the outward flow is around 0.6% in both directions (0.64% of ‘privately held’ cases to listed group firms, cf 0.56% of ‘listed group’ cases to privately held firms).  In other words, there is no significant difference in the likelihood that a client will transfer a case from a listed group firm to a privately held firm versus the likelihood of a transfer in the other direction.

Interestingly, however, a significantly larger proportion of cases handled by privately held firms were transferred to other privately held firms than occurred between pairs of listed group firms.  Just 651 cases – or 0.36% of the sector total – were transferred between listed group firms.  This compares with 1,344 – or 1.4% of the sector total – transferred between privately held firms.  We shall see that over a third of these latter cases can be attributed to the transfer of a large portfolio belonging to a single client.  But even taking this into account, the ‘churn rate’ among privately held firms is more than twice that among listed group firms, suggesting that clients of privately held firms are somewhat more likely to be unhappy with some aspect of their services.

Transfers by Australian and New Zealand Clients

Looking at only those cases belonging to Australian and New Zealand residents – i.e. those with which patent attorneys are likely to deal directly, rather than through an overseas attorney or law firm – a slightly different picture emerges.  The equivalent summary diagram for this subset of cases is shown below.

Transfers between sectors - AU and NZ only

In contrast to the full sample – which is, of course, dominated by the majority of cases owned by foreign entities – privately held firms manage around 40% more cases owned by Australian and New Zealand clients than listed group firms.  But despite managing over 5,000 fewer cases than privately held firms, listed group firms ‘lost’ four times as many cases to privately held firms than were transferred in the other direction (224 versus 55).  So transferring Australian and New Zealand clients appear to show a preference for privately held firms over listed group firms.  I initially wondered if this was actually a preference for smaller firms over larger ones, however that does not seem to be so – the three largest privately held firms, Phillips Ormonde Fitzpatrick, FB Rice, and Wrays, all saw more cases transferred to them than away from them.

On the other hand, Australian and New Zealand clients seem more likely to have become dissatisfied with privately held firms than listed group firms, even if they subsequently choose to work with a different privately held firm.  The total number of cases transferred away from privately held firms was 662, compared with 319 from listed group firms.  And cases transferred away from patent attorneys entirely (i.e. back into the ‘non-attorneys’ group) were three-and-a-half times more likely to have come from a privately held firm than a listed group firm.

Overall, then, while transferred cases were more likely to end up with a privately held firm than with a listed group firm, they were also considerably more likely to have come from a privately held firm.  To put this another way, listed group firms performed better in holding on to cases belonging to Australian and New Zealand clients, losing just 2.3% of cases, on average, to transfers, compared with 3.4% of cases lost by privately held firms.  This data demonstrates that domestic clients are somewhat more volatile than the overall population, within which just under one in 100 (0.94%) cases were transferred away from listed group firms versus a little over one in 50 (2.2%) transferred away from privately held firms.

Transfers To and From Leading Firms

The table below lists the net gains (or losses, i.e. negative gains) due to case transfers for 12 selected firms.  Ten of these – all but the top and bottom in the table – are chosen because they are the leading firms, based on the total number of cases within the sample managed by each.  The table is ordered according to the size of the net gain or loss relative to the total number of cases managed at the end of the sample period.  The additional two firms included in the list, RnB IP and Cotters Patent & Trade Mark Attorneys, were selected because they are by far the ‘best’ and ‘worst’ performers under this ranking metric and because the reasons for this relate to firms within the top ten, and thus their inclusion helps to explain some of the other numbers.

Firm Total Net gain
RNB IP 410 203
WRAYS 6599 563
WATERMARK 12490 -25
GRIFFITH HACK 29158 -127
FB RICE 19193 -216
PIZZEYS 17257 -237

At the top of the table, RnB IP acquired nearly half of the cases now in its care via transfers.  In particular, 177 of its 410 cases were transferred from Pizzeys.  This, in turn, goes a long way to explaining Pizzeys’ net loss of 237 cases.  While this provides some explanation for the ongoing legal stoush between Pizzeys and RnB (which was founded by two former partners of Pizzeys), it is nonetheless a very small proportion of Pizzeys’ overall business, which will have very little impact on the firm’s overall performance.

The gains by Wrays are largely due to the significant losses from Cotters.  In particular, Facebook transferred a portfolio of 496 cases from Cotters to Wrays.  This transfer looks to have occurred in mid-2019, and thus long before the recent acquisition of Cotters by the ASX listed QANTM IP Limited (ASX:QIP) (see Listed Group QANTM IP Acquires Sydney-Based Cotters Patent & Trade Mark Attorneys).  This makes the A$6.3 million price paid by QANTM look like an even better deal for the former Cotters equity holders!

A significant contribution to the gains made by FPA Patent Attorneys was the acquisition from Spruson & Ferguson of a portfolio of 80 cases owned by companies in the Intel group.

On the other side of the divide, the losses by Griffith Hack were distributed across a large number of different clients, many of them Australian, and in this sense the net deficit reflects the firm’s relatively large exposure to a domestic client base.  Notable transfers away from Griffith Hack include 19 Bluescope Steel cases to Allens Patent & Trade Mark Attorneys, 15 cases in the name of TTI Macau Commercial Offshore to Spruson & Ferguson, along with 13 Swinburne University cases and 11 Powervision cases to Phillips Ormonde Fitzpatrick.

The relatively large net loss of cases from FB Rice is mostly due to the transfer of two substantial portfolios – those of Halliburton (217 cases) and its subsidiary Landmark Graphics (51 cases) – to Spruson & Ferguson.


In aggregate, just 1.4% of all cases, and 2.9% of cases owned by domestic clients, were transferred away from initial attorney firms during the period analysed.  Although not shared equally among firms, and thus impacting some more than others, this is a very low client attrition rate.  While those domestic clients that transferred cases away from their original attorney firms over the past 16 months showed some preference for privately held firms over listed group firms, in general – across both domestic and international clients – case retention rates were higher for listed group firms than privately held firms.

The bottom line is that client retention rates are very high in the Australian and New Zealand patent attorney profession – as I said at the outset, the received wisdom is that clients are typically very ‘sticky’.  There is nothing in the sample of cases that I have analysed to suggest that whether a firm is part of a listed group, or is privately held, has any significant effect on that ‘stickiness’.  In short, most established clients do not appear to care a great deal about the ownership structure of their patent attorneys – at least. not enough to cause them to take their business elsewhere.


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