22 July 2020

COVID Update – Apparent June ‘Surge’ in Provisional & Innovation Patent Filings Driven by Self-Filers and Chinese Applicants

BiohazardAt first glance, Australian patent filing numbers for June look surprisingly like good news for the pandemic-ravaged economy.  Australian provisional filings were up 4.5% on the same period in 2019, while innovation patent filings were up by an astonishing 141%.  Overall ‘original’ filing work (i.e. new applications not claiming priority from any earlier filing) by patent attorneys was up by just over 15%.  On closer inspection, however, these headline figures present an overly rosy view of the underlying reality.  The boost in provisional filings was driven entirely by self-represented applicants, while the surge in innovation patent filings – which was also responsible for the gains in original filings – was the result of another month of heavy use of the Australian innovation patent system by Chinese applicants.  As a result, the only real beneficiary of the stronger filing numbers in June is IP Australia, which saw patent application fees increase by nearly A$37,000 when compared against the same month in 2019.

One small sliver of more positive news is that Australian standard patent applications were very slightly (0.3%) higher in June 2020 than in June 2019.  This is the first month since March to show any year-on-year gain, following very significant declines in April and May.  It was assisted, however, by the fact that the month of June began on a Monday this year, giving it the maximum possible number of business days – two more than in 2019.  Without this, we may just as easily have seen a further decline in filings in June.

Over in New Zealand – where the total application numbers are significantly smaller than in Australia, and thus subject to larger relative fluctuations – filings have continued to hold surprisingly steady, with complete (standard) applications up by 1.7% and provisional filings up by 8.5% year-on-year for June.

Small Rise Australian Standard Patent Applications

The chart below shows the percentage changes in Australian standard patent and provisional applications between 2019 and 2020 for the first six months of the year.  Bucking the trend of recent months, standard application filings recovered in June, to be slightly (0.3%) higher than the same period last year.  However, this increase corresponds with just eight additional applications (up on 2,508 in 2019), and there were two additional business days in June 2020 (21 compared with 19 in 2019).  Even so, June was a substantial improvement on May.

AU Standard and Provisional filings - monthly changes

Provisional filings in June 2020 were 4.5 higher than the previous year – an increase of 19 applications over June 2019, and of 34 application over May 2020.  However, patent attorneys saw no benefit from this apparent lift in filings.  As the following chart shows, all of the increase was in filings by self-represented applicants and/or those identifying another non-attorney party as the address-for-service.

June provisional filings by agent type

Chinese Continue to Drive Surge in Innovation Patent Filings

June was another big month for innovation patent filings.  As the chart below shows, innovation patent applications were up by 141% over June 2019: an increase of 176 applications to 301.  Of these, 60% (181 applications) named Chinese applicants, 44 of which were filed without using the services of a registered patent attorney or firm. 

AU Innovation Patent filings - monthly changes

In 2019, just 33 innovation patent applications were filed naming Chinese applicants, which thus accounted for 84% of the net gain in filings.  The category with the next highest relative increase was self-represented Australian applicants, which increased by 12 applications, from 30 to 42.

New Zealand Applications Continue to Fluctuate

With a smaller number of applications overall, filings in New Zealand are subject to larger relative variations from month-to-month than their Australian counterparts.  Accordingly, New Zealand filings have been up and down all year in comparison to 2019, and June was an ‘up’ month, with gains of 1.7% and 8.5% in complete (standard) and provisional applications, respectively.

NZ Complete and Provisional filings - monthly changes

In absolute terms, 482 complete and 51 provisional applications were filed in New Zealand in June 2020, compared with 474 and 47, respectively, in June 2019.

‘Original’ Applications Up, but Associated Attorney Work Down

As in earlier articles, I define an ‘original’ application as one that does not claim the benefit of priority from any earlier applications.  Typically, such applications are based on new inventions developed by (mostly) domestic clients.  These represent an important part of the business of many Australian and New Zealand patent attorneys, because they may involve a number of hours of professional work, possibly including searching and/or advice on patentability and strategy along with drafting a patent specification for the new invention.

The figures for original application filings made in June 2020 using the services of patent attorneys, shown in the chart below, thus appear to represent surprisingly good news for the profession in Australia, with a gain of just over 15% bucking the trend of negative figures or every previous month of the year.

Original attorney filings - monthly changes

Sadly, however, the news is not a rosy as the headline numbers suggest.  As shown below, the bulk of the ‘original’ innovation patent filings in June originated in China, i.e. they were among the innovation patent applications discussed above.  It is practically certain that none of these involved any more work on the part of the Australian agent than receiving and filing an application drafted elsewhere.

June original innovation patent filings by origin

Counting only those original applications filed by patent attorneys and having at least one domestic (i.e. Australian or New Zealand) applicant – which removes the Chinese innovation patent filings from the mix – there was a year-on-year decrease of 2.3%, which is far more consistent with other recent months.

Filing Fees Up for IP Australia in June

While the origins of patent applications, and the applicant’s choice of whether or not to engage professional assistance, makes a big difference to patent attorneys, the filing fees are the same regardless of quality, origin, or agent.  As a result, IP Australia had a good month for patent filing fee collections in June, up by nearly A$37,000 on the previous year.

IP Australia monthly fee changes

Clearly, however, this is insufficient to make up for past declines, with patent filing fees still down by nearly A$142,000 for the first half of 2020, compared with the same period in 2019.

Conclusion – Positive Appearances are Deceiving

To summarise the above numbers, while total patent filings in June were up in Australia compared to the same month last year, there were at least three factors contributing to this seemingly positive result without which we would undoubtedly have seen a substantial decline.

First, June 2020 was a ‘long’ month, having two additional business days compared to June 2019.  The average number of new standard patent applications filed on a business day in June was 114, so without these two extra days the 0.3% gain in filings might instead have been a 9% decline.

Second, a large year-on-year gain in innovation patent filings was due primarily to the growing enthusiasm of Chinese applicants for these patents.  These filings also skewed the number of original application filings, since only around one third of the Chinese innovation patent applications claimed priority from any earlier filing.  New original filing work performed by patent attorneys on behalf of Australian and New Zealand clients actually declined by 2.3%.

Finally, while the number of Australian provisional filings was up on June 2019, this was entirely on account of self-represented applicants.  This is obviously of no assistance to patent attorneys facing a decline in business, but what is slightly less obvious is that it is generally of limited value to either the applicants themselves, or the economy more generally, since outcomes for self-represented applicants are overwhelmingly poor.

Over in New Zealand, filing numbers are always substantially lower than in Australia, and thus more susceptible to large relative fluctuations from month to month.  This makes it difficult to draw any firm conclusions about the impact of the COVID-19 pandemic on New Zealand patent filings, although on figures for the year to date, it appears that – much like the impact of the coronavirus itself – this is less than in Australia.


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