Last month I reported that, against the trend of 2020, September was a busy month for Australian patent filings, with standard applications up by 8.1% on the same month in 2019. (In fact, following more recent additions and corrections in IP Australia’s records, the increase is even higher, at 9.2%.) But, sadly, any optimism this might have generated was short-lived, with October filings down by 7.9% on last year. Numbers of new filings originating in Australia, the US, Japan, and Europe were all substantially lower than in October 2019, although applications from China once again bucked the trend. Filings from all other countries were comparable to 2019, down by just 0.7%.
Counted at the end of October, Chinese applicants have filed 1822 Australian standard patent applications during 2020, just 6% behind Australian applicants at 1937. This compares with 1410 applications filed by Chinese applicants at the same time in 2019. Most of these gains have come in the second half of the year, with monthly filings from China being substantially higher than during 2019 in every month since June. If this trend continues for the final two months of the year, Chinese residents will surpass Australians for the first time as the second largest users of the Australian patent system after the US.
Chinese applicants also continued to make ridiculously high use of the innovation patent system, reflecting the effect of subsidies back in China, rather than any inherent value of the innovation patents themselves. By the end of October, Chinese residents had filed 1719 innovation patent applications, compared with just 332 at the same point in 2019. Meanwhile, Australian residents filed 801 innovation patent applications, with a further 618 coming from the rest of the world combined. With just nine months remaining until its abolition, the innovation patent system is now looking very much like the laughing stock that it has long been regarded as by some critics.
For the ‘coronavirus-affected’ period from March to October, the number of standard patent applications filed in Australia is 2.4% below the same period last year while provisional filings are down by 3.0% overall. However, a relatively large number of provisional applications are filed by self-represented applicants, and the decline in professionally prepared and filed provisionals is slightly higher, at 4.4%.
While all of this means fewer standard and provisional filings for the patent attorney profession generally, the pain has not been shared equally. Indeed, some sectors of the market, and individual firms, have seen growth in their filings compared with 2019, while others have experienced more significant declines. Very broadly speaking, the best place to be, in terms of 2020 patent filings, is a medium-sized or large privately-held firm, although micro-practices and medium-sized firms within the listed groups have also collectively increased their share of standard patent filings during the pandemic.
Australian Patent Filings Back to ‘COVID-Normal’ in October
Following a surprising ‘boom’ in September, standard patent application filings for October were back in negative territory compared to 2019, as they have been for most of the year, declining by 7.9%. Provisional filings were also down on last year, although by only 2.5%, which is an improvement on August (-11.4%) and September (-11.1%).
As has also been the case throughout much of 2020, provisional applications were more likely than in the previous year to be filed without the assistance of a registered patent attorney, meaning that the profession experienced a larger drop in new drafting and filing work than the overall decline indicates.
China Leads in Filing Growth
In October, compared against 2019, the number of Australian standard patent applications filed by applicants from all countries of origin declined, with the exception of China. The number of Chinese-originating applications was significantly higher than in 2019 for the fifth consecutive month. The top sources of Australian filings are shown in the chart below – Australia, the US, Japan, Europe (all members of the European Patent Convention are included under ‘EP’, although the dominant origins within Europe are Germany, the UK, Switzerland, and France) and China – with all other countries of origin being combined into a ‘rest of world’ (‘ROW’) category.
In the period from March to October, Chinese applicants have filed a total of 1557 standard applications, which is higher than the number filed during the same period by Australians (1544), and second only to US-originating applications (8413). For the full calendar year to the end of October, the number of applications originating in China trails domestic applications by just 115. It is therefore quite possible that, for the first time ever, Australian will drop to third place as users of our own national patent system. Back in January I speculated that Chinese applicants could take second position from Australian applicants within six years. That is now looking to be a ridiculously conservative estimate – if it does not happen this year, it will almost certainly happen in 2021.
How are Patent Attorney Firms Doing?
People that I have spoken to in the Australian patent attorney profession have uniformly told me that they have remained busy throughout 2020. For those whose practice involves a significant proportion of patent prosecution work this may not be surprising – although filings may be down in 2020, more applications were filed in the past, and examination has been continuing at full capacity within IP Australia. I have also heard from some attorneys in smaller firms that while their patent filings may have declined, trade mark work has increased significantly. However, another factor may be that I have not heard from a fully representative cross-section of the profession.
The chart below shows the number of standard patent applications filed between March and October (inclusive) each year from 2016 to 2020, broken down by the size of the firm handling the application. My firm size categories are based on the number of patent attorneys at the firm, as at the start of November 2020, according to the register maintained by the Trans-Tasman IP Attorneys Board (TTIPAB), as follows:
- micro – 1-3 patent attorneys
- small – 4-9 patent attorneys
- medium – 10-24 patent attorneys
- large – 25+ patent attorneys
For large and micro practices, 2020 has continued a 2019 trend of decline and growth, respectively. However, in 2020 there has been a reversal of fortunes for small and medium-sized practices, with small firms handling a lower number of filings in 2020 after growth in 2019, while medium-sized firms have gained filings following a decline in 2019.
The next chart shows the breakdown of standard patent application filings according to firm ownership, i.e. whether a firm is a traditional privately-held practice, or a member of one of the two ownership groups listed on the Australian Securities Exchange (IPH Limited, ASX:IPH, and QANTM IP Limited, ASX:QIP).
Clearly, the brunt of the decline in standard applications during the pandemic has been borne by the listed groups, which have experienced a collective decline in filings for the second year running. Privately-held firms, by contrast, have collectively filed more applications between March and October 2020 than during the same period in 2019.
The following two charts show the corresponding breakdowns in filing numbers by size and ownership for provisional applications.
In 2020, existing trends of large firms, and listed group firms (which are, in a number of cases, the same thing) losing share of provisional filings has continued, while privately-held firms collectively, and medium-sized and micro firms in particular, have maintained provisional filing numbers compared with 2019. Small firms, on the other hand, seem to have lost out in 2020, following a number of years of growth.
The table below summarises the collective changes between 2019 and 2020 in the number of standard patent application filings made between March and October for firms of different sizes within the privately-held and publicly-listed sectors. While there are, of course, substantial variations within some of the categories, it is not my intention here to single-out individual firms for attention. Broadly speaking, however, micro-practices (all of which are private), and medium-sized firms in the privately-held sector have been faring somewhat better in standard filings during the pandemic than in the same period of 2019, mostly at the expense of firms at the lower and upper end of the listed sector.
| Private | Listed | |
|---|---|---|
| Micro | 10.1% | |
| Small | -1.3% | -18.2% |
| Medium | 22.8% | 5.3% |
| Large | 1.3% | -8.1% |
2019-2020 Change in Standard Filings by Size and Ownership
Nearly 91% of all Australian standard patent applications filed between March and October originated overseas, and thus the above figures may largely reflect the decisions of foreign attorneys in directing their clients’ Australian applications. If so, then those attorneys appear to have shown a preference this year for medium-sized firms over smaller or larger ones, and for privately-held firms over firms in listed groups.
The following table summarises the corresponding breakdown of collective changes between 2019 and 2020 in the number of provisional filings. Keeping in mind that there has been, overall, a 4.4% decline in attorney-filed provisional applications in 2020, those applicants that have been filing – which are almost exclusively Australian – have demonstrated a distinct preference for medium-to-large, privately-held, firms. It is notable, however, that it is only the categories of small privately-held firms, and large listed group firms, that have actually performed below the overall average.
| Private | Listed | |
|---|---|---|
| Micro | -0.4% | |
| Small | -10.1% | 0.0% |
| Medium | 3.3% | -4.1% |
| Large | 11.3% | -13.4% |
2019-2020 Change in Provisional Filings by Size and Ownership
Conclusion – A Challenging Year to Explain!
As might be expected from a heavily disrupted year, clear trends in Australian patent filings are difficult to discern, and implications for the future even harder to predict. However, a few patterns seem to be emerging.
- Overall, filings are down in 2020. However, while this runs against the general trend of growth over the past decade, it is notable that standard patent applications previously declined by nearly 1% in 2019, so a drop in numbers is not unprecedented, and may not be entirely attributable to the pandemic. It is possible that there are other underlying reasons for Australia falling out of favour as a filing destination.
- Filings from China have grown substantially. Standard applications from all countries other than China fell by 4.1% for the year to 31 October 2020. Thus the fact that the overall decline is ‘only’ 2% is attributable to the increase in Chinese-originating applications.
- The impact of the downturn in filings has not been felt equally across the patent attorney profession. Some firms have, in fact, been doing much better in 2020 than they did in 2019. It is difficult to tell to what extent this is due to successful business strategies, as opposed to good fortune. Certainly, those firms that have been able to acquire a significant share of the growing Chinese market have benefited.
- During the pandemic, some trends that had been emerging in market share by firm size and ownership structure appear to have reversed. While small firms (4-9 patent attorneys) had shown growth in both standard and provisional filings over recent years, this has reversed during the pandemic, seemingly to the benefit of medium-size firms (10-24 patent attorneys). Meanwhile, large firms (25+ patent attorneys) have continued to lose market share – although even here the trend is not uniform, with one large, privately-held, firm achieving growth in both standard and provisional filings so far this year.
Many people will be glad to see the back of 2020! And while the roll-over of the calendar year is, in many ways, an arbitrary marker of time, the fact that the Australian economy is starting to pick up, more workers are returning to offices, and there are a couple of promising vaccine candidates nearing approval, does serve to create a more positive feeling heading into 2021. It will be interesting to see if – and when – this starts to be reflected in patent filing numbers.
0 comments:
Post a Comment