04 June 2021

Is Corporatision Creating a ‘Brain Drain’ in the Australasian Patent Attorney Profession, or is it Just Slick Marketing?

Brain drainAn article appeared on the Lexology legal news service in the past week that riled me a little – not least because it mentions my name and (in my view) misrepresents something that I wrote a few months ago.  For those who may be unfamiliar with Lexology, it is a service that aggregates content from legal and attorney firms, and other service providers, creating a searchable archive and delivering tailored email bulletins to subscribers.  It is free to subscribe and read, but the firms that provide all the content pay handsomely for the privilege of being aggregated and distributed.  In other words, it is not so much a ‘news’ service for readers as it is a marketing service for the contributing firms.  Most of the content is originally published on the firms’ web sites, from which it is automatically picked up (‘ingested’) by Lexology. 

While many of the articles appearing on the Lexology site are useful and informative – e.g. reports of the latest legal developments in various jurisdictions served by the contributing firms – some are pure marketing.  The piece that has so irked me falls, in my opinion, into the latter category.

The article in question is entitled ‘The brain drain: why are senior patent attorneys leaving?’  Authorship is attributed to James & Wells partners Ceri Wells and Adam Luxton.  Wells is one of the firm’s founders, while Luxton recently joined the firm having previously worked for Spruson & Ferguson – a firm owned by listed holding company IPH Limited (ASX:IPH).  Lexology picked the article up from James & Wells’ website, although that was not its first outing – it was originally published as a sponsored article in Australasian Lawyer [PDF 1.04MB]

Never let it be said, then, that James & Wells has not extracted maximum value from the piece, which bears all the hallmarks of having been written not by Wells and Luxton themselves, but rather by a marketing professional.  It takes the classic public relations form of ostensibly objective reporting, interspersed with quoted and paraphrased comments from Wells and Luxton in support of the article’s main theses, which are that:

  1. there has been an ‘exodus of senior patent attorneys from formerly private firms’ because of ‘corporatisation’, and the acquisition and merger strategies of the listed holding companies IPH Limited and QANTM IP Limited (ASX:QIP);
  2. as a result, those firms are losing the benefit of these senior practitioners’ experience, and they are ‘being replaced by younger people with a lot less experience’ who are ‘missing out on the mentorship they need at that point in their career’;
  3. this may lead to junior attorneys feeling ‘overworked and stressed’;
  4. practitioners in ‘corporatised’ firms may lack the autonomy and discretion to keep clients ‘at the forefront’ and to build strong relationships ‘based on trust and respect’; and
  5. established firms now owned within corporate groups are no longer able to guarantee clients that ‘whoever you engaged in that organisation would be able to deliver’.

Overall, the tenor of the article is simply that ‘corporatised firms = bad’ whereas ‘traditional privately held, partnership type models (like James & Wells) = good’.  Perhaps it feels plausible that this might be so, and doubtless there are people around who will attest, anecdotally, to some experience that supports the argument.

I am just not persuaded that it is true, or that having firms going around claiming that it is are doing the Australasian profession any favours.

15 May 2021

‘Patent Box’ Update – the Devil is in the Details When it Comes to Dates

Calendar datesI previously reported on the Australian government’s budget announcement that it will be introducing a so-called ‘patent box’ tax incentive for medical and biotech (and, possibly, clean energy) innovations.  Implementation details of the scheme are yet to be worked out, and the government is promising to consult closely with industry on the design of the patent box.  However, while the final form of the scheme – which will not come into effect until 1 July 2022 – may not be known for many months, there is already at least one critical issue that prospective users of the system may need to consider.

The government’s fact sheet on ‘tax incentives to support the recovery’ states that ‘…granted patents, which were applied for after the Budget announcement, will be eligible’.  There is, as yet, no clear indication of what the government means by ‘applied for’, however in its ‘What’s New’ email (to which you can subscribe here), sent on 14 May 2021, IP Australia states that ‘[t]o be eligible, the patent must have a priority date after 11 May 2021…’.  Being unable to find this detail in the budget papers, I sent out a tweet asking whether anybody else had seen it, and tagging @IPAustralia, which responded:

There is a big difference between ‘priority date’ and ‘filing date’, which hopefully will be open for discussion during the public consultation.  If the critical date is the priority date, then this means that Australian medical and biotech innovators who have already filed a priority application (e.g. a provisional application) prior to the budget announcement would not be eligible for the patent box tax incentive if they subsequently file a complete application claiming the benefit of the provisional filing date.  On the other hand, if they were now to file the same complete application in Australia without a priority claim, then they would be eligible for the scheme upon grant of any resulting patent.

The risk of dropping a valid claim to priority, of course, is there there may be intervening prior art that could invalidate or limit the scope of the claims, which has been made public after the priority date, but before the subsequent complete filing date.  To minimise this risk, the complete application should be filed as soon as possible

Fortunately, the Australian grace period protects an applicant against their own disclosures during the 12 months prior to the complete filing date.  Furthermore, the discovery of intervening prior art would not be fatal, at least up until grant of the patent (see regulation 10.2B(7) of the Patents Regulations 1991), since the patent request could be amended to include the priority claim, with the consequence that the patent box incentive would then be unavailable.

The choice to file in Australia without claiming priority would not affect the applicant’s right to claim priority in other jurisdiction, either through direct applications or via the Patent Cooperation Treaty (PCT).

But, frankly, this seems perverse.  To my mind, the logical choice for the critical date is the filing date of the complete patent application, which commences the patent term of up to 20 years during which the patent box tax incentive could be claimed.  Basing eligibility on the priority date will simply encourage strategies, such as I have outlined above, to engineer eligibility.  This does not serve anybody’s interests.  The government will not make significant savings on the operation of the patent box scheme, while applicants will feel compelled to adapt their patent filing strategies simply to comply with an arbitrary choice of eligibility criteria.

Hopefully, through the consultation process, common sense will prevail.  In the meantime, however, medical and biotech innovators with pending priority applications should probably seek advice from their patent attorneys.

14 May 2021

IP Australia Rises to the Challenge of Surging Demand for Innovation Patents

Team challengeLast month, IP Australia issued a notification informing applicants that, due to a high volume of new filings, they may experience delays in having innovation patents granted.  Innovation patents are issued following a formalities examination only – substantive examination for novelty, innovative step, and other requirements, occurs after grant, and only upon request.  As a result the delay between filing and grant is typically relatively short, and has historically been less than four weeks.  However, with a phasing-out of the innovation patent system now looming, and Chinese applicants in particular using the system to claim government subsidies on foreign granted patents, innovation patent applications are currently being filed at over four times their ‘normal’ historical rates.  This obviously means a lot of extra work for IP Australia to process all of these additional applications.

The good news is that after letting things get a little out-of-hand over summer (when, presumably, many staff were on annual leave), IP Australia now appears to be bringing the situation back under control.  Average pendency (i.e. the delay between filing and grant) peaked at 68 days for innovation patents granted in March, before falling to 52 days in April.  In both March and April, the number of patents granted exceeded the number of new applications filed, and the number of pending applications fell from a peak of 1229 in February to 879 at the end of April.  While this is still much higher than historical levels of about 100-150 innovation patent applications pending at any given time, it is clear that IP Australia has allocated additional resources, and has ramped-up handling of new innovation patent applications to the point where it is now once again processing them faster than they are being filed. 

Up until March, it looked as though delays could continue to grow.  It now seems likely that average pendency will be back below a month by July.  This is, of course, barring any further surge in demand that outstrips processing capacity – which could certainly happen, given that the final date for filing new innovation patent applications before the phase-out begins is 25 August 2021, and a last-minute rush might be expected.  But, for now at least, it looks like IP Australia has the situation in hand.

13 May 2021

Australian Government Announces a (Sort of) ‘Patent Box’ Tax Incentive

BoxesThis week, the Australian government handed down its annual budget.  At the risk of sounding overly cynical, I am always sceptical about how many of the policy measures announced in the budget will actually come to fruition, given that their funding is often dependent on hazy forecasts of future economic performance, and their implementation may span many years during which future budgets – and potentially new governments – may come and go, bringing their own priorities and revised forecasts.  But even I cannot help sitting up and taking notice when patents get a mention, with all of the ensuing media coverage that brings during the budget frenzy!

So the ‘big news’ is that the government is going to introduce a ‘patent box’ tax incentive scheme in Australia… sort of.  If you are not already familiar with the concept, a ‘patent box’ – the name refers either to an actual box on a form, or to a notional box into which a company allocates a proportion of its income – is a tax incentive scheme under which income that can be directly attributed to the commercialisation of patented technology (as distinct from other attributes, such as branding, know-how, or manufacturing capability) is taxed at a reduced rate.  Other income continues to be taxed at the standard corporate rate.

The Australian patent box scheme is actually going to be somewhat limited, initially applying only to medical and biotech patents, with the possibility that it might also be made available to the clean energy sector.  The incentive will only be available on income generated from patents applied for after the budget announcement (i.e. pre-existing patents and application will not be eligible).  And it will not come into effect until 1 July 2022.  The tax rate on eligible income will be 17%, compared with the normal corporate tax rate of 30% for large companies, or 25% for small and medium enterprises (SMEs).  This discounted rate is higher than other countries that operate a patent box system, e.g. France 15%, Spain 12%, UK 10%, Belgium 6.8%, Luxembourg 5.84%, and Netherlands 5%.  Even taking into account that a number of these countries have a lower corporate tax rate than Australia, equal or larger discounts are also available elsewhere, e.g., in France (where the corporate tax rate is 32.02%), Spain (25%), Belgium (25%), and Luxembourg (24.94%).

So – true to form – the Australian patent box will be a very ‘middle-of-the-road’ affair, with limited eligibility, and relatively modest tax discounts, especially for SMEs that are already subject to a lower tax rate than larger corporates.  As it so often does, the government has decided to limit its exposure by picking winners – this time, medical and biotechnology industries – leaving other sectors (such as IT, where Australian companies such as Atlassian, Canva, Afterpay, Judo Bank, Zip Co, and AirWallex have been punching well above their weight) to fend for themselves.  Or, more likely, to move their R&D activities overseas, into more favourable jurisdictions.

On the other hand, the announcement is something of a turnaround for this government, considering that criticism among G20 finance ministers in 2014, and a 2015 review commissioned by the Office of the Chief Economist in the Department of Industry delivered negative conclusions that seemed to have killed off any prospect a patent box scheme being introduced in Australia.

30 April 2021

March Madness? A Patent Filing Boom Month Defies Recent Trend

BoomI had just finished writing, yesterday, about the latest annual Australian IP Report, and the continuing decline in patent filings in Australia, when I decided to take a look at the numbers for March 2021.  To my immense surprise, March was a boom month for Australian patent applications!  The total number of filings, across all application types (provisional, standard, and innovation patent applications) for the month was 3,906.  To find a month in which more applications were filed in Australia it is necessary to go back eight years, to April 2013, when 7,062 applications were filed.  And that only happened because of the large number of applicants bringing filings forward by up to 18 months in anticipation of the Raising the Bar law reforms, which raised the threshold for the grant of a valid patent and commenced on 15 April 2014.  The only other month that comes close is September 2015, when 3,827 applications were filed.

Of course, part of the reason for the high filing numbers in March is the current surge in innovation patent filings, which are presently running at about four times their ‘natural’ level (based on historical behaviour).  In large part, this is driven by Chinese applicants collecting granted patents in order to claim government subsidies, but also by other users in anticipation of the impending phase-out of the innovation patent system from 26 August 2021.

But innovation patents are not the whole story.  As data presented below demonstrates, there were more standard applications filed in March 2021 than in any month since September 2015.  Even in 2018 – which was a peak year for standard applications – there was no individual month in which more applications were filed.

Nor can the boom month be attributed to Chinese applicants – or any other particular country of origin.  Applicants from seven out of the top 10 countries of origin filed more applications in March 2021 than during the same period last year.

So what is going on here?  I have no idea!  This could be a one-off.  It could be some sort of ‘bounce-back’ from the COVID-19 pandemic (which is, let us not forget, far from over globally).  Or maybe there is something else going on here.  Time – and perhaps a more detailed analysis – will hopefully tell.

29 April 2021

In 2021 Annual Report, IP Australia Makes the Best of Declining Patent Filings

ReportingToday (29 April 2021) IP Australia released the Australian Intellectual Property Report 2021 (‘IP Report’), its annual round-up of filing statistics and other facts and figures from the previous year.  As always, my interest is primarily in the Patents chapter of the IP Report and, this year, much of the data presented in that chapter will not be news to readers of this blog.  Notwithstanding small variations – due to the volatile nature of ‘live’ patent records – the IP Report substantially confirms the figures that I published back in January.  The total number of standard patent applications filed in Australia fell by 2%, mostly due to an 8% decline in ‘direct’ filings, while the number of applications filed via the PCT (Patent Cooperation Treaty, a.k.a. international application) route rose by 1%.  Innovation patent applications increased massively – by a factor of around two and a half – driven largely by Chinese demand for granted patent certificates.  Unfortunately for the state of Australian innovation, provisional application numbers continued on a downward trend, with the IP Report noting that they have fallen by an average of 1% per annum over the last 10 years.

The leading Australian resident applicants for standard patents in 2020 were casino gaming machine developer Aristocrat Technologies, national research institute Commonwealth Scientific and Industrial Research Organisation (CSIRO), innovative electrical appliance maker Breville, the University of Sydney, and Monash University.  The top foreign applicant, for the second year running, was Chinese telecommunications device manufacturer OPPO, followed by LG Electronics, Huawei, Apple, and Qualcomm.  The IP Report also confirms that the top countries of origin for Australian standard patent applications were the US, Australia, China, Japan, Germany, and the UK, and that Chinese applicants came within a few dozen applications of knocking Australian residents off second position on the ladder.

As I have pointed out on numerous occasions, the trends in Australian patent filings have not been good for some time.  Not only are Australian residents making less use of the patent system – standard patent filings by domestic applicants in 2020 were down by 10% on 2019 numbers – but Australia is apparently becoming a less-favoured filing destination for many foreign applicants.  The IP Report tries valiantly to be upbeat, noting that standard patent applications have shown an overall upward trend over the past decade, with 2020 filings 15% higher than in 2011, and that despite the decline (for the second year running) in 2020, application numbers remained ‘higher than the 10-year annual average’.

It is important, however, to view that 15% growth figure in context.  Over the decade from 2010 to 2019 (the most recent year for which data is available from the WIPO Statistics Data Center) filings in the US grew by 27%, in South Korea by 29%, at the European Patent Office by 20%, and in China by an unprecedented 260%.  Of the major patent offices, only Japan experienced a decline in filings – and this is hardly a standard against which Australia should be measuring itself.  It is an easy observation that much of the recent growth in filings has been driven out of China, and that this may not be sustainable, however that is hardly positive news for Australia.  Without significant growth in filings from China, standard patent applications in Australia would have fallen by over 3% in 2020.

The next few years are unlikely to bring a turnaround.  As the IP Report points out, a relatively small decline in filings in 2020 ‘occurred despite the considerable economic impact of the COVID-19 pandemic’ but, because patent filings tend to be a lagging indicator, ‘the effects of the economic crisis in 2020 may not be fully observed until beyond 2021’.

31 March 2021

RePipe Appeals, Following Failed Attempts to Amend

Site safetySome time ago – indeed, BC (i.e. before COVID) – I reported on a decision of Justice McKerracher in the case of Repipe Pty Ltd v Commissioner of Patents [2019] FCA 1956 (RePipe No 1).  RePipe is a plumbing business based in Western Australia that has developed a risk management software system called rerisk®, which is available as a service to other businesses that want to improve their workplace health and safety (WHS) processes.  The system comprises a server-based backend, and an app that can be installed on portable devices (i.e. smartphones or tablets) carried by workers on site.  In use, information and documentation pertinent to WHS compliance processes for particular jobs carried out by workers at specific locations are downloaded to the portable devices. The system provides prompts and checklists to ensure that workers comply with relevant procedures, generates alerts when problems or risks are identified, and enables information provided by the workers to be uploaded back to the server and/or communicated to other workers on site.

RePipe has filed patent applications in a number of jurisdictions.  In Australia, two innovation patents covering the rerisk® system were examined and found liable to be revoked by the Patent Office, on the basis that their claims were not directed to patent-eligible subject matter, i.e. a ‘manner of manufacture’ under the Australian law.  RePipe appealed to the Federal Court, which upheld the Patent Office decisions in RePipe No 1, issued on 22 November 2019.  The court found that the claimed inventions were, in substance, merely unpatentable business methods.  The claims were not saved by the fact that the inventions were necessarily implemented in software.  As Justice McKerracher explained (RePipe No 1 at [93]-[94]):

No specific application software has been claimed or even identified in any claim of the Patents. No computing programming logic or code is disclosed anywhere in the Patents. The substance of both inventions is a mere scheme that can be implemented using some unidentified software application to cause a server computer and smartphone to perform the steps identified in the claim. To implement the scheme, a reader must use his/her own skill and knowledge to write an appropriate software application. No such application is disclosed in the Patents.

…The language used by patent attorneys when drafting and amending claims cannot convert what is, in substance, an unpatentable business method or scheme into a patentable invention by merely asserting that the invention is in the field of computer technology or by using words in the claim or specification that refer to computer technology …. As a matter of substance, there is no meaningful technical content in the description in the body of the claims or specification.

This was not, however, the end of the story.  Following some further ado (discussed below), RePipe has filed an application for leave to appeal to a Full Bench of the Federal Court of Australia, on 2 March 2021.

30 March 2021

‘AI Inventor’ Update – DABUS Decision Goes to Federal Court

PrayerIn a fairly predictable development, Stephen Thaler has asked the Federal Court of Australia to review the Patent Office’s finding in February that a patent application cannot be validly filed in this country naming a machine as inventor.  The ‘Application for Judicial Review’ was filed on 9 March 2021 in the Victorian Division of the court, and has been assigned number VID108/2021.  Having been represented by Davies Collison Cave (DCC) in the patent application filed at the Patent Office, Thaler is represented in the Federal Court proceeding by Allens.  The reasons for this change are unclear – DCC incorporates a legal practice as well as its patent and trade marks attorney practice, and could presumably have handled the Federal Court application.  However, it is not unusual for applicants to switch representatives when moving from the Patent Office to the courts, either from necessity, or due to a perception that different firms have particular strengths in different areas of practice.

While the case may be casually characterised as an ‘appeal’ against the Patent Office decision, it is not technically an appeal under the Patents Act 1990.  The Act, and the Patents Regulations 1991, expressly set out the various decisions that are appealable to the Federal Court, and the lapsing of an application for failing to identify a valid inventor is not such a decision.  Instead, the application for review is made under the Administrative Decisions (Judicial Review) Act 1977 (ADJR Act), which provides more generally for review of administrative decisions by the Federal Court.

29 March 2021

Free, Streamlined Extensions of Time to End at IP Australia, but COVID Impact Can Still be Considered Under ‘Normal’ Procedures

First aidSince April last year, IP Australia has provided a streamlined process under which most deadlines associated with Australian patent, trade marks, and design rights – including evidence deadlines in opposition matters – could be extended by up to three months, at no charge, if the extension is required ‘due to the disruptive effects of the COVID-19 pandemic’.  That program ends on 31 March 2021.  From 1 April 2021, extensions of time will still be available for those impacted by the COVID-19 outbreak, but will be considered on a case-by-case basis.

Under the streamlined program, a party seeking an extension of time has been required only to tick a box in order to make a declaration that the impacts of COVID-19 had prevented a relevant act from being carried out within time.  This is much simpler (and cheaper) than the usual process, under which detailed evidence is required – typically in the form of a formal declaration or affidavit, along with any relevant accompanying exhibits – demonstrating exactly how events and/or circumstances have prevented the deadline from being met.  Additionally, official fees have been waived under the streamlined program.  These are typically based on the number of months of additional time requested, and can be quite substantial, e.g. up to A$1500 for a three-month extension of time to file evidence in a patent opposition.

While a blanket waiver of fees is unusual, it is clearly within the power of IP Australia to choose not to levy a fee for any service that it provides.  However, it is not within the agency’s power to waive the requirements of the Patents Act 1990 or the Patents Regulations 1991 (or corresponding legislation and regulations relating to other IP rights) with regard to the grounds upon which extensions of time may be legitimately granted.  In principle, therefore, streamlined extensions have generally been considered under existing provisions allowing for deadlines to be extended where ‘circumstances beyond the control’ of the responsible person(s) have prevented an action from being taken within the required time.  Ticking of the ‘COVID-19 box’ has thus been treated as prima facie evidence that the pandemic was, indeed, the cause of a failure to meet a deadline, with IP Australia warning that a false declaration could put the validity of the applicant’s IP rights at risk.

The initiative to make obtaining COVID-19 extensions simpler and cheaper was further complicated by the fact that in proceedings involving other parties, IP Australia is usually obliged to give those other parties an opportunity to comment on, and/or object to, the grant of an extension of time.  This obligation could not be suspended, and there were at least two patent matters in which objections were lodged.

With practices and procedures for requesting extensions of time returning to normal (or, at least, ‘COVID-normal’), it is to be expected that any party requiring an extension as a result of the impact of COVID-19 will bear a greater onus to demonstrate exactly why an extension is justified.

28 February 2021

Australian Patent Office Rejects Amazon Cloud Computing Invention as Patent-Ineligible

Cloud ComputingA delegate of the Commissioner of Patents has refused an application (no. 2018204629) by Amazon Technologies, Inc (Amazon) on the basis that it is not for a patent-eligible invention under Australia’s ‘manner of manufacture’ requirement: Amazon Technologies, Inc [2021] APO 7.  Amazon’s claimed invention relates to the execution of processing tasks within a cloud computing system, presumably such as its own Amazon Web Services (AWS) platform.  Specifically, it provides a mechanism for applications executing on ‘virtual machines’ within the cloud system to access additional resources as required during bursts of high demand.

This is yet another case in which a computer-implemented invention that appears at least superficially ‘technical’ has been found to be unpatentable because it is, as a matter of ‘substance’, in fact an ineligible business innovation, rather than a technical innovation.  There are many, many, words in Amazon’s main claims, and a lot of them seem highly technical, principally because they define the operation of a process within a technical system.  But does this mean that the inventive process is, itself, technical in nature?  The delegate determined that it is not.  He found that Amazon’s claims were directed to a scheme in which ‘business rules’ are applied for scheduling processing tasks, while the scheduler itself was performing only its ‘usual independent function’, with ‘no improved operation of the computing technology’.

In this case, I think that the delegate’s decision is a reasonable application of the law on patent-eligibility of computer-implemented inventions, as it has been interpreted by the Australian courts.  It is, however, a long decision, which could not fairly be described as light reading.  It is unfortunate that decision-making in this area of the law has become increasingly arcane and obtuse.  So rather than picking over the delegate’s decision, dissecting the lengthy patent claims, or reviewing the Federal Court authorities, I am instead going to do my best to explain Amazon’s invention and why it failed the patent-eligibility test in my own way, as plainly as I can.  And while I believe that the delegate’s decision is justified under the current law, I shall also explain why I think the law under-emphasises the technical context in which inventions such as Amazon’s are devised, and why a more nuanced approach might be more appropriate.

26 February 2021

DABUS Denied Down Under – Australian Patent Office Formally Rejects AI Inventor

Access DeniedBack in December 2020 I reported on the progress of an Australian patent application naming an ‘artificial intelligence’ going by the name DABUS (‘Device for the Autonomous Bootstrapping of Unified Sentience’) as inventor.  The application – no. 2019363177 – was derived from an international application filed under the Patent Cooperation Treaty (PCT), and names Dr Stephen Thaler, the developer of DABUS, as applicant.  At that time, the Australian Patent Office had raised an objection to the naming of a machine as inventor, and sought further submissions from the applicant on this issue.  I anticipated that the case would be referred to a hearing officer to determine the matter by way of a formal decision, and predicted that Dr Thaler’s rather unconventional assertions that an AI can be an inventor, and that he is entitled to receive any resulting patents by virtue of ownership of the AI, were unlikely to be accepted by the Patent Office.

That has all now come to pass, with a decision of a delegate of the Commission of Patents issued on 9 February 2021: Stephen L. Thaler [2021] APO 5.  In accordance with the plan language of the Australian Patents Act, and established legal principles, the delegate has determined that a patent can only be granted to a person, that a machine is not a person, and that there is no mechanism whereby the right to apply for a patent on an invention devised by a machine can be legally transferred to any person.

In short, a patent application naming a non-human inventor cannot be validly filed, regardless of who is named as the applicant.  A corollary of this (although not addressed in the decision) is that a patent on an invention devised by a machine can never be validly granted, even if the true nature of the inventor is concealed from the Patent Office, because there is simply no mechanism for any named applicant to derive a legal right to apply.  In practice, applicants are required to provide the Patent Office with a declaration of entitlement, and in the case of a machine invention this declaration would necessarily be invalid and/or false.

01 February 2021

Why Do Applicants File Divisional Applications, and Are They as Important as ‘Original’ Applications?

DivisionIn its 2020 IP Report, IP Australia introduced a novel measure of patent application filing intensity to identify top applicants – namely, the number of ‘original’ applications filed, excluding any divisional applications.  For the uninitiated, divisional applications are patent applications that are based on subject matter that is ‘divided out’ from previously filed applications (typically termed ‘parent’ applications), as distinct from ‘original’ applications that comprise new content filed for the very first time.  I took issue with the ‘original applications’ metric, on the basis that I did not consider there to be any coherent or logical basis for simply ignoring divisional applications when comparing applicant activity.  My views have not changed significantly over the intervening months.

It is certainly true that not all divisional applications are created equal.  At one end of the spectrum there are divisionals filed primarily as a way to buy additional examination time, with the parent application being allowed to lapse.  To distinguish these kinds of divisionals we can call them ‘continued examination’ applications. At the other extreme, there are divisional applications that are filed for the primary purpose for which they exist – to enable an applicant to obtain a patent for a distinct (second or subsequent) invention disclosed, but not claimed, in the original application – where the original application typically goes on to be granted, while the divisional proceeds independently.

Within the latter category of divisionals, there are also degrees of ‘independence’.  Sometimes the invention claimed in a divisional application is closely related to that of the original application.  For example, it might be substantially the same invention, where the applicant is seeking a different (e.g. broader) scope of protection.  In many cases, however, the invention claimed in a divisional application is distinct from the original invention.  There are numerous reasons why an applicant may end up disclosing multiple inventions in a single initial filing, either intentionally or unintentionally, and a discussion of all of those reasons is beyond the scope of this article.  But regardless of how it comes about, such an initial filing is best viewed as equivalent to a ‘bunch’ of applications, all of which are just as entitled to be counted as if they had been filed separately on the same day.

It is difficult to identify the purpose of each divisional application, other than by drilling down and comparing what is actually claimed against the parent application from which it has been divided.  However, some information can be gleaned from the eventual fate of the parent application.  For example, if the parent lapses without ever being accepted, it might be inferred that the divisional was filed for the purpose of continuing examination of the claims.  Conversely, if the parent application is accepted, then it is more likely that the divisional application was filed to pursue claims to a further invention, or to an alternative scope of the original invention.

To get an initial idea of the way in which applicants use divisional applications in Australia, I have analysed the outcomes for parent applications since 2002.  Over this period, divisional applications have become considerably more ‘popular’, with the number of divisional filings increasing more than threefold, compared with an overall increase in standard application filings of just 30%.  Most of this growth occurred between 2010 and 2016, with a slight decline in divisional applications from 2018.  Over time, around 70% of parent applications have been accepted, indicating that the majority of divisionals are not filed merely for the purpose of continuing examination of the original application.

29 January 2021

China to Cancel Patent Subsidies, and Emphasise Quality Over Quantity

Great WallAs highlighted in a report recently published by the US Patent and Trademark Office (USPTO), entitled Trademarks and Patents in China: The Impact of Non-Market Factors on Filing Trends and IP Systems, the high rate of Chinese patent and trademark filings in recent years is widely believed to have been influenced by government subsidies and other ‘non-market factors’.  Since at least 2011, some Chinese applicants appear to have been taking advantage of the Australian innovation patent system to maximise the subsidies they are able to claim for foreign patent grants.  In 2020, Chinese residents were by far the largest users of the system, filing more innovation patent applications than all other nationalities combined.

But could it be that the days of government subsidies, and an associated massive growth in patent applications originating in China, are drawing to a close?

On 27 January 2021, the China National Intellectual Property Administration (CNIPA) announced, in a notification entitled ‘Notice of the CNIPA on Further Strictly Regulating Patent Application Behaviour’ (in Chinese) (‘Notice’), that many lucrative subsidies must end by the middle of this year, with all others to be phased out by 2025.  (A brief report of the Notice can be found on the China IP Law Update blog, while a Google translation of the Chinese original is quite comprehensible.)

The Notice states that the overriding objective of the new regulations on patent application behaviour is:

In order to thoroughly study and implement Xi Jinping’s thoughts on socialism with Chinese characteristics in the new era; to earnestly implement the decisions and deployments of the Party Central Committee and the State Council; and to earnestly promote China’s transformation from a major importer of intellectual property rights to a major country of IP creation, and from the pursuit of quantity to the improvement of quality.

19 January 2021

Australian Patent Filings Fell in 2020, Despite Significant Growth (Again) in Applications from China

New Year 2021In 2020, the number of standard patent applications filed in Australia fell by 1.8%, to 29,240 from 29,786 in 2019.  Much of this decline can be attributed to domestic applicants, which filed around 10% fewer applications in 2020.  On the other hand, Chinese applicants filed nearly 20% more applications in 2020 than in 2019, falling only 48 applications short of the number filed by Australian applicants.  US residents remained the top users of the Australian standard patent system, being named on 13,037 applications, which was a 1.6% decline on 2019.

Among the leading origins for Australian patent filings, China, South Korea, the UK and Japan all increased their application numbers over 2019, while Canadian, Australian, French, and Swiss applicants filed substantially fewer applications.  The leading applicant, for the second year running, was Chinese telecommunications device manufacturer OPPO, which increased its new filings by 39%, to 435, eclipsing second-placed LG Electronics with 236 applications.  Rounding out the top three was Huawei, with 229 new applications in 2020.  Huawei’s heavy investment in Australian patents is interesting, considering that the company is barred from supplying advanced equipment for use in Australian telecommunications networks due to ‘security concerns’.  Perhaps it may yet expect to derive income from the Australian market in the form of licensing revenues from its standards-related and other patents.

The picture is very different for innovation patents – the second-tier rights that are now well into their final year of full availability before being phased out.  Chinese applicants seem to have treated the impending abolition of the system as if it is a ‘going out of business’ sale, increasing filings by over 400% and becoming by far the largest users of innovation patents.  Indian applicants seem also to have caught on, rather late in the piece, to the advantages of a system that enables a patent to be granted without the time and expense of substantive examination, with applications originating in India jumping from just eight in 2019 to 529 in 2020 (growth of over 6500%, if such a measure were meaningful off this small base).  Some US applicants also seem to have jumped at the final opportunity to obtain innovation patents, nearly doubling their filings from 86 in 2019 to 159 in 2020.

As usual, provisional applications were filed almost exclusively by Australian applicants.  The total number filed in 2020 was down by 2% on 2019.  However, it is likely that the number of ‘quality’ provisional has fallen by more than this number would indicate, with applications prepared and filed with the assistance of external patent attorneys having dropped by nearly 5%, while self-filing increased by a similar proportion.

15 January 2021

How Up-to-Date is IP Australia’s AusPat Data?

SearchingOne of the great resources provided by IP Australia is its AusPat online patent data service.  AusPat enables users to search for Australian patents and applications using a range of options and search fields, view numerous data items for each application, and access most incoming and outgoing correspondence via eDossier.  In my view, it is one of the best available systems for online access of national patent data.  For example, in comparison with the USPTO’s services, AusPat effectively combines the functionality of the US Patent Full-Text Databases, the Public Patent Application Information Retrieval (PAIR) system, and the Patent Assignment Search system, into a single convenient and powerful interface.  And while Australian patent information ultimately finds its way into various other public and proprietary databases, AusPat is the first place that any new filings, changes, or events will be reflected.  It is, therefore, the go-to source for the most up-to-date data on all Australian patents and applications.  I rely heavily upon AusPat for much of the analysis I present on this blog, including the regular updates I have been providing over the past few months on patent filings during the COVID-19 pandemic.

One thing that other users may be wondering is: exactly how up-to-date is the data available in AusPat?  You might think that with almost all filing and other transactions now being conducted electronically, the consequences of any new applicant actions would be reflected immediately in AusPat.  However, that is not quite correct.

12 January 2021

While One IPH Firm Sues Former Partners, 20% of Patent Attorneys Jump Ship from Another

Moving boxesOn 14 December 2020, Pizzeys Patent and Trade Mark Attorneys – a firm in the stable owned by listed company IPH Limited (ASX:IPH) – filed suit in the Federal Court of Australia against former Pizzeys principals William Bennett and Martin Richardson, along with the new firm they have established, RnB IP (collectively ‘RnB’).  The lawsuit alleges that Bennett and Richardson lured lucrative US law firm clients away from Pizzeys, in breach of non-compete, non-dealing, and/or non-solicitation restraints that were included in their employment contracts subsequent to the acquisition of Pizzeys by IPH.

This lawsuit has been a long time coming, after Pizzeys was awarded preliminary discovery back in December 2019.  The documents required to be produced by William Bennett following that decision included communications with Martin Richardson, marketing plans, and communications with prospective clients, relating to the establishment of RnB IP.  I believe that discovery was provided early in 2020, and it is unclear why it has taken Pizzeys so long to decide to commence proceedings against RnB.  Perhaps they would blame the pandemic?

Meanwhile, elsewhere in the IPH group, there appears to have been a recent exodus of patent attorneys from Griffith Hack.  In December 2020, there were 48 patent attorneys recorded on the Register maintained by the Trans-Tasman IP Attorneys Board (TTIPAB) as being employed by Griffith Hack, but only 37 of these were still listed on the firm’s web site.  I am aware that at least one of these was a departure earlier in 2020, but my understanding is that most are recent resignations where staff are currently on ‘gardening leave’, or otherwise temporarily restrained from commencing new employment (and thus updating their registration details). 

These numbers represent a loss of about 20% of registered patent attorneys from Griffith Hack over a short period of time, suggesting a significant level of dissatisfaction among the firm’s professional staff.  Whether this dates back to life under the ownership of Xenith IP (which acquired Griffith Hack in 2017), or is a consequence of the more recent management of IPH (which acquired Xenith in 2019) is unclear.


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