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.

The Fate of Divisional Parent Applications

The chart below represents the total number of divisional applications filed annually since 2002 (blue trace), along with the fate of the corresponding parent applications, i.e. either accepted (orange trace), or lapsed without achieving acceptance (grey trace).  In a small number of cases (yellow trace) the outcome is unknown, either because status data on the parent is missing or – particularly for very recent filings – because the parent application has not yet been finalised either way.

Annual number of divisional filings and outcome of parent applications, 2002-2020

The number of divisional filings grew rapidly between 2006 and 2016, from 1,697 to 5,862 (subject to the disruption between 2013 and 2015 caused by introduction of the Raising the Bar law reforms, which affected all types of applications).  During the same period, the overall number of standard patent applications (including divisionals) rose only from 25,551 to 28,487 in 2016, i.e. the number of underlying ‘original’ filings actually declined.  It is difficult to determine why this occurred by looking only at these numbers.  One possibility, however, is that applicants may have been increasingly choosing to file original applications intentionally disclosing more than one invention.  This can be a good strategy to reduce up-front costs, particularly when filing in multiple jurisdictions and/or via the international (PCT) application system, since it minimises the number of individual applications that must initially be filed.  The decision on whether or not to pursue the additional invention(s), and the costs of doing so, can then be deferred for several years, if desired.

The following chart shows the outcomes for parent applications as a proportion of all divisional applications filed each year. 

Annual outcome of parent applications as a proportion of all divisional filings, 2002-2020

The above data indicates that over the past two decades, around 70% of all divisional parents have been accepted.  This proportion has been fairly consistent over time, despite some disruption of applicant behaviour commencing with the Raising the Bar reforms in 2013.  This disruption appears to have extended over a number of years, with an initial rise in the proportion of parent applications being accepted, followed by a decline of a similar magnitude, and a recovery over the past couple of years.

Age of Patent Applications at Divisional Filing

A possible explanation for the disruption to divisional filings is that the initial increase in parent acceptance rate may have resulted from a corresponding increase in divisional applications being filed prior to commencement of the Raising the Bar reforms.  This would then have been followed in later years by a compensating decline due to these divisional applications for additional inventions having been effectively brought forward.  Data on the average age of parent applications at the time of divisional filing, shown in the following chart, provides some support for this hypothesis.

Average age of parent applications, 2002-2020

There was a clear decline in the age of parent applications (i.e. the number of years between the filing date of the parent, and that of the divisional application) in the lead-up to commencement of the Raising the Bar reforms, suggesting that many applicants did indeed bring forward divisional filings in order to obtain the benefit of less stringent patentability requirements under the former laws.  The subsequent settling of parent age to a shorter time period than prior to the reforms is primarily due to a reduction in the maximum examination period for all standard applications from 21 months to 12 months following issuance of the first examination report, along with other efforts within the Patent Office to reduce the overall pendency of applications.

Are Divisional Applications More Likely to Lapse?

In additional to being filed in order to protect additional inventions, or to continue examination of claims in a parent application, divisional applications may be filed for ‘insurance’ purposes.  For example, a divisional application may be filed where the applicant is concerned about the potential for an adverse outcome in the parent application (e.g. due to a third-party opposition) or to maintain a pending application just in case it may be needed to pursue claims of different scope from the parent.  If the adverse event does not occur, or the speculative need does not arise, then it is the divisional application, rather than the parent, that would go on to lapse rather than being accepted.

If this were a major use of divisional applications, then we might expect to see divisionals lapsing at a higher rate than other types of standard patent application.  However, this is not the case.  The chart below shows the rate of lapsing of standard patent applications filed annually since 2011, broken down into PCT national phase entry (NPE) applications, original direct filings, and divisional filings.  An average lapsing rate for all applications filed over the decade between 2007 and 2016 is also shown for reference. 

Lapsing Rate of Standard Applications, 2011-2020

The lapsing rate for all applications declines in more recent years because an increasing proportion of these applications remains pending, i.e. neither lapsed nor yet accepted.  This decline occurs later for divisionals because of the earlier requirement to pay renewal fees to keep these applications alive, and because the Commissioner of Patents typically directs examination to commence sooner after filing than for direct original and NPE applications.  Most divisional applications filed up until 2018 have been finalised, whereas a number of NPE and direct original applications filed as far back as 2016, or earlier, remain pending without a final outcome.

It is clear that a divisional application is no more likely to lapse than any other type of application.  In fact, the applications that most often lapse are direct original applications, while PCT NPE applications are the least likely to lapse.  This makes sense.  By the time an application is filed in Australia via the PCT route, it has typically received an international search report (and possibly search and/or examination reports in other jurisdictions) and the applicant has had up to 31 months since the priority date to assess the commercial justification for pursuing patent rights in Australia.  There is, accordingly, far more certainty around the purpose and outcome of the application than for a direct filing, which typically corresponds with a priority application filed no more than 12 months earlier, and where the applicant may yet to have received any search or examination reports.

Divisional applications fall somewhere in between.  The applicant would typically have sufficient information to assess the potential outcome for a divisional application, and a particular purpose or strategy in mind when filing.  Even so, as with any application there are no guarantees, while circumstances and needs may change during the pendency of the application.

It is worth noting that the figures in the above chart represent lapsing from all causes, including not paying annual maintenance fees and/or failing to request examination when directed to do so.  Some applications become abandoned without ever being examined, perhaps because the applicant has received adverse outcomes from corresponding applications in other jurisdictions, has ceased operations, or has simply lost interest in the application for some reason.  Most, however, go on to be examined.  When I last looked at examination outcomes, back in June 2018, I found that up to 80% of all applications that enter examination go on to be accepted.  Thus about two-thirds of all applications that lapse do so following one or more rounds of examination.

Conclusion – ‘Divisional Applications’ are ‘Applications’!

The foregoing analysis strongly suggests that a substantial majority of divisional filings are just as significant to their owners, and to the patent system, as ‘original’ filings – in other words, that ‘divisional applications’ are, mostly, ‘applications’ like any other.  In around 70% of cases, the parent applications are themselves accepted, indicating that the divisional applications are more-likely directed to additional inventions not covered by the claims of the parent, rather than being ‘continued examination’ applications.

Furthermore, divisional applications are ultimately just as likely as ‘original’ applications to be accepted – slightly more so, in fact, than ‘original’ applications filed directly in Australia, though slightly less than applications filed via the PCT.  But a divisional application is, a priori, no more or less likely to end up being accepted or abandoned than any other application, on average.  So there is no reason to believe that divisional applications are any more speculative, or of lesser value or interest to their applicants, than ‘original’ applications.

Excluding divisional applications from filing tallies, as IP Australia chose to do in its 2020 IP Report, is therefore likely to substantially undervalue the use made of the Australian patent system by applicants that file a significant number of divisionals.  If a majority of divisional applications are directed to additional inventions, distinct from those claimed in the corresponding parent applications, then excluding divisional filings simply fails to count those extra inventions within the patent system.  The leading 20 applicants in 2019 (i.e. the year covered by the 2020 IP Report) filed a total of 3011 standard patent applications, of which 598 – or 19.9% – were divisionals.  That is a lot of applications to ignore!


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