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.

Details of Innovation Patent Filings, Grants and Delays

The chart below shows the number of innovation patent applications filed and the number of innovation patents granted each month since January 2019, along with the number of pending applications at the end of each month.  The number of filed applications includes applications converted from other application types (i.e. standard or provisional) during the month.  Pending applications have been calculated by starting with the actual number pending at the end of April 2021, and then projecting back according to the numbers filed and granted – or, more rarely, abandoned or rejected – in each preceding month.

Innovation patents filed, granted and pending

Historically, the number of applications filed, granted, and pending each month have been roughly equal, which is consistent with applications being processed at about the same rate that they are filed, with a processing delay of around a month.  However, as the number of new innovation patent applications has grown to unprecedented levels over the past year – and particularly when it surged past 600 in October 2020 – IP Australia failed to keep pace, and the backlog of pending applications blew out to over 1000.

Fortunately, it seems that the resources have been found in March and April to start making serious inroads into the backlog, and the number of pending applications is now falling again.

The following chart shows the impact that the growing queue of waiting applications has had on pendency, by plotting the average delay (in calendar days) between filing and grant of all innovation patents granted each month since January 2019.  The average pendency is computed after removing outliers with exceptionally long delays, which are mostly due to processing of applications for extensions of time (which can take well over three months).

Innovation patent pendency (days)

Historically, innovation patents have been granted within three to four weeks of filing.  However, once the number of filings started to exceed the rate of processing in October 2020, the average delay grew significantly, peaking at 68 days in March this year.  Fortunately, with the processing rate now once again exceeding that of new filings, the delay is back under eight weeks and (hopefully) falling.

Finally, the chart below shows a breakdown of the number of innovation patents granted each month according to applicant origin (i.e. Australia, China, and other).

Innovation patent grants by applicant origin

Most of the growth in demand for innovation patents has come from China, although domestic grants hit a high-point in April, and I expect this trend to continue as the final filing date of 25 August 2021 approaches.  Much of the recent growth in the ‘other’ category is coming out of India, although the reasons for this are unclear.  Unlike China, there are no widespread government incentives for Indian applicants to obtain foreign patents.  It does appear as though many of the Indian applicants are associated with universities or research institutes, so there may be specific institutional incentives driving some of these filings.


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