It is common to summarise patent filing numbers over calendar years – back in January I reported on various filing statistics for 2020, and IP Australia did likewise in April. For most Australian businesses, however – including patent attorney firms – the more important reporting period is the financial year ending on the 30th of June. It is therefore interesting to look at patent filing numbers over the 12 month period commencing at the beginning of July, overall and for individual firms. In this article I will report on filing performance in the 2021 financial year (‘FY21’), which ran from 1 July 2020 to 30 June 2021, as compared with the previous (and, to some extent, earlier) financial year.
Surprisingly, despite the global pandemic, and a decline in filings over the 2020 calendar year, the number of Australian standard patent applications filed in FY21 grew by 3.6% over FY20, largely due to a very strong first six months of 2021. Innovation patent applications surged ridiculously, to more than three times their numbers in FY20, for reasons that have nothing to do with either the pandemic, or a genuine interest by most applicants in obtaining enforceable rights. Unfortunately for the health of the Australian innovation ecosystem (and the patent attorneys that support it), filings of new provisional applications declined by nearly 5% in FY21.
The leading firms for patent filings in FY21 were mostly the well-known names you would expect to see, although a couple of smaller firms have slipped into the top 20 on the strength of large numbers of innovation patent filings, primarily made on behalf of Chinese applicants. The benefit of the growth in standard applications has not been shared equally, with a couple of big name firms experiencing a decline in new filings, while others did much better than the overall 3.6% growth rate.
I have also looked at the numbers of some key prosecution events – namely new examination requests, responses to examination reports, and acceptances – over the past few financial years. These indicate that the overall prosecution workload increased slightly in FY21, ensuring that patent attorneys (and examiners) were kept busy with the examination of earlier-filed applications, despite the ongoing pandemic. Strong numbers of examination requests filed in FY21 suggest that this work will continue to flow into, and beyond, the current financial year.
Total Filings
The table below shows the total number of applications of each available type (innovation patent applications, provisional applications, and standard patent applications) filed during FY21, along with the corresponding numbers for the previous financial year, and the percentage change.
| Application Type | FY21 | FY20 | Change |
|---|---|---|---|
| Innovation | 6,948 | 2,277 | 205% |
| Provisional | 4,636 | 4,865 | -4.7% |
| Standard | 30,404 | 29,356 | 3.6% |
| Total | 41,988 | 36,498 | 15% |
Not surprisingly, there has been a massive uplift in innovation patent filings during FY21, dominated by applications originating in China and (more recently) India, during the lead-up to phasing out the innovation patent system from 26 August 2021.
Provisional filings, on the other hand, fell by 4.7% in FY21. This continues a longer-term trend of declining provisional application numbers. Unfortunately, this does not bode well for the state of Australian innovation – at least insofar as the protection of locally-developed IP is concerned – given that provisional applications are almost all filed by Australian individuals and companies, and represent the most common entry point to the patent system for these applicants.
In more positive news, filings of Australian standard patent applications – which have recently been in decline – have experienced a resurgence in FY21, up by just over 1,000 applications over the previous 12 months. This has been driven by a significant uplift in filings in the first half of the 2021 calendar year which, if it continues for the remainder of the year, would see filing numbers back above where they were at the previous peak in 2018.
To demonstrate just how strong filings have been over the January-June 2021 half-year, the chart below shows the total number of standard applications filed in Australia for this same period each year since 2010.
Setting aside the exceptional case of 2013 – when numbers up until mid-April were boosted by applicants bringing forward new applications ahead of the Raising the Bar law reforms – 2021 has seen the strongest first half ever, potentially restoring the long-term positive trend that existed prior to 2019.
The Leading Firms for Australian Patent Filings
The following chart shows the number of applications filed in FY21 by the top 20 Australian and New Zealand patent attorney firms, broken down into the different application types (i.e. standard, innovation, and provisional applications). The ranking is based on the total number of applications of all types filed by each firm. The chart also shows the numbers of applications that were self-filed by the applicant (i.e. where the filing agent matches a named applicant or inventor) and that were filed by non-attorney agents (i.e. where the filing agent is different from the applicant/inventor, but is not a registered attorney or established firm).
Self-represented applicants predominantly file provisional and innovation patent applications, and it is relatively rare for standard applications to be self-filed. Around 25% of provisional applications and 22% of innovation patent applications were self-filed in FY21, whereas only 1% of standard applications were self-filed. Most of the applications filed by non-attorney agents were for innovation patents, and the overwhelming majority of these were filed on behalf of Chinese and Indian applicants taking advantage of the fact that these patents are granted rapidly and without substantive examination.
Over the past couple of years, Chinese applicants in particular have become more inclined to engage the services of Australian patent attorneys to handle innovation patent filings. Firms that filed disproportionately large numbers of innovation patent applications in FY21 – most notably Alder IP and Remarkable IP – are major beneficiaries of this trend. However, this source of revenue will evaporate from 26 August 2021, when the phase out of the innovation patent system commences, and it will no longer be possible to file new (non-divisional) innovation patent applications.
Gains and Losses in Standard Application Filings
Considering that the overall number of standard patent applications filed in FY21 grew by 3.6%, we should expect attorney firms, on average, to make gains in their filing numbers. As the chart below shows, however, benefits of the growth in filings were not evenly shared.
Among those firms that filed more than 1,000 new standard patent applications in FY21, Davies Collison Cave, FB Rice, Shelston IP, and FPA Patent Attorneys all made above-average gains, while Spruson & Ferguson, Griffith Hack, Phillips Ormonde Fitzpatrick, and Pizzeys suffered a reduction in new filings over FY20. With regard to the publicly listed groups, this is good news for QANTM IP Limited (ASX:QIP), which owns Davies Collison Cave and FPA Patent Attorneys, but a more mixed outcome for IPH Limited (ASX:IPH), which owns Spruson & Ferguson, Griffith Hack, Shelston IP and Pizzeys.
While there are some big percentage gains further down the league table, it is important to keep in mind that these are measured off a much lower base, among firms that filed fewer than 10 applications per week, on average.
Gains and Losses in Provisional Filings
The number of provisional applications filed is generally an indication of the amount of work a firm is doing preparing new original applications on behalf of domestic clients. With provisional filings down by nearly 5% in FY21, we would expect to see a corresponding decline in the numbers for the leading attorney firms. As the chart below shows, however, most of the top firms experienced reductions in provisional filings that were considerably higher than 5%.
The above chart includes the top 11 firms by provisional filings, and omits all firms from the overall top 20 that filed fewer than 50 provisional applications in FY21. Data for the omitted firms showed large percentage changes that were not particularly meaningful in view of the small numbers of applications involved.
All but three of these leading firms experienced a decline in provisional filings in FY21 over FY20. Of the larger firms, only FB Rice and Shelston IP increased their provisional filings. The large gain by James & Wells came off a relative small base of just 35 applications in FY20, and presumably reflects the fact that this New Zealand firm has recently expanded its service offering in Australia by establishing a presence in Brisbane and Melbourne.
Patent Prosecution Workloads
New standard patent application filings are the input to a pipeline of future work for patent attorney firms, when those applications eventually come up for examination. Speaking with Australian patent attorneys in the second half of 2020 – when the effects of the COVID-19 pandemic might have been expected to suppress demand for IP services – most reported that they continued to be keeping busy. The chart below, which summarises total numbers of selected events in the prosecution of patent applications over the past five financial years, goes some way to explaining why this may have been the case. The selected events are examination requests (typically required within 3-4 years of filing), examination responses (filed in reply to examination reports issued by IP Australia), and acceptances (which occur when/if all examination objections are overcome).
The total number of responses to examination reports filed in FY21 was just over 26,000 – the highest since FY18, despite the declines in new application filings in 2019 and 2020. Many examination responses involve work by patent attorneys to prepare submissions and/or amendments to applications to address objections raised by examiners.
The total number of examination requests filed in FY21 was also the highest for a number of years, which should translate into a further increase in work processing examination reports, and preparing and filing responses, over the next 12-18 months or so.
Interestingly, the number of application acceptances did not increase in line with the number of responses in FY21, suggesting that the success rate of responses may have declined relative to FY20.
It should be noted that the higher numbers of examination requests in FY17, and of examination responses and acceptances in FY17 and FY18, are in part due to the spike in new filings in the early part of 2013 ahead of the Raising the Bar reforms. Many of those applications were still making their way through the examination process up until 2018.
Conclusion – the Future Looks Stable for Most Australasian Attorneys
After two successive calendar years of declining numbers of standard Australian patent applications being filed, a resurgence in the first six months of 2021, and corresponding growth in FY21 over FY20, is good news for the Australian patent system, and the patent attorneys who work within it. Over the coming years, these filings will make their way into the examination process, providing ongoing prosecution work for attorneys. In the meantime, a strong showing of examination requests filed in FY21 should ensure a solid flow of prosecution work through FY22 and into subsequent years. This is the bread and butter of many patent attorney businesses, and it is also the work on which most trainees and junior attorneys cut their teeth and build up experience. While the growth in filings and examination requests is relatively modest, it represents a welcome return to a trend that appeared to have reversed over the past couple of years.
The growth has not been shared uniformly among firms, and some will have more work in the pipeline, relative to past performance, than others. But, as in any competitive market, attorneys will no doubt move to where the work is available, and/or clients will take their business to where the capacity and service levels best meet their needs. Personally, I am more concerned with the overall health of the profession than with the performance of individual firms.
A more worrying trend is the continuing decline in provisional filings. I know that not all Australian innovators commence their patenting journey with a domestic provisional application – some file US provisionals or other foreign applications, or go straight to standard or innovation patent applications – but most do. It is therefore a discouraging sign that fewer provisional applications are being filed. Either Australians are innovating less, or they are becoming less inclined to pursue protection for their innovations through the patent system. This is also not good news for those attorneys whose practice predominantly comprises providing advisory, drafting, filing and prosecution services to domestic clients.
Finally, a couple of firms are about to lose a large proportion of their revenues when the phase out of the innovation patent system commences on 26 August 2021. I hope that they have plans for sustaining their businesses into the post-innovation patent future!
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