27 January 2023

Australian Patent Filings Declined Slightly in 2022, but Held at Historic Highs by Strong International Interest

Goodbye 2022In 2022, for the second year running, the number of standard patent applications filed in Australia exceeded 30,000.  While there was a slight decline of 0.5% compared with 2021, filings remained at a historic high.  This was, however, primarily due to continuing growth of nearly 1% in applications originating overseas.  Applications from Australian residents fell by 16.6%, returning to around the same level as between 2016 and 2020 following a bumper year in 2021 that was driven substantially by applicants wishing to secure a filing date prior to the phase-out of the innovation patent system.  Also disappointing was a continuing decline in the number of provisional applications filed.  Provisional filings have not been as low as they are now since the mid-1980s.

The United States remained the largest source of new Australian patent applications, by a large margin, accounting for 46% of all filings.  Australian residents held on to second position, despite the significant drop in filings, as the number of applications from China fell for the first time in more than two decades.  The top 10 remained the same overall, with the UK and South Korea each gaining a position, at the expense of Germany and France.  The UK is now in fifth place, and only marginally behind fourth-placed Japan, following two consecutive years of strong growth in filings.

Australia’s poor patenting performance continues to be a concern.  It is not just about resident applications, and there are a number of other metrics – including filings in other jurisdictions and various other innovation indicators – that consistently point to Australian underperformance in the identification, protection, management and commercialisation of technological innovations.  This is an area in which Australia needs to do better.

Standard Patent Applications

With the innovation patent system being phased out, it will become increasingly unnecessary to refer to ‘standard’ patent applications in Australia, which are simply the ‘regular’ form of application available in almost every country, subject to full substantive examination prior to grant, and having a maximum term of 20 years.  (For the record, there were just 190 innovation patent applications filed in 2022.)

In 2022, a total of 32,252 standard patent applications were filed, which is just 0.5% below the record number of 2021, and only the second time filings have exceeded 30,000.  There was a slight increase in the number of PCT national phase entry (NPE) applications, but a decrease in direct filings.

Standard Patent Applications, Total and by Filing Route, 2011-2022

The record number of filings in 2021 was influenced by the final deadline for filing of new innovation patent applications, considering that standard applications filed prior to 26 August 2021 can be used as a basis for filing divisional innovation patent applications for up to eight years.  It is therefore somewhat surprising that new applications continued in comparable numbers in 2022.  I had expected new filings to drop back closer to the levels seen in 2018 to 2020, particularly considering that some applications may have been brought forward to meet the innovation patent deadline.  Some explanation for this overall result can be found by drilling down into the origins of the applications.

Countries of Origin

The chart below compares annual filings since 2011 by Australian residents against applicants from the rest of the world (RoW).  Take note of the different axes for the two traces.  Foreign applicants filed 354 more applications in 2022 than in 2021, while Australian applicants filed 500 fewer applications.  As a result, Australian residents accounted for just 7.8% of filings in 2022, compared to the peak of 10.3% in 2013, and an average of 8.9% across the period shown.

Standard Patent Applications by Applicant Residence, 2011-2022

At first blush this looks to be a disappointing result for Australian resident filings.  And it is, though not as bad as it might appear.  In August 2021, prior to the innovation patent phase-out deadline, Australian residents filed over 300 more standard patent applications than in any ‘normal’ month.  It is likely that many of these were applications that were brought forward to secure an earlier filing date, and which would otherwise have been filed either in the latter part of 2021 or in 2022.  As I have already observed, in this context it is not unexpected to see Australian residents filing numbers dropping back in 2022 to a level commensurate with 2018-2020.

There was, by comparison, only a modest boost in filings by foreign applicants in the weeks prior to 26 August 2021.  The large jump in filings from the rest of the world in 2021, and the further increase in 2022, is largely unrelated to the demise of the innovation patent system.  It is booming filings by foreign residents that has maintained overall application numbers above 32,000, and that was almost sufficient to offset a significant fall in Australian resident filings in 2022.

The top 10 countries of origin remained the same as in 2021 (and 2020), although there have been a couple of changes in the rankings.  With a second consecutive year of strong growth in filings, the UK passed Germany to take fifth position, while South Korea outgrew France to retake eighth spot after slipping back in 2021. 

Country Filings YOY Growth
United States 14720 1.1
Australia 2506 -16.6
China 2184 -7.6
Japan 1588 2.8
UK 1552 12.2
Germany 1382 -0.4
Switzerland 1240 -1.6
South Korea 907 17.3
France 828 4.7
Canada 786 8.0

Australian residents managed to retain second position despite the significant drop in applications discussed above, thanks to a decline in Chinese filings.  The chart below compares Australian resident and Chinese application numbers since 2011.  As can be seen, 2022 was the first year from this period in which Chinese filings have fallen.  In fact, the last time filings from China fell year-on-year was in 2001, when Chinese residents filed 32 Australian applications, down from 65 in the year 2000.

Standard Patent Applications, Australia vs China Residents 2011-2022

Direct ‘Original’ vs Divisional Filings

In 2022, the number of direct ‘original’ filings (i.e. those not based on any earlier Australian standard patent application) fell by 10.8%.  However, this followed an increase of 20.2% in 2021 and is fairly consistent with filing numbers for this type of application since 2015.  As has also consistently been the case since 2015, there were nearly twice as many divisional applications as direct original applications filed in 2022.  The number of divisional applications fell only slightly, by 1.7%.  The chart below compares annual direct original filings with divisional filings since 2011.

Direct National Filings by Type, 2011-2022

Provisional Applications

Australian provisional applications are almost all filed by applicants resident in Australia, and are the most common ‘entry point’ to the patent system for these applicants.  The chart below shows annual provisional filings since 2011, in total and broken down into those filed with the assistance of a registered patent attorney or firm and those that were either self-filed (i.e. by an applicant or inventor) or filed by another non-registered agent.  The number of provisional filings continued a disturbing downward trend, falling a further 6% to 4035 applications in 2022.

Provisional Applications by Filing Agent, 2011-2022

Provisional applications are now at historical lows, with fewer than 5000 having been filed each year since 2018.  Prior to this, provisional filing numbers had been above 5000 since 1986, with the all-time high being 7434 in the year 2000.  As I have observed in the past, falling provisional filing numbers reflect either a decline in potentially patentable innovation in Australia, or declining awareness, interest and/or appreciation of the value of patent protection (or, quite possibly, all of the above).  It is also notable that while the proportion of applications filed with professional assistance has increased over the years, the number of applications filed using patent attorneys in 2000 (4660) was greater than the total number of applications filed in 2022!  The decline has therefore been bad news not only for the state of Australian innovation, but also for the patent attorneys who serve Australian innovators.

Conclusion – Resident Applications Continue to Disappoint

A lack of growth in filings by Australian residents continues to be a concern.  Foreign filings overall have continued in a long-term upward trend, and were 30% higher in 2022 than in 2011.  Australian resident filings, on the other hand, were up by just 5.2% over this period, and show no indication of any sustained growth.  The number of provisional applications filed each year has continued to decline.  The best that can be said of this is that a larger proportion of provisional applications is now filed with professional assistance and that the resulting numbers of standard applications claiming priority from earlier provisional applications are not following the same trend.  This suggests that the provisional applications that are being filed are of higher quality, on average, and are more likely to provide a basis for further patenting activity than has been the case in the past.

Patent practitioners sometimes suggest to me that Australian applicants may increasingly be choosing to file their initial applications elsewhere in the world, and in particular using the US provisional application system.  This is difficult to investigate, because no information on US provisional applications is made public unless, and until, a subsequent application is filed and published that claims priority back to the provisional filing.  However, I have observed previously that the proportion of international (PCT) applications by Australian residents that claimed priority from a US filing has actually declined in recent years, particularly since commencement of the America Invents Act in 2013.  Furthermore, the most recent data available from the World Intellectual Property Organization (WIPO) IP Statistics Data Center shows that the total number of US patent filings by Australian residents has been declining for many years, down to 3468 applications in 2021 from a high of 3976 in 2008.  All available evidence thus points away from any increased use of the US system by Australian residents.

In 2022, Australia ranked 25th overall in WIPO’s annual Global Innovation Index, and 7th in the South East Asia, East Asia, and Oceania (SEAO) region – behind South Korea, Singapore, China, Japan, Hong Kong and New Zealand.  Consistently with earlier years, Australia ranked very highly – fifth in the world – in the area of ‘human capital and research’, while being in the top 20 for both ‘institutions’ and ‘infrastructure’.  Despite these advantages, Australia ranked 37th on ‘knowledge and technology outputs’.  The country is a consistently poor performer in technology transfer and commercialisation.  The Global Innovation Index report, on page 53, specifically calls out Australia (alongside Uzbekistan and Rwanda, among others) as an economy that is ‘struggling to translate inputs into outputs’.  Sub-par patenting activity, i.e. a failure to capture, protect and capitalise on patentable intellectual property, is a symptom of this struggle.  Australia’s anaemic patent performance is not due to any lack of scientific or technical innovation.  Australia ranks seventh in the world on the generation of scientific and technical articles, and ‘citable documents’, but way down the list at 41st on patents.

Australian innovators need to do better when it comes to managing and protecting patentable intellectual property.  The challenge lies in finding a way to make this happen.


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