Have Australia’s ‘Raising the Bar’ Law Reforms Suppressed Patent Oppositions?

Australia has a pre-grant patent opposition system.  That is to say, once an application has passed examination and been accepted for potential grant as a patent, there is a period (of three months) during which anybody may oppose the grant.  The subsequent opposition proceedings – if they run their full course – consist of a series of evidentiary stages, legal submissions, and an oral hearing, following which the hearing officer (a delegate of the Commissioner of Patents) issues a written decision on the outcome of the opposition.  In the final reckoning, the patent application may emerge unscathed, it may be refused, or it may end up being granted subject to narrowing amendments. 

The patent opposition system recognises that the examination process is imperfect.  Examiners have limited time, resources and technical expertise.  Therefore, they may not always find the closest and most relevant prior art, or spot every technical and legal issue that might be identified by a motivated competitor to the patent applicant, equipped with a team of technical and legal experts.  Furthermore, opposed applications are presumably those that are of greatest concern to competitors, enabling the system to weed out invalid claims that have the greatest potential to unfairly stifle competition.

In the years prior to 2016, the number of oppositions filed each year was fairly consistently between 100 and 120.  In recent years, however, it has commonly been between 40 and 60.  In other words, there are now only about half the number of patent oppositions being filed than was the case just a decade ago.  So, if oppositions play an important role in the Australian patent system – and the policy rationale for having them asserts that they do – is it possible that they are now less effective than they once were?  And, if so, then why?

In this article, I will present data on all patent oppositions filed between 2008 and 2023.  I will demonstrate that the decline in patent oppositions appears to be associated with the commencement of the Raising the Bar (‘RtB’) IP law reforms in 2013.  Among other things, the RtB reforms introduced more stringent standards of patentability, particularly in relation to inventive step and the level of disclosure required to support broader patent claims.  The reforms also changed the standard of proof to be applied during examination and opposition proceedings.  I will show that in the post-RtB era, opposition proceedings have more frequently progressed through to a final decision, and that opponents have had somewhat greater success in completely eliminating opposed applications.  However, the overwhelming majority of opposed applications still result in granted patent rights, and in nearly half of all cases the opponent has been wholly unsuccessful and the patent has been granted with the originally accepted claims.

While the data cannot directly reveal the reasons for the significant reduction in opposition filings, I tentatively argue that the change in the standard of proof applied in patent oppositions may have had the unintended consequence of suppressing patent oppositions, and reducing the effectiveness of the opposition system.

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Tags: Australia, IP RAPID, IPGOD, Law reform, Opposition, Raising the Bar

Games — Now Less Patentable than Ever in Australia

In a recent decision, a Hearing Officer within the Australian Patent Office rejected Australian patent application no. 2018219972, in the name of casino operator Crown Melbourne Ltd, relating to a modified roulette table layout.  In particular, the claimed invention was designed to provide a ‘double zero’ roulette game having similar visual appearance and betting options to a ‘single zero’ game, while also offering additional betting options over the traditional ‘double zero’ game.  In essence, the modified layout ‘stacks’ the single and double zero boxes at one end of the number grid, instead of placing them side-by-side in the previously-established manner.  The application was rejected on the ground that the subject matter of the claimed invention is ineligible for patenting, i.e. is not for a ‘manner of manufacture’ under Australian law.  Specifically, the Hearing Officer found that ‘merely presenting a different wagering space layout that does nothing otherwise to the functioning of the apparatus cannot be considered as a physical phenomenon or transformation’, which would have been required for the invention to be patent-eligible.

You might not be surprised by this outcome.  Surely – you might think – simply providing a different layout of the numbered boxes on a roulette table cannot be the kind of thing for which a patent may be granted?  Traditionally, however, the situation would not have been considered so clear-cut.  Changing the layout also changes the wagering options available to players of the game.  The layout thus interacts with the rules of the game to change the game itself, arguably producing a ‘new’ game.  Throughout most of the history of the Australian patent system, this would have been considered patentable.

But you do not have to take my word for this.  The very same claims were previously found to be patentable by the Australian Patent Office!  The rejected application is a divisional, the ultimate ancestor of which was application no. 2008203384 (‘the original application’).  That application was itself filed in parallel with innovation patent no. 2008100694 (‘the innovation patent’).  The innovation patent was examined in 2008, and successfully certified on 5 February 2009.  The original application was also eventually examined, and received a clear examination report on 3 November 2014.  The only reason the original application did not proceed to acceptance and grant was because the innovation patent remained in force, and section 64 of the Australian Patents Act 1990 prohibits a single owner from being granted two patents simultaneously for the same invention.  After the innovation patent expired on 25 July 2016, Crown submitted that the original application should then proceed to acceptance.  But, instead, the Patent Office issued an adverse examination report, including the objection that the claimed invention was not a patentable ‘manner of manufacture’.

So, what changed?  The law?  Patent Office practice?  Or something less easily identified?

In this article, I discuss developments over the past 20 years in the patentability of games in Australia.  In summary, it seems that as recently as 2003 it was relatively straightforward to obtain a patent for a game, with the overwhelming majority of examined applications being successful.  Over time it has become substantially more difficult, although there are numerous examples of a relatively liberal approach by the Australian Patent Office up until at least the early 2010’s.  But since 2015 the tide has definitely turned, and patent applications relating to games now fail more often than they succeed.  The recent Aristocrat decision provides a glimmer of hope for game innovators, suggesting the possibility of a return to the principle that a working inter-relationship between game apparatus and associated rules of play may be sufficient to support a valid patent.  However, with this decision currently under appeal, and the Patent Office applying it narrowly only to certain types of analogous computer-implemented casino gaming systems, the prospects of any significant new liberalisation of examination practice in this area seem limited.

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Tags: Australia, Games, IPGOD, Patentable subject matter

The 2020 Australian IP Report: Revisited

Last month, I wrote about IP Australia’s release of the Australian Intellectual Property Report 2020 (‘IP Report’).  I focused in particular on data included in the ‘Patents’ section of the report, and raised some questions about the methodology and the accuracy of some of the results presented.  I am pleased to say that IP Australia (more specifically, Benjamin Mitra-Kahn, who is the General Manager & Chief Economist in the Policy & Governance Group) reached out to me regarding the issues raised in my article, and we have spent the past couple of weeks working through our respective data sets to identify the origins of the discrepancies between our numbers.  IP Australia will be updating the online version of the IP Report to incorporate a number of corrections.  In this article, I will run briefly through the issues that we identified, and present some updated numbers of my own.

Users of the 2019 release of the IP Government Open Data (IPGOD) will want to take note of a problem with the ‘related patent information’ table (a.k.a. ‘ipgod128’), which records data relating to divisional and additional applications, whereby a number of entries are missing corresponding with applications filed during the final weeks of 2018.  This error resulted in my undercounting of divisional applications in 2018, such that I found an increase in 2019 where the IP Report identified a decline. 

Australian organisations, including a number of universities, that might have felt short-changed by the ‘top-five’ list of applicants presented in the IP Report, should be pleased by corrections that will reflect the true numbers of filings they made during 2019.

To some extent, IP Australia and I have agreed to disagree regarding the merits of distinguishing between ‘original’ and divisional applications, and of ranking applicants on the basis of ‘original’ filings rather than total filings (i.e. including divisional applications).  We do agree, however, that not all divisional applications are created equal, and that a more nuanced approach is necessary to develop a better understanding of how applicants use divisional applications, and what implications this may have for the operation of the patent system, as reflected in this tweet from IP Australia’s Office of the Chief Economist:

Hi Mark, thanks for the collaboration offline, and the ongoing conversation. As discussed, divs aren’t 2nd class filings, or perceived as such, but an important part of the current patent application story. Keen to explore how to better categorise them.

— IPAustraliaEconomist (@IPAustralia_OCE) May 8, 2020

While there may still be some minor differences between my numbers and those of IP Australia, due to changes in the live data between the times that we respectively extracted our information, the numbers in this article should be in substantial agreement with those in the revised version of the 2020 IP Report.

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Tags: Australia, IPGOD, Patent analytics, Patent Office

Interactive Maps II: Where do Leading Patent Attorney Firms Find New Clients?

In my previous blog post, I explained how preparing articles looking at patent applicants, patent recipients, and attorney firm performance over calendar year 2019 had got me thinking about where ‘new’ Australian patent applicants come from, in the literal sense of where they are located geographically?  I also noted that IP Australia’s annual IP Government Open Data (IPGOD) release includes geographical information, in to the form of latitude and longitude coordinates, for Australian-resident applicants.  In particular, the most recent release, IPGOD 2019, includes location data for most Australian applicants going back over more than three decades, up until the end of 2018.

From this data, I have generated two interactive maps.  In the previous article I presented the first, showing the geographical distribution of new applicants that used the services of a patent attorney versus those that filed their own applications.

In this article, I present the second map, showing the distribution of new client acquisitions by ten leading Australian patent attorney firms.  The maps shows that, unsurprisingly, metropolitan applicants that engaged an attorney showed a distinct – though not universal – tendency to choose a firm with a local physical office.  Interestingly, comparing with the other map of self-filers versus those that engaged an attorney, an absence of local patent attorneys does not appear to be a major influence on whether applicants chose to self-service, rather than tracking down an attorney – the distributions of self-filers and those who engaged an attorney look very similar.  On the other hand, among leading firms it is clear that some do a better job than others of reaching out to acquire clients in regional areas.

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Tags: Australia, IPGOD, Patent analytics, Patent attorney profession

Interactive Maps I: Where Do New Australian Patent Applicants Come From?

In my recent articles looking at patent applicants, patent recipients, and attorney firm performance over calendar year 2019, I noted (from all three perspectives) the disappointing showing of Australian applicants.  That being said, there are, nonetheless, thousands of applications filed by Australian residents every year, which got me wondering – out of idle curiosity as much as any expectation that it would be especially enlightening – where do ‘new’ Australian patent applicants come from?  I mean this in the most literal sense: where are Australian companies and individuals, filing for the first time, located geographically?

Fortunately, IP Australia’s annual IP Government Open Data (IPGOD) release includes geographical information, in to the form of latitude and longitude coordinates, for Australian-resident applicants.  In particular, the most recent release, IPGOD 2019, includes location data for most Australian applicants going back over more than three decades, up until the end of 2018.  I thought it might be fun to turn some of this data into interactive maps.

I have generated two such maps.  In this article I will present the first, which shows the geographical distribution of new applicants that used the services of a patent attorney versus those that filed their own applications.  Unsurprisingly, the data shows a concentration of applicants in the major cities of Sydney, Melbourne, Brisbane, Adelaide, and Perth.  However, a significant number of applicants is also located in regional Australia.

In a separate article, I present the second map, showing the distribution of new client acquisitions by ten leading Australian patent attorney firms.

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Tags: Australia, IPGOD, Patent analytics

Australian SMEs Show a Growing Preference for Smaller Patent Attorney Firms

Back in February, I published data which indicated that Australian patent attorney firms within listed groups, and perhaps larger firms in general, appear to have been losing share in the market for Australian patent applications filings to smaller, privately-held firms.  In this article I will take a closer look at this trend, by focusing specifically on filings by Australian-resident applicants, breaking firm size and corporate structure down into more precise groups, and looking at the behaviour of small and medium sized enterprises (SMEs) in particular. 

When it comes to preparing and filing original patent applications for new inventions, Australian SMEs collectively are patent attorneys’ most significant clients, by far.  In 2017, SMEs filed as many original patent applications with the assistance of patent attorneys as all other categories of Australian applicants combined.  They are also the only category of Australian applicants that actually generated an increase in the number of original patent applications filed over the decade spanning 2008 to 2017.

In recent years, however, this important category of patent applicants has been exhibiting some clear trends in choice of patent attorney service providers.  In particular, as I will show in this article, Australian SMEs are increasingly choosing smaller service providers over larger ones and, since local attorney firms began to be owned by publicly-listed companies, privately-held firms over those within the listed groups.

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Tags: Australia, IPGOD, Patent attorney profession

Proposed Merger of QANTM IP and Xenith IP – Another Symptom of a Great Malaise in the Australian IP Services Market?

On 27 November 2018 QANTM IP Limited (ASX:QIP) and Xenith IP Group Limited (ASX:XIP) announced that they have entered into an agreement to merge through an all-scrip scheme of arrangement.  The merger is subject to approval by a court, and by Xenith shareholders.  If it goes ahead (as seems likely), each Xenith share will be exchanged for 1.22 QANTM shares.  Existing QANTM and Xenith shareholders will end up owning 55% and 45%, respectively, of the merged group, which will comprise five Australian specialist IP firms (Davies Collison Cave, FPA Patent Attorneys, Griffith Hack, Shelston IP and Watermark), along with IP valuation, innovation and advisory service provider Glasshouse Advisory (currently owned by Xenith IP) and Malaysian IP firm Advanz Fidelis (which was acquired by QANTM IP in June 2018). 

Based on the closing share price of QANTM and Xenith on 26 November 2018, the merged group would have a market capitalisation of A$285.2 million, which still places it well behind the original listed Australian IP group, IPH Limited (ASX:IPH), which had a market cap of A$1.11 billion as at close of trading on 30 November 2018.

An additional interesting piece of information to fall out of the QANTM/Xenith announcement is the fact that IPH had itself been courting QANTM with a view to a possible merger or acquisition.  In an ASX announcement on 27 November 2018, in response to ‘media speculation’, IPH confirmed making a number of approaches to QANTM on the basis of non-binding, conditional proposals, culminating on 20 November 2018 with a proposal with an equivalent value of A$1.80 per QANTM share (a notional premium of 37.4% over the A$1.31 at which QANTM shares were trading on that day).  QANTM countered by announcing that its Board did not consider this proposal to be in best interests of its shareholders, due to its ‘highly conditional’ nature and ‘significant execution risk’.

All this would appear to confirm something that I have long suspected – that the Australian market is not big enough to sustain three publicly-listed groups of IP service providers.  IPH obviously saw QANTM as a potential acquisition target, while QANTM clearly did not wish to be acquired on IPH’s terms!  Instead, QANTM and Xenith have decided that they will be stronger together than they are separately.

But why is it such a struggle for these groups to flourish in the Australian market?  One advantage of the public listing of these companies is that, through their annual reports, there is now far greater transparency than ever before in respect of the financial performance of IP services businesses.  In combination with publicly-available data on Australian filings for IP rights, this provides useful insights into where the revenues – and profits – are coming from.  I have looked at these numbers, and I am afraid that my conclusions are not rosy.  The Australian market appears to be stagnant, with firms struggling to enhance profitability.  Growth in the listed groups has come through acquisitions rather than genuine new business, with revenues per professional staff member being pretty consistent across the industry.  Low-value, transactional work, which ought to have the greatest exposure to competition and downward price pressure, continues to be significantly more profitable than high-value, bespoke services.  Yet, despite the obvious challenges and risks that these circumstances present, as far as I can tell firms are continuing to do the same old things that they have done for years, in terms of professional staff management and marketing, with the predictable result that nothing much is changing.

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Tags: Australia, Innovation policy, IPGOD, Patent attorney profession

Evidence Shows that 2013 Australian Patent Law Reforms Have Had No Long-Term Effect on Application Acceptance Rates

On 15 April 2013, the majority of provisions in the Intellectual Property Laws Amendment (Raising the Bar) Act 2012 came into effect.  Among other things, these reforms were designed to lift the inventive step standard, and to impose more-stringent requirements on the disclosure in a patent specification.  As a consequence of this, you would think that some inventions that would have been patentable prior to commencement of the reforms would be unpatentable under the new standard, and that some patent specifications that would have passed muster previously could fail to meet the higher standards for disclosure.  And, if so, then it might logically follow that the proportion of applications that successfully pass examination (i.e. are accepted for grant) would be lower under the new law than under the old.

Yet, as logical as that reasoning may seem, just recently I published an analysis indicating that acceptance rates across almost all examination technology sections at the Australian Patent Office were, in fact, consistently increasing on an annual basis between 2014 and 2016.  That result is surely worthy of a closer look!

A more-detailed analysis of Australian patent examination data covering a period of over three years either side of the Raising the Bar reforms, from 2010 up until the end of 2017, indeed confirms that a naïve assumption that lifting standards should reduce acceptance rates is incorrect.  In fact, acceptance rates had been rising for a number of years prior to commencement of the reforms, and initially this trend continued under the supposedly higher standards.  And although there was subsequently a brief decline in acceptance rates, this has been followed by a period during which acceptances have once again been on the rise.  Indeed, right now it appears as though the proportion of applications that are accepted for grant following examination is around 80%, which is almost exactly where it stood immediately prior to commencement of Raising the Bar.

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Tags: Australia, Examination, IPGOD, Law reform, Patent analytics, Patent law

The Australian Government is Asking SMEs How They Manage and Exploit Their Intellectual Capital (Mostly, They Don’t)

The Australian Government’s Department of Industry, Innovation and Science (DIIS) has launched a consultation ‘to better understand the needs of innovative Small and Medium Enterprises (SMEs) in managing and exploiting their intellectual capital’.  If my experience is anything to go by, the first challenge will be finding Australian SMEs with an understanding of what intellectual capital is, let alone how to manage and exploit it in any systematic way.  Fortunately, DIIS has provided its own definition of the term: ‘by intellectual capital we mean things like ideas, know-how, branding, data, trade secrets and copyright and also registered intellectual property (IP) rights such as patents, trade marks, designs and plant breeder’s rights.’

While potentially patentable inventions may form only a small part of a company’s intellectual capital – and there are, of course, many businesses that are not at all involved in the generation of new technology – patent filings are nonetheless widely seen as one indication of innovative activity within the national economy.  Additionally, applying for IP protection is a clear signal that a business has some awareness of its intellectual capital, even if only informally.  In the case of a patent filing, someone has at least identified the existence of an invention, and made a conscious decision that it is of sufficient value to warrant protection.  I recently wrote about Australia’s poor performance in patent filings, which I attribute to a generally negative mind-set, arising from a combination of ignorance, aversion, and lack of appreciation of the value of patents (and other forms of IP).  Relatively low rates of patent filing might therefore be a reflection of an absence of awareness, processes, and strategies for actively managing and exploiting intellectual capital within the vast majority of Australian businesses.

According to a 2016 report published by the Australian Small Business and Family Enterprise Ombudsman (ASBFEO), there were over 2.1 million businesses operating in Australia in 2015.  Just 0.2% of these (around 3,700) were classified as large businesses, employing over 200 people.  A further 2.4% (just under 51,000) were medium-sized enterprises, employing between 20 and 199 people.  The majority of businesses smaller than this – 60.6%, or just over two million – are non-employing sole traders (like me).  As I demonstrate in this article, however, even on the most generous interpretation of the available data, less than 0.3% of SMEs and sole traders filed any kind of Australian patent application in 2015.  On average, SMEs filed around 1.5 applications each (if they filed at all), while the typical individual applicant filed only a single application.  By comparison, just over 5% of large firms filed patent applications in Australia, and on average these firms filed over five applications each.

I fear, therefore, that DIIS will not receive too many responses to its consultation, and those businesses that do respond are unlikely to represent a broad cross-section of Australian SMEs.  Businesses for which intellectual capital is barely on the radar are unlikely to become aware of the consultation, or take the time to respond to questions set out in the Submission Guide, such as: ‘What does “intellectual capital” mean to you?’; ‘What role does it play in your business strategy?’; ‘How does your business exploit its intellectual capital?’; ‘Can you tell us about any successes or failures?’; ‘Do you seek advice on how to manage and exploit your intellectual capital?’; and ‘If not, why not?’.

For those SMEs, and other stakeholders, with an interest in the fate of Australia’s innovation patent system, this consultation provides a further opportunity to make their views known.  When provisions to abolish the innovation patent were recently dropped from legislation introduced to Parliament, IP Australia announced that the Government had ‘decided to undertake further industry consultation targeted at better understanding the needs of innovative SMEs before the phase out of the innovation patent occurs’.  The Submission Guide does not expressly mention the innovation patent, however the consultation is explicitly linked to the Productivity Commission’s inquiry into Australia’s IP arrangements, noting that the Government is ‘committed to continue to further explore the overall needs of Australian SMEs in relation to exploiting their intellectual capital, and securing, utilising and enforcing their IP rights.’  Filing numbers presented in this article show that, for whatever reasons, SMEs have made increasing use of the innovation patent system over time.

While the consultation is primarily directed to SMEs, the Submission Guide also appears to envisage that submissions may be received from ‘professional organisations providing service or advice to SMEs.’

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Tags: Australia, Intellectual capital, IPGOD, Public consultation

Examination Allocations, Delays and Acceptance Rates at the Australian Patent Office, 2014-2017

It is perfectly reasonable for anybody who has applied for a patent to want to understand how the application process works, how long it is likely to take, and what are their prospects of actually receiving a granted patent in the end.  Unfortunately, it is not easy to find this information, in part because there are many factors that influence the patent examination process.  These factors include the different laws and regulations that apply in each country, variations that depend upon the field of technology of the invention, and the effect of workloads and application backlogs in the relevant patent offices.

In this article, I will review the application process at the Australian Patent Office, and look at some recent data drawn from the latest 2018 release of the Intellectual Property Government Open Data (IPGOD) to illustrate how delays in examination, and prospects of success, can be dependent upon technology and the way in which examination work is allocated within the Patent Office.  I was initially prompted to conduct this analysis by anecdotal accounts of a patent application ‘death squad’ within a particular team of Australian examiners.  However, since the plural of ‘anecdote’ is not ‘data’, I wanted to see whether there is any evidence to support these accounts within the most recent IPGOD data.  I did find the answer, along with a number of other insights.

The first thing to understand about the Australian patent examination system, for those not already familiar, is that it requires each patent applicant to file a request for examination that is generally distinct from other filing formalities.  This is in contrast to the US system, for example, in which examination fees must be paid at filing of a new application, which is then examined in its turn without further action by the applicant.  In Australia, it is possible to request examination (and pay the corresponding fees) at the time of filing, however most applicants elect to defer this step.  After filing, examination may be requested at any time, but a request must be filed within five years of filing, or within two months of the applicant being directed to request examination by the Commissioner of Patents, whichever is earlier.  This is almost invariably the Commissioner’s direction, since directions are typically issued within three-to-four years of the initial filing date, i.e. well within the five year limit.

As we shall see, what happens next depends strongly upon the field of technology of the invention – or, more precisely, upon how the examination task is allocated within the Patent Office, which is, in turn, largely technology-dependent.

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Tags: Australia, Examination, IPGOD, Patent Office

New Data Released by IP Australia Provides Fascinating Insights Into Patent History

In the first year of operation of the Australian national patent system – 1904 – just over 1,200 patent applications were filed, more than 85% of which were lodged in the names of individual inventors, rather than companies.  In 2017, by contrast, around 28,600 Australian standard patent applications were filed, of which just 10% named personal applicants – nowadays, 90% of all patent applications are filed by companies and other collective organisations.  This observation naturally prompts the question: when did invention cease to be a predominantly individual activity, and become principally the product of corporate research and development?

With the release by IP Australia last week of the first stage of the 2018 Intellectual Property Government Open Data (IPGOD) it becomes possible to directly answer this question for Australian patent filings.  For the first time, thanks to machine learning technology, every applicant on every application for all four registered IP rights (patents, trade marks, registered designs and plant breeder’s rights) is flagged as either an individual, or a corporate entity.  In past years this information was only consistently available for patent records from around 1980, due to the more limited data that could be extracted from earlier record-keeping systems.  By the 1980’s, over 80% of all patent applications were being filed each year by corporations rather than individuals.

In fact, the transition from consistently 80% or more personal filings to consistently over 80% corporate filings took place over a period of nearly four decades, starting in 1920.  The final year in which more patent applications were filed by individuals than by corporations was 1933, and by the start of the second World War over two-thirds of patent applicants were corporations.

Historical records also clearly show the impact of international conflicts, and global and domestic economic events, on patent filing behaviour.  A comparison using US patent data as a benchmark also shows that filings of Australian patent applications have historically tended towards strong growth, but relatively high volatility.  In the 21^st century, however, growth in Australian patent filings has clearly slowed relative to the US benchmark.

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Tags: Australia, Economics, IPGOD, Patent analytics

Patent Applicants Are the Most Prolific Patent Opponents

A few weeks back I looked at the geographical origins of participants in Australia’s patent opposition system, finding that Australian residents are overwhelmingly the most likely to oppose patents, and proportionately the most likely applicants to be opposed (although, numerically, US-originating applications are opposed slightly more often).  Under the current Australian law, anyone can oppose the grant of a standard patent, or the certification of an innovation patent, for any reason, although it is reasonable to suppose that most oppositions are filed by companies or individuals with concerns about prospective infringement.  It is, of course, perfectly possible to infringe somebody else’s patent without having had any prior involvement with the patent system.  There is certainly no requirement to have any patents or applications of your own in order to be at risk of infringement, or to have reason to wish to oppose a competitor’s application or patent.

Nonetheless, from analysing data available in the 2017 edition of IP Australia’s IP Government Open Data (IPGOD) set, I have found that one thing that the vast majority of patent opponents have in common is that they are also the owners of their own patents and/or applications.  Of 1,234 oppositions to standard patents (under section 59 of the Patents Act 1990) and to innovation patents (under section 101M) between 2004 and 2016, an overwhelming 82% were filed by entities (which I shall call ‘applicant-opponents’) that also filed at least one patent application during this period. 

Furthermore, while applicant-opponents made up only 0.33% of all patent applicants, they were collectively responsible for filing 6.6% of all Australian patent applications between 2004 and 2016.  The top 30 patent filers over this time includes 10 applicant-opponents. 

In one respect, this is not a surprising discovery.  Parties that are engaged with the patent system in one aspect (e.g. as patent applicants) are presumably more likely to be engaged in  range of other aspects, such as searching of patent registers and databases, monitoring their competitors’ patenting activities, identifying and watching applications that may present an infringement concern, and opposing in cases where it is deemed to be worthwhile in order to mitigate risk or curb overly-expansive patent claims.

On the other hand, as I have already noted anybody can become an infringer, whether wittingly or unwittingly.  It is therefore a little disturbing that the opposition data indicates that parties without patents or applications of their own appear to take little interest in the risks potentially presented by their competitors’ patent applications.

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Tags: Australia, IPGOD, Opposition, Patent analytics

Users of the Australian Pre-Grant Patent Opposition System

Australia has a pre-grant patent opposition system, meaning that an opportunity is provided after a standard patent application has been approved by an examiner, but before a patent is actually granted, for third parties to raise objections.  Specifically, once an application has be accepted for grant, the accepted specification is published and there is then a three-month period during which anybody who believes that the granted patent would be invalid (wholly, or in-part) may file a notice of opposition.  The filing of such a notice commences the formal opposition procedures defined in the Australian Patents Act 1990 and Patents Regulations 1991, which are described in greater detail in this earlier article.  It is also possible to oppose an Australian innovation patent, via a similar procedure.  However, since innovation patents are initially granted quickly, without substantive examination, and can only be opposed after examination and certification, the corresponding opposition proceedings are necessarily initiated post-grant.

The World Intellectual Property Origanization (WIPO) web site includes a handy primer on opposition systems, which suggests that pre-grant systems are relatively uncommon in the developed world, with Australia being counted among such IP luminaries as Costa Rica, Honduras, Mongolia, Pakistan, and Zambia in providing for pre-grant opposition proceedings.  Although the completeness of the WIPO summary is questionable – it does not, for example, include New Zealand, which has a pre-grant system similar to Australia’s – it is certainly true that none of the so-called ‘IP5’ offices (i.e. the European Patent Office, Japan Patent Office, Korean Intellectual Property Office, State Intellectual Property Office of the People's Republic of China. and the United States Patent and Trademark Office) has such a system.  Other than Australia and New Zealand, it appears that the most significant countries having pre-grant opposition systems are India, Spain, and Portugal.

So, who uses the Australian pre-grant patent opposition system?  Using data available in the 2017 edition of IP Australia’s IP Government Open Data (IPGOD) set, I have analysed information on oppositions to standard and innovation patents commenced since 2004 (when the IPGOD opposition records commence).  This analysis shows that:

1. Australians are overwhelmingly the most common participants in opposition proceedings, with Australian-resident companies or individuals having filed 771 oppositions, and Australians being applicant and/or opponent in two-thirds of all oppositions filed;
2. Australians are almost equally likely to oppose applications by other Australians (261 oppositions filed) and by US residents (262 oppositions filed);
3. the US is the second most common origin of opponents (258 oppositions filed), and US-resident companies or individuals are involved, as applicant and/or opponent, in around one-third of all oppositions;
4. in terms of absolute numbers, US-resident applicants are the most common targets of opposition proceedings (453 cases), however this largely reflects the fact that US residents are by far the largest users of the Australian patent system – in relative terms, Australians are the most likely to be opposed, with oppositions being filed against just over 2% of all accepted applications naming Australian applicants;
5. the Australian opposition system is rarely used by residents of countries other than Australia and the US, with the next most common origins of opponents being New Zealand (45 cases), Germany (34 cases), and the UK and Denmark (tied on 21 cases each);
6. even accounting for the generally low usage of the Australian opposition system other than by Australians and US residents, Japan is a notable anomaly – while Japanese applicants were the second largest beneficiaries of the Australian patent system between 2004 and 2016, receiving over 17,500 patents, Japanese applications were opposed only 22 times, and Japanese residents were responsible for only nine oppositions during this period; and
7. other than relatively high usage by Australians and New Zealanders, and the notably low usage by Japanese, residents of other countries tend to use the Australian opposition system in fairly consistent proportion with their use of the Australian patent system.

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Tags: Australia, IPGOD, Opposition, Patent analytics

Technology Specialisations of Australia’s Patent Prosecution ‘Powerhouse’ Firms

In 2016, 24,331 patent applications were accepted for grant by IP Australia.  Based on the examination sections to which these applications were allocated, the top technology areas were mechanical engineering (11%), process engineering (10.6%), and construction and mining (9.8%).  And 80% of all these patent applications were handled by just ten firms.  The top three firms – Spruson & Ferguson, Davies Collison Cave, and Griffith Hack – account for over a third of all applications accepted in Australia.

The process of guiding an application through the examination process is commonly known as prosecution.  While local clients generally require a wider range of value-added services, such as advice on patentability and drafting of patent specification, over 90% of all Australian patent applications originate with overseas applicants that primarily require prosecution services.  And since Chapter 20 of the Australian Patents Act 1990 effectively gives registered patent attorneys an exclusive role in providing paid services to complete key tasks required for successful prosecution of a patent application, these services are the ‘bread and butter’ of many of the larger patent attorney firms in Australia.

In this article I will look at the ten firms that power four fifths of all Australian patent prosecution, and the areas of technology in which they operate.  It is important to appreciate, however, that this is not intended as a recommendation of the services these firms provide in relation to any particular technology.  Each firm in the top ten is large enough to employ attorneys with a range of technical backgrounds, and handles applications across all of the technology areas examined by IP Australia.  Self-evidently, far greater specialisation is found in smaller firms, which have fewer attorneys.  Small firms also tend to provide a greater proportion of their services to local Australian clients, and to engage in less of the high-volume incoming prosecution work on behalf of foreign applicants.  A number of smaller firms therefore appeared in my earlier analysis using filing data broken down to distinguish Australian small and large business applicants.  A firm’s experience, and success, in patent prosecution is therefore just one consideration among many in the selection of an Australian IP service provider.

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Tags: Australia, Examination, IPGOD, Patent attorney profession, Patent Office

IP Firm Patent Filing Data Reveals a Tough and Competitive Market for Australian Attorneys

In its Australian Intellectual Property Report 2017, IP Australia revealed that it received one percent fewer standard patent applications in 2016 than in the previous year. While this is first and foremost a bad sign for innovators, who are clearly finding it harder to justify spending on new products and services, and/or on patenting their developments, it is also not great news for Australian patent attorneys, who are operating in a very challenging business environment.  The silver lining, according to the IP Australia report, was that Australian resident applicants filed 15% more standard applications in 2016 compared with 2015.  You might expect that this would be good for the local patent profession.

However, my own analysis of data released by IP Australia in the Intellectual Property Government Open Data (IPGOD) 2017 reveals a less rosy picture.  Once innovation patents (down by over 4%) and provisional applications (up by just 0.2%, and twice as numerous as standard application filings) are taken into account, the growth in total Australian filings by Australian applicants is only 4%.  Furthermore, all of this is derived from the increase in standard applications, which generally represent the same work, and the same value (to both the applicant and the attorney) as a standard filing by a foreign-resident applicant.  For the most part, provisional applications – which represent the beginning of the patenting process in a majority of cases – are a more telling indicator of current and future innovative activities by clients, and thus of revenues for their attorneys.  Yet provisional filings by Australian entities last peaked in 2012, before declining by nearly 10% in 2013, and have yet to recover to their former high.

Many IP services firms are no different from other businesses, in that they want to generate growth in profits, and deliver value to shareholders – whether these be traditional partners/owners of the firm, a corporate holding company, or investors in a public share market.  With the Australian market for patent filing and prosecution services stagnating, growth must come through developing new service offerings, winning new clients away from competitors, and/or change and innovation within the firm to generate efficiencies, reduce costs, and grow the bottom line.  All of these strategies require investment, whether it be in internal development, marketing, or technology innovation.  It is hardly surprising, then, that some firms are pursuing innovative business avenues, such as public listings and acquisitions, to raise capital and build critical mass to make such investments.

A more complete analysis of Australian patent filing activity over 2015 and 2016 further reveals that:

1. the top 10 Australian firms accounted for 65% of all patent filings in Australian in 2016
2. members of publicly-listed groups dominate the top 10 overall, which includes only two independent firms;
3. however, a more diverse picture emerges when looking specifically at filings by Australian applicants, who are significantly more likely to use the services of an independent firm, particularly if they are an individual rather than a corporate entity; and
4. while there are many individual gains and losses in market share over the two years analysed, there is no sign (as yet, at least) of any general net tendency for clients to move in either direction between listed and independent firms.

Overall, the figures presented below reflect a dynamic and highly-competitive market for patent filing and prosecution services in Australia.  Fears that public ownership of some firms, and a degree of consolidation in the market, may adversely impact competition appear, for the present at least, to be unfounded.

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Tags: Australia, IPGOD, Patent analytics, Patent attorney profession

How ‘Rational’ Are Australian Patent Applicants?

Last Tuesday night, I watched episode 2 of season 3 of the Australian version of the reality TV program for entrepreneurs seeking investors, Shark Tank.  The episode featured a husband and wife team, Margaret and Peter Powell, who were after funding for their ‘Catch’n’Release’ anchor retrieval system.  Their ingenious mechanism – that immediately impressed all of the ‘sharks’, along with many viewers including me – enables an anchor that has become caught under coral to be dislodged and retrieved without damaging the reef.  Everything was going along swimmingly, until the question of patent protection was raised, and the Powells revealed that a patent application was filed in 1999, and now has less than three years to run.  Four of the five ‘sharks’ very quickly declared themselves ‘out’.

This got me thinking about what motivates Australian innovators to file patent applications.  Obviously Peter Powell never intended that it would take him so long to develop and prototype his invention, or that it would be over 17 years and require the mentorship of a celebrity entrepreneur before he could finally secure a manufacturing deal and bring a product to market.  With the benefit of 20/20 hindsight, it is clear that the Powells would have been better served by waiting to apply for their patent until they were further along the development path.  No doubt, however, they would have had the usual concerns that the invention might be intentionally or inadvertently publicised, appropriated by someone, or independently developed elsewhere, if they did not move to secure their rights at the earliest opportunity.  In other words, they might have been motivated more by fear, uncertainty, and doubt, than by a rational business strategy.

When economists refer to ‘rational choice’, or ‘rational actors’, they are talking about a theoretical construct that is assumed to take account of available information, such as probabilities of events, and potential costs and benefits in determining preferences, and to act consistently in arriving at a self-determined best choice of action.  This is not, of course, how real people generally behave.  Real people often fail to obtain and take into account all of the available information, make little or no effort to determine probabilities, costs, and benefits, and allow their decisions to be swayed by emotional considerations.  Often, the more important the decision, the less likely it is that an individual will make a rational choice (in the economic sense). 

Large corporations, on the other hand, tend to perform somewhat better in the ‘rational choice’ stakes.  For example, a wealthy multinational corporation such as Google, IBM, Microsoft, or Apple, has little to fear over a decision about whether or not to file a patent application for a particular invention – the fate of its entire business hardly depends upon a single patent.  A corporation is better-served by developing a strategy or formula for determining when it will, or will not, file for patent protection, based upon extensive information, experience, and sophisticated advice to which it has ready access.

It therefore seems to me that if we want to know what ‘rational’ behaviour looks like when it comes to Australian patent filing, we should look at how foreign applicants (which accounted for 91% of all standard patent application filings in Australia in 2016, according to IP Australia’s Australian Intellectual Property Report 2017) act.  By comparing the behaviour of Australian applicants against this standard, we might be able to get a sense of just how rational, or otherwise, is their decision-making.

When I did this, I found that the behaviour of large Australian firms (defined as those having 200+ employees) very closely follows that of foreign applicants.  Small-to-medium enterprises (SMEs) appear to be slightly less rational, while private individual applicants (the category into which the Powells fall) exhibit significantly different, and clearly sub-optimal, behaviour.

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Tags: Australia, Examination, Innovation policy, IPGOD, Patent analytics, Strategy

IP Australia’s Chief Economist on the Role of Economic Modelling, the Innovation Patent... and Perpetual Motion!

[Note: This is the third, and final, part of the transcript of my conversation last year with IP Australia’s Chef Economist, Benjamin Mitra-Kahn.  The first two parts were A Conversation with IP Australia’s Chief Economist and Talking ‘Data’ with IP Australia’s Chief Economist.]

The Australian innovation patent system has been under a cloud for some time, with first the (now defunct) Advisory Council on Intellectual Property (ACIP), and then the Australian Government’s Productivity Commission, calling for the system to be abolished.  The original source of evidence behind these calls was a report produced by IP Australia’s Office of the Chief Economist entitled The economic impact of innovation patents.  The report used Australian patent filing data, linked to company-level business information, to make the case that the innovation patent is not achieving the objective of stimulating innovation among Australian small and medium enterprises (SMEs).

Many patent professionals have a different perspective on this issue, albeit one that is strongly influenced by the particular cross-section of users of the innovation patent system that they encounter in their daily practice.  I recently read a ‘defence’ of the system by a New Zealand-based practitioner arguing, in essence, that innovation patents had been useful to a number of his clients, and he would be sorry if they were to be abolished.  While I believe that there is an argument to be made, based upon the data, that more weight should be given to attorney-represented SME applicants in assessing the worth of the innovation patent system, the kinds of ‘feelpinions’ expressed in that article do not, in my view, constitute a very useful contribution to the debate.

But if those at the coal face might have difficulty in seeing the forest for the trees (if you will pardon my carbon-based mixed metaphor), might it not also be the case that economists, with their penchant for aggregating and analysing data, could sometimes fail to see the trees for the forest?  Either way, it seems that a clash of cultures has arisen between those who view the individual trees as important and those who believe that the system can only be properly evaluated via an aerial view of the entire forest.  My own inclination, absent evidence to the contrary, is to presume that each of these perspectives lies at the extreme of a continuum, and that they are therefore equally likely to provide an incomplete view.

In any event, this disparity in the perspectives of IP practitioners and economists was a topic I was very keen to discuss with IP Australia’s Chief Economist, Ben Mitra-Kahn, when we spoke last year.  But before we got to that, we first covered the future of IP Government Open Data, a.k.a. the IPGOD, and the fate of patents on perpetual motion under the new ‘utility’ requirements introduced in 2013 by the Raising the Bar patent law reforms.

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Tags: Benjamin Mitra-Kahn, Economics, Innovation patent, Innovation policy, Interview, IPGOD, Patent Office

Reforms Cut Average Patent Opposition Delays by Two Years, But They Still Take Too Long

Australia has a pre-grant patent opposition system, meaning that an opportunity is provided after a patent application has been approved by an examiner, but before a patent is actually granted, for third parties to raise objections.  The usual policy justification for pre-grant oppositions is that they allow grounds of invalidity that may have been unavailable to the examiner to be raised by parties who may have greater familiarity with, and access to, knowledge and prior art information relating to the claimed invention.  Most often, an opponent is a competitor of the patent applicant, and thus has a particularly strong incentive to ensure that an invalid patent that may hinder its own activity is not issued.  Accordingly, the public benefits from this additional level of scrutiny which can reduce the incidence of invalid patents being granted.

The disadvantage of pre-grant opposition proceedings is that they extend the period during which a patent application remains pending – sometimes by many years.  In the event that (as is overwhelmingly the case) a patent is ultimately granted, the patentee may have been deprived of a significant portion of the time during which it might have been able to immediately enforce its rights.  The wider public is also disadvantaged by lengthy delays, during which time the ultimate scope of any patent granted – or, indeed, whether or not a patent will be granted at all – remains uncertain.

Prior to the Raising the Bar (‘RTB’) reforms to the Australian patent laws and regulations, which came into effect on 15 April 2013, the largest contribution to opposition delays was the time taken by opponents and patent applicants to prepare evidence supporting their respective positions.  Although the rules nominally allocated three months to each of the three usual evidentiary periods, applications for extensions of time, and for opportunities to file additional evidence had become, in practice, almost impossible for the Patent Office to refuse.  However, the RTB reforms included significant amendments to the Patents Regulations 1991 that have substantially limited the ability of each party in a patent opposition to obtain an extension of time to prepare evidence.  With four years now having passed since the amendments commenced operation, it is timely to take a closer look at their impact on opposition delays.

Using data available in the 2017 edition of IP Australia’s IP Government Open Data (IPGOD) set, I have analysed 211 patent oppositions that have commenced since 2004, and which proceeded through to a Patent Office hearing and final decision.  Of these, 102 were conduced entirely under the pre-RTB regime, while 57 were conducted wholly according to post-RTB extension-of-time regulations.  The remaining 52 oppositions were ‘transitional’, in the sense that they commenced pre-RTB, but included at least one evidentiary period governed by the post-RTB rules relating to extensions of time.

The main findings from my analysis are that:

1. the RTB reforms have cut the average total duration of an Australian patent opposition by nearly 50%, from just over four years (1512 days) to just over two years (773 days);
2. variability in opposition duration has dropped even more dramatically, by more than a factor of three, but the standard deviation remains high at over 200 days;
3. the average total time required for parties to prepare and file evidence has been slashed from 803 days to just 250 days;
4. however, the period between finalisation of evidence and a decision following a hearing remains lengthy, averaging 332 days, and also highly variable, with a standard deviation of 130 days;
5. furthermore, where an application is not refused as a result of opposition (i.e. the overwhelming majority of cases), the period between the decision and grant of the patent is hugely variable, having a standard deviation of 162 days, in relation to an average of just 121 days.

A common contributor to non-evidence-related delays, both before and after a hearing on the substantive merits of an opposition, is the procedure that must be followed if the applicant wishes to amend the application to address grounds of opposition.  Additionally, although appeals of opposition decisions to the Federal Court of Australia are relatively rare, when they do occur they contribute significantly to the average duration and variability of post-decision delays.  Finally, it appears that it is not uncommon for delays to be incurred after finalisation of evidence primarily due to a failure of the Patent Office to progress the opposition expeditiously to a hearing.  These delays may be on the order of many months, as a result of which the average time between completion of evidence and a decision in post-RTB oppositions is now greater than the average time required for preparation and filing of all evidence by both opponent and applicant.

It is therefore clear that while the RTB reforms to the requirements for obtaining an extension of time to prepare evidence have been highly effective, many patent oppositions are still taking months longer to resolve than should be required.  What has changed, however, is that opponents and applicants are no longer the primary source of delays.  The next frontier for further improvement in the speed of resolution of patent oppositions lies within the Patent Office.

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Tags: Australia, Evidence, Extensions of time, IPGOD, Opposition, Patent analytics, Patent Office

Talking ‘Data’ With IP Australia’s Chief Economist

It has been an unduly long time – just over a year, in fact – since I published the first part of a conversation I had with IP Australia’s Chief Economist, Benjamin Mitra-Kahn.  But the two of us (mainly me, if I am honest) have finally got our act together to edit most of the transcript into a readable form.  I am therefore very pleased to be able to start publishing the remainder of our discussion.  Despite the passage of time, the content is still highly relevant, indeed in some ways even more so, considering the increasing importance of economic analysis and the role of data science in driving government policy in relation to intellectual property.

Late last year, for example, the Australian Productivity Commission (PC) released its final report on its Inquiry Into Australia’s Intellectual Property Arrangements.  The report reviewed the Australian IP system in its entirety, and made a number of significant recommendations to the Government, which are currently under consideration.  While prior reviews and inquiries into components of the IP system had been conducted by panels that included economists, the PC’s review was the widest, and the first to be conducted entirely by economists.  Naturally, the PC sought to draw conclusions and make recommendations based on evidence, and a key theme of the final report is the need for accountability in the IP system, including by developing and maintaining a sound evidence base to inform policy decisions.

It is in this context that economic research, such as the 2012 study by Boston University academics James Bessen and Michael Meurer which concluded that ‘patent trolls’ cost the US economy $29 billion in 2011, can have a huge impact.  Some people (including me) questioned the reliability of the source data and methods used in that study, but a far larger number – including some widely-read media outlets – simply took the Bessen and Meurer results at face value.

I was therefore very interested to get the views of IP Australia’s Chief Economist on that particular study, and to talk about the work that is being done in Australia to make better-quality data available to researchers, and other interested stakeholders, through the IP Government Open Data (IPGOD) initiative.

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Tags: Benjamin Mitra-Kahn, Economics, Innovation policy, Interview, IPGOD, Patent Office

‘Clustering’ Australia’s Patent Applicants

I recently generated an interactive map of Australia’s most innovative postcodes, using recent Australian patent application and maintenance data.  While it is, of course, interesting to know whether one lives or works in a particularly innovative part of the country, the exercise of classifying activity by postcode is inherently artificial, in that it presupposes there is something ‘meaningful’ about the region covered by each particular postcode.  There is, however, no reason to suppose that this is the case.  There is nothing about the boundaries between adjacent postcodes, which are set by postal authorities for their own administrative purposes, that would necessarily lead to them being well-suited to the task of locating innovative activity.

A somewhat less arbitrary regional structure (from a socio-economic perspective) is defined by the Australian Bureau of Statistics (ABS), in the form of a hierarchy of ‘statistical areas’ (SAs).  In conjunction with its Australian Geography of Innovative Entrepreneurship (2015) research paper, the Department of Industry, Innovation and Science produced its own interactive Innovation Map using the ABS SA3 definitions as the basic regional unit.  Generally speaking, SA3s are regions with populations between 30,000 and 130,000 persons and reflecting regional identity in terms of geographic and socio-economic characteristics.  This results in aggregation of data over wider areas than individual postcodes.  In Sydney, for example, it results in the greatest number of patent filings being attributed to the Sydney Inner City SA3 region.  It is not possible, at this level, to observe the particular concentration of activity occurring around Macquarie University in the North of Sydney noted in my postcode-based analysis, since this is ‘diluted’ by lower activity in other parts of the encompassing Ryde-Hunters Hill SA3 region.

The answer you receive thus depends upon the question you ask, e.g. how many patent applicants are located within a particular postcode, or within a particular SA3 region?  In both of these cases, a set of geographic areas is imposed before even commencing the analysis, and the results are constrained by this choice.  In the real world, however, innovation does not begin or end at some artificial boundary set by a postal officer or statistician.  So how can we analyse the distribution of patent applicants objectively and without applying predetermined geographic constraints?

One approach to this problem is a technique known as cluster analysis, or clustering.  The idea behind clustering is to apply an algorithm to automatically group elements in a data set according to a measure of similarity, such as geographic proximity.  It can be regarded as a form of machine learning in which the algorithm is designed to ‘discover’ patterns in the data without explicit direction from a human operator. 

In this article, I present some results of applying one of the most commonly-used clustering algorithms, k-means, to an Australian patent application data set to analyse national and local distributions of patent applicants.  This kind of analysis could be used, for example, to identify regions in which it could be most productive to invest in support for innovative industries, or to set up a business providing services to innovative companies, such as R&D tax advice or IP services.

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Tags: Australia, Innovation, IPGOD, Patent analytics