Who Were The Leading Australian Patent Prosecution Firms in 2021?

With significant increases in both standard and (especially) innovation patent applications, 2021 should have been a bumper year for patent attorneys operating in Australia.  And although that was true overall, the benefits were not uniformly distributed.  While some smaller firms experienced gains in filing numbers well above the overall growth rate, a number of larger firms within the publicly-listed ownership groups struggled to keep pace.  Spruson & Ferguson remained the biggest filer of new applications – particularly following integration of the Shelston IP business – but achieved virtually no overall growth in new filings.  The number of applications filed by third-placed Griffith Hack actually fell in 2021, with the firm narrowly avoiding falling behind fourth-placed FB Rice.

Having a focus on incoming work from foreign applicants, Spruson & Ferguson filed only marginally more new standard patent applications on behalf of Australian residents than its closest competitors, Davies Collison Cave and Griffith Hack.  About half of all filings handled by Spruson & Ferguson originated in the US, slightly above the overall proportion of 45% Australian standard applications by US applicants.  A handful of firms – particularly RnB IP, Pizzeys, and FPA Patent Attorneys – rely far more heavily on US-originating work, while Madderns is notable for handling a higher proportion of filings from China than from the US.

Looking beyond filings to ongoing patent prosecution work, Spruson & Ferguson was the leader in 2021, by a large margin.  Generally speaking, firms with larger numbers of filings over the previous few years had more prosecution work in 2021, which was an advantage for Spruson & Ferguson and Griffith Hack despite their failure to keep pace with their competitors in terms of growth in new filings.  The flip side of this, of course, is that relatively lower filing numbers in 2021 will result in less prosecution work over the coming years.

Read on for all the details.

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Tags: Annual patent data, Australia, Patent analytics, Patent attorney profession

Federal Appeals Court Affirms the Role of ‘Balance’ in Scheme for Extending Term of Pharmaceutical Patents

On 18 March 2022, the Full Court of the Federal Court of Australia issued decisions relating to term extensions of patents covering pharmaceutical products: Commissioner of Patents v Ono Pharmaceutical Co. Ltd [2022] FCAFC 39 (‘Ono’); and Merck Sharp & Dohme Corp. v Sandoz Pty Ltd [2022] FCAFC 40 (‘MSD’).  The two decisions have (at least) three things in common.  First, both were decided unanimously by a panel comprising Chief Justice Alsop and Justices Yates and Burley.  Second, both found against the patentee, with the court reversing the primary judge’s decision in Ono granting an extension of term, and confirming the primary judge’s decision in MSD nullifying a previously granted extension of term.  And, third, both referred to the principle set out in the objects clause (section 2A) of the Patents Act 1990 that ‘the patent system balances over time the interests of producers, owners and users of technology and the public’ (emphasis added).

The scheme for extending the term of pharmaceutical patents inherently involves a balancing act.  Its primary purpose is to ensure that patentees are not excessively disadvantaged by delays in securing regulatory approval to market patented products.  For example, if a drug is not approved for use until 10 years or more after a patent application is filed, the patentee may have less than half of the standard 20 year patent term remaining to compensate for its investment in discovery and development before becoming exposed to generic competition.  On the other hand, an extended period without competition necessarily exposes the wider public to higher costs of medical treatment.  In an effort to balance these competing interests, the relatively complex provisions of the Patents Act aim to ensure that a ‘typical’ pharmaceutical patentee benefits from up to 15 years of exclusivity, by granting extensions of the patent term of up to five years, i.e. to a maximum of 25 years from filing.  (A 2013 review of pharmaceuticals patents – which the government initially declined to release – found that 53% of such patents have an effective life of 15 years, while 89% have an effective life of over 10 years.)

The primary provisions of the Patents Act governing extensions of patent term are:

1. section 70, which sets out the conditions that must be satisfied before a patentee can apply for an extension of the term of its patent;
2. section 71, which sets time limits for filing of applications for extensions of term; and
3. section 77, which specifies how the duration of an extension of term is to be calculated. 

In each of Ono and MSD, the patentee sought to obtain an advantage, or avoid disadvantage, by arguing for beneficial interpretations of the extension of term provisions.  In each case they failed.  And in both cases the Full Court upheld the principle that the purpose of the extension of term scheme is to balance the competing interests of the patentee of a pharmaceutical substance against the public interest in the unrestricted use of the pharmaceutical invention after expiry of the patent.  In Ono, in particular, the Full Court rejected the proposition that sections 70, 71, and 77 should be construed to achieve a commercial outcome for the patentee.  In MSD the Full Court again invoked the principle of ‘balance’ in declining to permit an extension of term based on a later Australian marketing approval, in circumstances where the patentee had already obtained the benefit of an ‘export only’ approval of a substance falling within its patent claims with an effective life of over 15 years.

The relevance of the Full Court’s focus on balancing of interests, and its references to the objects clause, could extend beyond these cases.  The three judges here are all among the five who recently heard the appeal in the Thaler ‘AI inventor’ case, in which the competing interests of developers and owners of ‘invention machines’, and of the broader public (who might not see the same benefit in granting patent monopolies on automatically-generated inventions), are potentially at stake.  It will be interesting to see whether they adopt a similar approach to weighing up the balance of interests in that case, also.

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Tags: Appeal, Extension of patent term, Objects clause

Australian Appeals Court Seems Sceptical of Push to Name DABUS ‘AI’ as Inventor

On 9 February 2022, the appeal by the Commissioner of Patents against the decision of Justice Beach finding that the ‘AI’ machine known as DABUS (‘Device for the Autonomous Bootstrapping of Unified Sentience’) could be named as inventor on a patent application filed by Dr Stephen Thaler, was heard before an expanded Full Bench of the Federal Court of Australia.  The five-judge panel comprised Chief Justice Allsop, and Justices Nicholas, Yates, Moshinsky and Burley.  The appointment of an expanded panel (three judges is usual), including the Chief Justice, is notable, and suggests that the court considers the question of whether a machine can be an inventor for the purposes of the Patents Act 1990 to be one of particular legal importance.  The case was argued for Dr Thaler by David Shavin QC (who also appeared at first instance), and for the Commissioner of Patents by Sophie Goddard SC (appearing for the first time in this matter).  Hamish Bevan (who represented the Commissioner at first instance) argued the Commissioner’s case in reply.  The proceedings were conducted via video conference, and I observed online.

I think that it is fair to say that Dr Thaler did not experience such a smooth ride on appeal as he did at first instance.  Where Justice Beach seemed positively enthusiastic about the idea of allowing patent applications to be filed, and patents granted, for inventions autonomously devised by machines, the judges on the Full Bench appeared sceptical of a number of the arguments presented on behalf of Dr Thaler, and at times subjected Mr Shavin to fairly sharp questioning and criticism.  There are some aspects of the original decision that are unlikely to survive the appeal, although Dr Thaler only requires one line of reasoning to stand in order to prevail.

Based on the arguments presented, there are a number of sub-questions that the Full Court may need to decide.  First, there is a question of whether the case is simply about determining the meaning of the word ‘inventor’ as a matter of pure statutory construction, or about deciding whether or not to develop the concept of the inventor according to a common law methodology.  Either way, the court then needs to decide whether or not a non-human, machine inventor should be included.  In doing so, it may need to consider whether non-human inventors are compatible with other provisions of the Act, and in particular with the section that deals with the entitlement to be granted a patent.  A machine cannot possess or assign intellectual property rights, so provisions that most naturally apply to transfers of title between (natural or legal) persons may not necessarily be compatible with ‘AI’ inventors.  Justice Beach found that two different mechanisms specified in the legislation could apply to enable Dr Thaler to claim ownership of patent rights on inventions made by DABUS.  He will need at least one of these to survive the appeal.

There are a number of avenues by which the Commissioner could succeed in her appeal, but by the same token there are multiple opportunities for Dr Thaler’s defence of the appeal to be successful.  It is difficult to predict which lines of reasoning the court may adopt, and indeed it is not unlikely that the judges will hand down multiple concurring and/or dissenting opinions.  On balance, my sense is that the appeal is more likely than not to succeed – perhaps by a majority rather than unanimous judgment.  If so, then Australia will rejoin the many other jurisdictions in which corresponding applications naming DABUS as inventor have been rejected.

The remainder of this article provides a summary of the major arguments presented at the hearing.  It is somewhat lengthy, but considerably less so than the full day spent at the Federal Court!

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Tags: Appeal, Artificial intelligence, Australia, DABUS, Inventorship, Patent law

Australian Medical/Biotech ‘Patent Box’ Tax Legislation Revealed

On 10 February 2022, the Treasury Laws Amendment (Tax Concession for Australian Medical Innovations) Bill 2022 was introduced to the Australian parliament, and received its first and second readings in the House of Representatives.  The Bill represents the fulfilment of an undertaking in the Federal Government’s 2021 budget to introduce a ‘patent box’ scheme to encourage innovation and commercialisation in the Australian medical and biotechnology sectors.  A ‘patent box’ (the name refers either to an actual box on a form, or to a notional box into which a company allocates a proportion of its income) is a tax incentive scheme under which income that can be directly attributed to the commercialisation of patented technology (as distinct from other attributes, such as branding, know-how, or manufacturing capability) is taxed at a reduced rate. 

Under the scheme established by the legislation, the minimum concessional tax rate is 17%, compared with the normal corporate tax rate of 30% for large companies, or 25% for small and medium enterprises (SMEs).  However, the full benefit of the scheme is only available to the extent that R&D leading to development of a patented invention is conducted in Australia.

As the government had indicated in its original budget announcement, only medical and biotechnology inventions will be eligible for the patent box tax concession.  In particular, a patent will be eligible if it is ‘linked’ to a therapeutic good included on the Australian Register of Therapeutic Goods (ARTG).  This means that a product, which is covered wholly or in part by the claims of the patent, must be a therapeutic good (e.g. a pharmaceutical substance or medical device) that requires, and has received, marketing approval in Australia.

Interestingly, however, the patent relied upon as the basis for eligibility under the patent box scheme need not be an Australian patent.  A patent will qualify under the scheme if it is an Australian standard patent (i.e. innovation patents are not eligible), a US utility patent, or a European patent granted under the European Patent Convention (EPC). 

It was initially proposed that only patents having a priority date after the announcement would qualify.  However, in further positive news, according to the Bill patents granted or issued after the date of the budget announcement (11 May 2021) will be eligible.

It is intended that the patent box concession will commence in the coming financial year, i.e. from 1 July 2022.  However, for this to happen the legislation will need to be passed in both houses of parliament before federal election is called.  It is widely anticipated that this will occur in early to mid April, shortly after the government hands down its budget on 29 March 2022.  With no further sitting days scheduled prior to budget week, it could become a race against time to get the legislation through.

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Tags: Australia, Innovation policy, Legislation, Patent box, Tax incentives

Mea Culpa! Corrections to 2021 Australian Patent Filing Statistics Show a Bigger Bumper Year than Originally Reported

This week I discovered an obscure and insidious bug in the code that maintains my Australian patent database.  It has existed for months, but did not manifest itself until January, when I prepared the data for my reports on 2021 patent filings.  The impact was that around 2,000 standard patent applications, or just over 6% of the total, went missing.  These were almost exclusively PCT national phase entry applications, mostly filed by foreign applicants.  I have now fixed the bug, and updated my data.  The two affected articles, Australian Patent Filings Up in 2021, Aided by Innovation Patent’s Demise and Huawei Takes Top Spot in Australian Patent Filings, While Aristocrat Slides Down Rankings (which was originally titled ‘LG Takes Top Spot…’), have been corrected.  The general analysis and observations are substantially unaffected by the corrections, although obviously some of the specific numerical results were wrong.  For those who have already read the original articles, here is an overview of the more significant corrections.

Most notably, the total number of standard patent applications filed in 2021 is higher than I originally reported, at 32,393 rather than 30,343.  This makes last year a new record for Australian filings by an even larger margin than reported!

The ‘missing’ applications were essentially a random sample of the overall PCT national filings, so the corrections do not change the ranking of countries of origin – the top five are still the US, Australia, China, Japan and Germany.  The numbers of filings from the US and Australia grew by more than originally reported, while Chinese originating filings remained steady compared to 2020 (not declining, as reported), Japanese filings fell by less than reported, and German filings grew slightly, rather than declining slightly as reported.

The leading applicants remain largely unchanged, although there have been some changes in ranking due to small corrections in total filing numbers.  LG and Huawei are almost neck-and-neck at the top of the filing table, so it is not hugely surprising that they have swapped places, with Huawei (255 applications) just ahead of LG (251 applications).  My apologies to any LG fans who may have been celebrating the win!

Aristocrat picked up no additional applications in the correction (none of its 2021 filings were based on PCT applications), and its slide down the rankings was therefore slightly greater than originally reported, down to 25^th rather than equal 21^st place.  It is still the leading Australian resident applicant, by a comfortable margin.

Provisional filing numbers were unaffected by the software bug, while innovation patent filings were negligibly impacted – just 10 applications went missing from a total of 7,653 filed in 2021.

My apologies to anyone who may have relied upon the original data for any reason.

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Tags: Annual patent data, Australia, Patent analytics