Australian Intellectual property Report 2013

Patents

In Australia, there are two routes to apply for a standard patent: either directly with IP Australia, or through an international filing system under the Patent Cooperation Treaty (PCT). Following the GFC in 2008-2009, the demand for Australian patents from both of these routes declined. PCT applications have been relatively flat since 2010, but the number of direct applications to IP Australia has rebounded strongly - with 36% growth over the last three years (Figure 1). These movements partly reflect an increased number of US residents filing directly with IP Australia rather than through a PCT application.

Figure 1: Standard patent applications at IP Australia, 2003-12.

Description: The number of PCT national phase entry applications is higher than Standard direct applications with 19,107 applications in 2012 compared to 7,251 standard direct applications. The combined total is 26,358 for 2012.

Source: IP Australia
PCT = Patent Cooperation Treaty.

90% of patent applications are from non-residents

In 2012, IP Australia received 26,358 standard patent applications (PCT national-phase entries and standard direct applications). Of these, 90% were from non-residents and the remaining 10% were from Australian residents.

• Among non-Australian residents, US residents filed the highest number (11,376), followed by Japan (1,746) and Germany (1,594).

Figure 2 shows the top countries of origin for patent applications in Australia. The colours indicate the number of filings, increasing from few filings (light yellow) to many filings (blue). Percentage changes from 2011-2012 are also noted. For instance, applications from South Korea increased by 48%, China by 34%, Australia by 11% and the US by 4%.

Figure 2: Top international patent applicants to IP Australia in 2012 and change from 2011.

Description: The growth in patent applications in Australia from 2011 to 2012 has been the greatest from South Korea (increasing by 48% to 502), China (increasing by 34% to 510), Australia (increasing by 11% to 2,627) and the US (increasing by 4% to 11,378).

Source: IP Australia

Granted patents

As with applications, the majority of patents are granted to non-residents.

Table 1: Patents granted to residents and non-residents, 2011 and 2012

Description: Non-residents received 93% of granted patents in 2012 with 16,413 compared to 1,311 for residents of a total 17,724 granted patents.

Source: IP Australia

Learn more about what happens after a patent is granted.

Innovation patents

The demand for innovation patents has increased in recent years. Filings increased from 1,341 in 2009 to 1,856 in 2012 (Figure 3). Most of this increase reflects non-resident filings and China alone accounts for over half of the overall increase.

China driving growth in innovation patent filings

Figure 3: Innovation and provisional patent applications, 2003-12.

Description: In 2012 there were 5,660 provisional patent applications and 1,856 innovation patent applications.

Source: IP Australia

Provisional patents

The total number of provisional patent filings began falling in the mid-2000s, but has stabilised in the last three years. Australian applicants accounted for 94% of total provisional filings
in 2012.

Design rights

In 2012, IP Australia received 6,449 design applications: 3,793 from non-residents and 2,656 from Australian residents (Figure 4).

Growth in design applications due to non-resident filings

Figure 4: Design applications, 2006-12

Description: Between 2006 and 2012 more non-residents applied for designs than residents, with 3,793 design applications from non-residents in 2012 compared to 2,656 from residents.

Source: IP Australia

Design applications from non-residents have been increasing in volume and accounted for 59% of applications in 2012. Applications from Australian residents have declined slightly since 2006.

The examination of a design is voluntary, but to defend a design right in court, a successful examination is required to obtain certification. If there is no pressing need to defend the design, applicants often avoid paying the cost of examination, and this is reflected in the low number of certifications in Figure 5.

The examination of a design is voluntary. Learn more about the designs application process.

Figure 5: Design registrations and certificates, 2006-12

Description: There are many more registrations each year than certifications with 5,995 design registrations in 2012 compared to 963 design certifications.

Source: IP Australia

Plant breeder's rights (PBR)

For the last decade, IP Australia received an average of 345 PBR applications per year. In 2012, approximately 45% of PBR applications were from Australian residents (Figure 6).

Applications for plant breeder's rights average about one per day

Figure 6: Plant Breeder's Rights applications, 2003-12

Description: In 2012 non-residents filed 166 plant breeder's right applications, which is more than the 138 received from residents. Since 2003 residents have filed more PBR's than non-residents in five of the ten years, specifically 2007, 2008, 2009, 2010 and 2011

Source: IP Australia

Applicants must request official examination of the plant. Learn more about the plant breeder's rights application process.

A successful examination leads to a registered PBR. The US, New Zealand and the Netherlands are the most active applicants and together comprised 65% of non-resident applications and registrations in Australia last year. Of the total PBR registrations in 2012, 56% were by Australian residents.

Figure 7: Plant Breeder's Rights registrations, 2003-12

Description: Plant Breeder's Rights Registrations have varied from a maximum of 362 in 2005 to a low of 144 in 2012, with residents receiving more than non-residents in five of the ten years, specifically 2003, 2006, 2008, 2010 and 2012.

Source: IP Australia

Trade Marks

Trade mark filings dipped at the start of the GFC. The current level of applications (in terms of both classes and filings) exceeds those prior to the crisis (Figure 8).

Majority of trade mark filings from Australian residents

The majority of trade mark filings in Australia originate from residents. In 2012, there were 41,106 (66%) applications from Australian residents and 21,527 (34%) applications from non-residents.

Figure 8: Trade mark applications, filings and classes, 2003-12

Description: The number of trade mark applications (classes) has grown from 73,437 in 2003 to 112,543 in 2012, with a dip during the global financial crisis. Filings have grown since 2003, to 62,633 in 2012.

Source: IP Australia

Applications from the US, the United Kingdom (UK), China and Japan have increased since 2011 while applications from European residents have fallen. The level of foreign applications tends to be more volatile than domestic applications.

Trade mark applications in Australia: Australia and Asia growing. Europe slowing

Figure 9 shows the total number of filings in 2012 by the first-named applicant's country of residence. The colours indicate the number of filings, increasing from light-yellow (few filings) to blue (many filings). The numbers and the change in applications from 2011 to 2012 are shown for the top ten countries of origin and Australia.

Figure 9: Trade mark applications (filings) by country of origin in 2012 and change from 2011.

Description: The growth in resident and non-resident trade mark applications in Australia for 2012 has been the greatest from the United Kingdom (increasing by 10% to 1,812), Japan (increasing by 8% to 1,105), Australia (increasing by 3% to 41,106) and the US (increasing by 3% to 7,279).

Source: IP Australia

Key issues

An often noted observation on IP is the winner-takes-all effect, when blockbuster products dominate the return in areas such as copyrighted films, patented products, trade marked global brands, and designs. This effect is evident in Australia: an estimated 30% of patents capture 90% of patent value (Figure 13).

Winner-takes-all effect in IP

Figure 13: The cumulative number and cumulative value of patents in Australia.

Description: 90% of market value is generated from only 30% of patent applications in Australia.

Source: Jensen, Thomson and Yong 2011

World trade in IP is rising, but no growth in Australia

World trade in IP is rising, but there is no growth in Australian figures. On a global scale, royalty and licensing transactions for patents have grown rapidly in volume and as a share of world GDP. While growth in global patent transactions has outpaced world GDP, this is not mirrored in Australia's economic figures:

• For the past decade, IP transactions in Australia have remained steady, with IP receipts at roughly 0.25% to 0.5% of the current account; and
• IP payments have been 1.0% to 1.5% of the current account, which means Australia pays out more than it earns.

It is worth noting that being a net importer of IP does not necessarily have adverse economic implications. As long as imported knowledge and technology translates into improved domestic productivity, there is scope for significant economic benefits.

Australia is behind the curve on investment in ideas

Australia's investment in ideas is below that of other developed countries, especially innovation leaders. Such investment is the foundation for creating valuable IP rights.

• The recent Australian Innovation System Report 2012 noted the 'considerable gap between Australia and other OECD countries'.
• In Australia, the intangible stock of capital is equal to only 4% of tangible assets, whereas in the US it is 91%.

More information

• The changing face of innovation 2012
• A report on the value of European patents evidence from a survey of European inventors

Trade Opportunities

Australia is engaging actively in the new research debate about tangible and intangible assets. The underlying relationship between intangible investment and productivity growth suggests current investment in Australia is relatively low.

Trade opportunities for technology and IP rights

Since the early 2000s, the world's most advanced economies have shifted from investing in tangible assets (machines and factories) to investing in intangible assets (research and development, design, organisational expertise and branding).

• Australia has not yet made this shift, but investment in ideas is rising.
• Firms report that of all the barriers to innovation they face, access to knowledge and technology is their lowest concern.
• In 2010-11, more than 60% of intangible investment in Australia could be protected by IP rights.

These intangible assets aim to build knowledge and IP, which in turn lead to new products and improved performance and productivity.

Trade opportunities for technology and IP rights are growing. Australia is currently a net technology importer: OECD estimates suggest that Australia spent $8.3 billion on technology imports in 2011, but only earned $4.9 billion exporting IP and technology. The structure of those exports however points to growth possibilities based on certain industry trends:

• Australia's technology trade deficit is driven by Switzerland, Japan, the US and the EU-15;
• Australia holds a technology trade surplus with most Asian countries and the majority of non-OECD countries (Figure 14); and
• foreign companies invest more in conducting research and development in Australia than Australians invest overseas.

A net technology trade surplus with non-OECD countries

Figure 14: Technology trade balance by region and selected countries.

Description: Australia is a net importer of technology from the US, EU-15, Switzerland and Japan, but a net exporter - earning more than we pay for technology - to most other countries.

Source: OECD; (EU-15 = European Union pre-2004 enlargement)

More information

• OECD report Innovation strategy: getting a head start on tomorrow
• OECD report Measuring innovation: a new perspective
• Department of Industry, Innovation Science, Research and Tertiary Education (DIISRTE) Australian Innovation System Report 2012

Innovation, IP and growth

The location and ownership of economic resources - especially IP - increasingly determine who receives the returns from production and trade. For advanced industrialised economies, innovation, not production, is what drives growth today as global supply chains place less importance on assembly locations and greater importance on the origins of key resources and ideas.

• Australia's place in the global supply chain is primarily as a raw material supplier, an activity at the bottom of the value chain according to the latest OECD statistics.

Innovation, not production, is what drives growth today

While Australia has benefited so far from strong terms of trade in mining and resources, fluctuating global commodity prices jeopardise the sustainability of these economic benefits.

The value of ideas, however, appears to be steadily rising. The iPhone is a good example of this new direction. The iPhone is wholly assembled in China, but this activity only retains 2% of the profits (Table 3).

Table 3: Distribution of value for the Apple iPhone in 2010.

Description: While the iPhone is almost completely manufactured in China, only 2% of its value is earned by that labour input. The majority of value, 72% to be exact, is earned by the owners of the technology and brand.

Source: Kramer, Linden and Dedrick (2008, 2011, 2011).

More information

Capturing value in global markets: Apple's iPad and iPhone

Plant breeder's rights in Asia

Australia is a high-tech producer in agriculture and has a strong PBR system. However, some of our closest trading partners in Asia have yet to adopt a harmonised PBR system.

Australia's potential in high-tech agriculture industry limited by lack of strong Asian PBR system

• Only Vietnam and Singapore provide equivalent PBR protection in South East Asia.
• Case study evidence suggests that a PBR system is positive but will 'vary country-by-country and crop-by-crop'.
• Plant breeder's seem more likely to release their varieties in overseas countries which offer PBRs.

The lack of a strong and well-functioning PBR system in Asia may limit Australia's potential in high-tech agriculture and related industries.

More information

• UPOV report on the impact of Plant Variety Protection

Patent backlogs

Finally, patent backlogs are a global issue with local impacts: there are several million pending patent applications around the world, according to the 2012 World Intellectual Property Indicators. Delays in granting IP rights can lead to increased uncertainty in the marketplace as well as around technology transactions.

For patents granted in Australia in 2012, it took an average of three and a half years from filing, or national phase entry, to IP Australia granting the patent. Applicants took an average of 17 months to request that the office do the examination. Once requested, it took an average 11 months to deliver the first report, and an additional 14 months to grant (Table 4). These extended periods of time during which the applicant holds their application can add excessive delays.

Table 4: Average time for a patent granted in 2011 and 2012 to move through the system

Description: Patents granted in 2012 took an average 3.5 years to get through the system

Source: IP Australia, grants only
Note: Patent applications that were refused or lapsed are not included in the figures.

At present, applicants have 21 months from receiving the first report to resolving their application. The IP reforms will lower that period to 12 months, reducing backlogs and pendency.