Chapter 4: Designs
IP Report 2020
A design right protects the overall appearance of a product and allows the holder to exclude others from using the design in any commercial way in Australia for up to 10 years. The protection covers the shape, configuration or pattern that gives a product its unique visual appearance but excludes the feel of the product, what it’s made from or how it works.
In Australia, designs can be registered without substantive examination. However, to enforce their registered design rights, owners must have their designs certified through examination by IP Australia.
Design right applications and registrations:
In 2019, IP Australia received 7 476 design applications and registered 6 977 design rights (Figure 17). The number of design right applications decreased by 4.4 per cent after they reached a record high level in 2018.
The number of registered designs in 2019 fell by 5.3 per cent compared to the number of registrations in 2018. Figure 17 shows that design registrations have a similar trend to that for applications, indicating that the rate at which applications are registered is stable over the years. Both registrations and applications decreased in 2019, following four consecutive years’ growth since 2014.
A design right is only enforceable if, after registration, it is examined and certified by IP Australia. The owner of a certified design has exclusive rights to use, license and/or commercialise the design for up to 10 years. In Australia, the proportion of designs that are certified has been around 16 per cent of design registrations. In 2019, IP Australia certified 999 designs.
Figure 17: Design right applications and registrations, 2010–19
Country of origin:
In 2019, 2 675 design applications were filed by Australian residents, while the remaining 4 801 applications were filed by non-resident applicants. Resident applications fell by 13.6 per cent from their level in 2018. In contrast, non-resident applications increased by 1.7 per cent in 2019.
The share of applications filed by Australian residents has steadily decreased over the past decade, from 48 per cent in 2010 to 36 per cent in 2019, while the share filed by non-residents has increased from 52 to 64 per cent (Figure 18). This divergence in shares was attributable to 58 per cent growth in non-resident applications from 2010 to 2019 while resident applications fell by five per cent during the same period.
Figure 18: Share of design applications by residents versus non-residents, 2010–19
The US remains the largest foreign source of design right applications, accounting for 27.9 per cent of all applications in 2019, an increase of 7.5 per cent over its level in 2018. The countries ranked second and third for applications were China (4.8 per cent of all applications) and Germany (3.8 per cent).
In 2019, the top applicants for design rights came from a diverse range of countries and industries (Figure 19). French fashion company, Louis Vuitton, was the top-ranked international applicant, filing a total of 98 applications, while US-based Apple was second with just five less applications, followed by Dutch multinational company, Phillips, which filed 77 applications. Australian-based fashion house Zimmerman Wear retained its top ranking among domestic applicants, also filing 76 applications although this represented a drop of 42 from its 2018 level. Magi Enterprises, a retail fashion company trading as KOOKAÏ Australia, was ranked second with 74 applications.
Figure 19: Design applicants, 2019: Top 5
Source: IP Australia (2020 forthcoming), Intellectual Property Government Open Data (IPGOD) 2020, data.gov.au.
Top product classes:
The Locarno Classification System is the framework of product classes used internationally and in Australia to classify registered designs.(19)End note 19. For details, see https://www.wipo.int/classifications/ locarno/en/. In 2019, the Locarno class to which the highest number of design applications was attributed was Means of transport or hoisting (class 12). Nine per cent of all class attributions went to this class, which encompasses all land, sea, air and space vehicles including their component parts and accessories. The second-ranked class was Packages and containers for the transport or handling of goods (class 9), which received slightly less than eight per cent of all class attributions.
Design rights in the digital economy
Competing in global markets for digital products, such as mobile phones and laptop computers, requires producers to bundle their innovations with appealing and intuitive designs, both to distinguish their products in the market and to attract consumers for their unique designing. Legal design protection provides an incentive for ICT-related producers to invest in design while also potentially reducing consumer confusion about the source of different offerings.
Figure 20 shows the number of ICT-related design applications filed at IP Australia by filing date from 2000 to 2018.(20)End note 20. Following the definition given by the OECD Digital Economy Outlook 2017, ICT-related designs refer to those with any subclass in 14-01 to 14-04, 14-99, 16-01 to 16-06, 16-99, 18-01 to 18-04 and 18-99 of the Locarno Classification. For details, see https://www.oecd.org/ internet/oecd-digital-economyoutlook- 2017-9789264276284-en.htm.
The annual number of ICT-related design applications has trended upwards since 2000 when a total of 254 such applications were filed, and they represented six per cent of total design applications. However, they have shown a repeated pattern of steep growth followed by large declines, especially after 2005. The sharp fall of ICT-related designs in 2009 may reflect the impact of the global financial crisis.
After 2009, ICT-related applications recovered quickly and trebled to 746 in 2013, reaching its highest percentage of total applications, 10.8 per cent, in almost two decades. They then fell by a third in 2014 before recovering to a peak of 754 in 2017 and decreased to 650 in 2018.
Despite their volatility, ICT-related design applications have effectively trebled in the past decade and almost doubled their share of total applications. This may reflect increasing design innovation activity overall in Australia’s digital economy.
Figure 20: ICT-related design applications in Australia, 2000-18
The Designs Review Project:
Assessing the economic impact of design rights
IP Australia’s Designs Review Project (DRP) is a holistic review of what drives design innovation, the role of the IP system, and solutions to encourage design to Australia’s benefit.
IP Australia commissioned the Centre for Transformative Innovation (CTI) at Swinburne University of Technology to study the economic effects of past changes to the design rights system, and whether that system is providing incentive for Australian businesses to invest in design. Using financial records from 1.1 million Australian businesses between 2001-02 and 2016-17, and an in-depth survey of 50 000 Australian business, the study covers all active Australian businesses.(21)End note 21. The CTI study used the Business Longitudinal Analysis Data Environment (BLADE), a comprehensive database integrating administrative, tax, and IP records at the individual business level, which tracks the full population Australian businesses (including subsidiary parts of larger corporations) from 2001–02 to 2016–17.
Businesses in design rights-intensive industries spend on average 50 per cent more on research and development (R&D) than the average Australian business, are more labour intensive, and are more active in global value chains.(22)End note 22. Australian businesses are assigned into their primary industry of operation using the Australian and New Zealand Standard Industrial Classification (ANZSIC) 2006. The CTI team ranked all industries for their design rights intensity—their number of active design rights per employee, over the study period. In identifying design rights-intensive industries, the team included the highest ranked industries on this measure until a sample was constructed comprising five per cent of all active Australian businesses. These businesses are concentrated in manufacturing industries but also in wholesale trade; they may perform design in Australia while contracting others to manufacture or assemble products, domestically or overseas.
The study’s results suggest that holding a registered or certified design right leads businesses to have higher productivity (sales per employee, minus materials and equipment). This effect is greater when businesses have their design rights examined and certified, but only holds for businesses in design rights-intensive industries.
Among all Australian businesses, holding design rights is a forward indicator of more R&D and more exports. In turn, a business’s use of design rights is predicted by its R&D and exports, and coupled with the use of patents and trade marks.
The value of design rights stems from their use as part of a broader competitive strategy to manage the intangible aspects of products. This is a strategy highly relevant for globally active businesses, which are more likely than the average Australian business to be design innovators.
The CTI study is one of a series of four reports commissioned for the DRP, and the full CTI report will be published as part of IP Australia’s Economics Research Paper Series.