Monday, December 17, 2012

Productivity and Patents

The Australian and New Zealand Governments are looking at stronger economic relations between the two countries. The Productivity Commissions of each country have been asked to conduct a joint study on the options for further reforms that would increase ecomomic integration and improve economic outcomes.

The final report is now out. It identifies some initiatives that 'would extend trans-Tasman integration to the benefit of Australia and New Zealand'.

One of the recommendations coming out of the report is that the Australian and New Zealand Governments should proceed with the implementation of a single application and examination process for patents. I cover this in my post Implementation of a trans-Tasman patent examination model.

Under the proposed regime a patent applicant will make a single application to a trans-Tasman portal. The applicant will nominate New Zealand and/or Australia in the application. The trans-Tasman patent application will create a New Zealand application, an Australian application, or a pair of applications that is examined by the same examiner.

The Rationale

The Report notes that the 'single application and examination process for patents ... is intended to simplify the process for those seeking a patent in both Australia and New Zealand and to facilitate closer coordination between the Australian and the New Zealand Intellectual Property Offices'.

We are told that this initiative should have benefits for both countries. The Report notes that '[t]he patent examination process is complex, and it may be increasingly difficult for small countries to maintain the necessary capacity to conduct effective examinations'. I guess we are talking about New Zealand here rather than Australia.

Also mentioned is that '[c]loser cooperation between the Australian and New Zealand Intellectual Property Offices will offer knowledge transfer and greater specialisation which can improve the ability of both offices to respond to current and future demands'.

The Feedback

The New Zealand Institute of Patent Attorneys (NZIPA) submit that a single process would increase applications by overseas owners of intellectual property for patents in both countries (when previously they would have only applied in Australia), to the disadvantage of New Zealand innovators.

Smaller markets attract a correspondingly smaller bundle of patents covering the same overall field of technology. For example, any given electronics patent in the United States will have only a 1 in 100 chance of also being patented in NZ, and about a 1 in 10 chance of being patented in Australia.

The NZIPA feels that increased harmonisation with Australia will lead to an increase in filings from applicants outside Australia and New Zealand. The extent of the increase will depend on the nature and degree of harmonisation.

Common examination processes are most likely to cause a moderate increase (perhaps 50-100%) in patent filing in New Zealand as applicants tack a New Zealand patent application into a strategy that would previously have meant they only filed in Australia. A common patent would cause an increase in overall filings due to the increased market size covered by the patent. This would produce to a radical (500% or more) increase in patents covering New Zealand.

The Policy

IP Australia on the other hand accepts in its submission that the single examination process could increase patent filings in either country. However, there are two reasons why it expects any increase to be ‘modest'.

First, although the proposed reform is anticipated to reduce costs, the commercial viability of seeking patent protection in an additional jurisdiction depends on a range of other costs associated with prosecuting, maintaining and enforcing patent rights.

Second, Australia and New Zealand are both members of the Patent Cooperation Treaty, an international patent law treaty, which already provides a streamlined approach for filing applications in multiple jurisdictions. As such, the proposed changes merely present another option for applicants who wish to file in Australia and New Zealand.

What now?

I agree with the obervations in the Report that 'the impact of a joint application and examination process on the rate of patent filing is difficult to predict — particularly given that many other factors also influence the decision to seek patent protection'.

One of the interesting issues on the horizon is a proposed sharp increase in examination fees for Australian patent applications. This may result in more than a 'modest' increase in New Zealand as patent applicants rely on a cheaper New Zealand search to support their Australian applications.

2 comments:

  1. Thanks for this post, Matt.

    Interesting note on IP Australia's new extortion - whoops, I mean 'examination' - fees: under the practice that is currently being proposed, it would not even be necessary to file a New Zealand complete application and obtain a search. Any Australian application claiming foreign priority would avoid the 'preliminary search and opinion' (PSO) process, and its associated fee. So a New Zealand provisional application would suffice! This also means that it is really only Australian applicants without international ambitions who will be affected, since foreign applicants will commonly have a priority filing in their own country and/or enter Australia via the national phase of a PCT application.

    There are some among us who have pointed this out to IP Australia Director General Philip Noonan, in the hope that it will serve to illustrate the ludicrousness of the proposal. We are not sure that it will help. The apparent arbitrariness of the rule appears to be driven by the desire to incorporate the PSO requirement into the online application process, i.e. IP Australia wants to enforce the $2200 fee at filing. If an application is not the national phase of a PCT filing, and does not claim foreign priority, the PSO fee will automatically be added so that filing cannot be completed unless the fee is paid.

    Attempting to bypass the system by filing via traditional means will not work, either. In this case, IP Australia will issue an Invitation to Pay the $2200 fee. If not paid within the specified time period, the application will lapse.

    While the proposed regulations provide for the PSO fee, and for an equivalent additional search fee that may be levied during normal examination, nothing in the Act or Regulations mandates either procedure or fee. That is, when and whether they are charged is a matter of Patent Office practice. It is therefore my hope that once it becomes apparent that these fees merely discriminate against local inventors and SMEs, someone will compel IP Australia to have a change of heart.

    Best wishes for the festive season!

    Mark

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  2. Thanks Mark. I agree with you that this proposal does look like it will discriminate against Australian resident inventors.

    An unintended but foreseeable consequence of this proposal may be that Australian resident inventors make their first filing in New Zealand rather than Australia. One way of encouraging stronger relations I guess!

    Have a great break. 2013 is looking more and more like an an interesting year.

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