Australia: The highs and lows of the 2019 Australian IP Report

Last Updated: 16 July 2019
Article by Georgina Hey and Frances Drummond

The highs and lows of the 2019 Australian IP Report

To mark .World Intellectual Property Day, IP Australia released its seventh edition of the Australian Intellectual Property Report 2019 (Report). The Report provides a snapshot of the Australian IP landscape in 2018 by consolidating data, highlighting trends and critically analysing its future.

In this article, we highlight some key statistics that arise from the Report, as well as outline some interesting research conducted in the trade marks and designs space.

Patents

Patent applications increased worldwide, averaging around 8% annual growth from 2010 to 2016.

Conversely, Australian patent filings in the same period have only grown by 2%, leaving Australia ranked 8th amongst OECD nations in terms of patent growth.

Although the innovation patent is being phased out, applications increased by 24% in 2018.

Patent grants fell by a whopping 25% in 2018.

Who is applying?

Non-residents accounted for 91% of standard patent applications and grants in 2018.

Resident applicants accounted for 51% of innovative patent applications in 2018.

Resident applications grew at a faster rate (9%) than that of non-residents (3%). This was largely due to flat growth in United States (US) applicants, who make up 45% of all applications.

Trade Marks

Trade mark applications and registrations reached a record high in 2018 – albeit by modest 4% growth.

Who is applying?

Unlike patent applications, resident applications make up 58% of applications.

However, application growth was almost entirely attributable to non-resident applications, which grew by 11%, whilst resident applications fell by less than 1%.

The top 5 sources of foreign trade mark applications are the US (over 12%), China (7%), UK (3%) and Germany (3%).

What are they applying for?

On average, 1.9 classes were nominated per each application filed.

The top five classes are: Technological and electronic apparatus (class 9), advertising (class 35), education, training and entertainment (class 41), scientific and technological services (class 42), and clothing, footwear and headgear (class 25).

Does the Australian Trade Mark Register Spark Joy?

In its 2016 Inquiry Report into Australias IP Arrangements, the Productivity Commission warned that trade mark cluttering may be a potential problem. A trade mark register is cluttered when it is crowded by unused or overly broad marks, which become costly and onerous obstacles for new applicants. In response to the Commissions inquiry, the government reduced the period before a trade mark is vulnerable to non-use cancellation from five to three years in February 2019.

However, the government may have been too quick to call in Marie Kondo. According to the Report, although there is an increasing number of cluttering marks, they form only a small proportion of all active marks on the register. In reaching its conclusion, IP Australia analysed several factors explored below.

Although the number of marks removed for non-use have doubled in the last decade, they represent less than 0.1% of the total marks on the register, in line with the general trend noted above.

On the basis that single-word trade marks are generally considered more valuable to businesses (concise and memorable), IP Australia also investigated how many of the 1000 most popular words are registered as trade marks in Australia. They found that only 56% of the list were registered, compared to 86% in the US. This statistic seems to have been extrapolated to indicate that there are still a large number of one-word trade marks available for use and registration, and therefore a lack of cluttering, although this could be viewed as a questionable logical conclusion.

The Report acknowledges that the low rate of trade mark renewal after the first ten-year registration term, may indicate the presence of trade marks in their ninth or tenth year, that are unused and therefore cluttering the register. However, one could argue that this is adequately dealt with through the non-renewal of these registrations.

While IP Australia seems satisfied with the state of its trade mark register at present, it may consider the following strategies when its time for tidying:

  • reducing the non-use cancellation grace period further;
  • reducing ten-year term of protection;
  • requiring a statement of use or intention to use at time of application; and
  • a Post Registration Proof of Use Audit Program, where randomly selected trade mark registrants are required to prove use of their mark (which its US counterparts launched in 2017).

Designs: Why is Australia lagging behind?

The Report includes a recent study, revealing that Australia has lagged behind other countries in terms of growth in both design IP intensity and design labour intensity. That is, Australia has a relatively low number of registered designs and persons employed in design-related occupations compared to countries such as Switzerland and the United Kingdom, which have stronger design economies.

The low uptake of design rights in Australia can be attributed to a number of concerning factors, such as the insufficient maximum design protection term of ten years, and perceived comparable high costs for certification and enforcement of design rights. However, there are sound reasons for utilising this underappreciated area of IP protection. Design registrations can provide relatively efficient high level rights if implemented appropriately and it is therefore disappointing to see the level of underutilisation.

In response, the Advisory Council on Intellectual Property made a number of recommendations in their Review of the Designs System, some of which have been accepted by the Australian Government, including:

  • reducing fees for multiple design applications;
  • increasing international harmonisation to reduce red tape associated with exporting and hence, the cost of design protection; and
  • extending the maximum term of design protection to fifteen years if a decision is made to join the Hague Agreement.

What design rights are people interested in?

It was also found that Australians register their designs under significantly different product areas (Locarno classes) compared to non-Australian applicants. Our designers tend to focus on Clothing (class 2), Furnishings (class 6), Buildings units and construction elements (class 25) product classes, whilst non-resident applicants mainly register their designs under the Recording, telecommunication or data processing equipment product class (class 14).

In particular, the US is a major importer of computing equipment. The Report considers the changing nature of the US design workforce as designers are moving from computer manufacturing to online services. It asserts that due to such change, there needs to be a stronger focus on the protection of virtual or non-physical designs in Australia (see our article here). This would be one simple way to increase the use of the registered design system in an area which is becoming increasingly relevant to our everyday lives.

Final comments

The latest statistics highlight some concerning areas for IP rights in Australia, including the relative shrinking of patent filings in Australia against global filing statistics, and the reduction in the number of Australian designers seeking to register their designs as a proportion of the overall filing figures. Perhaps some of the patent filing reductions can be accounted for by global economic movements, and the delayed impact of some of the Raising the Bar changes that have taken place in Australia.

It is positive to see that the relatively minor changes to the Australian trade mark systems are not apparently slowing the growth of filings in that area.

Australias IP regime has traditionally been seen amongst the best in the world. Despite the latest reduction in some filing statistics, IP Australias review does indicate a positive desire to monitor the IP rights landscape in the face of the relatively large number of changes made to the Australian IP regime over the past few years.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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