IPONZ report investigates the nature and source of patenting activity in New Zealand: but does it reveal the secrets of success?

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In an earlier article (1) we commented on the content of a Report from IP Australia regarding the rights it had administered in the 2020 year. We were especially interested in any insights the Report offered on the effects of Covid-19 on the IP landscape in Australia. Our conclusion was that it may be too early to predict, via statistical analysis, any decline in domestic R&D but the drop in overall design filings might signal depressed domestic and overseas manufacturing of finished articles.

The New Zealand Intellectual Property Office (“IPONZ”) has recently released a Report of its own (2) to investigate the nature and source of patent filing activity in New Zealand. The Report is a continuation of similar work commissioned by IPONZ in 2011. The Report marshals its analysis and conclusions under a series of headings which are reproduced in an Executive Summary which indicates some key trends or issues to consider (3).

A decline in patent activity

The largest overall trend in the study is the significant decline in patent activity in recent years. This is matched by a dramatic decline in publication across all technical domains starting in 2013 when looking at foreign applications.

The authors speculate that the decline in overall patent activity is likely a direct result of the substantial changes to New Zealand patent law, moving the nation to the international standard of absolute novelty, rather than the prior local novelty requirement. Since IPONZ has been able to take into account publications available via the internet as forming part of the prior art base since at least 2005 (4) this seems unlikely.

More likely is the requirement for examiners to examine for inventive step under the 2013 Act which has anecdotally also crept into their examination of 1953 Act applications. As the authors (correctly) note, while the provisions of the 2013 Act brought New Zealand into alignment with nearly all other patent offices, the significant resources this requires is likely causing a substantial backlog of patent prosecution. The most recent years seem to suggest that investments made in IPONZ are enabling a timelier process but (according to the authors) it remains to be seen how this change will impact future trends. One only hopes that since IPONZ commissioned the Report, these observations will not be ignored and efforts to build capacity within the Office will continue.

Comparison of domestic and foreign New Zealand patent activity

Analysis of patents filed by foreign applicants showed that the inventions protected in New Zealand are very high value (having very high levels of grant success). The authors deduce that foreign applicants choose to file in New Zealand as part of achieving wide global protection for their invention and these filings can therefore be described as “strategic” in nature.

While stating that it would therefore be unfair to compare domestic and foreign patent activity, the Report does disclose that a review of the levels of grant success of domestic New Zealand patents at multiple international offices (US, Europe, and Australia) also indicates a high level of grant achievement for New Zealand patentees.

Subject matter

In terms of subject matter, the majority of patents filed by foreign applicants concern pharmaceuticals. Of the top 20 largest global companies filing in New Zealand in the past 20 years, 16 are in the pharmaceutical or medical technology industries.

New Zealand domestic patent applicants continue to file heavily in technologies such as Agriculture and Food, Industrial Engineering, and Civil Engineering (specifically building materials). This pattern of technologies implies that New Zealand patent activity continues to focus on primary industries (we might add, in the case of building materials with a largely domestic focus). These technologies also reflect the nature of the most prolific domestic applicants: Fonterra, Gallagher, Carter Holt Harvey, and Crown Research Institutes (CRIs) such as AgResearch.

Geography

New Zealand’s strongest patent ties appear to be with Australia, the USA and the UK. Australia is by far the most common co-applied country for foreign applicants: 96% of patents filed in New Zealand by foreign applicants are also filed in Australia.

Japan, South Korea and China are the fastest growing larger (300+ inventions) source of foreign NZ patent applications. The fastest recent growth – albeit from a very low base – is coming from Brazil, Norway, Taiwan and Belgium. India, previously cited as a possible source of growth for New Zealand, shows a decrease beyond the previously mentioned overall decline in publication.

Academic sector leading the way in patent grant

The Report discovered that patent activity from the New Zealand academic sector produces notably higher levels of patent grant success than other domestic activity. These academic patents are generally more widely protected and are filed quadrilaterally (5) at more than twice the rate of NZ domestic filing (at nearly 16%).

Academic patent output is concentrated into five fields of study: Pharmaceuticals; Agriculture and Food; Biotechnology; Measurement and Information; and Materials Science.

Geographically, New Zealand academic institutions habitually file for patent protection in Australia and the United States (in addition to New Zealand). Interestingly, the US is now the most common foreign filing country for New Zealand academic institutions. According to the authors, this pattern of filing behaviour appears to be linked to the attempt to license patents, for which US granted status is often a prerequisite.

Profligacy in patent activity does not appear to equate with patent commercialisation success. Measurement of commercialisation outcomes and quality measurement of each institution’s patents results in a benchmark that is set by the New Zealand Dairy Board, Otago University, as well as the University of Auckland (more on this below).

The CRIs have shown an overall improvement from the 2011 study, when quality measurements such as filing breadth, collaboration, and citation are taken into account. Two of the top five entities in overall range are CRIs, with AgResearch second overall, and the New Zealand Institute for Plant & Food Research third. In the 2011 report, only AgResearch appeared in the overall top five, at fifth position.

The secret of successful commercialisation is?

As noted above, the Report identifies the New Zealand Dairy Board, Otago University, and the University of Auckland as being particularly adept at patent commercialisation. In a section entitled “Analysis of New Zealand Academic Patent Activity” the Report analyses the commercialisation potential of patent filings of New Zealand academic institutions. By plotting patent volume against intensity of filing, and then considering the extent of entanglement of patent rights (6), the University of Auckland, Otago University and The New Zealand Dairy Board come out on top.

The authors of the Report then double down by looking at the number of adverse citations caused by each of the patents owned by the relevant academic institutions. This is said to be a useful indicator of the commercialisation potential of a patent because “the collection of many adverse citations by a patent portfolio is highly desirable, as it means that there are many more potential infringers of your protected technology (the attempt at protection acting [as] a proxy for desire to market a product covered by the technology).” Alternatively, and more likely, as the Report itself notes it could just mean that a “blocking” patent is particularly noteworthy in its field.

Taking all of these factors into account, the Report then ranks the academic institutions surveyed with the University of Auckland coming out on top and Victoria University coming last. Unfortunately the authors do not offer any real insights into Auckland’s success other than to observe that, of the alternative strategies of high volumes of patents versus careful selection of specific patents which are then invested in more heavily, the latter strategy is more effective when it comes to successful technology transfer.

Conclusion

So, some interesting statistical analysis leads to the conclusion that it’s better to file less patents for better inventions if you want to successfully commercialise them. It reminds us of news articles that pronounce “Experts say Covid-19 community case could be problematic”. We (and we suspect others) could benefit from some insight into how those academic institutions which are successfully pursuing that strategy actually implement it: starting with what research to approve and fund, when and how to decide when to cull some projects in favour of the commercially viable ones, how to identify likely commercial partners, and what decisions are made and when around filing strategies.

Perhaps another report is in the offering? In the meantime, if you are from one of those organisations, or know someone who is, feel free to invite them to comment on what works (and doesn’t work) for them.

[1] Covid-19's effect on Australian IP filings
[2] Clarivate Report
[3] Much of this material is reproduced directly from the Report itself.
[4] Molecular Plant Breeding Nominees Ltd v Vialactia Biosciences (NZ) Ltd IPO P25/2005, 12 September 2005.
[5] That is, patent families filed in Europe, the United States, Japan and China.
[6] The number of patent families in which the IP was re-assigned or co-assigned with a for profit entity (excluding technology transfer corporate entities)