As previously reported on this blog, in the last two years several large Australian patent attorney firms (having a combined market share of close to 70% in Australia) have been listed on the stock exchange or been acquired by publicly listed companies. This means that almost 70% of the market share of Australian patent filings is controlled by three publicly listed companies:
- Intellectual Property Holdings (IPH) Limited, owner of Spruson & Ferguson (Australia, China, Singapore & Hong Kong), Fisher Adams Kelly Callinans, Pizzeys, and Cullens.
- Xenith IP Limited, owner of Shelston IP, Watermark and Griffith Hack.
- Qantm IP Limited, owner of Davies Collison Cave and Freehills Patent Attorneys
With these publicly listed companies owning up to 4 large firms and having operations extending beyond Australia and New Zealand to South East Asian jurisdictions such as China, the unaddressed issue of conflict of interest has started causing some consternation.
The individual firms owned by the same parent company (“the sibling firms”) continue to claim independence from each other. However, there are numerous examples of sibling firms acting on opposite sides of the same ongoing contentious matters.
There is also concern that sibling firms are prosecuting patent and trademark applications for clients who have contrary or competing whose commercial interests.
In our opinion, the conflict of interest provisions in the Code of Conduct (the Code) for Patent and Trade Mark Attorneys 2013 (Cth) (“the Code”) do not address the very real and unique conflict issues faced by the sibling firms’ attorneys on a daily basis.
The scenario of competing sibling firms owned by the same entity is unique to Australia and a similar situation specific to patent and trade mark attorneys has not arisen elsewhere in the world.
Too Little, too late?
The 2013 amendments to the Patents Act 1990, meant that Australian patent and trade mark attorney firms could incorporate. This led to the restructuring of firms and the subsequent purchase of some of Australia’s biggest patent and trade mark attorney firms.
The acquisition of patent and trade mark attorney firms commenced in 2014, with IPH being the first of the three public listed companies to start spending, purchasing five well-known Australian patent and trade mark attorney firms in two years.
Xenith IP Limited and Qantm IP Limited have followed in IPH’s successful footsteps by essentially copying IPH’s modus operandi of acquiring firms and operating these firms as separate (but commonly owned) businesses.
Interestingly, the scenario of sibling firms was never envisioned in the explanatory memorandums which initially proposed the 2013 amendments. Expert Australian IP blogger and author Mark Summerfield has neatly summarized the current situation thus, “the horse has bolted and that there is little point (or practicality) in now seeking to shut the gate”.
The Trans-Tasman IP Attorneys Board (“the Board”), is the regulatory body responsible for regulating patent attorneys in Australia and New Zealand. The Board is currently examining the conflict issues generated by70% of Australian attorneys being the employees of 3 companies.
A consultation paper was recently released by the Board and is available for viewing at IP Australia’s website. The consultation paper details some of the issues that are likely to be addressed by introducing revisions to the Code once submissions are received.
The consultation paper explicitly states that “the listed group scenario is a reality, and indeed a significant commercial reality given the concentration of attorney work in Australia currently undertaken by listed group firms.”
However, the Board does recognize that, while the structures for each of the listed companies are valid and legal business structures, the conflict issues, particularly those of sibling firms acting for clients with competing commercial interests is very important and must be addressed.
An Opportunity for foreign patent applicants to have a say
International corporations and their representatives rely heavily on Australian intellectual property firms to file and prosecute Australian (and New Zealand) patent and trademark applications. IP Australia’s 2016 IP Report revealed that over 90% of patent applications (21,484 out of 23,098 patent applications) filed in Australia in 2016 were owned by overseas applicants. United States based applicants file more than 50% of Australian patent applications, with Japan, Germany and the United Kingdom being the next big foreign filers.
The sheer weight of foreign filing numbers means that the seismic shift in Australian attorney firms’ ownership structures affects foreign attorneys (and their clients), not simply Australian attorneys and it is important that all stakeholders, including foreign applicants and attorneys, are aware of the ongoing changes in the Australian profession and file submissions detailing any concerns.
The Board has invited submissions from interested parties to make written submissions before 3 June 2017. Written submissions should be sent to MDB-TTIPABCodeOfConduct@ipaustralia.gov.au. Details for making the submissions are available on IP Australia’s website.