Welcome back to Industry Shifters.

Today we are exploring the interesting world of intellectual property.

Will patent trolls become a disruptive threat to Australian businesses?

Let’s find out!

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Patent Trolls

A patent troll is an entity that acquires patents to profit by enforcing patent rights against alleged infringers, often through litigation or licensing demands, rather than promoting technological advancement.

While patent troll activity has been less prominent in Australia compared to the US, there have been instances of companies acquiring patents primarily for litigation purposes.

Potential Impact

It is hard to put an exact figure on the value of Australia’s patent market, however it is clear that they form a significant part of the country’s economy, as patent-holding businesses account for approximately 35% of Australia's GDP.

Therefore, if this trend of patent trolling grows to become a significant thorn in the side of Australian businesses, in a worst case scenario patent trolls could potentially leach tens (if not hundreds) of millions of dollars per year out of Australia’s $1.7 trillion economy.

Why this WILL be disruptive:

• High Patent Values in Key Industries: Australia’s robust industries, such as biotechnology, pharmaceuticals, and software, make it an attractive target for patent trolls. These sectors hold valuable patents, and trolls often acquire rights in high-demand areas to leverage claims against companies operating within them.

• Limited Legislative Barriers: Unlike regions that have enacted patent reforms to curb trolling, such as the U.S. with the America Invents Act, Australia currently lacks substantial protections against frivolous patent litigation. This limited regulatory framework may make the country appealing to trolls who see it as a low-risk, high-reward market.

• Global Expansion of Patent Trolls: Non-practicing entities and patent assertion entities are expanding globally and view Australia as a relatively untapped market. The growing patent sector and patent values in Australia could attract more patent trolls looking to exploit gaps in protections.

Why this WON’T be disruptive:

• Existing Legal Deterrents: Australia’s legal system already includes factors that discourage frivolous litigation. For instance, the Federal Court of Australia requires a high level of specificity in patent infringement claims, limiting vague or overly broad accusations. Additionally, Australia’s fee-shifting rule, where the losing party typically bears the legal costs, deters unnecessary lawsuits that are common in trolling.

• Rising Legal Resources for SMEs: With increasing recognition of the patent troll issue, Australian SMEs have better access to legal resources, such as defence funds and IP insurance, aimed at combating frivolous claims. This makes troll tactics less effective over time as SMEs are better equipped to defend against them.

• Lower Patent Filing and Limited Risk of Trolling: Australia has a lower ratio of resident to non-resident patent filings, making it somewhat less attractive to trolls compared to larger patent markets. The Australian Productivity Commission has noted that while patent trolls exist, they pose a limited threat, indicating that the market conditions do not strongly favour troll activity.