TransTasman risks, page-5

Hi Fangk,
I don’t believe there is any immediate concern. It may be good for another 6 months. I could not find anything about escrow periods for the Pizzeys and Fisher purchases. Do you know when they expire? I put your ePCT question to the patent attorney and for a bottle of wine I was given a detailed explanation.
Patent attorneys traditionally made their money on renewals. This changed in the 1980s as various third party renewal businesses provided more cost effective services. Patent attorneys reacted by increased the patent and trademark filing fees. In 2001 Australia joined the Madrid protocol, a centralised trademark filing and payment system provided by WIPO. Madrid took some time to take effect as various countries had to enable new legislation but attorney firms saw their trademark business collapse from 50% to 20% of profits over a few years. ePCT national phase will have a much larger impact on profits than the Madrid protocol.
The present ePCT is a system provided by WIPO and is used to file and manage PCT applications. Most patent applications filed in more than one country originate from a PCT application. The PCT application provides many benefits including delaying the step of filing individual applications in each country around the world. It can cost an owner 50k or more in attorney (middle man) fees to file into 10 countries.
In the present system the owner will send out filing instructions to the middleman attorneys via its patent department (big corporate) or through its local legal representation (the originating attorney). Each of the middleman attorneys will enter the national phase in their country and invoice the owner or the originating attorney for the service.
ePCT national phase is an add on to the existing and highly successful ePCT system. There is an additional tab or screen in which the owner or originating attorney can tick boxes to enter the national phase in various countries. Also there should be a centralised payment system for distributing the received funds to the selected national patent offices. The computer system will file patent specification and other information.
With ePCT (national phase) the middleman attorneys are no longer involved in entering the national phase. Globally this will save patent applicants billions of dollars in middleman attorney service fees.
e-PCT national phase will seriously impact on the revenue and profits made by firms who make most of their money from processing national phase filings. These filings are the most profitable and highly automated aspect of an attorney practice. In FY14 Sprusons filed in the order of 4500 national phase applications in Australia, New Zealand and Singapore. The profit on those filings would be in the order of 10m and possibly more. Before tax they made 29m in total profit in FY14.
When ePCT national phase happens it will disrupt the existing patent attorney business model. The end users are expected to quickly adopt the system since it is part of the existing and trusted ePCT system. It offers massive cost savings to the corporate clients or additional profits to the originating attorneys who can raise a new service charge for attending to the filing overseas (by ticking a box). Over the longer term it is likely that other types of patent filings (convention applications) will be filed under the PCT system to benefit from the reduced costs.
There are no barriers to its implementation as it is permitted under the existing legislation. The final stage is a successful trial and the WIPO minutes suggest that this may be underway. It is consistent with the WIPO timetable for it tends to take WIPO three years to propose and implement a major change. ePCT national phase was proposed in 2013.
IPH has been expanding into Asian countries but it will not replace the lost profits. Only 10% of patents filed in Australia originate from Australian businesses and this work is much less profitable. Most Australian patents come from US, Japan and Europe not Asia. It does not work to buy a Japanese or US firm since the other Japanese or US firms would not send you their work.
The effect of ePCT national phase is well understood within the attorney profession. There have been presentations about it and commoditisation at conferences. Perhaps it is just a coincidence that IPH listed in 2014 after the announcement of ePCT national phase in 2013.