02 December 2014

STEM Benchmarking

The Office of the Chief Scientist Benchmarking Australian Science, Technology, Engineering and Mathematics report [PDF] comments
Science, technology, engineering and mathematics, referred to as STEM, are central to our future because of their role in securing Australia’s competitiveness in a rapidly changing world. The Prime Minister, the Hon. Tony Abbott MP, acknowledged this on 11 June 2014, when he said, ‘… science is at the heart of a country’s competitiveness, and it is important that we do not neglect science as we look at the general educational and training schemes’.
In view of the central importance of STEM, we need to know how we perform. We need to get ‘a fix’ on our performance—not an easy one, against ‘the world’, but a more challenging one, against nations that, like us, are essentially free-market economies with serious science engagement. We often depict Australia as ‘punching above its weight’ in research performance, with about 3 per cent of research outputs from 0.3 per cent of the world’s population. But approximately 90 per cent of all STEM research publications are attributed to roughly 15 per cent of countries and 90 per cent of citations are attributed to approximately 13 per cent of countries. Where we stand relative to ‘the world’ is of marginal value only, serving mainly to direct our attention from where it should be, which is on how to improve.
STEM is a global enterprise. As nations with which we collaborate and compare ourselves take planned, often urgent, action to improve their STEM base, we must be alert to the changes and decide what we ourselves want to do. In order to make wise choices, however, we need to know the baseline from which we start and have a view about where we want to be within a reasonable time.
This report provides insights into where we are and will help us decide what we should do. As an analysis mostly at a high level—signposts in kilometres not metres, let alone centimetres—it is intended to highlight performance and trends that might warrant further investigation, prompt questions for government and contribute to discussion on the future shape and scale of Australian STEM.
Chapter 4 of the report
examines the number of Patent Cooperation Treaty patent applications and triadic patent families filed by Australian inventors compared with inventors from other countries. 
It states - 
  • The number of Patent Cooperation Treaty applications and triadic patent families filed by an Australian inventor has fallen steadily in recent years. PCT applications have fallen by 22 per cent from their peak in 2005; triadic applications have fallen by 45 per cent from their peak in 2000. 
  • The number of PCT applications and triadic patents has increased for all the comparator countries other than the United Kingdom. 
  • The number of Australian PCT applications with a foreign co-inventor increased between 2002 and 2011. Despite this, the proportion of Australian PCT patents filed with an international co-inventor in 2011 was lower than that for most of the comparator countries, including all the European countries.
Patent systems have an important role in stimulating technological innovation by providing legal protection for intellectual property and disseminating useful technical information (Merrill et al. 2004). This facilitates technology transfer and the commercialisation and diffusion of knowledge. The patent system has clear economic objectives, but it also leads to non-economic benefits by increasing innovation and opening up access to new technologies (Advisory Council on Intellectual Property 2011). Patents can demonstrate a country’s capacity or willingness to exploit knowledge and translate it into potential economic benefits (European Commission 2012). They have been used to track knowledge diffusion across countries, regions, technologies and companies and to assess the international reach of innovative activities (Dernis 2007). Patent counts have been described as ‘measuring something above and beyond R&D inputs, a creation of an underlying knowledge stock’ (Hall et al. 1986).
Like many countries, Australia issues national patents through a national patent office, thereby protecting inventions developed within national boundaries. Local patents represent only a small proportion of total Australian patents, however: a better benchmark for innovation with international ramifications is a comparison of applications under the PCT and triadic patent families. For the purposes of this report, the nationality of a patent is considered to be the inventor’s country of residence.
4.3.1 The Patent Cooperation Treaty
Australian patents provide protection within Australia. To obtain protection in other countries inventors can either file separately in individual countries or file a single international application under the Patent Cooperation Treaty, which is administered by the World Intellectual Property Organization. A patent registered under the PCT is the closest thing to an international patent and protects inventions in over 180 countries.
Both applicants and patent offices in PCT member states benefit from the uniform formality requirements, the international search and preliminary examination reports, and the centralised international publication provided by the PCT system (World Intellectual Property Organization 2010).
4.3.2 Triadic patent families
Another measure of international innovation is the triadic patent family—a set of patents protecting the same invention and filed at the European Patent Office, the Japanese Patent Office and the US Patent and Trademark Office. It has been suggested that triadic patent families provide an improved measure of innovative performance and technological change at the international level (Dernis 2003). This is because triadic patent families cover a single invention and the resultant indicators are less influenced by individual patent offices’ rules and regulations and patenting strategies (Dernis 2007).
The OECD Patent Database, created by the Directorate for Science, Technology and Industry, covers patents filed under the PCT, and counts are based on data received from the European Patent Office. Only the original application is counted, thus avoiding double-counting of the same invention. The EPO Database provides good coverage for both OECD member and non-OECD member economies from 1981. PCT applications are presented according to the region of the inventor’s residence and the priority year.  The OECD Patent Database also covers triadic patent families. Data on triadic patent families are mainly derived from the EPO’s Worldwide Statistical Patent Database (PATSTAT).
As in the previous chapter, two groups of benchmarking nations were identified for analysis—countries at stages of development similar to that of Australia and with similar governance systems (the United States, Canada and selected European nations), and selected countries in the Asia–Pacific region.
This chapter compares Australia with the 11 European comparator countries (Austria, Belgium, Denmark, Finland, France, Germany, Ireland, Norway, Sweden, Switzerland and the United Kingdom), North America (Canada and the United States), and countries in our region (China, Japan, New Zealand, South Korea and Singapore).
4.6.1 Australian patent applications, 1981 to 2011
In 2012, 26 358 ‘standard patents’ were filed in Australia—10 per cent by Australian residents and 90 per cent by foreign applicants (IP Australia 2013). PCT applications accounted for 72 per cent (19 107) of the total. US residents filed the highest number of Australian standard patents (11 376), followed by Japan (1746) and Germany (1594). The number of PCT patent applications by an Australian inventor increased from 172 in 1981 to a peak of 2092 in 2005 (see Figure 4-1). The most rapid growth was between 1996 and 2005; this was followed by a 22 per cent decline from 2005 to 2011. Triadic patent families form a much smaller group than PCT patents (see Figure 4-2). In 1985 there were 153 triadic patents with an Australian inventor, compared with 357 PCT patents. By 2000 the number of triadic patents had increased to 380 (a 148 per cent increase) and PCT patents to 1755 (362 per cent). After 2000 triadic patent families began to decline (by 45 per cent from 2000 to 2011), whereas PCT applications continued to rise until 2005. The decline in PCT applications after 2007 might in part be a reaction to the global financial crisis. The Department of Industry reported an 11.6 per cent decrease in Australian standard patent applications (that is, applications filed in Australia) from 2007 to 2009. It attributed this to economic disruption caused by the GFC (DIISR 2012). By contrast, the decline in triadic patents started in 2001, six years before the GFC began.
4.6.2 Australia’s patent applications and those of comparator countries, 2002 to 2011
With the exception of the United Kingdom and New Zealand, the number of PCT applications filed by each of the comparator countries increased between 2002 and 2011 (see Figure 4-3 and Table 4-1). Australian applications declined by 7 per cent, compared with increases of between 10 and 50 per cent in many of the European comparator countries. Australia’s rank within the comparator countries decreased from ninth in 2002 to eleventh in 2011, with Switzerland and China overtaking Australia. The United States had the greatest number of PCT applications in both 2002 and 2011. By 2011, however, the gap between the United States and its nearest competitor, Japan, had decreased. China’s PCT applications grew by 1194 per cent between 2002 and 2011, from 1316 to 17 027. Of the Asia–Pacific countries analysed, PCT patent activity in China was well behind that of Japan but ahead of Korea, Australia, Singapore and New Zealand. Asian nations have led the growth in patent applications, with China, Korea, Japan and Singapore increasing the most. The number of Australian triadic patent families declined by 29 per cent between 2002 and 2011, from 294 to 209. Among the 19 countries analysed in this chapter, Australia had the fifth lowest number of triadic patent families in 2011 (see Figure 4-4).
4.6.3 PCT applications in Australia and comparator countries after the global financial crisis
After the global financial crisis global PCT applications fell by 4.5 per cent in 2009 (World Intellectual Property Organization 2010), the first such decrease in three decades (Mara 2010). In some ways the GFC rearranged the international patent landscape, resulting in large decreases in applications in many Western nations but growth in many Asian countries. China, in particular, experienced a large increase in PCT applications between 2008 and 2009, at 29.7 per cent (see Table 4-2). The countries that experienced the greatest decrease in PCT applications immediately following the GFC were Ireland (–11 per cent), Denmark (–10 per cent), the United Kingdom (–6 per cent), Sweden (–5 per cent) and the United States (–4 per cent). Although Australia’s PCT applications increased by 1 per cent between 2008 and 2009, the number declined again in 2010 and 2011, continuing the fall from the 2005 peak (see Figure 4-1).
The overall patenting trend for Australia before and after the GFC was one of declining PCT and triadic patent activity. This contrasts with most of the European countries analysed: all but the United Kingdom achieved overall growth in PCT patent applications from 2002 to 2011, despite a general slowdown in the post-GFC years.
4.6.4 International collaboration in PCT patents, 2002 and 2011
Globalisation trends are reflected in the internationalisation of R&D and innovative activities (Guellec & Potterie 2001). Cross-border co-invention represents international collaboration in the inventive process (Dernis 2007). In 2011 the share of Australian PCT patent applications filed with a co-inventor located abroad was 17 per cent (see Figure 4-5). Cross-border co-invention was lower in Australia than in all the analysed European countries, New Zealand (23 per cent), India (29 per cent), Canada (31 per cent), Singapore (33 per cent) and Indonesia (52 per cent). Australia’s cross-border co-invention did, however, increase from 14 per cent in 2002 to 17 per cent in 2011.
Australia’s low patenting rates reflects the poor collaboration between business and research in the public sector (Figure 4-6). Australia has the lowest level of business to research collaboration among the comparator countries. In OECD analysis of innovation active businesses, out of a total of 33 countries, Australia ranks 32nd on business to research collaboration for small to medium enterprises (SMEs), and 33rd for large firms (OECD 2011b). Similar analysis by the ABS, for countries for which data are available but including businesses with 0–9 employees, improves our position to 15th for SMEs and 21st for large firms. Only 13.7 per cent of our large firms collaborated with research organisations: slightly above the level of collaboration—9.6 per cent—by our SMEs (Department of Industry 2013).
Australian industry is dominated by small to medium business enterprises rather than R&D-intensive multinational enterprises. This industry structure probably influences Australia’s patenting profile. Although business funds large amounts of R&D (see Chapter 5), the outcomes of this R&D have not resulted in large numbers of patentable inventions. The low proportion of researchers in businesses (compared with higher education—see Chapter 8) and the low level of business to research collaboration might further limit Australia’s capacity to produce new intellectual property with commercial potential. The majority of patents applied for at the Australian Patent Office are from international patent holders: Australia imports more patentable intellectual property than it produces. These findings complement those in Chapter 2. Australia has a low to mid-range level of performance in patenting compared with European comparator countries and much lower than the larger economies of the United States, Japan and China. Our performance is poor—particularly when viewed against the dynamic patent activity among Asian nations.