In a recent blog post we highlighted the issue of the low innovation output of Australia’s largest companies, utilizing numbers of patent filings as a proxy for innovation level.

Using this same proxy we now analyse the innovation output of various countries and based on the data generate a so-called “public/private innovation ratio” which compares the number of patents filed by publicly funded institutions (generally universities and government funded research bodies) with the number filed by private enterprise. The results create concern for the overall state of innovation in Australia.

The chart below compares the number of patent applications filed in the last five years by all entities (public and private) based on country of ownership and reduced by patent family.

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The data is perhaps not surprising and illustrates the clear dominance of the United States, and to some extent, Germany, in global patent filings, within the range of countries compared.

The following chart illustrates the average number of patent applications per filer over the same period. A “filer” is defined as having the same ultimate owning entity.

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Interestingly, there is a clear difference in the number of patent families per filer based on country of origin. Germany, France and the Netherlands have comparatively high numbers of patent applications per filer whereas Canada, Italy and Australia have comparatively low. Closer scrutiny of the data reveals that, for example, German originating patent filings are dominated by relatively high patent filing entities whereas, in contrast, Australian originating patent filings are dominated by many small players with modest patent portfolios.

The chart below illustrates the percentage of patents filed by the top 100 filers in each country.

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This data indicates a clear difference between the group of France and the Netherlands and the group of Australia and Italy. The total number of patent filings from the former are dominated by the top 100 players, whereas in the latter there are significantly more players contributing to total patent filing numbers.

The following chart illustrates the “public/private innovation ratio” which is simply the fraction of the total number of patent families filed by publicly funded institutions.

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Australia clearly stands out in comparison to the other countries, revealing a very high proportion of patent filings which are to universities and other publicly funded institutions. A closer analysis of the data, however, suggests that this disparity is not particularly due to the fact that publicly funded institutions in Australia file many patent applications. It is, in fact, because very few Australian companies file large numbers of patent applications.

This is a concern for the future of innovation in Australia and particularly in light of the present government’s so-called “innovation agenda”. Using patent filings as a reasonable proxy for innovation output it seems that Australia relies heavily on public sector innovation to “transform” the economy. One wonders whether the public sector is the right vehicle to take on such responsibility and it is in sharp contrast to Australia’s trading partners where the majority of innovation is privately funded, particularly by large and medium to large corporations.

Until the Australian private sector transforms itself from one based largely on financial services to one more focused on developing valuable technical solutions, it is unlikely that the government’s initiatives on innovation will have any real impact. It is private enterprise that needs to take the lead in driving the future of innovation in Australia.