Patent Strategies for Australian SMEs in ICT and Electrical Engineering
In Australia, the ICT and electrical engineering sectors are driving innovation across industries such as healthcare, medical technology, agriculture, defence, and renewable energy. For small and medium-sized enterprises (SMEs) developing new technologies in these fields, intellectual property (IP) – particularly patents – can be a critical asset. However, navigating the complexities of patenting can be challenging. This article explores key patent strategies tailored for Australian SMEs in ICT and electrical engineering.
Understanding the Value of patents for SMEs
For Australian SMEs, patents can provide a competitive edge by securing exclusive rights over key technologies, preventing competitors from copying innovations.
Patents are not only tools of protection but also signals of value; They can enhance commercial opportunities. Companies that hold patents are more likely to engage in collaborations, including joint R&D and commercialisation arrangements. Moreover, patents can boost investor confidence, particularly in early-stage financing rounds, with international studies estimating a 20% increase in perceived value when IP protection is in place. In Australia, firms with patents are also more likely to attract external innovation funding than their non-patenting counterparts.
Studies have shown the benefits of IP ownership for SMEs. According to IP Australia, SMEs that file at least one IP right – whether a patent, trade mark, or design – are 16% more likely to experience a period of high employment growth. Start-ups that file IP in their first year are also twice as likely to experience high growth. The number of Australian SMEs holding patents has grown five times faster than SMEs in the broader economy over the past two decades, suggesting a clear association between innovation and growth. Despite this, the overall volume of patent filings by Australian applicants remains relatively flat.
Choosing What to Protect – And Where
Not every aspect of a product or technology needs to be patented. SMEs should focus on patenting what is commercially valuable – what makes their product unique and what competitors are most likely to copy. For instance, in a product ecosystem where one component drives the majority of revenue (like the blade in a razor-and-blade model), that component may warrant stronger protection. We can help you develop a tailored strategy to maximise your protection.
Understanding competitor behaviour can also shape patent strategy. Some competitors might manufacture compatible accessories, while others might replicate the core product. Knowing this can help SMEs tailor their claims to block the most commercially threatening activities. In some cases, this may mean filing separate patents with differing scopes or filing the same concept in multiple jurisdictions depending on the local market dynamics.
Filing in Australia first can be a cost-effective approach that allows businesses to test market viability before committing to international protection. The Patent Cooperation Treaty (PCT) route provides additional flexibility by extending the timeline for international filings, giving SMEs up to 30 months to decide on key jurisdictions. If targeting markets such as the United States, China, or other key export markets, SMEs should ensure that claims are tailored to the legal and commercial context of each country. For example, some jurisdictions may have stricter requirements for software-related inventions or place greater weight on local manufacturing and use. Strategic filing decisions should therefore be informed by both legal advice and the business’s global expansion goals.
Building a Strategic Patent Portfolio
Once the important products and technologies for protection have been identified, a filing strategy is key. Of course, a well-planned patent strategy aligns with business objectives and budget constraints.
For SMEs with more limited budgets, it is important to consider whether to build depth in a few key jurisdictions or to spread coverage across multiple markets. The right decision depends on a company’s commercial strategy, target markets, and competitive landscape.
If the budget is less constrained, obtaining a single patent can be a valuable start, but building a patent portfolio often offers stronger and more layered protection. A competitor can often avoid infringing a patent by omitting just one feature of the main claim. However, if an SME holds multiple patents covering different aspects of the same technology, competitors must avoid all protected features across all claims – an increasingly difficult task.
This layered approach not only increases the likelihood that infringement can be proven, but also complicates efforts to invalidate the portfolio. Each additional patent strengthens the defensive and commercial position of the owner, making the portfolio more resilient to challenge.
Patent or Trade Secret?
In some cases, a trade secret may be a more suitable option than a patent – especially for internal processes or algorithms that cannot be reverse-engineered from the final product. However, patents are often preferable for hardware and embedded systems where the innovation could be more easily copied. A hybrid strategy where key features are patented and complementary techniques kept secret is increasingly common among technology businesses.
Software, AI and Patent Eligibility
Patent protection for software and AI remains complex. In Australia, software inventions must demonstrate a technical contribution beyond a mere computer implementation. This means that SMEs working with software or AI must carefully frame their claims to show how the software interacts with hardware or improves a technical process.
Australia’s Role in Clean Energy and Electrical Engineering Patents
Australia is emerging as a competitive jurisdiction for clean energy-related IP. Among 19 major economies, it is the second-fastest growing destination for patent filings in clean energy generation and storage. Electrical machinery and apparatus patents also saw a significant uptick in 2023, reinforcing the country’s relevance in future-oriented technologies.
Practical Steps for SMEs
For Australian SMEs embarking on the patent process, a practical and methodical approach can make a significant difference. The first step is to assess what innovations are worth protecting and to consider the most suitable form of IP – whether patent, trade secret, or design protection. An informal prior art search can help determine whether the invention is truly novel, and based on this, a provisional patent application can be filed to secure a priority date.
During the pendency of the provisional application, requesting an International Type Search (ITS) through IP Australia allows SMEs to better understand the relevant prior art that could be raised in subsequent examination. This foresight enables the drafting of a PCT application that takes account of known prior art, including claims crafted to distinguish over it. Where appropriate, the PCT specification might also briefly outline the problem presented by the closest prior art and how the invention addresses it. This can support the argument for inventive step and streamline the prosecution process in national phases.
To increase confidence before entering national phase filings, the goal should be to obtain a positive Written Opinion during the international phase. Working with a patent attorney who offers capped or fixed-fee services can help manage costs throughout drafting, filing, and prosecution. SMEs should also consider whether design registration offers additional value, particularly for consumer-facing products where appearance is commercially significant.
Finally, government support programs such as the R&D Tax Incentive and the Industry Growth Program can ease the financial burden of pursuing patent protection.
By integrating these steps into a cohesive strategy, SMEs can build a strong foundation for commercialising their innovation and securing long-term value from their IP.
Conclusion
For Australian SMEs operating in the ICT and electrical engineering sectors, patents represent more than legal rights – they are instruments of growth, leverage, and strategic positioning. While the path to a robust patent portfolio involves careful planning, budget management, and expert support, the potential rewards in terms of investment, market exclusivity, and collaboration are significant. By adopting tailored strategies and learning from global IP leaders, even small companies can build strong and valuable patent portfolios that support their commercial success.
Are you building a strategic patent portfolio? Our experienced and commercially minded attorneys will gladly be of assistance. Contact us to discuss your options and how MBIP can help.
