The importance of intellectual property intensive industries

Yesterday we told you about the World IP Day. Today we want to show you the importance of intellectual property intensive industries. As the United States Patent and Trademark Office announced in a press release according to a comprehensive report of the U.S. Commerce Department entitled “Intellectual Property and the U.S. Economy: Industries in Focus,” intellectual property (IP)-intensive industries support at least 40 million jobs and contribute more than $5 trillion dollars to, or 34.8 percent of, U.S. gross domestic product (GDP).

“This first of its kind report shows that IP- intensive industries have a direct and significant impact on our nation’s economy and the creation of American jobs,” said Commerce Secretary John Bryson. “When Americans know that their ideas will be protected, they have greater incentive to pursue advances and technologies that help keep us competitive, and our businesses have the confidence they need to hire more workers. That is why this Administration’s efforts to protect intellectual property, and modernize the patent and trademark system are so crucial to a 21st century economy that is built to last.”

While IP is used in virtually every segment of the U.S. economy, the report identifies the 75 industries that use patent, copyright, or trademark protections most extensively. These “IP-intensive industries” are the source – directly or indirectly – of 40 million jobs. That’s more than a quarter of all the jobs in this country. Some of the most IP-intensive industries include: Computer and peripheral equipment, audio and video equipment manufacturing, newspaper and book publishers, Pharmaceutical and medicines, Semiconductor and other electronic components, and the Medical equipment space.

The report has several important findings, including:

• IP-intensive industries contributed $5.06 trillion to the U.S. economy or 34.8 percent of GDP in 2010.

• 40 million jobs, or 27.7 percent of all jobs, were directly or indirectly attributable to the most IP-intensive industries in 2010.

• Between 2010 and 2011, the economic recovery led to a 1.6 percent increase in direct employment in IP-intensive industries, faster than the 1.0 percent growth in non-IP-intensive industries.

• Merchandise exports of IP-intensive industries totaled $775 billion in 2010, accounting for 60.7 percent of total U.S. merchandise exports.

World Intellectual Property Indicators, 2010

Fresh off the press from the World Intellectual Property Organization is the 2010 report on World Intellectual Property Indicators. The 148-page report is filled with comprehensive statistics on worldwide patent and utilility model activity, as well as activity in trademarks and industrial design.

Current trends and outlooks are also identified. Such trends include:
– Slowdown in patent grants worldwide, however utility model activity continues to grow.
– North East Asian countries file the highest number of patents per GDP.
– For the first time, the United States Patent and Trademark Office (USPTO) granted a higher share of patents to non-resident applicants compared to resident applicants.
– The majority of the top 20 IP offices saw growth in the number of industrial design applications, while the majority of the top 20 IP offices saw a drop in the number of trademark applications.

Of special interest is the subreport on „the Impact of Economic Crisis and Recovery on Innovation“.

Some excerpts from the subreport are included here:

To the extent that investments in innovation such as R&D are long term in nature, short-term fluctuations in the business cycle should only have a limited impact on investment in innovation. However, in the context of an economic downturn, R&D investments and the introduction of new products or processes decline due to reduced cash flows, decreased demand for new products/processes and increased business uncertainty, including uncertainty concerning the size of the future market.

As part of their stimulus packages, most governments of high-income economies, as well as a select number of fast-growing middle-income economies, have pledged to avoid cutbacks in science and R&D or to even increase spending.

Most major economies have emerged from recession, and many middle-income economies have returned to fast pre-crisis growth rates. The first signs of recovery are also apparent in the greater availability of venture capital since late 2009, and there appears to be a modest recovery in R&D spending. In addition, preliminary data for the first six months of 2010 point to renewed growth of PCT applications.

The crisis is likely to have a lingering impact on IP filing behavior in 2010 and 2011, which – based on lessons from past crises – is likely to be more pronounced for patent than for trademark filings. Thus, while trademark applications are expected to return to healthy growth in 2010 and 2011, recovery in patent applications is bound to be more modest.

The post-crisis world economy is likely to see faster rates of economic growth in low- and middle-income economies – especially in East Asia and India. The corresponding geographic shift of innovative activity, as measured by R&D expenditure and IP filings, that  has been ongoing for a number of years is bound to continue. Despite their detrimental effect on revenues and cash flows, economic crises can offer opportunities for rationalization, the acceleration of structural changes, new entrepreneurship and “creative  destruction” – elements that are only incompletely measured by R&D expenditure or IP filings. The true overall impact of the crisis  and of recovery on innovation – be it positive or negative – is likely to become apparent only over time.