Thursday, 17 March 2016

IP and the national economic climate: are we using the wrong barometer?

The World Intellectual Property Organization (WIPO) and national patent-granting offices publish annual reports that show, among other things, the quantity of patents applied for and granted. This data, which enables readers to draw comparisons between different countries as well as to contrast patent filing and grant activity of a single country over a period of years. On a more detailed level, we can also learn much about the identity and therefore the patenting activities of large corporations that either generate their own innovations or acquire them from others. Over the years, as national patent laws have come closer together following regional harmonisation (eg in the European Union) and the imposition of blanket norms (eg TRIPS), the temptation to make comparisons between countries and draw conclusions has grown since there is a more cogent basis for the comparison -- even though the patent law and practice of three vast and important jurisdictions, the United States, China and India, remains in many respects quite idiosyncratic and can undermine attempts at meaningful comparison.

The tendency to draw conclusions, based on the volume of patenting activity, that countries are lagging behind in innovative activity or are commercially stagnating is inevitably enhanced by the social media, where for example the results of some detailed discussion are distilled into a Tweet. The shocking news that country A is dropping behind country B in the Great Innovation Race is easy and instantly absorbed, but the link to the more circumscribed and qualified conclusions of a report's author may not receive that many clicks.

It is easy to overestimate the significance of patent data as an indicator of the technological or industrial health of a national economy, since patent filing is only one of a number of significant contributing factors. In the vast majority of countries more patents are sought and secured by foreign businesses than by domestic ones, and some countries depend for their stability and growth on sectors that are nowhere as patent-rich as, say, telecoms and information technology. Food production, tourism, financial services and natural resources are cases in point.

This point has been raised by European trade mark organisation MARQUES, which writes the following on its LinkedIn site:
It has become customary to use national patent-filing statistics as a proxy for the extent to which national economies are thriving, stagnating or declining. Thus for example, a high rate of patent applications in the US is seen as an indicator of strong economic growth, in contrast with, for example, Spain, Portugal, the UK or Italy.

Does anyone know why it should be patent filings rather than trade mark filings that are used for this purpose? After all, not all countries are industrial or manufacturing bases; some depend on tourism, financial services and other sectors that are relatively light in terms of patents. However, the extent to which branded goods are bought and sold does reflect the extent to which consumers and commerce have money to spend.
Do we then place too much importance on the gross statistics? Do we fail to look beyond them with sufficient care? In short, are we measuring the climate of economic growth and commercial activity by the wrong barometer?

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