Patents are engine of economic growth, says WIPO

17 Oct 2006 | News | Update from University of Warwick
These updates are republished press releases and communications from members of the Science|Business Network
The international patents system is emerging a key engine of economic development, according to the latest annual report of the World Intellectual Property Organization.

The World Intellectual Property Organization

The international patents system is emerging a key engine of economic development, with growth in filings mirroring economic activity, according to the 2006 annual report of the World Intellectual Property Organization (WIPO), released earlier this week.

Companies are relying more and more on the IP system to protect investments in new markets, and a total of 5.4 million patents were in force worldwide in 2004, the most recent year for which complete statistics are available.

Kamil Idris, Director General of WIPO, said the 2006 report reflects changes in the collection and analysis of data and now provides, “Better understanding the impact of the patent system on economic and inventive activity around the world.”

There has been a marked increase in the use of the international patent system, with WIPO’s Patent Cooperation Treaty (PCT) becoming a major tool for companies seeking broad-based protection. The number of PCT applications grew at an average annual rate of 16.8 percent between 1990 and 2005, exceeding134,000 applications in 2005. The PCT is now used in 47 per cent of all international patent filings.

Filings double

The number of patent applications filed worldwide almost doubled between 1985 to 2004, rising from 884,400 to 1,599,000 with an average annual rate of increase of 4.75 per cent since 1995. This is in line with the average annual growth in world gross domestic product (GDP) of some 5.6 per cent.

The report says there has been a boom in patent filings in north east Asia over the past 20 years, with the emergence of China and South Korea as major industrial economies. In only 20 years, China has become the 5th largest patent office in the world, by number of patent applications filed, and patent filings by Chinese residents grew more than five-fold between 1995 and 2004 to reach 65,786.

South Korea is the 4th largest patent office in the world and is also experiencing very high growth rates, with a three-fold increase in patent filings by residents between 1994 and 2004.

The favoured few

But although more applicants are seeking protection for inventions outside their country of residence, and emerging and fast-developing economies have been using the patent system more, use is still very concentrated. Five patent offices account for 75 per cent of all patents filed and 75 per cent of patents granted worldwide. These are the US, Japan, the European Patent Office, South Korea and China.

Indeed, the ownership of patents in force, or granted over the past 20 years, shows an even greater concentration, with Japan and the US holding 29 per cent and 22 per cent, respectively, of all patents in force in 2004.

For the first time WIPO has introduced measures that weight the number of patents by measures including population, gross domestic product, and R&D expenditure, to produce patent intensity measures. This shows that Japan and South Korea, in particular, have very high rates of patenting as a proportion of GDP, or of research and development activity, filing five times as many patents per dollar of R&D as Europe and North America.

These indicators also show that smaller industrialised economies, such as Australia, New Zealand, Finland and Denmark, have above average rates of filing.

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