IP matters: intangible intellectual property rights are driving innovation and economic growth

A new study measuring the importance of intellectual property (IP) rights in the EU economy has found that about 39 per cent of total economic activity, worth some €4.7 trillion annually, is generated by industries that are reliant on intangible IP assets as the basis of products and services.

In total, approximately 26 per cent of all employment in the EU, or 56 million jobs, is provided directly by these industries, while a further 9 per cent of jobs stem indirectly from IP-intensive industries.

The study also found that average remuneration in IP-intensive industries is more than 40 per cent higher than in other sectors.

The report notes that an efficient system of intellectual property rights is essential to foster the virtuous circle leading from investment in research to jobs – via innovation. It is vital to ensure that Europe’s IP system remains a useful instrument in implementing new innovation policies designed to drive new growth. 

The investigation was also prompted by calls from industry for indicators to measure the

economic impact of IP rights. In addition, there have been question marks raised in public debates, over the role of IP in supporting innovation and creativity, generating a requirement for facts and figures to ensure such debate is based on sound evidence.

While there have been several reports on specific types of IP rights, industrial sectors or countries, this study is the first to quantify the overall contribution made by IP‑intensive industries to the EU economy, in terms of output, employment, wages and trade.

Intellectual property rights play a hugely important role in stimulating innovation and creativity, said Michel Barnier, Internal Market and Services Commissioner. “I welcome the publication of this study, which confirms that the promotion of intellectual property rights is a matter of growth and jobs.”

The study shows the use of intellectual property rights in the economy is ubiquitous. Sectors ranging from high-tech industries to manufacturers of sports goods, toys and computer games, are all making intensive use of not just one, but often several types of intellectual property rights, Barnier noted. The evidence provided by the report, “will help us to further underpin our evidence-based policy making,” he said.

The study, “Intellectual Property Rights-intensive industries: contribution to economic performance and employment in Europe” was carried out jointly by the European Patent Office (EPO) and the European Commission’s Office for Harmonisation in the Internal Market (OHIM).

This report shows that the benefit of patents and other intellectual property rights is not just unproven economic theory, said Benoît Battistelli, President of EPO. “For innovative companies intangible assets have become extremely important.”

This is especially true for SMEs, but it is also the case that research centres and universities often find patents open the door to capital and business partners. 

António Campinos, President of the OHIM said the study provides a clear answer to the question of how important intellectual property rights are in driving innovation. “They do matter, they matter a lot,” Campinos said.

This study comes on the foot of a broadly similar exercise carried out in 2012 by the US Patent and Trademark Office together with the Economics and Statistics Administration, which reached comparable findings for the US economy this study has done for the EU economy.

IPR-intensive industries are classified as those that register more intellectual property rights per employee than other sectors, or those where use of intellectual property rights is an intrinsic characteristic of the industry’s activity. Examples of industries backed by different types of intellectual property, include the manufacture of power-driven hand tools – patents; the manufacture of basic pharmaceutical products – trademarks; the manufacture of watches and clocks - designs; book publishing -copyright; and cheese making - geographical indications.

Sectors as diverse as financial services and insurance, advertising agencies, ice cream manufacture, wallpaper manufacture, wine production, electric lighting and domestic appliances, satellite telecommunications, and extraction of oil and gas are also all IP-intensive, and many make simultaneous use of more than one IP right.