For the half-year to 30 June 2014, the IPKat's regular team is supplemented by contributions from guest bloggers Alberto Bellan, Darren Meale and Nadia Zegze.

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Tuesday, 1 October 2013

OHIM Observatory releases EU-wide study on the overall contribution made by IP to the EU economy


As usual during these periods of budget planning, government shutdown and market tribulations, economic studies often lead the way to provide with huge amounts of data, demonstrating various elements of how important Intellectual Property is. Yesterday,  The European Patent Office (EPO) and the Office of Harmonization for the Internal Market (OHIM) published a long awaited report  related to the economics of Intellectual Property Rights (IPR) intensive industries and their contribution to economic performance and employment in the EU.

To end up with this heavily documented report, EPO and OHIM decided to join their efforts. Following the same path, these two GuestKats (Laetitia and Bertand) have partnered to get through the study and analyze the main findings. After consideration of their respective fields of interest, Bertrand is bound to look at patents, copyrights and geographical indications whereas Laetitia has the duty to focus on trade marks and design rights. These are the 5 main IPR covered by the report. Specific tasks will be conducted in two following posts.
 
Let’s start with an overview of this IP contribution to economic performance and employment study. The study focuses on data collected from the 27 EU members States, the new comer Croatia being excluded in regards of the lack of IP data for this country at the moment. Amd covers a two years period between 2008 and 2010.

Merpel asks: What is an Intellectual Property Rights-intensive industry? The study defines it as being “those having an above-average use of IPR per employee.” But the determination of an IPR intensive industry is much more complicated than how it looks.  For patents, trade marks and designs, IPR intensity is determined by examining the volume of IP rights obtained by all industries at OHIM and EPO in relation to the level of employment in those industries. In short, it is the number of IP rights per 1000 employees that will determines whether or not an industry is IRP-intensive. For copyright and GIs, IPR-intensive industries are pre determined. In a similar USPTO report, 75 industries (from among 313 total) were identified as IPR-intensive.

The report was made in order to produce evidences that an intellectual property system is helping innovation and creativity. The study was also made on demand from several industries to measure the economic impact of IP rights. It follows a similar report made by USPTO published in April 2012. 
The methodology used is therefore very similar, in order to “achieve maximum comparability of the respective study results."
The principles behind the methodologies are: "first, determine which industries use IPR more than others; use industry-level economic statistics to determine employment and value added (GDP) generated in those industries; third, compare the industry-level economic aggregates to those for the overall economy in order to determine the weight in the economy of IPR-intensive industries."

In both, the main findings are pretty much the same and can be summarized as follows:

I IPR-intensive industries represent an important and increasing part of EU employment and GBP

 IPKats are not afraid to crunch numbers
The study states that 26% of EU jobs are directly contributed by the IPR-intensive industries, during the period 2008-2010. IPR intensive industries also generate employment in non-IPR-intensive industries, leading to a  total of direct and indirect employment of 35% of all EU jobs.
Over the same period 2008-2010, IPR-intensive industries generated almost 39% of total economic activity (GDP) in the EU (€ 4.7 trillion). As a comparison, value for GBP in the US was $5.04 trillion in 2010, which is worth 3.72 trillion euro (34.8 % of US GBP).

The report further states:

“Trade marks industries constitute the account for the highest shares in both employment and GDP, followed by patents and copyright in the US and by designs, patents and copyright in the EU.
Comparing the results of this EU study with those for the US reveals that the two economies have a similar structure, as is to be expected given their similar level of development. However, in terms of the contribution of IPR-intensive industries, the shares in employment and GDP are somewhat higher in the EU: 26% vs. 19% for employment and 39% vs. 35% for GDP.”


II You earn more money when working in a IPR-intensive industry

This is the part where all IP workers will either be delighted to learn it or will contest it. Again, trade marks industries end in first place. Wages in IPR-intensive industries are higher than in non-IPR‑intensive industries. As a result, The average weekly wage in IPR-intensive industries is € 715, compared with € 507 in non‑IPR‑intensive industries. That represents an important difference of 41%. This “wage premium” is 31% in design-intensive industries, 42% in trade mark-intensive industries, 46% in GI-intensive industries, 64% in patent-intensive industries and 69% in copyright-intensive industries.

III IPR-intensive industries lead the way for EU export

The third main finding of the report is related to the role played by IPR-intensive industries in the EU’s external trade. The results are quite impressive: 90% of EU export are performed by IPR intensive industries. That's good news considering the EU trade deficit worth €174 billion, or 1.4% of GDP.

However, 88,3% of imports are made by the same industries. The report explains the high level of import: “This is because even industries producing commodities such as energy are IPR-intensives while on the other hand, many non-IPR-intensive activities are also non-tradable. For that reason, 88% of EU imports consist of products of IPR-intensive industries.”

Still, the balance between import and export remain positive to the EU trade position.

***
This significant report is the result of an extensive collection of data and woldwide cooperation between the key-actors in the IP industry (ackowledgements to UKIPO, OECD and USPTO). Being the first work product of a sightly controversial European Observatory aiming at raising awaraness about the economic and social importance of the IP system, these guest Kats' mission is to identify in up-coming posts the practical information for all target groups: policy-makers, IP offices, industry and academics, as highlighted by OHIM and EPO presidents in the Executive summary. 

Interview by Michel Barnier in French-"IP must live with its time"
'IP Matters, and matters globally' see OHIM news release
Is IP a Grey matter?

 

5 comments:

Suleman said...

Whilst it's nice to see that IP rights are a good thing to have, I would be very hesitant to draw further conclusions from this report. Yes, we are a knowledge economy, and that's the future. That does not necessarily mean we need more or stronger IP rights. Perhaps the message for policy-makers and IP offices is that based on this report there's no need to do anything differently.

Anonymous said...

Let's not forget the case against patents. Some argue they stifle innovation, see http://research.stlouisfed.org/wp/2012/2012-035.pdf, for example.

Anonymous said...

I'd go further - this report is flawed. Most patents do not make it to term. No account has been given to this. If a patent has not made it to term then it is regarded by somebody as useless. How can the registration of a patent be an indication of valuable IP when so many do not make it to term? Likewise the utility of trade mark registration in Europe is one thing but it may be that such utility is in fact the driver and not the actual intention to use the trade mark, once registered.

Anonymous said...

It will be interesting to see how this report get used, qouted, trotted out etc. as proof that IPRs drive economic activity. But the study itself makes no such claim. It does categorise industry sectors into "IP-intensive" and non-IP intensive (via a very crude sorting process; those with more than the average number of IP rights/thousand employees are "IP-intensive"... read the methodology for a good laugh). Then it presents lots and lots of economic data about those sectors, especially employment figures. Never do the authors state that there is a causal relationship between the IP-intensiveness of the industry (because they actually do not have data to demonstrate that such a relationship exists). Rather than show causation, they have just made some nice correlations that have nothing to say about the impact of IPRs on innovation, employment, wages, or any other area of policy interest.

But lack of any claim for causation in the report will not stop the IP-cheerleaders from fabricating such a relationship. In fact, Barnier is quoted in the press puff as saying "I welcome the publication of this study which confirms that the promotion of IPR is a matter of growth and jobs". Battistelli (President of the EPO) said: "This report shows that the benefit of patents and other IPRs is not just economic theory." No, actually it doesn't, and the fact that you claim it does means you have not read the report, you are willfully misleading in your conclusion, or you actually believe your own hype.

Look for more of this in the weeks to come (ManagingIP.com titles its coverage "EPO-OHIM study puts a value on European IP"). What a waste of taxpayer money.


to support IP policy

James Nurton said...

To Anonymous (1/10, 20:40 BST):

Thanks for the mention of Managing IP and our news item on the report, which covered the main findings in brief.

You may also be interested in our blog post, which took a more analytical look at some of the conclusions and methodology:

http://www.managingip.com/Blog/3261434/Questions-about-the-European-IP-value-report.html

James Nurton
Managing IP

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