While the strength of the recovery remains uncertain, a new United Nations report indicates a continuing geographic shift of intellectual property (IP) rights, especially towards Asia.

Innovative activity and demand for intellectual property (IP) rights dipped during the global economic crisis, and the post-recession innovation landscape will invariably look different than it did before the crisis, according to a new report from the United Nations agency charged with protecting inventions, trademarks, industrial designs and copyrights.

“Falling revenues and reduced cash flows, diminished access to credit and increased economic uncertainty have led companies to adjust their innovation strategies. Many countries saw a slowdown of growth in research & development (R&D) expenditure in 2008,” according to the World Intellectual Property Organization (WIPO). “While growth in IP filings started to slow before the onset of the crisis, the economic downturn has intensified this slowdown and, in many cases, prompted a decline in filings.”

Data for publicly listed firms indicate a 2007-2008 slowdown in year-on-year growth, but reflect an actual 1.7 percent decrease in R&D expenditure between 2008 and 2009.

The 2010 edition of WIPO’s World Intellectual Property Indicators report, released this month, offers a comprehensive overview of the current use of different forms of IP rights worldwide, including patent and industrial design activity. Looking at preliminary IP filing data for 2009 for the largest IP offices, a special section on the economic crisis reveals a drop in patent and industrial design applications at many of these offices.

“As the world economy started to slow sharply in 2008, an estimated 1.91 million patent, 3.3 million trademark and 660,000 industrial design applications were filed across the world,” according to WIPO’s announcement of the findings. “Compared to 2007, these figures represent a slowdown in the growth of patent and industrial design applications and an actual decline in the number of trademark applications.”

In 2008, during the early phase of the global recession, the total number of patent applications filed worldwide rose by 2.6 percent over 2007, albeit at a slower rate than in previous years. Approximately 1.91 million patent applications were filed across the globe in 2008. The slowdown is largely due to zero growth in applications filed in the United States, as well as a 1.3 percent drop in Japanese applications, a 1.1 percent drop in the Republic of Korea and a 6.5 percent drop in the United Kingdom.

However, applications filed in China grew substantially — by 18.2 percent — preventing the worldwide total from reaching zero growth in 2008.

Further reflecting the weak global economy’s impact on innovation, growth in total patents granted slowed from its peak of 19.5 percent in 2006 to 0.6 percent in 2008. The total number granted stood at around 777,600 in 2008. Again, without the substantial growth of grants in China, there would have been a total worldwide contraction in 2008.

For the 15th consecutive year, industrial design applications showed year-on-year growth in 2008. However, the number of industrial design applications worldwide rose only 5.7 percent, which is considerably slower than the growth rates for the previous three years; the majority of the top 20 IP offices around the world recorded 2007-2008 growth rates below those for 2004-2007. Once again, substantial growth in China (+17 percent) was the main source of the worldwide increase in 2008.

While the UN agency expects an economic recovery to prompt a rebound in IP filings, it makes clear that there will likely be a continuing geographic shift of innovative activity away from the usual national sources and toward up-and-comers.

“The post-crisis innovation landscape will invariably look different from that of a decade ago,” WIPO Director General Francis Gurry said in a statement from the UN. “While the strength of the recovery remains uncertain, there will likely be a continuing geographic shift of innovative activity toward new players, especially in Asia.”

Nearly 6.7 million patents were in force worldwide in 2008 — representing a 5.3 percent increase over 2007 — 48 percent of which were owned by residents of Japan and the U.S. However, the number of patents in force in China and the Republic of Korea saw double-digit growth at 24 percent and 10.1 percent, respectively, “reflecting a shift in patent activity towards North East Asian countries,” the WIPO report says. Preliminary 2009 data show a drop in patent filings at most offices except for those in China alone, which exhibited 8.5 percent growth in applications.

Meanwhile, the available 2009 data for nine major IP offices worldwide showed a drop in industrial design applications for all offices, except China and Hong Kong (SAR). Last year, the IP offices of the E.U. and the U.S., among others, saw considerable declines in the number of applications received compared to 2008. In contrast, applications in China grew by 12.3 percent over the same period.

Furthermore, while France accounted for the largest number of industrial designs in force in 2008, with around 400,000, China holds the largest share of total industrial design activity; the IP office of China received around 312,900 industrial design applications, which amounted to nearly half (48 percent) of the world total. With a 40 percent growth rate, the country is thought to have surpassed France for the largest number of industrial designs in force in 2009.

“Whereas, 20 years ago, one might have expected innovation to emerge from the United States of America or Europe, in one in three cases one may now expect it to emerge from Japan, the Republic of Korea or China,” Gurry said in a speech to the assemblies of the WIPO member states. “Trends in economic growth and patterns of investment in education and R&D make it clear that further continental shifts will occur in the world of innovation and that the map of innovation will continue to evolve.”

Resources

World Intellectual Property Indicators 2010
World Intellectual Property Organization (United Nations), September 2010

Signs of Recovery Emerge after Economic Crisis Hits Innovation and IP Filings
World Intellectual Property Organization, Sept. 15, 2010

Demand for Intellectual Property Rights Starts to Recover
UN News Service, Sept. 15, 2010

Innovation, Growth and Development – The Role of WIPO
Speech by Francis Gurry
World Intellectual Property Organization, Sept. 20, 2010