Patent Statistics as an Innovation Indicator Lecture 3.1
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1 as an Innovation Indicator Lecture 3.1 Fabrizio Pompei Department of Economics University of Perugia Economics of Innovation (2016/2017) (II Semester, 2017) Pompei Patents Academic Year 2016/ / 27
2 Contents of the Lecture* 1 An Introduction on Patents as indicators 2 Information on Patents 3 World Intellectual Property Organization (WIPO) 4 Patent Statistics *References: 1 Patent Statistics as an Innovation Indicator, Nagaoka et al.(2010), EI, Chapter 25, Vol.2 sections: 1 and 2.1; pages World Intellectual Property Indicators 2016, WIPO Report (Facultative) Pompei Patents Academic Year 2016/ / 27
3 An Introduction on Patents as indicators Patens versus R&D as innovation indicators When data on Innovation is lacking, R&D expenditure is often used as a proxy for innovation or technological progress However, expenditure is an input for R&D rather than an output of R&D, which should be innovation Recently, patent information is increasingly used to analyze innovation and the innovation process, and patent statistics are increasingly used as a measure of innovation This because important progresses in the development of patent databases occurred in the last years. The seminal one is, of course, the National Bureau of Economic Research (NBER) patent database. In addition, similar databases have been constructed by the OECD, European Patent Office (EPO), and Institute of Intellectual Property (IIP) in Japan However, patent statistics should be used carefully and wisely as they are not free from problems nor do they correspond perfectly to innovation Pompei Patents Academic Year 2016/ / 27
4 An Introduction on Patents as indicators Drawbacks of Patents as Innovation Indicators 1) Not all patents represent innovation, nor are all innovations patented In order for an invention to be granted a patent, an invention has to satisfy certain criteria, in particular, novelty, nonobviousness (or inventive step), and industrial usefulness. Those criteria and their interpretation differ over time and across countries. Chemical compounds were not patentable in many countries, even in Europe, in the 1950s and 1960s. In developing countries, useful innovations might not have satisfied these criteria even in more recent years, or inventors might not have bothered to apply for patents, given the unsatisfactory enforcement of patent rights. Firms may deliberately choose not to patent their inventions, since patent systems require their disclosure. If firms believe that they can protect their inventions by other means such as making it a trade secret, they might decide not to patent. Pompei Patents Academic Year 2016/ / 27
5 An Introduction on Patents as indicators Drawbacks of Patents as Innovation Indicators (II) 2)The value of patents is highly skewed, as there are a small number of highly valuable patents and a large number of patents with little value Scherer and Harhoff (2000) showed that about 10% of the most valuable patents account for more than 80% of the value of all the patents, based on their survey of German patents. According to the Japan Patent Office (JPO) survey, more than 60% of patents are neither used internally nor licensed out. Firms often use patents strategically; for instance, take out patents on inventions simply to block other firms patents or to deter entry Reflecting these considerations, a larger part of process innovation is not patented compared to product innovation Despite that, patent information remains the most valuable source of information, even though users should keep in mind that it is not free from various types of noises and biases Pompei Patents Academic Year 2016/ / 27
6 Information on Patents Scope of the Patent Information Patent documents provide a rich set of information on the invention: 1 The bibliographic information (that is the set of information useful for identifying the invention and the patent) 2 the abstract of the invention 3 the claims, the description of the invention, and the drawings and their description The patent database developed for academic research (NBER patent database, EPO-PATSTAT, and the patent database of IIP in Japan) use mainly bibliographic information. This bibliographic information include : (1) application, including title, abstract and technology class; (2) priority, continuing applications, and family; (3) publication; (4) examination request; (5) grant, including technology class; (6) applicant and assignee; (7) inventor; and (8) citation relationship. Pompei Patents Academic Year 2016/ / 27
7 Information on Patents A focus on the concept of Technology Class International comparisons in economic studies are generally based on sector classifications, for instance, comparisons of production, employment, research and development or foreign trade. Sectors are defined by typical products, so that in the real world sectors describe the main economic activities of enterprises The production and function of products are based on technologies, and most products use a variety of technologies The notions of sector and technology describe different aspects of products and must be analysed separately Patents are oriented towards the legal protection of technologies and therefore the classification of patents is based on technologies or products which use specific technologies The technological classes (or technological fields) we deal with here, are used in most reports on patent statistics (for instance, the WIPO Report) and rely on the International Patent Classification (IPC) Pompei Patents Academic Year 2016/ / 27
8 Information on Patents The International Patent Classification (IPC) The Strasbourg Agreement concerning the International Patent Classification (of 1971), which entered into force on October 7, 1975, provides for a common classification for patents, including published patent applications, inventors certificates, utility models and other patent document. The Classification, being a means for obtaining an internationally uniform classification of patent documents, has as its primary purpose the establishment of an effective search tool for the retrieval of patent documents This classification is also a basis for investigating the state of the art in given fields of technology and for the preparation of industrial property statistics which in turn permit the assessment of technological development in various areas EPO-PATSTAT database relies on IPC classification Pompei Patents Academic Year 2016/ / 27
9 Information on Patents Differences in Patent Information across Countries: patent grants vs patent applications 1)There can be a long time lag between patent applications and grants in both Japan Patent office and EPO because the patent examination system. As a result, the patent grant information can be a poor indicator of the recent inventive activities in these countries; for that reason is better to use patent application data 2) All patent applications are automatically disclosed in Europe and Japan but not in the United States (disclosure of patent applications was introduced in 1999, but only partially). As a result, while the published patent applications provide comprehensive information on the inventive activities in Europe and Japan, they do not in the United States. Therefore,patent grant information is commonly used in the United States while patent application information is used in Europe and Japan Pompei Patents Academic Year 2016/ / 27
10 Information on Patents Differences in Patent Information across Countries: Citations US patent applications are accompanied with a significant number of references cited by applicants (they have to demonstrate from which previous patents they drew the new ideas) It means that in the US NBER database, there is important information on patent relationships. This information is used to study technological innovation externalities across US enterprises In the case of the EPO, the disclosure of prior literature is not obligatory and examiners are the dominant source of references. Most citations in the search report are identified by the examiners Similarly, in Japan, while there is a general obligation for disclosing related patents which was recently introduced, the penalty for failing to do so is not explicitly defined Pompei Patents Academic Year 2016/ / 27
11 Information on Patents 3 Most Used Databases on Patents The differences above are very important to correctly interpret the data contained in the 3 databases (the most important across the world): 1) NBER database is entirely based on the US patent grant data it has no information on applications and on the technology classification by International Patent Classification 2) The EPO Worldwide Patent Statistical Database (PATSTAT) developed by the EPO covers 172 countries, so it has a global scope. It covers more than 53 million national or regional patent records and 7 million utility model patent records. PATSTAT is based on the patent application data, but it also covers the information on the publication and the grant 3) The IIP database is based on patent processing documents disclosed by the Japan Patent Office Pompei Patents Academic Year 2016/ / 27
12 World Intellectual Property Organization (WIPO) Patent Statistics from the WIPO Report 2016 The World Intellectual Property Organization publishes every year a report on World Intellectual Property Indicators, that besides trademarks and industrial designs also includes information on patents The results we report here refer to the last report (World Intellectual Property Indicators, 2016) Statistics on patents include all filing activity reported by all patent offices around the world (national and international ones, such as the EPO) According to the WIPO s report the global patent filings grew by 7.8%, in 2015 (the publishing year is 2016, but the year to which statistics refer is 2015) As in previous years, China was the main driver of growth: from already high levels, patent applications in China increased by 18.7% This is, of course, a flow (new filings in 2015) The majority of statistics we will see in the following refer to these flows of new patent applications, only in few cases we will give information about the stock of patents (patents in force) Pompei Patents Academic Year 2016/ / 27
13 The State Intellectual Property Office of the People s Republic of China (SIPO) received the most applications in 2015 and became the first office to receive more than a million applications in a single year. SIPO was followed by the USPTO, the Japan Patent Office (JPO), the Korean Intellectual Property Office (KIPO) and the European Patent Office (EPO). Pompei Patents Academic Year 2016/ / 27
14 From 1883 to 1963, the USPTO was the leading office for world filings. Application numbers at the JPO and the USPTO were stable until the early 1970s, when the JPO began to see rapid growth, a pattern also observed Both the EPO and KIPO (Korean Intellectual Property Office) have seen increases each year since the early 1980s, as has SIPO since 1995 Pompei Patents Academic Year 2016/ / 27
15 Offices located in Asia received 61.9% of all applications filed worldwide in 2015, compared with 50.2% in This high share reflects the fact that three of the top five patent offices are located in Asia. Offices in North America accounted for 21.7% and those in Europe for 12.5% of the 2015 world total. Pompei Patents Academic Year 2016/ / 27
16 The Republic of Korea has had the highest number of patent applications per unit of GDP since 2004 (through this measure patent activity is normalised by the economic size of the countries). The Korean ratio of resident applications to GDP is considerably higher than those of Japan and China, ranked second and third, respectively. Reflecting strong growth in resident applications, China s resident applications per unit of GDP increased from 1,263 in 2005 to 5,269 in 2015 Pompei Patents Academic Year 2016/ / 27
17 This figure shows not flows (that is new patent applications in 2015 or their average ) but the stock of patents in force (not expired), by country from 2008 to 2015 In 2015 the US have still most of patents in the world (almost 3 millions), anyway China is growing fast Germany is stable but it is among the top 5 countries in the world Pompei Patents Academic Year 2016/ / 27
18 Italy falls in the top 20 offices in terms of patents in force (stock of patents) in 2015 What matters in this figure, besides the ranking, is the share of patents granted to Non-residents Unfortunately countries such as Japan, Germany and Italy do not report this information However, we see that in most of countries the share of patents that Non-resident hold is very important For instance, in the US Non-resident hold nearly 50% of patents, in France 70%, in the UK 91.4%, in Sweden 84.9% Pompei Patents Academic Year 2016/ / 27
19 Most of top 10 applicants are large Asian Corporations A patent family is defined as patent applications interlinked by one or more of: priority claim, Patent Cooperation Treaty national phase entry, continuation, continuation-in-part, internal priority and addition or division. Pompei Patents Academic Year 2016/ / 27
20 Pompei Patents Academic Year 2016/ / 27
21 Based on IPC categories, WIPO report uses 35 technological fields In 2014 there were the top five technological fields that covered almost 30% of all applications Computer technologies and electrical machinery are the most important patented technologies around the world Pompei Patents Academic Year 2016/ / 27
22 This figure shows the importance of patenting technological fields in countries with higher propensity to patent In France, Germany and Sweden patents in Transport (automotive sector) play a crucial role In Germany are also important patented innovations in Mechanical Elements and electrical Machinery For China, Canada, The Netherlands, Korea and the US, very important are patents in computer technology Pompei Patents Academic Year 2016/ / 27
23 The Relative Specialisation Index This index is largely used to measure technological specialisation (in terms of patents) across countries It captures whether a country tends to have a lower or a higher propensity to file in certain technology fields by correcting for the effects of country size and by focusing on concentration in specific technology fields RSI = Log (F CT /ΣF CT ) ΣF T /ΣF C where F CT is the number of patents in technology T and country C ΣF CT is the total number of patents in all technology fields T of country C ΣF T is the sum of patents in technology T for all countries ΣF C is the sum of all technologies T in all countries C A positive value for a technology indicates that a country has a relatively high share of patent filings related to that field of technology Pompei Patents Academic Year 2016/ / 27
24 Denmark shows good specialisation in biotechnology, whereas India, Israel and the US in computer technology Finland, Russia, China and Germany in chemical enginering, after several countries Italy shows a little specialisation in civil engineering (construction of roads, bridges, railways) Pompei Patents Academic Year 2016/ / 27
25 Finland, Sweden, Canada and the US witness good specialisation in digital communication, whereas Japan, Austria, Germany and Korea in electrical machinery Russia, Denmark and China in food chemistry, whereas Ireland and India in IT methods for management Pompei Patents Academic Year 2016/ / 27
26 It is worth noting that both China and Germany show very good specialisation in machine tools (until 10 years ago also Italy did) Concerning medical technology Israel, Netherland and Australia are specialised country Italy shows negative values in both technologies, it means that it has weaknesses in these fields Pompei Patents Academic Year 2016/ / 27
27 China shows a good specialisation in the solar energy A specialisation for Italy is registered for the wind energy technology (RSI= 0.106) Pompei Patents Academic Year 2016/ / 27
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