The Demographics of Intellectual Property RICHARD SOUSA HOOVER INSTITUTION Stanford University JIRICO O.P. Jindal Global University June 10, 2017
Intellectual Property 1. Patents 2. Copyright 3. Trade Secrets 4. Trademark 5. Personal privacy and publicity 6. Misappropriation
What This Presentation Is Not About Patent Trolls Patent Holdup Patent Thickets Patent Holdout Royalty Stacking Injunctive Relief Efficient Infringement Venue Shopping Patent Pools Abuse of Market Power
The US Constitution Article I, Section 8, Clause 8 securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries Only right cited in the US Constitution
US Patent #1
[T]he patent laws Before then, any man might instantly use what another had invented; so that the inventor had no special advantage from his own invention. The patent system changed this; securing to the inventor, for a limited time, the exclusive use of his invention; and thereby added the fuel of interest to the fire of genius, in the discovery and production of new and useful things. Abraham Lincoln Lectures on Discoveries and Inventions, 1858-59
What is the most patented device in US?
Why Do Patents Matter?
1. Aging Population 1. Increased life expectancies More older people 2. Inverted age pyramid Fewer workers 3. Increased medical expenditures End of life care Diabetes and Alzheimer's
Data source: United Nations Department of Economic and Social Affairs, Population Division, https://esa.un.org/unpd/wpp/download/standard/population/ (accessed 5.11.17) US Age Profile Population Distribution by Age Bracket 60% 50% 40% 30% 20% 10% 0% 1950 2000 2015 2050 0-4 5-19 20-64 65+
Old Age Dependency Ratio 16.0 Workers per Retiree 15.7 14.0 12.0 10.0 11.5 10.0 8.0 7.0 6.0 4.0 4.8 4.0 2.4 4.4 2.0 0.0 USA India 1950 2000 2015 2050
Old Age Dependency Ratio United States India 8 16 7 14 6 12 5 10 4 8 3 2 2.4 6 4 4.4 1 2 0 0 1950 2000 2015 2050 1950 2000 2015 2050
US Population Growth, 65+ (millions) 90 80 70 60 50 40 30 20 10 80+ 65-79 0 1950 1960 1970 1980 1990 2000 2010 2020 2030 2040 2050
2. Demand Changes Pharmaceuticals Medical devices Transportation Communications Battery life and miniaturization Leisure and travel
Sustainability Adaptability Source: http://news.stanford.edu/press-releases/2017/05/01/flexible-organicwaveelectronics/ (accessed 5.1.17)
Thomas Fogarty
3. Seismic Changes Industrial Revolution Cotton gin Assembly line Telephone & telegraph Transistors Personal computers Miniaturization Digital Revolution Sewing machine Railway system Aviation Internet Social media Fiber optics
600 GDP Billions of US$ (1990) 500 400 300 200 100 0 1820 1870 1915 Germany UK Russia USA Data source: The Maddison Project, http://www.ggdc.net/maddison/maddisonproject/home.htm (accessed 4.25.17)
10,000 GDP Billions of US$ (1990) 9,000 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0 1820 1850 1880 1910 1940 1970 2000 2008 Germany UK Russia/USSR USA
10 GDP Billions of US$ (1990) - Log terms - 9 8 7 USA Russia/USSR UK 6 Germany 5 4 3 1860 1880 1900 1920 1940 1960 1980 2000 Data source: https://unstats.un.org/unsd/snaama/dnllist.asp (accessed 5.11.17)
10 9 GDP Billions of US$ (2015) - Log terms - - Adjusted for PPP - USA China India 8 Japan Germany Russia UK 7 6 5 1950 1960 1970 1980 1990 2000 2010
Academic Research 1950s patent system stimulates research by private firms 1990s thru 2000 Patents, IPR protection and economic growth fit hand in glove 2002-2003 patents impede innovation patents are monopolies, not licenses 2006-2013 Lemley and Shapiro 2014-present patents stimulate innovation
Source: Alexander Galetovic, Stephen Haber, Ross Levine, An Empirical Examination of Patent Holdup, Journal of Competition Law & Economics (2015) 11 (3): 549-578
Value of US Intellectual Capital, 2009 80 Percent of Sector s Value Attributable to IC 70 60 50 40 30 20 10 0 Media (1) Telecomm (2) Health Care Equipment (7) Pharma & Biotech (9) Transportation (11) Economywide--44.2% Source: Kevin Hassett and Robert Shapiro, http://sonecon.com/docs/studies/value_of_intellectual_capital_in_american_economy.pdf
4. GDP Growth and IP Rights -5 0 5 10 0 2 4 6 8 10 Patent protection, 2016 GDP growth, 2015-2016 Fitted values Source: Property Rights Alliance, The International Property Rights Index 2016
Changing IPR Environment IND USA -5 10 0 5-2 -1 0 1 2 3 Change in overall IP environment Avg annual GDP growth, 2010-15 Fitted values
Changing IPR Environment IND USA -5 10 0 5-2 -1 0 1 2 3 Change in IP protection Avg annual GDP growth, 2000-15 Fitted values
GDP Growth & Change in IP Rights Change in Overall Intellectual Property Rights Environment 2010-2015 2005-2015 2000-2015 25 largest economies.37*.40*.43** 110 countries.39**.41**.40** Change in Strength of Property Rights Protection 2010-2015 2005-2015 2000-2015 25 largest economies.40*.32.34* 110 countries.26**.30**.33** ** significant at 5% level; * significant at 10% level
1. Demographic shifts Aging population 2. Changing demand Requires innovation 3. Creative industries Patent intensive 4. Patent protection Greater growth
THANKS Alex Galetovic Stephen Haber Miles Fowler Isabel Lopez Rumei Su Leilei Xu Property Rights Alliance O.P. Jindal Global University