Intellectual Property is the Key to an Innovation Economy

A young inventor who contributed new patent applications in 2015 to advance the future of cognitive, cloud and Internet of Things.

Today the World Intellectual Property Organization, WIPO, is celebrating the 17th World Intellectual Property (IP) Day with the theme: “Innovation – Improving Lives.” Innovation improves our quality of life and supports communities around the world. Some examples include a low-cost, accurate malaria detection device that allows better diagnosis and treatment; a cooler that can keep vaccines cold off the power grid in 110 degree temperatures; and rapid and early HIV diagnosis tests in low-resource settings. Every year the U.S. government highlights, celebrates, and accelerates the patent review process for these and other game-changing innovations through our Patents for Humanity award program.

Our consistent, clear message around the world is that these kinds of innovations require a comprehensive intellectual property framework to flourish. 

Through our economic diplomacy overseas, we encourage other governments to establish predictable legal regimes that ensure IP rights can be secured and enforced. We stress that due process and transparency from law enforcement, regulators, and the judiciary are essential ingredients for the protection and enforcement of intellectual property.

This has worked for the United States. According to the U.S. Commerce Department, IP-intensive industries – including information and communications technology (ICT), pharma, and entertainment – account for more than 45 million direct and indirect U.S. jobs (nearly a third of the workforce), 50 percent of U.S. exports, and almost 40 percent of U.S. GDP. In addition, these jobs pay well. Average weekly wages in IP-intensive industries are 46 percent higher than in non-IP intensive fields.

And we believe it can work everywhere. Every country, regardless of its level of development, requires a strong, balanced system of intellectual property protection and enforcement to develop businesses finding innovative solutions to social problems, unique brands, and creative content. A recent U.S. Chamber of Commerce international index found a strong positive link between robust IPR protection and increased technology transfer, scientific exchange, clinical trials, research spending, high-tech sector growth, access to finance, access to digital technology, jobs, and foreign direct investment (FDI). And annual surveys published by the World Economic Forum and Organization for Economic Co-operation and Development (OECD) show that countries perceived as having the strongest intellectual property protections are among the most economically competitive.

 Intellectual Property protection is particularly helpful for Small and Medium Enterprises (SMEs). A recent academic paper published by the U.S. Patent and Trademark Office’s Chief Economist found that patents help startups access financing, create more jobs, grow higher sales, and become more innovative. For example, Patents for Humanity winner GestVision is a startup that has developed a rapid, affordable urine test to diagnose preeclampsia, the leading cause of prenatal death for mothers and babies worldwide. GestVision’s test kits are being used in clinical studies around the world, including Bangladesh, Mexico, and South Africa, and the company is gearing up to manufacture the kits in large volume. GestVision’s patent represents its most important asset and the key to saving countless lives around the world. The European Union in 2013 found that SMEs that own IPR perform better, with almost 30 percent higher revenue per employee than SMEs without IPR. And there is clear private sector demand for IPR protection; take the case of Kenya. After Kenya — a country striving to boost entrepreneurship — digitized its patent application system last year, the number of patent applications jumped from less than 10 to over 250 in just a few months.

So we engage in economic diplomacy to promote respect for IPR. Our annual Special 301 Report identifies challenges faced by U.S. industries in enforcing their IP in foreign markets, calls for policy reforms or technical assistance to address these barriers, and highlights positive progress. The World Trade Organization’s Article 66.2 Report further details the extensive science and technology cooperation and capacity-building assistance we offer to help Least Developed Countries. With support and training, they can commercialize and disseminate their own life-changing innovations. Moreover, they can establish model IP protection and enforcement systems to secure and sustain such innovations. Our embassies around the world are celebrating World IP Day today with programming tailored to the specific context of their host countries such as concerts, film screenings, panel discussions, and university lectures. Throughout the year, our Economic and Commercial Officers advocate for improved IP protection and enforcement on behalf of U.S. companies worldwide.

The evidence is overwhelming: a strong IP system is a key factor in driving the kind of modern knowledge-based economy that many of our counterparts around the world are eager to replicate.

However, weak IPR protections undermine IP’s economic and social benefits. Conservative estimates maintain the United States loses more than $225 billion each year from counterfeit goods, piracy, and theft of trade secrets. In 2014, the OECD estimated global losses of more than $461 billion, or 2.5 percent of world GDP, from counterfeiting. According to the International Chamber of Commerce, up to 2.4 million legitimate jobs and over $100 billion in fiscal revenues were lost to counterfeiting and piracy in 2013, with these figures set to more than double by 2022. Governments and citizens can ill afford to miss out on these economic benefits. Consumers likewise should not suffer the tragic consequences of fake airbags, medicines, and vehicle parts.

Clearly, a strong IP protection and enforcement framework is critical to the development of an innovative knowledge economy, unlocking vast economic benefits by supporting citizens’ creative potential. With this blog post, and with our daily work at the Department of State, we attempt to highlight the important link between the inventions that make our lives better and the regulatory, judicial, and law enforcement foundations that make them possible.

Happy World IP Day!

About the Author: Patricia M. Haslach serves as Acting Assistant Secretary of State for Economic and Business Affairs at the U.S. Department of State.