/ Created by Gottfried Schüll

Patents Strengthen Economy and Job Market

Current publications underline the importance of intellectual property rights and Germany’s top position in IP

Düsseldorf, March 9, 2018 – Patents promote a country's innovative strength, knowledge transfer, economic development and growth. This thesis is confirmed by Dr. Kristina M. L. Acri, scientist at Colorado College, in a recent essay (published in the George Mason Law Review, 2017, Vol. 24). It also addresses the position of Germany, which, according to an online article by Bloomberg, ranks second among the ten most innovative nations, behind South Korea. And according to a study conducted by the Global Intellectual Property Center (GIPC), the conditions for the protection of intellectual property rights in Germany are particularly good.

Industries in which the fixed costs for research and development are relatively high profit from having their intellectual property rights protected. In the pharmaceutical industry, for example, the expenditure of innovative companies on a particular drug is about 200 times as high as that of generic drug manufacturers. Intellectual property rights (IP) make it possible to reproduce costly innovations at moderate costs. In that way investments can pay off in the long term.

More employment through IP investment

Acri also highlights the positive effects on the labor market in her essay, referring in particular to a study by US researchers Robert J. Shapiro and Aparna Mathur from 2014, which states that if India were to align its IP activities with those of China, foreign direct investment in India would increase by around 33 percent annually, which could lead to 18,000 new jobs in the pharmaceutical industry alone. If adjusted to U.S. IP activities, India is predicted to increase its investment by 83 percent and create 44,000 new jobs in the industry by 2020.

Opportunities for start-ups

Just how much an economy can be invigorated by the protection of intellectual property rights is also reflected in the opportunities for young companies. For example, a U.S. study from 2016 concludes that start-ups in particular benefit greatly from patents. According to the study, patents filed with the United States Patent and Trademark Office (USPTO) since 2001 and accepted or rejected before 2014 will result in 36 percent growth in employment and 51 percent growth in turnover for the start-ups examined over the next five years. These property rights have also proven to have a significant impact on the further innovative ability of young companies.