Apr 082013
 

nsfLast year the National Science Foundation published an issue brief by John Jankowski on the importance that American firms in different industries place on intellectual property.  It presents survey data showing which industries rely on which types of IP:  trade secrets, trademarks, utility patents, design patents, copyrights, or mask works.  Firms were asked to rank these types of IP protection as “very important,” “somewhat important” or “not important.”  Jankowski shows how different types of intellectual property are far more important to some industries than others.  Trademarks, trade secrets and copyright were valued most by the companies in the survey, yet 84%, 85%, and 88% of all firms surveyed said these were “not important” to them.

The results are more interesting when they are broken down by industry and compared to last year’s USPTO report  Intellectual Property in the U.S. Economy: Industries in Focus.  (The USPTO report describes the economic contributions of industries that “rely on” different types of IP protection.  Its findings are often cited by officials seeking higher levels of protection in laws and trade agreements.)  Comparisons cannot be as exact as one might like, because the two reports use different levels of specificity in their industry classifications.  NSF reports its results at the three-digit level of industry classification under the North American Industry Classification System (NAICS), while the USPTO uses the more precise four-digit level.

Copyright

There are two industries that USPTO report includes as reliant on copyright that match a corresponding industry class in the less-specific NSF report.

NSF Report USPTO Report
511 Publiishing 5111 Newspaper, periodical, book, and directory publishers
5112 Software publishers

 

Not surprisingly, both reports show that copyright is important to publishing firms.  However, even among publishers there is far from unanimous agreement on the importance of copyright.  The NSF report says that 36% of publishers surveyed counted copyright as “very important,” 25% said “somewhat,” and 39% counted copyright as “not important.”

Patent

Eleven of the industries the USPTO report includes as reliant on patents correspond to four less precise industry groups in the NSF report.

NSF Report USPTO Report
325 Chemicals 3252 Resin, synthetic rubber, fibers and filaments
3253 Other chemical products and preparation
3254 Pharmaceuticals and medicine
3251 Basic chemicals
333 Machinery 333 Machinery
334 Computer and electronic products 3341 Computer and peripheral equipment
3342 Communications equipment
3343 Other computer and electronic products
3344 Semiconductor and other electronic components
3345 Navigational, measuring, electromedical, and control instruments
335 Electrical equipment, appliance, and components 335 Electrical equipment, appliance, and components

 

Among these industries, 14-25% of respondent firms considered utility patents to be “very important;” 6-12% considered utility patents to be “somewhat important;” and 63-81% considered utility patents to be “not important.”  The NSF survey shows that the chemical, computer/electronic product, and electrical equipment/appliance/components firms were all more likely to count trademark protection as “very” or “somewhat” important than patent protection.

The NSF survey also reports survey results for firms “with R&D activity” versus firms without R&D activity.  Those engaged in R&D activity are more likely to value nearly all kinds of intellectual property protection as either “very” or “somewhat” important.

The NSF survey results are consistent with studies that have reported on earlier surveys of businesses regarding their attitudes toward intellectual property protection.  A well-known paper by Mansfeild showed that some industries rely far more heavily than others on intellectual property protection in their decisions on where to locate overseas operations.  A 2000 paper by Cohen, Nelson and Walsh surveyed manufacturers in various industries and found that relied less on patents than other factors like lead time and secrecy to protect their innovations. The NSF survey is notable for its inclusion of a wider selection of industries, and more types of intellectual property.

The USPTO report methodology determines whether or not specific industries are IP intensive by evaluating the industries’ use of intellectual property.  The authors acknowledge that this may lead their findings to contradict studies that are based on direct input from firms.

…we should note that defining ‘IP-intensity’ as the use of intellectual property protection is an approach open to criticism. Although commonly used in the scientific literature, such intensity measures tend to overweight those industries that more commonly use patents, trademarks, or copyrights for purposes other than activities closely related to R&D or commercialization per se.  The term ‘IP-intensive’ defined in this report is not necessarily directly related to the value or purpose of the IP held by companies.

In all, the NSF tells a more nuanced story about the importance of intellectual property to businesses than one sees when watching policy debates.  When policymakers or industry groups declare that IP protection is responsible for 55 million jobs, they are adding up employment figures from various industries.  But the firms that make up those industries do not all place a high value on IP, and many responded to the NSF survey that most types of IP are “not important” to them.

For certain industries, certain types of IP are indeed very important.  But even within these industries, some firms rely more heavily than others on IPR protection.

 

 

 

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