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World Patent Report Confirms Increasing Internationalization of Innovative Activity

Geneva, July 31, 2008

Increased patent filings in North East Asian countries (mainly China and the Republic of Korea (ROK)) and the United States of America (USA) drove growth in worldwide filing of patent applications, which topped 1.76 million in 2006, representing a 4.9% increase over 2005, according to the 2008 edition of the World Patent Report of the World Intellectual Property Organization (WIPO).

The report, based on 2006 figures (the last year for which complete worldwide statistics are available) also shows that patents granted worldwide increased by 18% with some 727,000 patents granted in 2006 alone. The substantial increase in patents granted is due, in part, to efforts by patent offices to reduce backlogs as well as the substantial increase in the number of patents granted by China and Republic of Korea. According to these statistics, the total number of patents in force worldwide at the end of 2006 was approximately 6.1 million.
The Director General of WIPO, Dr. Kamil Idris, observed “A major increase in innovative activity in China, the Republic of Korea and the United States has driven the overall growth of patent filings in 2006.  This reflects a consolidation of earlier trends which demonstrate a marked shift in innovation hubs around the world.”  He further added “While use of the patent system remains highly concentrated among a group of countries, statistics show an increasing level of patent activity in emerging countries.  This is an encouraging trend,” he added.
Mr. Francis Gurry, WIPO Deputy Director General who oversees the Organization’s work relating to patents, said that, given its growing political importance, a better understanding of the “evolution and use of the patent system is critical to understanding policy debates including the role of intellectual property in economic growth and development, the relationship between IP policy and other key public policy issues, such as health and the environment, and to initiatives to improve the efficiency of the patent system itself.”  He added, that “the report, which is part of WIPO’s on-going commitment to improve statistical information on patent activity, allows users to analyze and monitor the latest trends in patent activity based on objective and detailed information.”
Growing Internationalization of Patent Activity
While statistics reveal patterns of concentration in patent activity, they also point to a growing tendency for applicants to file their applications in multiple countries.  This trend towards increasing internationalization of patent activity is demonstrated by the growth in international filings through the Patent Cooperation Treaty (PCT) and in non-resident patent filings. “The PCT is the most important route for international patent filings, with an estimated 49% of all international patent applications being filed through the PCT,” said Mr. Gurry, noting efforts to further simplify use of the PCT and WIPO’s continuing drive to improve efficiency. 
The number of international patent filings submitted via the PCT in 2007 is estimated to be 158,400, representing a 5.9% increase over the previous year.  The USA is by far the largest user of the PCT system, a multilateral agreement administered by WIPO which provides a simplified method for international patent filing. In 2006, 33.6% of all PCT filings originated from the USA, almost twice that of the next largest user, Japan, which accounted for 17.5% of all PCT filings.  Mr. Gurry observed that “Emerging countries such as India, Brazil and Turkey are increasingly using the system to file international applications.”
The proportion of worldwide patent filings by non-residents increased from 35.7% in 1995 to 43.6% in 2006. In addition, between 2005 and 2006, total non-resident patent filings increased by 7.4%, in contrast to total resident filings which increased by 3.1%.  Non-resident filings originating from US applicants accounted for 21.9% of the total non-resident filings, followed by Japan with 21.7% and Germany with 10.8%.  The combined share of worldwide non-resident patent filings by the eight largest countries of origin (the USA, Japan, Germany, the ROK, France, the Netherlands, the UK and Switzerland) increased from 66% to 74% between 2000 and 2006.
The level of internationalization varies across countries and economies. The share of non-resident patent filings is very high in the patent offices of Hong Kong (SAR) China, Israel, Mexico and Singapore – where more than 90% of total filings are submitted by non-resident applicants.
Patenting activity in emerging countries also increased in 2006. The patent offices of India (24,505), Brazil (24,505) and Mexico (15,505) all received a large number of filings in 2006. For the majority of the reported emerging countries, non-resident applicants accounted for the largest share of total filings in these countries.
Trends in Patent Activity
The share of total worldwide patent applications submitted by applicants from the top 10 countries of origin (i.e. the countries in which applicants reside) increased from 82.4% (2000) to 85.2% (2006).  Applicants from Japan (514,047 applications), the USA (390,815 applications), the ROK (172,709 applications), Germany (130,806 applications) and China (128,850 applications) accounted for 76% of the total number of patent applications filed worldwide in 2006.  Significant growth in the number of patent applications filed domestically fuelled China’s share of total worldwide patent filings which rose from 1.8% to 7.3% during the period 2000-2006.  Between 2005 and 2006, the total number of patent applications filed worldwide by applicants from China, the ROK and the USA increased by 32.1%, 6.6% and 6.7% respectively.
In terms of offices, in 2006, for the first time since 1963, the United States Patent and Trademark Office (USPTO) received the largest number of patent applications (425,966), followed by the Japan Patent Office (408,674). The patent offices of China (210,501), the ROK (166,189), and the European Patent Office (135,231) also received a large number of filings.
The period 2000-2006, also saw a significant increase in the number of filings originating from Australia, China, India and the ROK. The average annual growth rate in patent filings for these countries was far above that of all reported countries in Europe and North America. Japan, the United Kingdom and Sweden experienced modest growth in patent filings (less than 1% a year).
Although the number of patent applications filed across the world has steadily increased, the rate of increase is below that observed for other economic indicators such as gross domestic product (GDP) and trade.  That said, research and development (R&D) expenditure and volume of patent filings are highly correlated. Countries with a high level of R&D investment tend to have a higher number of patent filings per resident as seen in the USA, Japan, China, Germany, France, the United Kingdom (UK) and the ROK.
Patents Granted
The bulk - some 73% - of the 727,000 patents granted across the world in 2006 were concentrated in a small number of countries of origin - Japan, the USA, the ROK and Germany. Between 2000 and 2006, the number of patents granted to applicants from China and the ROK grew by an annual average of 26.5% and 23.2% respectively.
Ownership of Patents in Force
Applicants from Japan (approximately 1.6 million) and the United States (approximately 1.2 million) owned the bulk of the patents that were in force in 2006. Between 2004 and 2006, there was a significant increase in the number of such patents owned by applicants from Finland (85%) and the ROK (47%).  More than half of the patents in force in 2006 were filed during the period 1997-2003. Many patents are not maintained for the full term of 20 years from filing typically because the cost of maintaining the patent exceeds the economic return on the related product or service. Maintenance fees are payable at intervals throughout the life of the patent.  Only a minority of patents are maintained for the full term.
Technology Sectors
In 2005 (the latest year for which technology data are available), the most intense patenting activity is evident in the following sectors: computer technology (144,594), telecommunications (116,770), and electrical machinery (121,350) technologies. Between 2001 and 2005, patent filings in computer technology, optics, and semiconductors grew by 5.3%, 5.0% and 4.9%, a year, respectively. There was a modest increase in pharmaceuticals filings (1.7%) and a decrease in biotechnology filings (-2.7%).
Recent pressures on energy resources have boosted patenting activity in the energy sector, in particular in relation to solar (thermal and photo) energy, fuel cells and wind energy. Applicants from Japan accounted for the largest number of applications in the fields of solar energy and fuel cells.  Whereas, Germany and Japan were the top two countries of origin for wind energy technologies.
Patent Offices Workload
In 2006, major patent offices continued to be challenged with significant backlogs in applications to be processed.  Mr. Gurry said “while the report underlines promising trends in the use of the patent system, it also points to the need to find solutions to address the persistent backlogs in workload at many IP offices around the world.”  The number of patent applications pending examination at the USPTO rose to 1,051,502 in 2006.  Similarly, in recent years the JPO has experienced a sharp rise in the number of pending applications with some 836,801 patent applications outstanding at the end of 2006.  This is largely due to the introduction of a reduced time limit for request for examination - from 7 years to 3 years -which is likely to increase the examination workload at the JPO for some years.  The number of pending applications at other large patent offices, such as the European Patent Office, Germany and Canada is also significant.
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