As inventors, you sometimes need to be reminded of the important role you play in the American economy. While small businesses are often cited as the engine that thrusts U.S. GDP forward, it has been proven over and over again that Intellectual Property is a vital instrument in advancing economic growth and the quality of life for all Americans.
Indeed, a recent report released via the USPTO suggests that 81 industries designated as IP-intensive directly accounted for 27.9 million jobs and indirectly supported an additional 17.6 million jobs over the last few years.
This roughly represents 30 percent of all jobs in the U.S. The total value added by IP-intensive industries amounted to 38.2 percent of U.S. GDP and IP-intensive industries paid 47 percent higher weekly wages compared to other industries.
Further, at $842 billion the merchandise exports of IP-intensive industries made up 52 percent of total U.S. merchandise exports. Exports of service-providing IP-intensive industries approach 100 billion, accounting for 12% percent or more of total U.S. private exports in services.
“Patents add to the incentive that inventors have to invest in costly research and development (R&D) by providing the opportunity to reap the rewards of their innovations. In the words of Abraham Lincoln, the patent system ‘added the fuel of interest to the fire of genius in the discovery and production of new and useful things.’”
Those manufacturing firms that show a bias towards investing in R&D, tend to patent new products at higher than average rates. Roughly 63 percent of large manufacturing firms reported patenting their most significant new product innovation, compared to only 47 percent of medium firms and 36 percent of small firms.
It appears that patenting firms are perhaps only 1-2 percent of U.S. firms but are among the largest in the economy, accounting for 33 percent of employment. Patenting firms create more jobs than their non-patenting counterparts of the same age across all age categories except the very youngest (firms <1 year old).
The authors also find that most patenting firms are small businesses. But, because they patent less frequently, the majority of U.S. patents are held by a few large, prolific patenting firms. Lastly, they find that while the manufacturing sector is particularly patent intensive with more than 6 percent of firms owning a patent between 2000 and 2011, the majority of patenting firms are in the services and wholesale sectors.
Revenue specific to the licensing of IP rights totaled $115.2 billion a few years ago, with 28 industries deriving revenues from licensing. Total merchandise exports of IP-intensive industries increased to $842 billion in 2014 from $775 billion in 2010.
So, how does American innovation fare against the rest of the world? In the “battle for ideas” South Korea crosses the finish line first, followed by Sweden, in Bloomberg’s Innovation Index, which measures R&D intensity, value-added manufacturing and patent activity. The U.S. fell one spot to No. 9, while Israel moved up one notch to No. 10.
According to the report, China held its title as the strongest-ranked emerging market, at No. 21, as it improved its tertiary education score while its high-tech concentration wavered.
Sweden gets a special mention in the report: ““In the culture, people are super individualistic — this means that people have ideas and are very interested in pursuing them in this way in order to become wealthy,” said Henrekson. “The incentives are there and the tax system favors them.”
Coming back to America, I have a personal note to share regarding my experiences with local inventors over the last 20 years: I have seen numerous stories of average people achieving extraordinary success with their ideas. These particular individuals went against the grain and traditional wisdom of peers, co-workers and naysayers to succeed even when the odds were stacked against them. They showed tremendous courage and foresight to get their idea patented and often ended up making millions of dollars after commercializing their product in a particular industry sector.
Don’t let comments such as your idea is too expensive, too complicated or will never sell, as excuses to drop your dreams of making it big with your invention: It is possible and I have helped literally thousands of inventors protect and profit from their ideas. Your success is what helps drive American innovation and growth and will help propel us past rivals such as Sweden and South Korea.
If you would like access to these inventor journeys and advice on how to proceed with your idea or invention please contact me using the form below.