World Intellectual Property Report 2022
Necessity has been called the mother of all inventions, and the most recent example was when the world was caught unawares amid the Covid-19 pandemic in 2020 without any cure available. However, soon there was a surge of hope as we finally found a breakthrough in the form of anti-virals and mRNA vaccines. A similar account of inevitable human innovation is also discussed in the World Intellectual Property Report 2022 (“Report“) titled “The Direction of Innovation,” very recently published by the World Intellectual Property Organization (“WIPO“).
The Direction of Innovation
The report discusses how specific causes have shaped innovation and creation in the recent past. The ‘direction of innovation‘ here means the sum of all the decisions individuals, firms, universities, and governments make on which technological opportunities to pursue at any time. The report observes how this decision-driven allocation of resources sets the direction of innovation in communities and countries. The report also suggests how public policies can steer innovation in a direction that best responds to society’s needs.
The report discusses, however, that since the first Industrial Revolution was kickstarted 250 years ago, several technological advances have occurred. The present era has been called the Fourth Revolution, where technological advances are now based on digital technologies, such as robotics, artificial intelligence, and big data. The report calls the period from 2000-to 2020 that of digital technologies.
The first two chapters of the report have been dedicated to discussing the past 100 years of innovation- the trends, growth, and pitfalls. These chapters also provide a detailed discussion on innovation ecosystems, the impact of policy measures on innovation, the role of developing economies in innovation, and the case studies from history that show the course of innovation in the past century.
Chapter 3 of the report discusses three significant causes which, in the recent past, have significantly shaped and guided the direction of innovation. These are- the Covid-19 crisis, the fight against changing climate, and the ongoing digital revolution. The chapter also presents relevant case studies on how these three causes have greatly determined how human and economic resources have been used and distributed over innovation sectors. The pandemic especially has made medical research change course and transcend borders. Its impact has reached beyond the immediate search for an effective vaccine to affect innovation in other medical research and practice areas.
Similarly, the impending global warming crisis has encouraged countries and corporations to invest and support research and development of more sustainable alternative technologies (like electric vehicles, solar PV energy, and low-carbon technologies) to fight the doom. Lastly, the chapter discusses how digitalization has completely turned the world on its axis and how this revolution has affected the direction of innovation, leading to general-purpose digital technologies growing faster than the average patent filings across all technologies.
Some other key findings of the report are:
1. The report observed and analyzed the patenting trends over the last 100 years and concluded that the overall growth had exponentially increased by 25x, reflecting a gain of about 3% per year in the previous century.
a) The transport sector witnessed an annual growth rate of 21% and occupied a 28% chunk of all patents during the 30 years ending in 1925. The transport sector grew twice its size in these 30 years.
b) Post this period, in the next three decades up to the 1960s, medical innovation tremendously progressed, and this sector grew about three times its size. In this era, 7% of all patents were from the medical innovation sector.
c) For the next 35 years till 2000, Computer and related innovation (“ICTs“) tripled, and the sector represented 24% of all patents and showed an 8% annual growth rate.
d) In the next 20 years till 2020, digital innovation increased by four times, and this sector represented 12% of all patent applications, with a 13% annual growth rate
2. As per the report, between 2015 and 2020, digital-related innovation has grown 172% faster than all patents in the past five years, and the average patenting activity for big data has gone up by 699%, while patenting activity for artificial intelligence has gone up by 718% and that for cloud computing has gone up by 122%.
3. The IT industry in East Asia, Japan, the Republic of Korea, and China have emerged as the forerunners when it comes to integration in the global economy as core and active participants in international value chains.
4. The report also notes that the development of all East Asian economies has familiar elements, including economic catch-up, fast technological progress of private firms and industries, and government policies to reduce the risks for firms entering new industries.
5. Due to the factors mentioned earlier, by 2020, Japan held 25% of the world’s ICT-related patents, while the Republic of Korea had 18%, and China was right behind at number three, containing 14% of all ICT-related patents.
6. Before the oil price shock in 1973, global innovation in low-carbon emission technologies had been growing annually at a rate of 6%. However, starting from 2012, this sector’s growth has stagnated.
7. Covid-19 vaccines generated 83% of global GDP, and USD 71 trillion was generated as the social benefit of Covid-19 vaccines.
8. Digital general-purpose technologies are transforming industries by bringing in new innovators, structures, practices & values, and today traditional innovators face competition from IT-based firms.
9. Due to market competition, firms tend to invest in innovation activities that yield the highest payoff in the shortest time. The report also observed that established firms avoid innovation activities that are risky and uncertain.
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