A patent is a government-granted right that gives inventors a monopoly to make, sell, and use their inventions for a certain period of time. In exchange, the investor is obliged must disclose the details of the invention so that that others can make use of them when the patent expires.
Counting patents is a means of gauging how well countries transform knowledge into usable inventions. Countries with more patents are in a better position to pioneer new-to-world technologies and therefore derive above-average economic gains from intellectual property. The Canadian Intellectual Property Office describes the link between patents and the nation’s welfare:
By giving inventors monopolies on their creations for a specific time period, patents protect investments and allow inventors to profit financially from their creativity. This in turn provides an attractive incentive for research and development, ultimately benefiting all Canadians. Without the possibility of patent protection, many people might not take the risk of investing the time or money necessary to create or perfect new products, without which our economy would suffer.
Patents do more than make money and encourage creativity, however. They are also a means of sharing cutting-edge information. Because each patent document describes a new aspect of a technology in clear and specific terms and is available for anyone to read, they are vital resources for businesses, researchers, academics, and others who need to keep up with developments in their field.1
Of course, not all patents are equally valuable. Counting triadic patents—that is, those submitted for the same invention to patent offices in the U.S., E.U., and Japan—reduces some sources of sample bias and ensures that the patents counted are worth counting. This indicator shows the U.S. and Japan are the world’s major innovation centres, filing almost 60 per cent of the world’s triadic patents between them.
The U.S. holds more than 30 per cent of the world’s patents and comes first on this indicator. Yet it falls to eighth place when patents are measured in proportion to its population.
Indeed, while country shares are important, size isn’t everything. Less populous countries that are increasingly specializing in a particular industry are able to produce a high number of patents in proportion to their populations; and they are able to develop competitive advantage in today’s technology-driven economies. Switzerland, for example, ranks 7th in patent share by country. But it jumps to 1st place among the peer countries when ranked by patents per million population because of its leadership in the pharmaceuticals industry.
Patents protect inventions in return for divulging their secrets. They thus encourage invention on the one hand and the spread of new technical knowledge on the other. Patents are a convenient way of estimating the relative amount of invention among countries. Taken together with other indicators, patents provide a rough-and-ready indication of relative innovation capacity and performance. But invention is not innovation: Innovation occurs when inventions become commercialized into world changing products or services.
Patents also have some generally recognized shortcomings as indicators of innovation: innovative companies may not patent an invention because the procedure is deemed too costly; or a company may choose other methods—such as trade secret protection—to secure an invention from theft. In networked industries as varied as railroads and video games, companies find that sharing invention globally to improve performance of the network as a whole is a better strategy than patenting. Nevertheless, comparing patents—especially patents around the same invention (patent families)—in the three main patent areas (North America, Europe, and Japan) does help indicate relative national innovative abilities and capacities.
Canada’s share of triadic patents filed increased from 0.9 per cent in 1985 to 1.4 per cent in 2007, an increase of 0.5 percentage points. Over the same period, Japan’s share increased by 6.1 percentage points, while the U.S. share declined by 3.9 percentage points.
Use the pull-down menu to compare the change in Canada’s share of world patents with that of its peers.
The U.S. and Japan together have 839 of the world’s 2,000 biggest companies, equal to a combined asset base of $41.3 trillion.2 Many are leading technology or manufacturing companies whose business rests on a patent base they have to defend.
In contrast, only 59 Canadian companies are among the top 2,000 in the world.
Yes. By making patenting of intellectual property a business objective and by patenting strategically around an invention, Canada can pull up its grade in this report card, which has languished in the “D”s for the past few decades. Patenting gives a country “skin in the game,” something that can be traded with other firms when there is a need to combine inventions to create a new product.
What’s more, Canadian companies don’t have to patent Canadian inventions to introduce new-to-world innovations—they could also be taking more initiative to patent high-value products and services that originate elsewhere in the world. Products that result from international collaborative research are integral to today’s global supply chains, and these products are available to the businesses and the countries that make patenting a key part of their strategic business plans.
1 Canadian Intellectual Property Office, “A Guide to Patents: Part I” [Online, cited January 18, 2010].
2 Forbes.com. [Online, cited January 12, 2010].