World IP Day, April 26: Dynamic Entrepreneurship Depends on Strong IP Raymond J. Keating, SBC Council, Washington D.C.
World IP Day is (was) April 26th. As the World Intellectual Property Organization points out: “Every April 26, we celebrate World Intellectual Property Day to learn about the role that intellectual property rights (patents, trademarks, industrial designs, copyright) play in encouraging innovation and creativity.”
Small Business and IP From a small business perspective, establishing and protecting IP rights is essential. In a booklet published by SBE Council, Unleashing Small Business Through IP: The Role of Intellectual Property in Driving Entrepreneurship, Innovation and Investment, I noted that “the centrality of the entrepreneurial sector to the U.S. economy was the case yesterday, is the case even more so today, and if the U.S. remains friendly to entrepreneurship – including protecting property rights – then it promises to be increasingly the case far into the future.” As documented throughout the book, dynamic entrepreneurship relies on strong IP protections at home and in international markets, thereby encouraging startups, allowing entrepreneurs and small businesses to attract financial capital, pushing innovation forward, providing entrepreneurs with confidence in seeking and capitalizing on opportunities in domestic and international markets, and serving as an engine for economic growth and job creation. For good measure, it’s also unmistakable that each IP-intensive industry – from software to entertainment to pharmaceuticals – is overwhelmingly populated by small businesses. For example, among pharmaceutical and medicine manufacturers, 57 percent of employer firms have less than 20 workers, 79 percent less than 100 employees, and 91 percent less than 500 workers. If we want robust entrepreneurship in industries like pharmaceuticals and so many others, then IP rights and protections are essential.
Growth in IP Investment It is worth noting that while private-sector investment has performed poorly over the past decade, investment in IP has been the strongest broad category of investment in the GDP data. From the first quarter of 2006 to the fourth quarter of 2016, for example, real investment in intellectual property products grew at an average real annual rate of 3.6 percent. That compared to average growth in gross private domestic investment of 1.4 percent, and in nonresidential (i.e., business) fixed investment of 2.5 percent. Also, the 3.6 percent rate of growth in IP investment ran well ahead of the average rate of growth for the economy, which registered a woeful 1.5 percent.
America’s IP System Best Among Ranked Nations There is overarching good news on the IP front for the U.S. economy from an international competitiveness standpoint. As noted in the 2017 edition of the U.S. Chamber of Commerce’s The Roots of Innovation: U.S. Chamber International IP Index , the United States offers the best IP system among the 45 nations ranked. The index scores economies on six categories: “patents, copyrights, trademarks, trade secrets and market access, enforcement, and ratification of international treaties.” Regarding the importance of IP rights, it was pointed out, “The most up-to-date data on the benefits of IP protection reveals that IP is, in fact, a critical instrument for countries seeking to enhance access to innovation, grow domestic innovative output, and enjoy the dynamic growth benefits of an innovative economy. Conversely, weak IP protection stymies long-term strategic aspirations for innovation and development.”
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