By Alan S. Wernick
FSB FisherBroyles LLP
Information technologies play a significant role in the U.S. and world economy. The roles of these technologies touch virtually every business and most individuals on a daily and often ubiquitous way. Consider the business critical computer applications and systems used to run many businesses or the use of computers in education, health care, financial services and many other industries or simply how businesses and individuals communicate on a daily basis with each other. Intellectual property protection provides the legal framework motivating, protecting and supporting innovations in information technologies.
The report, "Intellectual Property and the U.S. Economy: Industries in Focus," released in March and produced by the U.S. Commerce Department's Economics and Statistics Administration and the U.S. Patent and Trademark Office (USPTO) quantifies the impact of intellectual property protection on the U.S. economy. Deputy Commerce Secretary Rebecca Blank, commenting on the release of the report, said, "Virtually every U.S. industry either produces or uses intellectual property protections — either directly or indirectly."
Let's examine several key findings from the report:
•The entire U.S. economy relies on some form of IP, because virtually every industry either produces or uses it.
•IP-intensive industries contributed $5.06 trillion to the U.S. economy or 34.8 percent of GDP in 2010.
•By focusing on relevant data and various statistical measures, this report identified 75 industries (from among 313 total) as IP intensive. These IP-intensive industries directly accounted for 27.1 million American jobs, or 18.8 percent of all employment in the economy, in 2010. A substantial share of IP-intensive employment in the United States was in the 60 trademark-intensive industries, with 22.6 million jobs in 2010. The 26 patent-intensive industries accounted for 3.9 million jobs in 2010, while the 13 copyright-intensive industries provided 5.1 million jobs.
•40 million jobs, or 27.7 percent of all jobs, were directly or indirectly attributable to the most IP-intensive industries in 2010. About 27 million of those are either on a payroll or under employment contracts, working directly for the IP-intensive industries. Nearly 13 million more are indirectly supported through the supply chains servicing these industries.
•Between 2010 and 2011, the economic recovery led to a 1.6 percent increase in direct employment in IP-intensive industries, faster than the 1 percent growth in non-IP-intensive industries.
•Jobs in IP-intensive industries pay well compared to other jobs. Patent- and copyright-intensive industries have seen particularly fast wage growth in recent years with the wage premium in patent-intensive industries increasing from 66 percent in 2005 to 73 percent in 2010 and the premium in copyright-intensive industries rising from 65 percent to 77 percent.
•The comparatively high wages in IP-intensive industries correspond to, on average, the completion of more years of schooling by these workers. About 42 percent of workers age 25 and above in these industries in 2010 were college educated, compared with 34 percent on average in non-IP-intensive industries.
•Merchandise exports of IP-intensive industries totaled $775 billion in 2010, accounting for 60.7 percent of total U.S. merchandise exports.
Regarding the IP-intensive jobs being created, Blank said, "IP-driven jobs are good jobs. In fact, wages for jobs in IP-intensive industries are 42 percent higher on average than wages in other industries. And, in recent years, wages have grown quickly in patent- and copyright-intensive industries. This means that IP protections aren't just important for businesses and entrepreneurs — they are important for working families. In other words, these good-paying jobs help support economic security for America's middle class — and they will continue to do so in the years to come."
Concerning the impacts of trademarks, patents and copyrights on the U.S. economy, USPTO Director David Kappos said, "I don't think anyone can overstate the significance of the fact that industries using the federal trademark system most actively employ one quarter of all American workers."
Protection of IP has been woven into the very fabric of the United States from its founding as seen in the U.S. Constitution. IP protection furnishes a strong foundation and fertile soil for the robust growth of innovation not only in information technologies, but many other industries. Understanding IP rights in information technology transactions will greatly facilitate risk allocation in those transactions. Given the major role that IP plays both in the economy as a whole and in each individual business, properly protecting IP rights will significantly contribute to the success of the economy and every business. Understanding the role of IP protection in the economy is important and addressing its role in your business information technology transactions is critical.
© Alan S. Wernick