Every year, the major patent authorities around the globe, including the World Intellectual Property Organization (WIPO), the European Patent Office (EPO) and the United States Patent and Trademark Office (USPTO) publish statistical information on applications filed, applications published, patents granted and more. Tables are made available that show application and grant numbers per applicant residence country (among many other criteria). Traditionally, the figures for the major industrial countries, such as the USA, Japan, South Korea and the larger European economies have looked very impressive. In more recent years, China has risen up the ranks and in 2014 was the third biggest filer of international (PCT) applications (21,516) behind only the USA (57,239) and Japan (43,918).
It is perhaps to be expected that the filing and grant numbers for a particular country are broadly in line with the size of its economy or other measures such as size of population, R&D spend, etc. It could be said that countries with small economies filing more patents are more “patent-efficient” than countries with large economies filings fewer patents.
Using the filing and grant figures published by WIPO and the EPO, we hope to provide an analysis of which countries are more “patent efficient” and which are less so. It should be acknowledged that companies file “at home” (i.e. at their own national or regional patent office) more than abroad, and so the figures from the EPO will admittedly be somewhat skewed towards European filers. We have not considered figures from the USPTO or UK IPO as the figures favoured home filings too heavily. We have combined this with the nominal GDP for each country (as published by the International Monetary Fund) to calculate a “patent efficiency”, i.e. the number of patents/applications per billions of US$ nominal GDP. We have not adjusted the GDP figures for purchasing parity since patent filing and prosecution cost largely do not take purchasing power into account either.
The most “patent efficient” countries are those recognised internationally as tax havens, led by the British Virgin Islands, whose EP efficiency (124) is more than twice that of second-placed Liechtenstein with a score of 57, and thirteen times Switzerland’s 9.6. This is not surprising since they attract a disproportionate number of IP holding companies in relation to the size of their GDP. However, perhaps more surprisingly, the absolute application/patent count for these countries / territories is still very small compared with larger economies. Given the disproportionately high patent efficiency of the tax havens, these are not included in Fig. 1.
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Looking at the plot for the EPC contracting states only (Liechtenstein excluded), at least two groups of countries appear to be discernible: the larger economies forming a “branch” at a relatively low efficiency level, albeit of generally increasing efficiency score with increasing GDP; and a “field” of smaller economies, many with significantly higher efficiency score than most of the larger economies.
It is tempting to explain the high ranking of Switzerland - at least for EP filings, though not so much for PCT filings - as being the result of a favourable tax regime. However, if tax was indeed a significant factor it is then perhaps surprising to see Finland, Sweden and Denmark near the top of the table, all having relatively high tax regimes.
The shape of the lower branch (consisting of Spain, Italy, France, the UK and Germany), and indeed its existence, is also noteworthy. The almost consistent upwards shape might suggest a principle of “the bigger the economy the higher the patent efficiency”. However, this principle does not at all fit in with the smaller economies achieving the higher efficiency levels in the “field”.
The UK appears to spoil the upwards trend in the “branch”. The UK’s GDP is marginally larger than that of France, but the efficiency is significantly lower. It could be that UK-based applicants are typically interested in a smaller number of key territories than France-based applicants – such as the US, China and (of course) the UK. This may render direct filing in these countries favourable over the PCT route and diminish the demand for European patent applications – therefore impacting the EP/PCT efficiency figures for the UK. The lack of substantive examination in France may also encourage French applicants seeking protection at home to file European patent applications in preference to national applications, whereas UK applicants seeking protection within the UK can rely on a good substantive examination with only a national application. Further, since it is not possible to enter the national phase in France from a PCT application, PCT applicants need to enter the European regional phase in order to seek patent protection in France, which further boosts European filings from French applicants.
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In Fig. 2, three distinct groups can be recognised. The “field” in the left hand portion of the plot is primarily made up of the European states that constituted the “field” in Fig. 1, with the notable addition of South Korea (achieving an impressive PCT filing efficiency score of 8.7).
The second group is again the branch of the larger European economies, now extended to include Japan, the most “patent efficient” (with a score of 9.5 for PCT applications).
The two largest economies, the USA and China, form their own group thanks to the size of their respective GDPs. Whilst US applicants file the most PCT and EP applications – well ahead of second-placed Japan for PCT and Germany for EP filings – the USA achieves relatively low efficiency scores of 3.3 (PCT) and 2.1 (EP).
China’s patent efficiency is lower, although this is perhaps not so surprising, as much of its GDP comes from its huge manufacturing sector. Patent activity is still a somewhat recent phenomenon, with its IP system only set up in 1979. We would expect China’s patent efficiency to (continue to) rise in the future.
For high-GDP, non-EPC contracting states such as Japan, China and the US, the efficiency of filing PCT applications is approximately twice that for EP applications, whereas in the case of the larger European economies, the PCT efficiency is approximately the same or marginally lower than the EP efficiency – reflective of European applicants’ stronger focus on the European market.
Instead of calculating a patent efficiency based on GDP, as was the case in this study, other metrics which could be studied include research and development (R&D) spending and population. However, amongst the larger economies, R&D spending tends to be about 1.5 to 4.0 per cent of GDP and thus the broad trends are likely to be similar. On the other hand, the more industrialised countries would show a higher patent efficiency if population were considered, instead of GDP. Finally, we also note that, in the case of EP applications, the efficiencies of publication and grant were found to be broadly in line with the filing efficiency, in that no one country appeared to have a significantly lower grant efficiency.