Recently the World Economic Forum, the organisation behind the annual Davos economic meeting, published its Global Competitiveness Report 2014-2015. The report provides an overview of the competiveness of 144 economies that are ranked against 12 pillars, including institutions and infrastructure, health and education, labour and goods market efficiency, technological readiness and innovation. This year the UK rose one spot to ninth, based on an increase in “business sophistication” and its general business environment.

A key indicator in the institution pillar was the perceived strength of Intellectual Property (IP) protection. 

Focussing on the strength of IP, the top ten were as follows 

Click here to view table.

The USA was ranked in 20th place, with China and India at 53rd and 65th, respectively. Germany, which often prides itself on the strength of its IP protection and enforcement, was ranked 21st. In short, the results should come as a surprise to regular practitioners in the various IP fields. 

To provide the background to these results, the rankings are based on data generated by a survey given to a “Partner Institute” from each country. For example, the UK partner institute is LSE Enterprise Ltd, the commercialisation arm of the London School of Economics. For China the survey was given to Institute of Economic System and Management, National Development and Reform Commission and the China Center for Economic Statistics Research, Tianjin University of Finance and Economics. The question asked was “In your country, how strong is the protection of intellectual property, including anti-counterfeiting measures?” with a value given from “eextremely weak” as one to seven for “extremely strong". In preparing the survey the Partner Institutes asked the above question to a random selection of business executives from small- and medium-sized enterprises and large companies in the main sectors of the economy (agriculture, manufacturing industry, non-manufacturing industry, and services).

Given the breadth of the single question and the fact that many business executives will not have any actual experience of IP enforcement, it appears difficult to give much weight to the results. It is also noted that there is no objective data included in these rankings, e.g. the number of brought/successful infringement or validity proceedings. Also, the question does not necessarily ask how strong the IP is relative to the other countries on the list – would the executives asked know if protection in their country was strong compared to others? There is also no distinction between regional IP protection obtained via centralised prosecution, such as European patents or Community Designs/TMs, and nationally derived rights. 

However, despite these apparent shortcomings in the actual results, what is most important is that there is a clear recognition that IP protection and its strength (or, at least, its perceived strength) are important factors in determining global competitiveness. 

For example, despite the relatively low ranking for China, data gathered by the World Intellectual Property Office places, for the the first time, China at the top of the rankings for both the source (filings by China) and the destination (filed in China) for the four types of IP (patents, utility models, trademarks and industrial designs). Also, as reported by the blog, China IPR, there has been a surge in 2012 in China to a total of 8,744 cases of patent infringement and counterfeiting disputes, which is more than twice the caseload of 2011. This is considered to be the result of a general effort in China to improve how the word sees the strength of their IP. How foreign investors view the strength of a nation’s IP protection is a key indicator when assessing whether or not to directly invest in that economy.

A recent study has analysed how foreign investment impacts on growth and development in developing nations, with an emphasis on the pharmaceutical sector in India. As mentioned above, India was ranked mid-table in the IP report, which tallies with the overall ranking of 72, despite the Indian economy being the tenth largest in the world by nominal GDP and third largest by purchasing power parity. The authors of the study conclude that if India reached the degree of IP protection equivalent to that of even China, annual foreign investment would increase by 33 per cent. 

To summarise, whilst it is debatable what conclusions may be reached based on the rankings of the perceived strength of IP in this report, it is unarguable that robust IP protection is an essential starting point for global competitiveness and, ultimately, for long-term growth. 

The full WEF report is available at: www3.weforum.org/docs/WEF_GlobalCompetitivenessReport_2014-15.pdf