Last week OHIM, through the EU Observatory on Infringements of Intellectual Property Rights, and the EPO, launched the first ever study on the contribution of IPR-intensive industries to the EU economy. As OHIM´s Chief Economist, my team and I worked closely with our EPO counterparts to produce the report, so I read James Nurton´s blog post of last week with interest. He raised some very legitimate questions, and I´m happy to have the opportunity to respond to them here.
James posed a twofold question about our definition of “IPR intensive industries”; first of all, given that we define as IPR-intensive those industries that use an above-average number of IP rights per employee, are we not almost destined to end up with half of all industries being IPR-intensive? The answer is: not necessarily so, this depends on how skewed the distribution of IPR intensity is among the industries. If a few industries are very IPR-intensive and many are not, then the distribution would be skewed and only a minority of industries would be above that average. It appears that in the EU, this distribution is fairly even.
Secondly, if half of all industries are IPR-intensive, James wondered, then why do they account for only 35% of employment (26% direct plus 9% indirect)? The answer is that there are a few very large industries, mainly in the public sector, which are by definition not IPR-intensive and which employ more than 50 million workers (out of a total of 218 million). If those industries were kept out of the calculation, then the employment share of IPR-intensive industries would be close to half (in the 45% range), and their share of GDP would be more than half. But we did not want to be accused of deliberately inflating the contribution of IPR-intensive industries.
James asked how we selected the IP rights for this study – the short answer is that we had to start somewhere, and therefore chose to focus on the IP rights managed by OHIM and EPO, i.e. patents, trade marks and designs, and copyright. This also ensured comparability with the US study. Geographical Indicators were added because they are important to certain countries, regions and industries, and because we could obtain data from the Agriculture and Rural Development Directorate General in the European Commission. Other rights mentioned by James could certainly be of interest, but those rights are either not used in the same way across the EU or data are difficult to obtain (eg trade secrets). In the future we hope to expand the range of IP rights that we study.
In terms of the “quality” of IP rights, James’s point is that some patents are more valuable than others, and the same is true for trade marks, and that this fact needs to be taken into account somehow. In principle we agree. It is indeed correct that taking the quality of the IPR into account was outside the scope of the study. It is a valid concern, but even if it had been possible to deal with it, it would have introduced additional assumptions and complexity into the study. It was also important to use a methodology that was similar to that used in the US study in order to arrive at results that could be compared.
James asks about our sourcing of data from EPO and OHIM and not at EU national office level. For this part of the study, filing data is used simply to select the IPR-intensive industries. It is a fundamental assumption of the study that whether or not a particular industry is IPR-intensive is a basic characteristic of that industry, independently of geography. Therefore, it is safe to assume that if an industry is trade mark intensive based on CTM applications, then this industry would also be trade mark intensive if national trade marks had been considered as well. Limiting the filings to EPO and OHIM made the data matching exercise much less complex.
Finally, James’s question of whether the fact that we counted NICE classes rather than trade marks inflates the importance of trade marks relative to the other IP rights, because of OHIM’s “3 for the price of 1” fee structure. The answer is simple: the fact that we use classes rather than applications as the measurement unit does not affect the results because the average to which each industry is compared is also calculated based on classes. So whether we count classes or applications, the same industries would have been identified as trade mark-intensive.
The high contribution of trade mark-intensive industries simply reflects the widespread use of this IP right and its broader applicability compared to the other IP rights.