Earlier this month WIPO, the World Intellectual Property Organization, released some key facts and figures and a press release relating to the number of patent applications that were filed in 2020 under the Patent Cooperation Treaty (PCT).
The PCT system allows an applicant to file a single PCT (or “international”) application through which patent protection can be sought in most countries around the world. This delays the point at which the applicant has to file separate national or regional patent applications in each jurisdiction of interest. The PCT system is used by applicants across the globe.
International application filing stats are a useful metric for innovative activity. Given the tumultuous effect of the COVID-19 pandemic on societies and economies globally in 2020, the statistics released by WIPO make interesting, and somewhat heartening, reading.
The headline is that, despite an estimated drop in global GDP of 3.5%, 2020 was a record year for international application filings with the number of filings growing by 4% compared with 2019. This corresponds to a total of 275,900 applications filed in 2020 and an increase of more than 10,000.
China was a major contributor to the growth in filings, with an increase of 16.1% in Chinese-originating applications in 2020. That Chinese patent applications have increased is perhaps not surprising given that China’s economy grew last year despite the pandemic. That said, double digit filing growth is impressive.
However, filing growth was also seen in countries whose economies suffered significantly during the pandemic. Of the top ten filers, the USA, the UK, South Korea, Switzerland and Sweden all saw growth in filing numbers in 2020 while their economies shrank. Notably, filings originating from the UK grew by 2.2% in 2020 despite the economy shrinking by 9.9 %. Filings stagnated in France and fell slightly in Germany, the Netherlands and Japan.
Applicants from Asia lead the way
We have discussed previously how applicants from Asian countries, and particularly China, have come to dominate PCT filings. Click here and here for examples. The 2020 filing data shows that this trend has continued.
Historically, the USA have been the top filers of international applications. That changed last year when China took the lead. This lead has been extended in 2020 with 68,720 Chinese originating applications compared to 59,230 from the USA.
The rise of Asia as a patent-filing powerhouse is evident when looking at the breakdown of the top ten applicants of international applications globally. The only applicants from outside Asia in the top ten are Qualcomm (a US company) and Ericsson (a Swedish company). Otherwise, the list is dominated by Chinese, Japanese and Korean companies with Huawei taking the top spot with 5,464 applications. Contrasting this with data from 2005 demonstrates the rapid rise of Asian companies as international patent application filers in recent years. Back in 2005, nine of the top ten applicants were American or European, and Philips was the top applicant filing 2492 applications, less than half of Huawei’s 2020 number.
It should be noted that the dominance of Asian originating applications is the result of dramatic growth in Asia, not falling innovation in Europe and the US. For example, the number of applications filed by US applicants has grown by 29% since 2005. But this is dwarfed by 2650% growth in Chinese applications over the same period.
A positive future?
International patent application growth in 2020 perhaps offers some hope that innovative sectors of the global economy are prevailing in these difficult times. That said, it may be too early to see a downturn in patent filings caused by the pandemic.
The graph below shows international application filings between 2005 and 2012. This period includes the 2008 financial crash. In the UK, it is estimated that the economy shrank by 6.9% between Feb 2008 and March 2009. Similar falls were experienced in countries across the globe. Despite economic hardship, international application filings rose in 2008 by 3,308 only to fall later in 2009.
Graph 1: Number of international applications filed each year between 2005 and 2012. This includes the period of the financial crash.
The delay between economic downturn and the corresponding fall in patent applications may be explained by the time it takes to develop an idea into a fully-fledged invention that can be patented. Applications filed today represent research and development carried out previously. So, a fall in investment in a recession may not emerge in patent filing stats immediately.
Furthermore, many international applications will claim priority from earlier applications filed twelve months earlier, increasing the delay between initial investment in an innovative idea and the filing date of a related international application.
If the pandemic follows a similar course to the recession of 2008-09, international application filings may yet fall in 2021. But there is reason to be cautiously optimistic that this will not happen.
The nature of the recession in 2008-09 was very different to now. The current constraints on economies caused by lockdowns is the result of necessary political decisions to put public health before the economy, not an inherent drop in demand and cash flow as in 2008-09. So patterns experienced in 2008-09 may not be applicable now.
In any case, record filings in 2020 is encouraging. Time will tell whether this upward trend continues in 2021.
If you would like to discuss the many advantages of filing PCT applications, or for more information about PCT patent applications and other forms of intellectual property protection, please contact us.
This article is for general information only. Its content is not a statement of the law on any subject and does not constitute advice. Please contact Reddie & Grose LLP for advice before taking any action in reliance on it.