World class patents in cutting-edge technologies
Who is leading the world in intellectual property? Our new study sets out to answer this question by focusing on the most important patents in fields of research: those that will be crucial for future prosperity. The results: The United States is the dominant patent superpower, but China is catching up fast. Europe, meanwhile, slowly but surely is dropping down the order.
As innovation goes, so goes the economy
Innovation is crucial for economic success. And patents, in turn, form the fundamental foundation of innovation. As a result, numerous studies have relied on patents as an indicator of a nation’s future competitiveness. So, nothing new to see here? No, far from it! Our latest study breaks with the usual approach in three ways: First, it takes into account the huge differences in the quality of patents and standards of patent definitions by focusing only on the ten percent most important patents — what we call “world-class patents.”
Second, it restricts itself to 58 cutting-edge technologies, such as blockchain, 5G, or smart grid (see Race Bare Chart below). Third, it does not merely count patent applications but assesses the active patent portfolio at a given date — thus taking a snapshot of active patents rather than just counting newcomers.
Quantity vs. quality
The most important advantage of our approach is that it brings the patents into focus which really matter. Wind energy technology is a good example when explaining the discrepancy between the great mass of patents and the elite world class patents: All in all, 2019 saw 40,011 wind energy patents worldwide until September 9th. 16,740 of these were from China. Out of these, however, only 300 are world class patents based on their market coverage and their citation by official examiners in patent offices.
In 2019, China held about 40 percent of the global wind energy patents in total, but only 6.6 percent of the world class patents. By comparison, Germany holds 958 world class patents in wind energy, out of a total of 3,829 patents in that technology as of September 9th, 2019 (see Figure 1).
Patent hyperpower United States
The results show that the unipolar moment of the United States is not over yet — at least when it comes to world class patents. In 2000, the United States held the most-world class patents in 55 of the 58 technologies examined. In 2019, this number was only down slightly. It still leads in a staggering 50 technologies, taking second place in each of the other eight ones. It is particularly far ahead in the fields of health and security.
The United States is also strong in central cross-sectional technologies in the field of digitalization. A case in point is artificial intelligence. Even though it has been losing a little ground, it still holds almost half the world-class patents in the world and has a solid lead over second-placed China.
China is catching up fast
While the U.S. lead is impressive, China’s dynamic is even more so. In 2000, China was not a serious challenger in intellectual property: In not a single of the 58 technologies, did it hold a position among the five nations with the most world class patents.
In 2010, it had gained some ground but still did not make it into the top 3 in any of the technologies. Today, however, it holds the most world-class patents in five technologies and has made it into the top 3 in 37 more.
Recycling, water treatment, and waste management are three environmental technologies where China has outperformed its competitors, now holding the largest number of world-class patents in them. China also leads in the two nutritional technologies of biocides and fertilizer. Coming from out of nowhere, China is now considerably ahead of all other countries in the latter, including the United States.
Watch out for South Korea
So far, so foreseeable. Given its size and research potential, it is no wonder that China has indeed been able to not only produce many patents but also many world-class patents. However, East Asia’s rise is not limited to its foremost powerhouse only. While Japan remains a very formidable player (holding most world class patents in three technologies), South Korea’s growth dynamic has secured it a spot in the top echelon, too.
Just like China, it was nowhere to be found among the five nations with the highest number of world-class patents in 2000. By 2019, it had secured a top 5 spot in 29 technologies. This means that South Korea holds fifth place or higher in terms of the number of world-class patents in more than half of all technologies considered. Taking into account its size, its performance is even more impressive.
Europe needs to step up its game
So far, the rise of East Asia mostly goes at Europe’s expense. This is particularly true for France. In 2000, it held the top 5 spots in 41 of the 58 technologies examined. In 2010, the number had already dropped to 19. In 2019, it stood at 12th. Both the United Kingdom and Germany have also witnessed sharp declines in the past decade. The UK dropped from 40 in 2010 to 21 top 5 positions in 2019. Germany, Europe’s strongest patent power, still earned an impressive 47 top 3 positions in 2010 but merely 22 in 2019.
One of the few fields, were Europe was able to hold its share of world-class patents stable or even slightly improve its position in certain subfields, is health. While it trails the United States by a large margin, it has been able to keep East Asia at bay.
World-Class Patent Oligopoly
The strong concentration of world class patents in a few major countries is striking — and a cause for concern about a growing divide between them and the rest of the world. Besides the seven nations mentioned so far, only Canada ranks rather high across most of the spectrum of cutting-edge technologies, making the top 5 in nine of them.
Given its small economy, Switzerland also has a broad basis and covers, in particular, the fields of industry, materials, digitalization, and health very well, where it achieves high global shares. Denmark has the third-most world class patents in wind power, Sweden, and the Netherlands stand out in a few specific fields. India, on the other hand, manages only four top 5 positions despite its size and its impressive economic growth rates.
More to come
In this post, we have given an overview of the central findings of the study. Over the next few weeks, we will take a more detailed look into the strengths and weaknesses of individual countries and regions. Stay tuned, or — if you cannot wait any longer — check out the full study.