Intellectual Property and the U.S. Economy


Patents, trademarks, and copyrights are the principal means for establishing ownership rights to inventions and ideas, and provide a legal foundation by which intangible ideas and creations generate tangible benefits to businesses and employees.

Intellectual property (IP) protection affects commerce throughout the economy by: providing incentives to invent and create; protecting innovators from unauthorized copying; facilitating vertical specialization in technology markets; creating a platform for financial investments in innovation; supporting startup liquidity and growth through mergers, acquisitions, and IPOs; making licensing-based technology business models possible; and, enabling a more efficient market for technology transfer and trading in technology and ideas.

On April 11, 2012, the U.S. Commerce Department released a comprehensive report, entitled "Intellectual Property and the U.S. Economy: Industries in Focus," which found that intellectual property (IP)-intensive industries support at least 40 million jobs and contribute more than $5 trillion dollars to, or 34.8 percent of, U.S. gross domestic product (GDP).

The report by the Economics and Statistics Administration (ESA) and the United States Patent and Trademark Office (USPTO) identified 75 industries (from among 313, total) as IP-intensive. These IP-intensive industries support tens of millions of jobs and contribute several trillion dollars to America's GDP. The report not only estimates the contributions of these industries to the U.S. economy, but also gauges the ripple, or domino, effects they have on employment throughout the economy.

"Every job in some way, produces, supplies, consumes, or relies on innovation, creativity, and commercial distinctiveness," said Under Secretary of Commerce for Intellectual Property and USPTO Director David Kappos. "America needs to continue investing in a high quality and appropriately balanced intellectual property system that will promote innovative, open, and competitive markets while helping to ensure that the U.S. private sector remains America's innovation engine."

Some of the most IP-intensive industries include: computer and peripheral equipment, audio and video equipment manufacturing, newspaper and book publishers, pharmaceutical and medicines, semiconductor and other electronic components, and the medical equipment space.

The report is particularly noteworthy because - for the first time - a systematic analysis of the use of trademarks is completed, showing that the industries most intensively using trademarks accounted for a large share of direct and indirect employment (24.7% of total employment) in the U.S. economy in 2010.

Principal Findings

  • The entire U.S. economy relies on some form of IP, because virtually every industry either produces or uses it.
  • IP-intensive industries accounted for about $5.06 trillion in value added, or 34.8% of U.S. gross domestic product (GDP), in 2010. Merchandise exports of IP-intensive industries totaled $775 billion in 2010, accounting for 60.7% of total U.S. merchandise exports.
  • IP-intensive industries directly accounted for 27.1 million American jobs, or 18.8% of all employment in the economy, in 2010.
  • A substantial share of IP-intensive employment in the U.S. was in the 60 trademark-intensive industries, with 22.6 million jobs in 2010. The 26 patent-intensive industries accounted for 3.9 million jobs in 2010, while the 13 copyright-intensive industries provided 5.1 million jobs.
  • While IP-intensive industries directly supported 27.1 million jobs either on their payrolls or under employment contracts, these sectors also indirectly supported 12.9 million more supply chain jobs throughout the economy.
  • In other words, every two jobs in IP-intensive industries support an additional one job elsewhere in the economy. In total, 40.0 million jobs, or 27.7% of all jobs, were directly or indirectly attributable to the most IP-intensive industries.
  • Jobs in IP-intensive industries pay well compared to other jobs. Average weekly wages for IP-intensive industries were $1,156 in 2010 or 42% higher than the $815 average weekly wages in other (non-IP-intensive) private industries. This wage premium nearly doubled from 22% in 1990 to 42% by 2010.
  • Patent- and copyright-intensive industries have seen particularly fast wage growth in recent years, with the wage premium in patent-intensive industries increasing from 66% in 2005 to 73% in 2010. And the premium in copyright-intensive industries rising from 65% to 77%.
  • The comparatively high wages in IP-intensive industries correspond to, on average, the completion of more years of schooling by these workers. More than 42% of workers aged 25 and over in these industries in 2010 were college educated, compared with 34% on average in non-IP-intensive industries.
  • Due primarily to historic losses in manufacturing jobs, overall employment in IP-intensive industries has lagged other industries during the last two decades. While employment in non-IP-intensive industries was 21.7% higher in 2011 than in 1990, overall IP-intensive industry employment grew 2.3% over this same period.
  • Because patent-intensive industries are all in the manufacturing sector, they experienced relatively more employment losses over this period, especially during the past decade.
  • While trademark-intensive industry employment had edged down 2.3% by the end of this period, copyright-intensive industries provided a sizeable employment boost, growing by 46.3% between 1990 and 2011.
  • Between 2010 and 2011, the economic recovery led to a 1.6% increase in direct employment in IP-intensive industries, faster than the 1.0% growth in non-IP-intensive industries.
  • Growth in copyright-intensive industries (2.4 %), patent-intensive industries (2.3%), and trademark-intensive industries (1.1%) all outpaced gains in non-IP-intensive industries.
  • Data on foreign trade of IP-intensive service-providing industries is limited. However, this report does find that exports of IP-intensive service-providing industries accounted for approximately 19% of total U.S. private services exports in 2007.

The full report can be found online here.