Intellectual property and the U.S. economy: Third edition

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 September 26, 2016, the U.S. Commerce Department released a comprehensive report, “Intellectual Property and the U.S. Economy: 2016 Update,” which found that IP-intensive industries support at least 45 million U.S. jobs and contribute more than $6 trillion dollars to, or 38.2 percent of, U.S. gross domestic product (GDP). The report, a joint product of the Commerce Department's United States Patent and Trademark Office (USPTO) and Economics and Statistics Administration (ESA), serves as an update to the Intellectual Property and the U.S. Economy: Industries in Focus report released March 2012.   

While IP is used in virtually every segment of the U.S. economy, the report identifies 81 industries that use patent, copyright, or trademark protections most extensively. These "IP-intensive industries" are found to be the source—directly or indirectly—of 45 million jobs, roughly 30 percent of all the jobs in this country. Some of the most IP-intensive industries include: software publishers, sound recording industries, audio and video equipment manufacturing, cable and other subscription programming, performing arts companies, and radio and television broadcasting.

The report includes several important findings, including:

•  IP-intensive industries continue to be an important and integral part of the U.S. economy.
• This report identifies 81 industries (from among 313 total) as IP-intensive. These IP-intensive industries directly accounted for 27.9 million jobs in 2014, up 0.8 million from 2010.
• Trademark-intensive industries are the largest in number and contribute the most employment with 23.7 million jobs in 2014 (up from 22.6 million in 2010). Copyright-intensive industries supplied 5.6 million jobs (compared to 5.1 million in 2010) followed by patent-intensive industries with 3.9 million jobs (3.8 million in 2010).
• While jobs in IP-intensive industries increased between 2010 and 2014, non-IP-intensive jobs grew at a slightly faster pace. Consequently, the proportion of total employment in IP-intensive industries declined slightly to 18.2 percent (from 18.8 percent in 2010).
• In contrast, the value added by IP-intensive industries increased substantially in both total amount and GDP share between 2010 and 2014. IP-intensive industries accounted for $6.6 trillion in value added in 2014, up more than $1.5 trillion (30 percent) from $5.06 trillion in 2010. Accordingly, the share of total U.S. GDP attributable to IP-intensive industries increased from 34.8 percent in 2010 to 38.2 percent in 2014.
• Revenue specific to the licensing of IP rights totaled $115.2 billion in 2012, with 28 industries deriving revenues from licensing. 
• Total merchandise exports of IP-intensive industries increased to $842 billion in 2014 from $775 billion in 2010.

View the full report.

USPTO Report Shows Intellectual Property-Intensive Industries Contribute $5 Trillion, 40 Million Jobs to U.S. Economy

On April 11, 2011, Secretary of Commerce John Bryson introduced Intellectual Property and the U.S. Economy: Industries in Focus, a report jointly authored by the Economics and Statistics Administration (ESA) and the USPTO, both bureaus in the Department of Commerce (DOC). This report is the first comprehensive analysis using USPTO administrative data to identify U.S. industries using intellectual property (IP) most intensively, and reports on the economic impacts of these industries. The report demonstrates that IP is widely used in the economy, and the industries that most intensively use IP account for a large share of economic activity upon which Americans rely upon for employment and new products and services. While this report does not contain policy recommendations and is not intended to directly advance particular policy issues, it suggests that the private and government sectors must pay increasing attention to the IP system and the public policy surrounding it.

The report identifies 75 industries (from among 313 listed in the North American Industrial Classification System) as IP-intensive. These IP-intensive industries support tens of millions of jobs and contribute several trillion dollars to our gross domestic product (GDP). 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 in the U.S. economy in 2010.

Major 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.

See the full report.