When Asked, Vast Majority of Businesses Say IP is Not Important

by Gabriel J. Michael
Dec. 24, 2013

Last year, the U.S. Patent and Trademark Office released a widely cited report entitled “Intellectual Property and the U.S. Economy: Industries in Focus.” This report played up the importance of IP, claiming “the entire U.S. economy relies on some form of IP,” and estimated that “IP-intensive industries” accounted for 40 million American jobs and 35% of the U.S. GDP in 2010.

While many pro-IP groups hailed the report as demonstrating the importance of IP to the American economy, the report was panned by critics who pointed out that the definition of “IP-intensive industries” was so broad as to be meaningless. Indeed, according to the report, the number one IP-intensive industry by employment in the United States was… grocery stores. Furthermore, although supporters of stricter IP regulation and enforcement continue to rely on the report to justify policies relating to copyrights and patents, the vast majority of the report’s purported economic benefits were attributed to trademarks.

USPTO’s report was released in March 2012, and received a lot of attention. Yet just one month prior, the National Science Foundation (NSF) released the findings of a survey on business use of intellectual property. While a few sites picked up on the NSF report last year, it received far less media attention than it deserved. Why? Perhaps because it turns out that if you actually ask, the vast majority of businesses report that intellectual property is not important to them.

Infojustice.org was among the few noting that the NSF’s findings directly contradict the USPTO report. The initial NSF report, published in February 2012, included data from 2008. However, it has recently been updated to include data from 2009 and 2010.

But wait – surely I’m making all this up. If “IP-intensive” industries account for 40 million jobs and 35% of GDP, intellectual property must be very important to businesses. What’s this “vast majority,” then?

In 2010, 87.2% of businesses reported that trademarks were “not important” to them.
90.1% of businesses reported that copyrights were “not important” to them.
96.2% of businesses reported that patents were “not important” to them.

If you still think I’m making these numbers up (and I wouldn’t blame you if you did), head on over to the NSF’s page describing the survey, results, and methodology. Note that these results are consistent across the three years of the survey, and the survey itself is a representative sample across the country.

According to the NSF, the Business Research and Development and Innovation Survey (BRDIS) “is an annual, nationally representative sample survey of approximately 43,000 companies, including companies in manufacturing and nonmanufacturing industries. The target population for BRDIS consists of all for-profit companies that have five or more employees and that perform R&D in the United States.”

If you examine the details, the survey results begin to make more sense. Larger companies tend to report intellectual property as being more important; businesses designated as especially “R&D active” also place more importance on various kinds of intellectual property.

Nevertheless, the results of this survey (now in its third year) are striking. Even when looking at a sector where one would expect heavy reliance on intellectual property, the results do not match expectations. For example, take one of the most copyright-dependent sectors we can imagine: “R&D active” software publishing. In 2010, 51.4% of respondents in this sector said copyright was “very important”; 34.6% said it was “somewhat important”; and 13.9% said it was “not important.” That is, only about half of respondents in a purportedly heavily copyright-dependent sector describe copyright as “very important” to their business.

In my mind, there are two ways of interpreting these data: either all the survey respondents are totally uninformed about what is going on in their businesses, or formal intellectual property protection is far less important to the vast majority of U.S. businesses than some would like us to believe.

Some additional highlights:

61.7% of businesses manufacturing computer and electronic products report that patents are “not important” to them.
96.3% of businesses with less than 500 employees report that patents are “not important” to them.
45.6% of businesses with 25,000 or more employees report that patents are “not important” to them.
53.6% of businesses classified in the information sector (NAICS code 51 – i.e., a sector we’d expect to rely heavily on copyright) report that copyrights are “not important” to them.
Overall, businesses report that trade secrets are the most important form of intellectual property protection, with 13.2% of businesses calling trade secrets “very important” or “somewhat important.” Trademarks are a close second, with copyrights and patents significantly farther behind. Trailing in last place is sui generis protection for semiconductor mask works, although that is no surprise.

The complete 2008-2010 BRDIS survey data can be downloaded here, or you can check out the individual tables referenced in this post right now: Utility Patents, Design Patents, Trademarks, Copyrights, Trade Secrets, Mask Works.
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Gabriel is a doctoral candidate in political science at GWU, general tech geek, and tinkerer/fixer/hacker. Visit his website.