Soaring revenues from intellectual property rights, UN report shows

Royalties and licence fees based on intellectual property rights have outpaced global economic growth in recent years to generate an estimated $180 billion in revenue a year, according to a new United Nations report which says growing demand for such rights is stimulating innovation at businesses worldwide.

The report, released today by the UN World Intellectual Property Organization (WIPO) in Geneva, finds that royalties and licensing fee revenue soared from $2.8 billion in 1970 to $27 billion in 1990 and then $180 billion in 2009.

The growth is so large that new intermediaries have emerged in the market, such as IP brokerages and clearing houses, WIPO says, adding that companies are also trading and licensing IP rights more frequently.

“Evidence shows that knowledge markets enable firms to specialize, allowing them to be more innovative and efficient at the same time,” WIPO said in a press release accompanying the report.

“In addition, they allow firms to control which knowledge to guard and which to share so as to maximize learning – a key element of modern open innovation strategies.”

WIPO says the growth has been especially strong in so-called complex technologies, or technologies consisting of multiple patentable inventions where patent ownership is often widespread.

In some industries, such as telecommunications, software and optics, companies have strategically built up large patent portfolios. The agency warns that increasingly overlapping patent rights could slow innovation in the future.

WIPO Director General Francis Gurry, in his foreword to the report, notes that innovation growth is no longer the preserve of only affluent countries.

“The technological gap between richer and poorer countries is narrowing,” he writes. “Incremental and more local forms of innovation contribute to economic and social development, on a par with world-class technological innovations.”