PATENT AND TRADEMARK OFFICE
`
`David Lnngdtm. Hmrr'rmiisl and l'uhqrArh'mvr
`Fenwick ‘l’u, Hermann-ifs!
`William l-Iawk‘ Emnnmifi!
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`(Jule. Dripnly (Ihr'qua'momfs!
`Andrew A
`Asrnt Tcsfayesus. Ecmmmisr
`I
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`Economics & Statistics
`Administrationf ='
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`.
`' Trademark. Office
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`Justin Antonipillai
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`Michelle K. Lee
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`Com-ascfor to the Secretary
`Delegated Duties of the Under St‘CI'cltll‘y
`for Economic {Wm-s
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`Jun-mm for
`Undcr' Secretary qf
`Ir-iteliecuml Property and szfcctor.
`[.18. Palm! and ’l-‘rmlanmrk Office
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`JOINT PRO'lECT TEAM
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`Robert Rubinovitz, l'l'epury Cht'quwm'rmist
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`Alan C. h'larco'. ChiqfEcbmmrfsf
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`ACKNOWLEDGEMENTS
`The Project Team would like to thank Vikrum Aiyer, Alexander Beck, David Carson, Amy Cotton,
`Edward Elliot, lim Hirabayashi, Amanda Myerg Nicholas Pairolero, Sandy Phetsaenngam, Shi-
`ra Perlmutter, Bridget Petruczok, Roy Rabindranath, Patrick Ross, and Daina Spencer from the
`USPTO; Nikolas Zolas and Cynthia Davis Hollingsworth from the Census Bureau; Thomas How-
`ells, Gabriel Medeiros, and Amanda Lyndaker from the Bureau of Economic Analysis; and Ryan
`Noonan and Rodolfu Telles from the Economics and Statistics Administration\ Ofice of the Chief
`Economist for their valuable contributions to this report.
`
`Executive Summary
`Innovation and creative endeavors are indispensable elements that drive economic growth and
`sustain the competitive edge of the U.S. economy. The last century recorded unprecedented
`improvements in the health, economic well-being, and overall quality of life for the entire U.S.
`population.' As the world leader in innovation, U.S. companies have relied on intellectual prop-
`erty (IP) as one of the leading tools with which such advances were promoted and realized. Pat-
`ents, trademarks, and copyrights are the principal means for establishing ownership rights to the
`creations, inventions, and brands that can be used to generate tangible economic benefits to their
`owner.
`
`In 2012, the Department of Commerce issued a report titled Intellectual Property and the U.S.
`Economy: Industries in Focus (hereafter, the 2012 report). The report identified the industries
`that rely most heavily on patents, trademarks, or copyrights as iP-intensive and estimated their
`contribution to the U.S. economy. It generated considerable interest and energized other agencies
`and organizations to produce similar studies investigating the use and impact of IP across coun-
`tries, industries, and firms.
`
`This report builds on the 2012 version by providing an update on the impact of IP on our econo-
`my and a fresh look at the approach used to measure those results. The update continues to focus
`on measuring the intensity of IP use, and its persistent relationship to economic indicators such
`as employment, wages, and value added. While our methodology does not permit us to attribute
`those differences to IP alone, the results provide a useful benchmark. Furthermore, this and other
`studies together make clear that IP is a major part of a robust and growing economy.
`
`Accordingly, in an effort to provide a more comprehensive analysis, this report also incorporates
`findings from other studies that target similar research questions but apply different methodol-
`ogies. Overall, we find that IP-intensive industries continue to be an important and integral part
`of the U.S. economy and account for more jobs and a larger share of U.S. gross domestic product
`(GDP) in 2014 compared to what we observed for 2010, the latest figure available for the 2012
`report. We discuss these and other results in more detail below.
`
`I
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`Principal Findings
`. IP-intensive industries continue to be a majot integral and growing part of the
`U.S. economy.
`. This report identifies 81 industries (from among 313 total) as IP-intensive. These IP-inten-
`sive 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 employ-
`ment with 23J million jobs in20l4 (up from 22.6 million in 2010). Copyright-intensive
`industries supplied 5.6 million jobs (compared to 5.1 million in 2010) followed by pat-
`ent-intensive industries with 3.9 million jobs (3.8 million in 2010),
`. While jobs in IP-intensive industries increased between 2010 and 2014, non-lP-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 and2}I4.IP-intensive industries accounted for
`$6.6 trillion in value added in2014, 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 in-
`dustries increased from 34.8 percent in 2010 to 38.2 percent in2014.
`. While IP-intensive industries directly accounted for 27.9 million jobs either on their pay-
`rolls or under contract in 2014, they also indirectly supported 17.6 million more supply
`chain jobs throughout the economy. In total, IP-intensive industries directly and indirectly
`supported 45.5 million jobs, about 30 percent of all employment.
`r Private wage and salary workers in IP-intensive industries continue to earn significantly
`more than those in non-IP-intensive industries. In2}L4,workers in IP-intensive indus-
`tries earned an average weekly wage of $1,3L2,46 percent higher than the $896 average
`weekly wages in non-lP-intensive industries in the private sector. This wage premium has
`largely grown over time from 22 percent in 1990 to 42 percent in 2010 and 46 percent in
`2014. Patent- and copyright-intensive industries have seen particularly fast wage growth
`in recent years, with the wage premium reachingT4 percent and 90 percent, respectively,
`in2014.
`
`a
`
`a
`
`The educational gap between workers in IP-intensive and other industries observed in
`2010 virtually disappeared by 2015. The share of workers in IP-intensive industries with a
`bachelor's degree or higher fell from 42.4percent in 2010 to 39.8 percent in 2015, whereas
`that percentage increased from 34.2 percent to 38,9 percent for workers in non-IP-inten-
`sive industries.
`
`Revenue specific to the licensing of IP rights totaled $ 1 15.2 billion in 2012, with 28 indus-
`tries deriving revenues from licensing.
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`Total merchandise exports of IP-intensive industries increased to $842 billion in20L4
`from $775 billion in 2010. However, because non-IP-intensive industries'exports in-
`creased at a faster pace, the share of total merchandise exports from IP-intensive indus-
`tries declinedto 52 percent in2014 from 60 percent in 2010.
`
`Exports of service-providing IP-intensive industries totaled about $81 billion rn 2012 and
`accounted for approximately 12.3 percent of total U.S. private services exported in 2012.
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`lv
`
`1 3 7 7 B 9
`
`. .10
`,. 10
`
`. ..12
`..14
`.. 19
`,, '21
`..22
`..23
`. .27
`
`, ,30
`.,31
`
`., ,31
`
`., ,31
`..32
`.,34
`..35
`..38
`,,39
`.,46
`. .47
`, .53
`
`Table Of Contents
`
`Executive Summary
`l. lntroduction,..,,
`ll, The 2012 Report and Related Studies
`lll. ldentifying lP-lntensive industries. , ,
`
`Patents. . . .
`
`Trademarks
`
`Copyrights,
`lV, lP-lntensive lndustries in the Economy.,,.,,.
`
`Employment
`
`Total Employment Supported by lP-intensive lndustries
`
`lP-lntensive PayrollJobs by State
`
`Average wages.
`
`Education.
`
`Value added
`
`lP Revenue.
`
`Foreign trade. .
`V, Conclusion, , ,
`
`Appendix.
`
`Patents
`
`Fractional vs, Whole Patents Counts
`Methodology ... ..
`
`Trademarks
`
`Trademark lntensity
`
`Top 50 Trademark Registering Companies
`
`Random Sample of All Trademark Registrations . . . , ,
`
`Copyrights.
`
`Combined List of lP-intensive industries. . . .
`
`REFERENCES
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`l. lntroduction
`"Whether through the music or movies that inspire us, the literature that moves
`us) or the technologies we rely on each day, ingenuity and innovation serve as the
`foundation upon which we will continue to grow our economies and bridge our
`cultural identities."
`
`-President Barack Obama, April26, 2016
`Innovation and creative endeavors are indispensable elements that drive economic growth and
`sustain the competitive edge of the U.S. economy. The last century recorded unprecedented im-
`provements in the health, economic well-being, and overall quality of life for the entire U.S. pop-
`ulation as technological innovation in medicine and groundbreaking scientific advances in many
`fields were realized.z Tremendous advances in worker productivity boosted individuals' earning
`capacity. This allowed consumers to purchase and enjoy the abundant supply of new products
`and increasingly diverse creative works of art. As goods and services became more accessible,
`they were distinctively marked so buyers could readily select products that meet their individual
`preferences.
`Intellectual property (IP) has been a vital instrument for achieving such advances throughout our
`nation's history. A growing number of U.S. and international studies demonstrate the important
`role of IP in economic activity. This report shows that lP-intensive industries continue to be a
`major, integral and growing part of the U.S. economy. We find that the 81 industries designated
`as IP-intensive directly accounted for 27.9 million jobs and indirectly supported an additional
`17,6 million jobs in2014. Together, this represented 29.8 percent of all jobs in the U.S' The total
`value added by IP-intensive industries amounted to 38.2 percent of U.S. GDP and IP-intensive
`industries paid 47 percent higher weekly wages compared to other industries. Further, at $842
`billion the merchandise exports of IP-intensive industries made up 52 percent of total U.S. mer-
`chandise exports. Exports of service-providing IP-intensive industries totaled about $81 billion
`in2012, accounting for I2.3 percent of total U.S. private exports in services.
`IP incentivizes the creation of new goods and services by conferring exclusive rights to their
`creators. While inventions typically are a product of ingenious endeavors that require long, per-
`sistent, and meticulous effort, subsequent duplication and use of such innovations are often less
`costly. Patents add to the incentive that inventors have to invest in costly research and develop-
`ment (R&D) by providing the opportunity to reap the rewards of their innovations, In the words
`of Abraham Lincoln, the patent system "added the fuel of interest to the fire of genius in the
`discovery and production of new and useful thingsJ'3 Similarly, copyrights provide the frame-
`work that incentivizes authors to create literary, artistic, musical, dramatic, cinematic, and other
`works by granting them the exclusive right to engage in the activities that derive economic bene-
`
`Gordon 2016.
`
`Nicolay and Hay 1905, 113.
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`fits from their work. Thus, patents and copyrights serve as tools to stimulate individual, firm, and
`industry level entrepreneurial ventures that feed into economic activities nationwide.
`
`To further exploit the potential of their competitive advantage, producers need effective ways
`to indicate to consumers the reliability of their products' source. A trademark "makes effective
`competition possible in a complex, impersonal marketplace by providing a means through which
`the consumer can identify products which please him and reward the producer with continued
`patronagel'a
`
`Patents, trademarks, and copyrights are the principal means for establishing ownership rights
`to the creations, inventions, and brands that can be used to generate tangible economic benefits
`to their owner. In2012, the Department of Commerce issued a report titled Intellectual Proper-
`ty and the (1.5. Economy: Industries in Focus. Produced jointly by the Economics and Statistics
`Administration (ESA) and the United States Patent and Trademark Office (USPTO), the report
`aimed to identify the industries that rely most heavily on patents, trademarks, or copyrights as
`IP-intensive and estimate the contribution of those industries to the U.S. economy. It generated a
`substantial amount of interest in the IP community, both domestically and abroad, and motivat-
`ed other agencies and organizations to produce similar studies investigating the use and impact
`of IP across countries, industries, and firms.
`
`This update of the 2012 report has two purposes. First, we duplicate the methodology of the 2012
`report to examine how the economic contribution of U.S. IP-intensive industries has evolved.
`Second, we review related studies that have been completed since 20L2, and discuss the contribu-
`tions of the different methods, The latest results bolster the 2012 findings, confirming - across a
`range of methodologies - the importance of IP in the economy. In fact, the relative contribution
`of IP-intensive industries generally increased in the last several years. We describe these and oth-
`er results in more detail in Section IV below.
`
`This report attempts to understand the ways in which IP is used across different industries. Our
`methodology aims to measure the intensity of IP use, but does not directly measure the extent to
`which IP incentivizes the creation of new goods and services, We find differences in employment,
`wages, value added, and other outcomes that are correlated with IP use, although our method-
`ology does not permit us to attribute those differences to IP alone. As in any area of research, no
`single study will yield the complete picture.
`
`This is why it is important for policy-makers and researchers to consider multiple methodologies
`for understanding how IP functions in the economy. We are encouraged that other organizations,
`agencies, and governments have been energized to replicate, extend, or supplement the work
`done in the 2012 report. Taken together, these contributions significantly advance our knowledge.
`Persistent research with a solid empirical foundation will continue to provide the evidence upon
`which good policy can rest. The evidence to date demonstrates that IP is an important part of a
`robust and growing economy.
`
`4
`
`Smith v. Chanel, lnc.402F.2d 562,566 (9'h Cir. 1968)
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`ll. The 2Ol2 Report and Related Studies
`It is instructive to evaluate the methodology and results of the 2012 report in the context of the
`related research completed since the first report's release. The 20L2 report identified IP-intensive
`industries, and compared those industries to other industries across a number of different di-
`mensions. The methodology consisted of identifying IP-intensive industries based on the use of
`IP. According to that report, intellectual property 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 entrepreneurial liquidity through mergers, acquisitions, and IPOs;
`' Supporting licensing-based technology business models; and
`. Enabling a more efficient market for trading in technology and know-how.
`All of these mechanisms combine to determine the value of IP to individuals and firms and the
`contribution of IP to the economy. Analyzing and measuring all the ways in which IP impacts
`the economy is beyond the scope of any individual report. However, a number of studies quanti-
`fying the economic impact of IP-intensive firms have emerged since the pubiication of the 2012
`report. We are encouraged to see continued interest in research that builds upon, challenges, and
`provides alternative methodologies to the2012 report.
`
`This section reviews a selected group of studies that targeted similar research questions to the
`20L2 report and which were published after that time. The European Patent Office and the Office
`for Harmonization in the InternalMarket (OHIM) published a comparable report in 2013 using
`European Union (EU) data.s 6It relies on similar methodologies to identify intellectual proper-
`ty rights (IPR) intensive industries in Europe and quantifies their contribution to the European
`economy in the 2008-2010 period. The study finds that IPR-intensive industries generated €4.7
`trillion worth of economic activity, which amounted to almost 39o/o of EU GDP. Furthermore, the
`study finds that IPR-intensive industries directly employed 56.5 million Europeans, which ac-
`counted for almost 26% of all,jobs for the period. The similarity in the findings serves to further
`reinforce the core message of the 2012 report that IP-intensive industries are an integral part of
`the economy.
`
`While these reports quantifli the contribution of IP-intensive industries in the economy, there is
`justified skepticism as to how accurately the employment and value added outcomes can be at-
`
`As of March 2016, OHIM is known as the European Union Intellectual Property Office,
`
`EPO and OHIM 2013.
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`tributed to IP itself. For cxample, the fact that we observe significant employment in IP-intensive
`industries does not inform us about the contribution of IP to economic growth because employ-
`ment in non-IP-intensive industries is a viable alternative. The reports also study the wage differ-
`entials between IP-intensive and non-IP-intensive industries. Both reports show that IP-intensive
`industries pay higher wages than other industries. While this wage premium is noteworthy, we
`cannot conclude that the wage differential is due to IP'
`
`In 2015, OHIM issued a second report, relying on firm-level data to compare firms that own
`IPRs to those that do not.7 The report considers a representative sample of over 130,000 Euro-
`pean firms and studies their economic outcomes, taking into account whether they own patents,
`trademarks, or designs. The study finds that IPR-owning firms earn, on average, 29 percent more
`in revenue per employee and pay, on average, 20 percent more in wages. This difference is even
`more significant for small and medium enterprises that own IPRs as they earn32 percent more
`in revenue, on average, per employee compared to their counterparts with no IPRs. While this
`study does not identify the causal impact of IPRs, it provides detailed evidence of a high correla-
`tion between IPR-ownership and economic performance.
`The methodology in the 2015 OHIM study addresses a limitation in the way the earlier reports
`defined IP-intensive industries. The previous reports measure IP-intensity at the industry-level
`based on the aggregate volume of IP relative to employment. They then designate an industry
`as IP-intensive or non-IP-intensive based on whether the IP to employment ratio falls above or
`below the average for all industries. There are reasonable, alternative measures of IP intensity;
`including a ratio of IP to gross output, research and development, or value added. But data lim-
`itations, such as data sensitivity and the absence of legal requirements on producers to record
`and report on internal activities, preclude access to data at the level of detail needed to systemat-
`ically employ such measures. The 2015 OHIM report successfully overcomes these limitations by
`developing detailed IP-to-firm data necessary for conducting a disaggregated analysis comparing
`IPR-owning with non-IPR-owning firms in Europe.
`
`USPTO and U.S. Census researchers have recently constructed patent-to-firm data to enable
`similar analysis for the U.S.s The authors match data on owners and inventors of U.S. patents
`issued between 2000 and 2011 to U.S. Census Bureau data on firms and workers. Using this com-
`prehensive database, the authors analyzepatent-intensive firms and their contribution to the U.S.
`economy. They find that patenting firms represent only 1 percent of U,S. firms (2000-201 1 ) but
`are among the largest in the economy, accounting for 33 percent of employment. Patenting firms
`create more jobs than their non-patenting counterparts of the same age across all age categories
`except the very youngest (firms <1 year old). The authors also find that most patenting firms are
`small businesses. But; because they patent less frequently, the majority of U.S. patents are held by
`a few large, prolific patenting firms. Lastly, they find that while the manufacturing sector is par-
`
`OHIM 2015.
`Graham etal.2015.
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`ticularly patent intensive with more than 6 percent of firms owning a Patent between 2000 and
`2011, the majority of patenting firms are in the services and wholesale sectors.
`A handful of recent academic papers have also attempted to measure the impact of IP on firm
`performance. One recent notable contribution uses detailed USPTO data to study whether pat-
`ents have a causal impact on the growth potential of startups.e The authors find that patents do in
`fact "help startups create jobs, grow their sales, innovate, and eventually succeed" and that a delay
`in a patent grant can retard the benefit of each of these.ro 1r
`Another line of research uses surveys to study the role that IP plays in the economic performance
`of firms as well as their innovative efforts. A recent study surveys over 6,000 American manufac-
`turing and service sector firms to evaluate the extent to which firms that introduce new products
`in the market outsource innovation to specialized firms. It finds that between2007 and 2009, 16
`percent of manufacturing firms introduced a new product in their industry, Of these innovators,
`42 percentreported patenting their most significant new product, though there is considerable
`variation across industries and firms. More R&D-intensive industries, i.e., those with above
`average share of firms investing in R&D, tend to patent new products at higher than average
`rates. Roughly 63 percent of large manufacturing firms reported patenting their most significant
`new product innovation, compared to only 47 percent of medium firms and 36 percent of small
`fi.rms.12
`The UK Intellectual Property Office published another survey based study in20l2 that aims to
`quantify the extent to which patents increased expenditure in R&D. Using data from the UK in-
`novation survey and linked data on firm performance, the authors estimate the patent profit pre-
`mium, meaning the additional returns to R&D that can be attributed to patent protection.'' They
`find that patent premiums are positive and provide incentives to invest in R&D, though estimates
`vary by type of firm and industry, Estimated patent premiums are lower for smaller firms and
`firms outside biotech and pharmaceutical industries. However, premium and incentive effects are
`comparable for young and older firms, indicating that patent protection can incentivize R&D for
`new as well as established innovators.
`
`9
`
`Farre-Mensa et a\.2016. By employing an instrumental variables approach, the authors are able to identify a causal
`relationship, as opposed to a mere correlation.
`10 tbid,z.
`I I Note that some startups may prefer a delay in patent grant because a larger share of its overall economic value may be
`realized later in the patent term or during the period of time that is accrued due to patent term adjustment.
`12 Arora et al.2016.
`13 Arora et al.2012.
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`Taken together, these contributions significantly advance our knowledge about the role of IP in
`the economy. An important direction of future work is exploiting even more granular data and
`seeking methods to identify causal links between IP and economic performance. Survey based
`studies, which can be designed to target specific research questions, will also continue to improve
`our understanding about the extent to which IP contributes to the economy. And it is critical that
`policy-makers consider scientific research standards when evaluating evidence with policy mak-
`ing implications.
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`lll. ldentifying lP-lntensive industries
`As in the 2012 report, IP-intensity for an industry is defined as the count of its intellectual prop-
`erty for a given period of time relative to the industry's total employment. An industry is desig-
`nated as IP-intensive if its IP-count to employment ratio is higher than the average for all indus-
`tries considered, Dividing IP-counts by employment is one approach to adjust for differences in
`industry size, which makes industries more comparable. However, there are other alternatives.
`For instance, IP-counts could be normalizedby capital holdings, research and development ex-
`penditures, value added, or gross output. In addition, other methods are available for differenti-
`ating between IP-intensive and non-IP-intensive industries.la To maintain consistency and allow
`comparisons to the 2012 report, this update follows the methodologies applied previously but
`expands coverage to the 2009-2013 period.'s
`
`Patents
`
`The USPTO grants utility, plant, and design patents that give the grantee the right to exclude
`"others from making, using, offering for sale, or selling the invention throughout the United
`States or importing the invention into the Unites Statesl'r6 Using the U.S. Patent Classification
`(USPC) scheme, patents are classified in over 450 patent "technology classes" that distinguish
`their inventive content.rT rs The USPTO maintains a general concordance between its technology
`classifications and 30 North American Industry Classification (NAICS) codes. The concordance
`enables analysts to associate utility patents with these NAICS coded industries.'e We rely on
`NAICS-based patent counts for 2009 to 2013 to identifr patent-intensive industries.2o This ap-
`proach strictly limits the patent analysis to the manufacturing sector because the concordance
`only associates patents with manufacturing industries. Non-manufacturing industries, such as
`construction, utilities, and information, may rely on utility patents, but these industries are not
`captured by the patent-NAICS concordance. We calculate a measure of industry patent "intensity"
`defined as the ratio of total patents over the five years in a NAICS category to the average payroll
`
`14
`
`l5
`l6
`t7
`
`l8
`
`19
`
`For example, analyzingthe differences by deciles or even evaluating a continuous function are possible alternative
`approaches that may prove informative.
`Detailed description of the methodology is provided in the Appendix.
`3s U.S.C. $ l5a(aXl).
`Utility patents may be classified into more than one technology class but are organized accot'ding to their primary clas-
`sification.
`While it does not affect any of the results in this report, it is worth noting that official use of the USPC was discontin-
`ued in January of 2015. Patents are now classified using the Cooperative Patent Classification (CPC) scheme.
`This concordance was created by the USPTO with financial support from the National Science Foundation. Because no
`similar concordances to NAICS are available for plant or design patents, only utility patents are used in our analysis.
`for rnore infornration on utility patents, For an overview
`See wwrv.uspto.gov/web/offices/aclido/oeipltaflall_tech.htm
`of NAICS, see www.census,gov/eos/www/naics/index.html.
`
`20
`
`See wrvw.uspto.gov/web/offices/aclido/oeipltafldatalmisc/patenting_trends/info_ptrends2008.txt.
`
`ALL 2105
`MYLAN PHARMACEUTICALS V. ALLERGAN
`IPR2016-01127, -01128, -01129, -01130, -01131 & -01132
`
`

`

`lntellectual Property and the U.S. Economy: 2016 Update
`
`8
`
`employment by industry.2r Because employment reflects the overall size of an industry, dividing
`patent counts by employment normalizes patenting activity with respect to industry size.22 This
`approach evens the playing field, so that the most patent-intensive industries are defined not as
`the ones with the most patents, but rather as those with the most patents per worker.
`Nearly all the industries identified as patent-intensive in the 2012 report are also designated as
`such for the2009-2013 period. One industry, resin, synthetic rubber, fibers, and artificial and
`syntheticf.bers andfilaments (NAICS 3252), did not make the cutoffin the current report. In
`addition, some changes occurred in the rank-order of these industries, For example, semiconduc-
`tor and other electronic componenfs (NAICS 3344) was previously designated as the third most
`patent-intensive industry, but dropped to fifth place. However, based on the close similarity in
`the list and rank-order of patent-intensive industries across reports, it appears that patent-inten-
`sity at the industry level is quite persistent over time.23
`
`Trademarks
`A trademark is defined as "a word, phrase, symbol, or design, or a combination thereoi that iden-
`tifies and distinguishes the source of the goods of one party from those of othersl'2a Through ex-
`clusive rights of use, trademarks confer legal protection that enables companies to communicate
`to consumers the quality characteristics of their products and services and recoup investments
`therein.
`
`As in the 2012 report, this study uses three different approaches to identify trademark-intensive
`industries.2s The first approach, as with patents, measures the trademark-intensity of an industry
`based on the ratio of trademark counts to employment and designates those industries with an
`above average ratio as trademark-intensive. Starting with the complete set of trademark regis-
`trations, we matched publicly traded companies by their name to a separate database containing
`information on the firms' primary industry and number of employees. These data allowed us to
`calculate trademark intensity by industry for the matched firms. The second approach uses the
`USPTO's listing of top 50 trademark registering companies (which, unlike the first approach,
`include both private and public companies) from the Performance and Accountability Reports
`for 2009-2013 and identifies industries that appear repeatedly as trademark-intensive. To expand
`coverage for privately-held companies and for smaller and younger firms, the third approach
`draws a random sample of 300 registrations from the 194,326 trademark registrations in 2013 '
`We assign NAICS industry codes to the U.S. registrants in the sample and calculate the industry
`share of total registrations, labeling those with an above average share as trademark-intensive.
`
`2l Using a five-year period (in this case, years 2009-13) instead ofjust one year helps minirnize the chance that anoma-
`lies in any given year will skew our results,
`22 Value added and gross output are two altemative gauges of industry size; however, estimates at the level of detail need-
`ed for this analysis are not available due to data confidentiality limitations.
`23 A detailed discussion of the methodology and a table of results are provided in the Appendix.
`24 U.S. Patent and Trademark Office 2016. We use the term trademark to encompass both trade and service tnarks.
`25 These methodologies are discussed in detail in the Appendix.
`
`ALL 2105
`MYLAN PHARMACEUTICALS V. ALLERGAN
`IPR2016-01127, -01128, -01129, -01130, -01131 & -01132
`
`

`

`lntellectual Property and the