The ‘Idea Standard’

Posted on 06. Apr, 2011 by Administrator in Economy, World

Why are we still using commodities and precious metals like gold as measurements of financial soundness? Why in this day and age when knowledge is worth infinitely more than a soft metal don’t we establish a ‘parallel standard’ for intellectual property that truly measures our wealth?

Together, the World Bank, WIPO (the World Intellectual Property Organization), and perhaps the UN ought to commission and conduct a regular inventory of the world’s patents and intellectual property to determine real market value. A team of scientists and economists could be assigned the task of examining each country’s inventory to appraise the value of their patents and intellectual property. In order to do so they should look at:

  1. total merchandise produced and sold that owe its existence to the patents;
  2. infrastructure that exists as a result of the patents (like factories, R&D institutes, etc.)
  3. the ‘downstream value’ of the patents as they apply to the other industries (crossover technology and multiple applications that are the result of those patents and are used to produce products/technologies that are directly dependent upon the patents)
  4. what each country’s economy would look like if those patents were rescinded and only allowed to be used in the country of origin

Using an agreed upon scoring and ranking method, each country would be assigned a dollar value on their technology which would form the basis of a country’s ‘Idea Standard.’ That standard (value) would ‘float’ — increase with world market demand or decrease if patents are retired.

This standard would be used as an additional measurement of a nation’s industrial or commercial strength. While this evaluation is already calculated into individual company worth, to my knowledge it has never been used to assess the core value of a country’s technology.

Economists will probably say this is a totally unworkable exercise given the complexity of the evaluation or because of other influencing factors such as a country’s indigenous raw materials that fuel the spread of its technology. I would contend, however, that we need to establish some new 21st century benchmarks if we are to move forward towards establishing true value/idea-based economies.

The growth of patents

Some countries have led the way in the race for patents. According to the latest report by WIPO, “Worldwide patent activity increased by 4.9% between 2005 and 2006, mostly due to increased filings by applicants from China, the Republic of Korea and the USA.

The total number of applications filed across the world in 2006 is estimated to be 1.76 million, representing a 4.9% increase from the previous year. Between 2005 and 2006, the number of filings worldwide by applicants from China, the Republic of Korea and the USA increased by 32.1%, 6.6% and 6.7% respectively.

The United States Patent and Trademark Office was the largest recipient of patent filings, for the first time since 1963, with a total of 425,966 patent applications filed in 2006. Patent applicants tend to come from a relatively small number of countries of origin; applicants from Japan, the USA, the Republic of Korea, Germany and China accounted for 76% of total patent filings in 2006. In that same year, approximately 727,000 patents were granted across the world.

Patent grants are concentrated in a small number of countries. Japan, the USA, the Republic of Korea and Germany received 73% of total patent grants worldwide. Between 2000 and 2006, the number of patents granted to applicants from China and the Republic of Korea grew by 26.5% and 23.2% a year, respectively (average annual growth rate). ”

The bottom line on patents: While the U.S. still holds a commanding lead, there has been an increase in the level of patenting activity in emerging countries, and it is bound to continue as those countries develop their state-supported R&D activities and even subsidies for inventors.

Globalists would argue that this is the right trend to support, that in order to bring the developing world along, we need to stimulate their technological growth. While that may be a compassionate view of world commerce, we live in a super-charged highly-competitive world environment. America needs its technology and its ideas, now more than ever, especially since we have ceded our manufacturing preeminence to foreign countries. To paraphrase an old saying, “Men who borrow their ideas can never repay their debts.”

Stephan Helgesen is former Director of the New Mexico Office of Science and Technology and retired U.S. Foreign Commercial Service Officer who served in twenty foreign countries. He is Honorary German Consul and CEO of 2nd Opinion Marketing, an Albuquerque-based international high-technology consultancy company.


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