US loses race on home turf as patent policy boomerangs

The bullying tactics employed by the US in ensuring that it rules the patents regime and therefore the world, is backfiring badly on itself. US companies, in fact, are losing the race even in the US where foreign companies have forged ahead in registering patents.
 
A recent study conducted by infojustice.org has found that many if not most firms in IP-intensive industries are foreign-owned. This runs contrary to popular belief and the belief of policymakers. The conclusion of the researchers is is that "IP policies adopted by [the US] Congress and the [US] Executive Branch may benefit foreign corporations at the expense of US consumers.” infojustice.org is a project of the Program on Information Justice and Intellectual Property, American University Washington College of Law.

While the US employees and contractors of a foreign firm may receive some income from the firm, researchers Jonathan Band and Jonathan Gerafi realised that much of the value generated by these employees and contractors are captured by the firm and repatriated to its domicile. The study, ‘Foreign Ownership of Firms in IP-iintensive Industries’, looked at over 5 million patents that were granted between 1998 and 2011.

Some of the shockers:

• Four of the “Big Six” publishers, the largest English language trade publishers, are foreign-owned. More than 80 per cent of the global revenue of the Big Six is generated by these foreign-owned companies.  These foreign-owned companies published more than two thirds of the trade books in the US.
• Four of the five largest STM (science, technical and medical)/Professional publishers are foreign-owned.  More than 90 per cent of the revenue of the five largest STM/Professional publishers was generated by foreign-owned firms.
• Only seven of the world’s 50 largest publishers of all categories are US-owned.
• The book publishing industry in Europe has approximately twice as many employees as in the United States.
• Of the top ten best-selling fiction authors in any language whose work is still in copyright, five are foreign.  A British author wrote three of the top five best-selling books in the US in 2012.
• Two of the three major record labels are foreign-owned. These two labels have a market share of 59 per cent.
• Thirteen of the twenty best-selling recording artists are foreign.
• Of the 50 most popular motion pictures in the United States in 2012, half were filmed partly or entirely outside of the United States.
• In 2013, the Oscar winners in thirteen of 24 categories were foreign. In 2012, the Oscar winners in eleven of 24 categories were foreign. In 2011, the Oscar winners in eight of 24 categories were foreign.
• Seventy per cent of the most recent generation of game consoles were manufactured by Japanese companies.  Japanese companies have manufactured 92 per cent of all game consoles ever sold.
• In 2011, foreign companies obtained 7,000 more US patents than US companies.
• In 2011 and 2012, seven of the top ten companies receiving US patents were foreign.
• 57 per cent of the global revenue of the fifteen largest pharmaceutical companies was generated by foreign-owned companies.
• The majority of the employees of both the US and the foreign-owned pharmaceutical companies work outside of the United States.

The report does not cover trademarks, but the story might be the same there too. The authors look at luxury brands and note that most luxury brands are foreign-owned as well: Louis Vuitton (France), Hermes (France), Chanel (France), Cartier (France), Gucci (originally Italian, now French-owned), Prada (Italy), Omega (Switzerland), Rolex (Switzerland), TAG Heuer (Switzerland), and Patek Philippe (Switzerland).

The US, the researchers indirectly concede, is probably fighting a losing battle. They say: “There is absolutely nothing sinister about foreign ownership of firms in IP intensive industries, including foreign ownership of companies originally established in the US. This is to be expected in a globalised economy with multinational corporations and complex cross-border supply chains.” In most industries, globalisation has not been working in favour of the US.

The conclusion of the researchers is still more stark, “In such a globalised economy, US policymakers should no longer assume without reflection that the beneficiaries of protectionist IP policies are US firms and, by extension, US workers and shareholders.”