Getting Sloppy

The relentless effort to create, control and optimize intellectual property is not by any means limited to American firms. Indeed, the scorecard is permeated by foreign competitors. Some, like German chemical concerns Bayer and Hoechst, have ranked as world leaders for more than a century. As they have for several decades, the Japanese continue to look strong in autos and computers and come close to dominating the electrical/electronics sector-though last year Korea’s Samsung catapulted to the top spot in this arena. Meanwhile, foreign firms are also making their presence felt in telecommunications, with Sweden’s Ericsson, Finland’s Nokia and Canada’s BCE, parent of Nortel Networks, all in the top six.

Still, the United States seems to be leading the way. After a long period of sluggishness, the rate of patenting by U.S. residents and corporations relative to the nation’s size and spending has been climbing for more than a dozen years (see “National Numbers Game,” TR November/December 1999).

Much of the growth is arising from small and middle-sized firms that previously played little role on the patenting scene, according to Harvard Business School professor Josh Lerner. That’s in line with the consensus view of startups as hotbeds of technological creativity. But the Patent Scorecard makes clear that many big American corporations are also doing well in navigating the intellectual-property vortex. Lerner and other observers feel the trend is indicative of a wellspring of innovation that has played a key role in driving the economic expansion that began in March 1991 and now ranks as the longest in U.S. history.

For Lou Galambos of Johns Hopkins University, the current U.S. edge stems from the country’s uniquely “large and complex system, which in education, government and business has sloppy boundaries that promise interaction.” That interaction between diverse sectors-and their abundance of venture capital and expertise-fosters the competition, risk-taking and creative change vital to success. The great challenge in today’s global business climate, Galambos says, lies in maintaining innovation now that the economies of scale built up in the post-World War II years no longer suffice to protect market share. In this quest, intellectual property has never been more important.