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The use of patents and the protection of intellectual property in the Canadian manufacturing industry

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by Mark Uhrbach

Using data from the Survey of Innovation 2005, this article will examine the use of patents by Canadian manufacturing plants. Survey findings establish that plants use strategic methods more than patents for intellectual property protection. Patent use varies both by how big the plant is and whether it is innovative or non-innovative. In addition, the use of patents by Canadian manufacturing plants varies by the subsector in which they are classified.

About this article
Findings
About the author

About this article

The sample unit for the Survey of Innovation 2005 was the ‘statistical establishment,’ for which the questionnaire substituted ‘plant.’ The more familiar latter term is also used in this article.

In the charts, each estimate is graphically illustrated as a bar. The confidence interval, a line extending through the end of the bar, shows that the estimate lies within the indicated range of values 95% of the time. Individual estimates with confidence interval values that overlap are not statistically significantly different from each other; those with confidence intervals that do not overlap are statistically significantly different from each other.

Further work based on the Survey of Innovation 2005 will be released in Summer 2008 in a working paper examining the use of different types of intellectual property by innovative firms.

More information about the Survey of Innovation is available here.

For further information about the Survey of Innovation or this article, please contact mark.uhrbach@statcan.gc.ca.

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Findings

What are patents?

Patents are rights granted to inventors—individuals or firms—so that they can benefit exclusively from their invention. In Canada, patents are generally granted for a period of 20 years from the date of the application. Patents can be used strategically to make a profit through selling or licensing the technology.1

In exchange for the exclusive rights granted them when they choose to patent their invention, inventors must pay a fee and describe, in writing, the uniqueness of their invention in clear and specific terms. This description is then available as a document for anyone to read.

In order to patent a technology in Canada, the inventor must show it to be novel and unique. The technology must have utility and it must also require a degree of ingenuity so that it is not obvious to someone who is skilled in the area of the technology.

Overview of intellectual property methods

During the three year period, 2002 to 2004, 3 out of 4 (76.4%) Canadian manufacturing plants used some method to protect their intellectual property (IP). During the three years, 2002 to 2004, about 1 in 5 (21.7%) plants used patents to protect their intellectual property. About 1 in 10 firms (12.2%) applied for a new patent during the three years, 2002 to 2004. In 2004, an average of 6.0% of the total revenue of Canadian manufacturing plants was protected by patents.

Manufacturing plants were more likely to use at least one of three identified strategic methods than to use patents to protect their IP: 42.4% used lead-time advantage over competitors, 40.4% used secrecy, and 33.8% used complexity of design, compared with only 21.7% of plants that used patents (Chart 1).

Chart 1 Use of patents by Canadian manufacturing plants, compared to strategic methods of intellectual property protection during the period 2002 to 2004. Opens a new browser window.

Chart 1
Use of patents by Canadian manufacturing plants, compared to strategic methods of intellectual property protection during the period 2002 to 2004

Plants may be less likely to use patents than strategic methods of IP protection for several reasons. The cost and the effort of procuring a patent may be a barrier for some plants. Also, some may feel that they will maintain a strategic or competitive advantage by keeping the new invention secret as opposed to disclosing its description and inner workings through patent documents. Finally, prosecuting another plant for patent infringement through legal means for copying a product or idea may be prohibitive or undesirable.

Patent use by size of plant

The Survey of Innovation 2005 collected data for three sizes of manufacturing plants: large (more than 250 employees), medium-sized (100 to 249 employees) and small (20 to 99 employees). During the reference period, a higher percentage of large plants (37.4%) than of medium-sized (29.4%) or small (17.9%) used patents to protect their intellectual property (Chart 2).

Chart 2 Percentage of firms protecting intellectual property, that used patents during the period, 2002 to 2004, by size. Opens a new browser window.

Chart 2
Percentage of firms protecting intellectual property, that used patents during the period, 2002 to 2004, by size

While large plants were more likely than their smaller counterparts to use patents, the data show that a similar share of plants of all sizes used strategic methods to protect intellectual property. During the reference period, about 60% of large, medium-sized and small plants used at least one strategic method to protect their intellectual property.

Patent use by innovators and non-innovators

Innovators were more likely to use patents than non-innovators. More than one-quarter (27.9%) of innovative plants used patents during the reference period, while only one-tenth (10.2%) of non-innovative plants did so.

Patent use by subsector

By their nature, certain industries will be more likely than others to embrace the use of patents to protect their intellectual property. This may be related to factors such as the degree of competition within an industry and the products or technologies that are produced by these industries.

The data show that among the 18 subsectors in the Manufacturing sector,2 patent use varies considerably (Chart 3). Three subsectors had among the highest levels of patent use during the reference period: Computer and electronic product manufacturing; Electrical equipment, Appliance and component manufacturing; and Plastics and rubber products manufacturing. At the other end of the spectrum, patent use was lowest among plants in Printing and related support activities, and Wood product manufacturing.

Chart 3 Percentage of manufacturing firms that used patents to protect intellectual property, by subsector, 2002 to 2004. Opens a new browser window.

Chart 3
Percentage of manufacturing firms that used patents to protect intellectual property, by subsector, 2002 to 2004

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About the author

Mark Uhrbach is with the Science, Innovation and Electronic Information Division (SIEID) at Statistics Canada. For more information about this article, please contact sieidinfo@statcan.gc.ca.


Notes

  1. Further information on patenting in Canada is available through the Canadian Intellectual Property Office by clicking here.

  2. The 18 Manufacturing subsectors measured are all at the three-digit level of the North American Industry Classification System (NAICS 2002).