Financial crisis – impact on PCT applications worldwide

In its recently published PCT Yearly Review - developments and performance in 2009, WIPO presented a brief analysis of the effect of the global financial crisis on PCT applications based on the PCT statistics.

According to WIPO, the economic downturn that followed the collapse and/or bailouts of numerous banking establishments is without a doubt the cause of the 4.5 percent drop in worldwide PCT applications in 2009 – the first-ever year-on-year decline since the PCT became operational in 1978.

As a result of a depreciation of asset values and a drop in the cash flow in company balance sheets, many companies were forced to cut R&D investment and expenditure for the acquisition and maintenance of patents. This coupled with the uncertainty about the future growth prospects of the world economy, forces companies to re-assess their medium to long-run returns on investment in R&D and the acquisition of patents.

According to WIPO the PCT member states were quite differently affected by the crisis. The most significant change is a 10.8 percent fall in PCT applications from the United States of America – the largest user of the PCT System, accounting for around 30 percent of total filings and represents close to 80 percent of the worldwide drop. Germany, the third largest user of the PCT System, saw a decline similar in magnitude to the US (drop of 11.3 percent in 2009). The two other major European users of the PCT system – France and the United Kingdom (UK) – were comparatively less affected by the crisis compared to the US and Germany, showing a modest decline for the UK (-3.4 percent) and even a slight increase for France (1.3 percent).

The experience of Japan, the second largest user of the PCT System, is similar to that of France: the number of PCT applications increased by 3.6 percent in 2009, while the number of resident filings at the JPO fell by 10.5 percent.

WIPO gives room for optimism for the future, stating that the latest economic data suggests that the major economies have emerged from the recession. However, the crisis is likely to have lingering effect on filing behaviour in 2010 and 2011. Finally the post-crisis world economy is likely to see faster rates of economic growth in emerging markets – especially East Asia.

For more information see: "PCT The International Patent System - Yearly review, developments and performance in 2009". (PDF file). Published by WIPO 2010.