Germany losing patent power; China catching up fast on US

While Germany remains the strongest European patent power, it is losing ground worldwide and the international balance of power in innovation is shifting, according to a report from German foundation  Bertelsmann Stiftung.

“ World class patents in cutting-edge technologies”, published yesterday, June 3, outlined the development of national and regional portfolios of patents in cutting-edge technologies since 2000.

Unlike reports which purely focus on a quantitative analysis of the countries where most patents are registered, Bertelsmann Stiftung’s analysis considers only the top ten percent of patents from technology groups, which are likely to shape important future developments and are often cited in patent applications as well as registered in many markets.

Germany’s results are “still impressive” across nearly the entire bandwidth of technologies, but its claim to the status of a leading technology nation is being increasingly challenged.

In 2010, Germany was among the top three nations worldwide in terms of world class patent numbers in 47 out of 58 technologies, such as wind energy and health. By 2019, that figure had dropped to less than half, with Germany only in the top three nations for 22 technologies.

No European country holds the largest number of world class patents alone on its own in any of the 58 technologies, but the EU-27 together manage to hold two top positions, in wind energy and functional food.

“Without Brexit, they could even call five first places their own. The UK’s relative strength in digitalisation is particularly relevant here. Europe is threatening to fall behind in new developments such as 5G or blockchain,” said the report.

It added: “Europe and Germany are stagnating or falling back. They can only hold their own in a few fields, in particular where they set out strongly to begin with. Those niches are also where they stand the best chances of keeping up internationally in future.”

Brigitte Mohn, member of the Bertelsmann Stiftung executive board, said that Europe needs a clear political commitment towards a common initiative.

“The competition clearly comes from Asia and the US. Keeping this in mind a pan-European innovation-platform surrounded by a transnational eco-system backed by the governmental budgets and financial incentivisation schemes would be a clear sign to take innovation serious as the basis for future resilience and sustainability for the European economies and societies in their countries,” she added.

Challenging a superpower

The US still occupies the leading position in almost every field, but China is catching up fast and has even overtaken the US in some areas.

In 50 of 58 cutting-edge technologies, the US has the most world class patents; in the remaining eight it has the second most. And, in technologies such as digital, health and security, it leads by a large margin—in big data, the US holds about half of the world-class patents.

“China, which did not exist as a developer in most technologies at the beginning of this millennium, spectacularly launched itself onto the higher ranks,” said the report. In 2019, China ranked among the three countries with the most world class patents in 42 of the 58 technologies.

Bertelsmann Stiftung said that China managed to overtake all other countries by sheer number of innovations for which patent applications had been filed years ago, but many of these were mass patents of little value.

“The figures in this study show that China has made enormous progress in world class patents. It is catching up quickly in almost every single technology since these patents were not only registered in their own country but also in important foreign markets,” added the report.

China has now overtaken the previously-leading US in the “most important” environmental technologies, holding slightly more than a quarter of all world class patents in recycling, with the USA in second place at about 21%. In water treatment, China has a patent share of 36%, over the US’s 22%.

In most other technologies, China is on a steep rise, although it’s not at the point yet where it could “dethrone” the US.

“All in all, East Asia has taken the position of innovation leader and absorbed the share once held by the US, with a current 46 percent share of world class patents in the environmental industry,” said the report.

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