While world slashed R&D in crisis, China innovated


Reuters | Sep 15, 2010 | 3:39pm IST

chinese-scientist While businesses worldwide cut their research and development budgets in the economic downturn, China invested heavily in innovation and sought more patents and trademarks, a United Nations agency said on Wednesday. The World Intellectual Property Organisation said U.S. applications for patents protecting new inventions were flat in 2008 and 2009, when recession made capital harder to access and customers harder to find. Filings for patents — which give inventors exclusive rights to profit from novel developments for a limited time — dropped 7.9 percent in Europe and 10.8 percent in Japan last year, with filings from Germany, Britain and France also lower.

But in China, a growing engine of the global economy, WIPO said patent applications jumped 18.2 percent in 2008 and another 8.5 percent in 2009. Chinese filings for trademark protection — affording rights to logos or distinctive signs on an indefinite basis — jumped 20.8 percent last year, when such applications fell 11.7 in the United States, 7.7 percent in Germany and 7.2 percent in Japan. "The post-crisis innovation landscape will invariably look different from that of a decade ago," WIPO Director-General Francis Gurry said in an introduction to the World Intellectual Property Indicators report. Beyond China, other emerging economies also sought to protect their innovations before the recovery, with double-digit growth in patent filings in Belize, Peru, Romania and Turkey in 2008.

RESEARCH AND DEVELOPMENT

Patent and trademark filings are seen as lagging economic indicators because they come at the end of the research and development cycle. But Gurry said the patterns seen during the recession suggested plenty of momentum for developing countries. "While the strength of the recovery remains uncertain, there will likely be a continuing geographic shift of innovative activity toward new players, especially in Asia," he said. The global downturn of 2008/09 reduced many companies’ cash flows and ratcheted up business uncertainty, making it harder for many to justify research and development spending. General Motors slashed its ‘research and development’ budget by 24.5 percent from 2008 to 2009, Toyota cut such spending 19.8 percent and Honda R&D spending dropped 17.7 percent, according to the WIPO report, citing U.S. Securities and Exchange Commission filings and annual reports. Some of the figures are for fiscal and not calendar years.

Outside the auto sector, heavy machinery maker Caterpillar also decreased R&D spending 17.8 percent. Consumer goods group Procter & Gamble’s R&D spending dropped 7.6 percent compared to Unilever’s 3.9 percent decline, WIPO said. While some technology firms such as Hewlett-Packard and Motorola cut their innovation spending, with decreases of 20.4 percent and 22.5 percent, respectively, others recorded a big boost in the peak of the crisis. ZTE, China’s No. 2 telecoms equipment maker, boosted R&D spending 44.8 percent and Huawei Technologies spending jumped 27.4 percent. In the United States, Apple spent 20.2 percent more on R&D from 2008 to 2009 and Microsoft’s spending rose 10.4 percent. WIPO said the greater availability of venture capital since late 2009 could help edge up investment in innovation around the world as well as the number of patents sought for inventions. But it warned a full rebound would take time. "The crisis is likely to have a lingering impact on (intellectual property) filing behaviour in 2010 and 2011," the report concluded.

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