The intellectual property debate can be complicated. But the simple truth is IP means jobs, prosperity and innovation. Protection for IP has propelled our economy to new heights for more than 200 years, cementing America’s place as the world’s top innovator with products like the automobile, the desktop computer, and cutting edge medicine. Here are seven charts that show the impact IP has on jobs and the American economy.

1. How Intellectual Property
Strengthens Our Economy
David Kappos
www.partnershipforamericaninnovation.org

2. The intellectual property debate can be complicated. But the simple truth is IP means jobs, prosperity and
innovation.
It seems like every day there is new research or arguments that support calls for changes to the IP system
generally, and the patent system in particular, or oppose them. And in the big picture – between all the talk
about patent trolls, patent litigation, and patent reform – it’s easy to forget just how important patents in
particular, and IP generally are to our economy and jobs.
The reality is that the economic success of the United States is deeply rooted in the history of American
innovation. Our economic security depends increasingly on developing innovative products and services that are
protected by a world-class intellectual property system, which creates value for innovation.
Protection for IP has propelled our economy to new heights for more than 200 years, cementing America’s place
as the world’s top innovator with products like the automobile, the desktop computer, and cutting edge
medicine.
Here are seven charts that show the impact IP has on jobs and the American economy:

3. IP is a major driver of our economic success
as a nation.
Let’s start with the big picture: IP-intensive industries
contribute over $5 trillion to the U.S. economy every year.
This economic output is driven by many industries from
automobile manufacturing and pharmaceuticals to software
and electronics and by companies of all sizes and in every
state.
48%
52%
IP intensive industries are half of the U.S.
private sector economy
IP Intensive Industries Other Industries
Source: US Department of Commerce

4. Intellectual property gives the U.S. our
competitive edge in the global marketplace.
For many American innovators, patent protection for their products and
services is the only bulwark against foreign competitors. Strong patent
protection prevents copyists from stealing plans, replicating designs and
undercutting innovators who have invested their time and money to create
the inventions in the first place.
This is especially important because IP-intensive industries in the U.S.
account for nearly three quarters, or $775 billion, of all American exports.
IP generally and patents in particular protect and maintain our edge in an
increasingly competitive global marketplace.
74%
26%
IP-intensive industries make up three
quarters of U.S. exports
IP Intensive Non-IP intensive
Source: US Department of Commerce

5. Our IP system contributes to the
employment of nearly half the private sector.
IP-intensive industries support over 40 million U.S. jobs or nearly half
of all jobs created by the private sector. But just because you don’t
work in invention-based industries like pharmaceuticals or aerospace
technology, doesn’t mean that your job doesn’t rely on IP.
Approximately 12.9 million people work in industries that don’t
directly depend on intellectual property but are created indirectly by
supporting IP-intensive industries. That means that IP policy is
important not just to engineers and scientists—it’s important to
everyone.
46%
54%
IP-intensive industries employ nearly half
of all U.S. private sector workers
IP Intensive Industries Other Industries
Source: US Department of Commerce

6. And these are excellent, high-paying jobs.
Jobs in patent-intensive fields like manufacturing, software
engineering, and semi-conductors pay on average over
$30,000 more per year than those in non-patent intensive
industries. In other words, moving from a non-patent
intensive job in sales to a patent-intensive job in
manufacturing would get you a $15 per hour raise on
average.$30,000
$35,000
$40,000
$45,000
$50,000
$55,000
$60,000
$65,000
$70,000
$75,000
$80,000
Patent Intensive Industries Non-patent intensive industries
Wages
Jobs in patent intensive industries pay 73%
more than other jobs
Source: US Department of Commerce

7. The U.S. patent system is also important for
young companies entering the marketplace.
Patents bring tremendous value to startups in the
software industry – especially when you compare
overall patenting levels to VC investment in the
U.S. and European Union. Even though the
United States and the EU have similar sized
economies as measured by GDP, American start-
ups file for seven times the number of patents
before IPO as their peers in Europe. And just as
we see higher patenting activity among U.S.
startups, we also see that they enjoy significantly
greater VC investment—$25.7 billion more in total
than counterparts in Europe.
0
5
10
15
20
25
30
35
US Europe
TotalVCInvestment(billionsof$)
0
2
4
6
8
10
12
14
16
US Europe
#ofPatentsBeforeIPO
Patents increase VC Investment in the U.S.
Source: Ronald Mann & Thomas Sager

8. In fact, patents are a good predictor of
success for a startup company.
Patents are a major competitive differentiator for small
software companies seeking VC funding in the U.S. An
American software firm with patents will raise, on average,
$11 million more from venture capitalists than a company
that doesn’t hold any patents on their technology. In fact,
venture capitalists invest an average of $2.7 million more
per patent held by a small software startup.
This is money used to bring their products to market, hire
more employees, and invest in their products to meet the
needs of customers.
20
22
24
26
28
30
32
34
36
38
Software firms with patents Software firms without patents
Millionsofdollars
Small software companies with patents attract
more investment dollars
Source: Ronald Mann & Thomas Sager

9. IP makes an impact in every single state
This economic impact is felt in every corner of the
country. Whether it’s the nearly 50,000 jobs in
Wyoming or the almost 7.4 million positions in
California, every single state benefits from
providing inventors the protection they need to
create and develop market-moving products.
Source: Global Intellectual Property Center