State of the nation — patents in Israel

What is the state of intellectual property in Israel, compared to the rest of the world?

The WIPO issued a report in April 2020, which showed the top categories for patents last year as well as the countries with the most patent applications.  The most-patented categories were computer technology, digital communication, electrical machinery/apparatus/energy, measurement technology, and medical equipment.

World Intellectual Property Organization Infographic

China surpassed the rest of the world in terms of patent grants in 2019.   The writing has been on the wall for some time, with applications actually surpassing the US already by 2012.

Rutman IP blogpost

Due to the 3-5 year delay between application and grant, we can expect to see China reach three times the US grant rate in 2021-2022, even if current trends do not continue.

A lot of the activity in China appears to come from government subsidies, which are offered to cover official fees, attorney fees, tax breaks and other financial support as well as rewards for use of patents and utility models, with 195 reported different subsidy measures in China all told in the “Medium to Long Term Plan for the Development of Science and Technology” of 2006, intending to transform its economy from “Made-in-China” to “Invented/Designed/Made in China”.  Japan and Korea have also offered similar subsidies historically.

So how does Israel stack up against this stiff government-subsidized competition? The startup nation is #17 in terms of the absolute number of patent applications, and ninth in patents per capita, well within the OECD and ahead of both the US and China.

RutmanIP blogpost – Quo Vadis, Startup Nation

Looking at this graphically we see the worldwide action a bit more clearly.

WIPO interactive Chart

Patents granted, by region – global

Closer to home, Israel is a bit of an island.

WIPO Interactive Chart

One practical statistic that can be gleaned ‘on the way’ from the number of applications and grants in the WIPO database is the ‘granting rate’ — namely the number of granted patents divided by the number of applications (in the year of the application).

Although irregular there is an overall downward trend, with the ~75%  acceptance rate of the 1970’s falling to ~55% currently.

While Israel’s government has no specific ‘bounty’ for patents, there is a  degree of government support for R&D, including investments in early-stage startups, support for university research, and participation in a number of bi-and multi-national R&D agreements.

As a result, Israel ranks fifth on the Bloomberg Innovative Country list (map below),

Bloomberg infographic

and ranks 13th on the Global Innovation Index.

Government funding and public bodies are primary sources of R&D money for well over half of Israel’s R&D activities. Most money is allocated for economic development in the industrial and agricultural sectors, which constitutes a large fraction of the total in comparison to other countries. Over 40 percent is used to advance knowledge through national, binational, and government research funds and through individual university allocations from the General University Fund administered by the Council of Higher Education. The remainder is dedicated to various health and social welfare fields.

The Israel Innovation Institute (formerly, Office of the Chief Scientist), an office of the Ministry of Industry, Trade and Labor is responsible for implementing government support for industrial research through the Law for the Encouragement of Industrial R&D. The III operates on an annual budget of about US $300 million, spent on about 1,000 projects undertaken by 500 companies.

The R&D Fund offers conditional grants of up to 50% of an approved startup’s R&D costs, with successful startups repaying the grant by royalty payments and unsuccessful startups walking away without obligation.

Other than the Innovation Institute, government research support includes grants to seven research universities.  Over 80 percent of all published Israeli research — and almost all basic research and basic research training – is conducted within the universities. The Israel Science Foundation (ISF), is the predominant source of competitive basic research funding.

Further government support does to dozens of government and public research institutes, and hundreds of civilian and military enterprises also carry out significant R&D. Additionally, several medical centers and a number of public service firms also contribute to Israel’s R&D output in fields including software, medical devices and diagnosis, pharma, telecommunications, power production, water resources management. Beyond this, tax benefits are offered to companies that can show significant R&D efforts.

The binational funds are available for use by Israeli startups interested in partnerships of various sorts with one or more foreign bodies.

This is all in addition to the significant R&D undertaken by thousands of small startups, ranging from high schoolers operating out of the basement to globe-spanning enterprises that have reached billion-dollar IPOs.