Recessions and Patent Applications: Navigating the Ups and Downs of the Innovation Economy
As predictions of an economic recession in the United States loom, 2023 has started with extensive layoffs throughout the tech industry. Though not to an equal degree, the biotechnology, pharmaceutical, and life science industries have not been excluded from employment cuts. In January, Verily, the healthcare and life sciences subsidiary of Alphabet, Inc., announced a restructuring that would cut about 15% of its workforce.  Likewise, several other biotech giants, including Thermo Fisher Scientific and Grifols, have disclosed plans to decrease workforce in the coming quarters. 
Although all recessions look different, a common question is how national economic decline affects innovation, especially within the biotechnology industry. One indicator of this trend can be seen in the number of patent applications being filed. For example, during the “Great Recession” from 2007 to mid-2009 the U.S. GDP declined over 5%.  Data published by the U.S. Patent and Trademark Office indicates that U.S. originating filings were consistently increasing from 2000 – 2007 but then dropped by over 4% in 2008, followed by another 3% decrease in 2009.  Filings finally returned to pre-Great Recession numbers in 2010.  Another report focusing exclusively on biotechnology patents published by the U.S. Patent and Trademark Office reveals that when sorting granted patents by the year they were filed, 2008 produced fewer biotech patents than surrounding years.  This decline in the number of granted patents can likely be attributed to a decrease in the number of patent applications filed, ultimately indicating that the biotechnology industry was not immune to the effects of the Great Recession.
More recently, during the COVID-19 recession in 2020, U.S. GDP dropped over 19%.  Although the available data is still in its early stages, the number of patent applications filed in the U.S. declined 5.4% between 2019 and 2020. 
While filing trends in non-recession years may not exhibit a consistent pattern, it is noteworthy that both recent recessions have resulted in a decline in filed patent applications. As a result, some analysts predict a decrease in patent filings during economic downturns, while others argue that the relationship between recessions and innovation is more nuanced and complex. Ultimately, recessions and the resulting impact on intellectual property are both difficult to predict as there are many factors at play, but it is evident that innovation and economic growth are deeply intertwined.
Editor: Brenden S, Gingrich, Ph.D.
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