Patents are the engine of innovation and growth

Icelanders are a creative and resourceful people; we are adept at thinking outside the box and finding new solutions. Although the Icelandic economy is resource driven, innovation is built on a solid foundation: we have strong universities, we publish a large number of scientific papers, and we fare well in terms of education, research, infrastructure and institutions. When it comes to the outcomes of innovation: technological innovations, intellectual property protection, product development and export of knowledge, however, we are not utilizing our potential to the full and lag behind other Nordic countries.

One of the areas with considerable growth potential is intellectual property protection, not least the protection of inventions through patents.

Iceland ranked lowest of the Nordic countries, 24th in the WIPO Innovation Index

The WIPO Global Innovation Index is based on 78 indicators compiled by many international organisations and has established itself as one of the key global measures of conditions for innovation and its output. In the most recent index Iceland is ranked 24th out of 139 countries. Though that can be considered to be a respectable standing for a small population country, our position has been deteriorating in recent years and is worse than all the other Nordic countries. Sweden is in 2nd place, Finland in 7th, Denmark in 9th and Norway in 20th. When we consider specifically how favourable the conditions are for innovation, we are in 20th place, yet we are only in 29th place in terms of innovation output.

40–60 Icelandic patent applications per year

Another important measure of the state of innovation and intellectual property protection is the patent index of the European Patent Office. According to that index, 62 Icelandic patent applications were filed with the EPO in 2024, which corresponds to about 159 applications per million inhabitants. That is some increase from 42 applications in 2023, but over the past decade the number has fluctuated between 40 and 60 applications per year and a sustained upward trend has not been observed. In these numbers we lag far behind the other Nordic countries and are at a level comparable to the average in the European Union.

• Sweden: 490 applications per million inhabitants
• Denmark: 440 applications per million inhabitants
• Finland: 420 applications per million inhabitants
• Norway: 170 applications per million inhabitants
• Iceland: 159 applications per million inhabitants
• European Union average: 150 applications per million inhabitants

Iceland leads among the Nordic countries in healthtech, but lags far behind in renewables

The findings from WIPO and the EPO align with those of a new report on patent applications of Icelandic companies over the past 20 years, prepared for the Icelandic Intellectual Property Office and presented at this year’s Icelandic Innovation Congress. The main conclusion of the report is that despite a strong human capital base, a robust scientific community and high creativity, Icelandic companies fall behind their Nordic counterparts in patent applications per capita. However, the situation varies significantly by sector. Iceland performs well, indeed best among the Nordic countries, in terms of patent applications in healthtech, with the medical device company Össur leading its peers. It is, however, very surprising that in the field of renewable energy Icelandic companies have filed virtually no patent applications during the last 20 years, placing us far behind the other Nordic countries. The discoveries made in recent decades in geothermal and other renewable energy technologies have apparently not been reflected in patent applications.

Numerous strong Icelandic exemplars

Patents are not just certificates hanging on the wall; they guarantee inventors and businesses exclusive rights to their inventions and are the engine of innovation and economic growth. They provide companies and investors with the assurance to invest in research and development by ensuring that inventions are not copied. In other words: patents turn good ideas into real value. We already have numerous strong companies building on intellectual property protection, including:

• Össur stands at the forefront of Icelandic peers in intellectual property protection. The company is a global leader in assistive technology and the Icelandic business with the largest number of patent applications.
• JBT Marel, one of the largest industrial companies in the country and globally leading in food processing technology, has for decades built its operations on innovation and intellectual property protection. The company holds a large number of patents protecting technologies used in food processing worldwide.
• Kerecis is Iceland’s first unicorn (a startup sold for more than USD 1 billion). It can safely be said that a substantial part of its value lies in its patents for processing fish skin for use in wound treatment.
• Nox Medical, a sleep research company, engaged in a tough battle with an international corporation over its invention which is covered by a patent and ultimately prevailed.
• Lauf Cycles has built a strong brand on the basis of a patent covering a bicycle fork with built in suspension and other patents on innovations for bicycles.
• Hampiðjan, with a 90 year history, shows that older companies can also be strong innovators. The company holds numerous patents protecting innovations in fishing gear technology.
• Alvotech uses patent protection both to safeguard its inventions in pharmaceuticals and biotech and to leverage information from older patent applications to develop biosimilars.
• Carbfix has developed and obtained patents for a unique method of binding carbon dioxide in rock to combat climate change.

All of these companies use patents as a tool to support growth and international competitiveness. They create high technology jobs, attract investment and strengthen Iceland’s image as a land of innovation.

Need for strategy and targeted action

The number of patents or patent applications does not tell the whole story, but it does say a great deal about how well we convert knowledge from research and development into value. It is vital to ensure that more Icelandic companies follow this path.

Innovation is the lifeblood of modern economies, and intellectual property protection is the lifeblood of innovation. Countries that excel at innovation are almost invariably countries where governments place emphasis on intellectual property protection through strategy and targeted action. Iceland has all the capacity to follow suit, but to do so it requires enhanced awareness, support and strategy in the field of intellectual property and patents. The next Össur or Kerecis is likely already in the making, and strong intellectual property protection will help it succeed on the global stage.

The article was first published in Viðskiptablaðið.