Sunday, November 28, 2010

U.S. Patent Activity Continues to Grow

Except for 2006, more U.S. patents were granted in 2009 (191,927) than in any previous year (see top chart).  And the number of patents granted in the last decade (1,827,000) is more than the number of patents granted in the quarter century between 1963 and 1987 (1,752,000).  For patent applications, almost five million applications have been filed in each of the last three years, and there were more applications filed in the last ten years than in the 33 years from 1963-1995 combined (see bottom chart).

Bottom Line: Despite the "worst economic crisis since the Great Depression," the most important ingredients and determinants of long-term growth for the United States were relatively unaffected: innovation, entrepreneurship, ingenuity, creativity, originality, and advances in science and technology, measured by U.S. patents.  Looking at the graphs above, you wouldn't even know anything of economic significance happened in the last few years - certainly nothing that materially affected patent activity.

Our "ultimate resource" - America's human resources,  human capital and entrepreneurial talent - are still strong, and the vitality and dynamism of the U.S. economy will prevail.  The U.S. economy has experienced 33 recessions since around the time of the Civil War, and has successfully emerged after each one into a new cycle of growth and expansion, and there's no reason that this last recession and the current expansion will be any different.  Judging by the ongoing expansion of U.S. patent activity, the future looks very bright, and American exceptionalism will continue to thrive.


At 11/28/2010 1:42 PM, Blogger Ben Eng said...

I'm skeptical that patent applications and grants is a good measure of innovation and entrepreneurial activity. Maybe in the past, innovators (especially in software) tended not to file patents---especially not for every trivial thing, as we do today. The increase is largely due to the use of patents to litigate for license fees. Hence, the rise of corporations whose sole business is patent trolling. This leads to all corporations building larger patent portfolios as a defensive measure for counter-suing. This is not productive activity.

At 11/28/2010 11:24 PM, Anonymous Anonymous said...

Patents per million persons would be a better, though still imperfect, measure of innovation. The main imperfections result from the fact that many patents in recent years were for software code, business methods, DNA (animal, plant, human, bacterial, etc.), and for the patent trolls mentioned by Ben Eng above. Software code should be copyright protected, not patented. Business methods aren't inventions and shouldn't be patentable. Patenting naturally-occurring DNA is absurd, but such patents have been granted.

If you correct for the patent abuses above and for population increases, I believe that the slope of the rise from 1985 through 2008 will be markedly reduced.

At 11/29/2010 10:12 AM, Blogger Hydra said...

Americas ultimate resource still needs food, clothes, and shelter, along with energy and transportation. we can design creative clotes, but sooner or later, somebody somewhere is going to have to start up a loom.

At 11/29/2010 10:46 AM, Blogger Buddy R Pacifico said...

The U.S. is becoming a knowledge economy (duh) and so software patent growth is very healthy. Software is used in new high-tech products such as Boeing's Dreadliner, from the cockpit to the jet engines.

All software originally produced can recieve a copyright that has world-wide acceptance. There is is no world-wide agreement on what constitutes a software patent.

Patent trolling has been a problem but high-tech products are going to have innovative software incorparated that may need patent protection -- even though it is very expensive to do on a world-wide scale. Copyright and patent enforcement in some countries is extremely difficult and the U.S. needs to reevaluate trade relations in this area.

At 11/29/2010 11:31 AM, Blogger Dale B. Halling said...

This is good news in general, however if you adjust for patents issued to US based inventors there has actually been a decline – see Either way you see that the number of patents issued has been essentially stagnant to for almost a decade. The last time you see a decline in the number of US patents is in the 1970s. This is not a good sign. Long term declines in the US are always associated with declines in invention and therefore usually declines in the number of patents. Unfortunately, we have significantly weakened our patent system since 2000.

The antipatent attitude about software is not based in fact or logic. Software is just a method of wiring hardware. If you are against software patents you have to be against patents for electronic circuits. ‘

The complaints about Non-Practicing Entities (NPEs) are not based in logic either. NPEs are the beginning of a secondary market for inventions. This will allow more capital to be directed toward inventions. Much (not all) of the negative attitude about NPEs enforcing their patents is generated by large companies that purposely infringe other inventor’s patents. This business strategy is called efficient infringement. For more information

At 11/29/2010 12:00 PM, Blogger Dan Ferris said...

How does an increase in government granted monopolies equate to healthy levels of innovation and entrepreneurship.

Sounds like healthy levels of rent-seeking, and the seizure of IP that's been in wide use for years.

At 11/29/2010 12:25 PM, Blogger Ian said...

The granting of trivial patents for software and for business methods are anti-competitive. They stifle innovation. They represent a massive tax on small businesses and startups.

They are however, a good example of American litigiousness exceptional-ism.

At 11/29/2010 1:02 PM, Blogger Buddy R Pacifico said...

There would probably be many more patents issued because Patent Office benchmark is 18months but average patent approval time is 40 months (2009). The patent process is expensive and varies wildly world-wide. With regard to software, copyright protection is universal world-wide.

The knowledge based U.S. needs to closely reevaluate trade relations with countries that don't have the will to enforce copyright, trademark and patent property protection.

At 11/29/2010 2:04 PM, Blogger Douglas Johnson said...

I'm a little skeptical here only because when I used to cover U.S.-Japan trade I noted that in the late '90s many Japanese tech companies started filing an unbelievable number of patents on the littlest things that were often just variations on existing patents to extend the life of a patent or to throw a legal question into the mix.

I don't know what's happening in this chart but are we to believe that in the year 2000 the world suddenly got 30% more innovative all in one year? I have my doubts. I think something else is going on here, but I haven't researched it and so I don't know what.

At 11/29/2010 2:37 PM, Blogger VangelV said...

Sorry Mark but you ignore the details. US patent activity is booming because of the court system's ability to harm innovators. Many of the frivolous patents would never have seen the light of day before not because people had not discovered things but because those things were not considered patentable in the first place.


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