Saturday, July 09, 2011

U.S. Patent Data Show No Innovation Slowdown

I'm reading Tyler Cowen's provocative book "The Great Stagnation" and blogging at 30,000 feet in the air on a Delta flight to Minneapolis (pretty amazing to be able to do that!).  Here's a quote from p. 20 in the first chapter of the book where Tyler discusses the supposed slowdown in innovation, supported by this factoid:

"The United States produced more patents in 1966 (54,600) than in 1993 (53,200)."  

MP: The top chart above (click to enlarge) shows the annual number of U.S. patents granted to U.S. residents from 1901 to 2009, using data available here from the World Intellectual Property Organization.  The selection of just two random years (1966 and 1993) from more than a century's worth of patent data seems very arbitrary, and ignores the subsequent 69% increase in patents between 1993 and the peak in 2006 (see chart).  

To illustrate how random and arbitrary the two years are, if we make a slight adjustment to the beginning and ending dates, we could say this: "The United States produced almost 18,000 more patents in 1994 (56,067) than in 1963 (37,291), or more than a 50% increase!"

And here's another amazing factoid: In just the single decade between 1988 and 1998 (a decade that spans Tyler's selection of the year 1993), the number of patents granted almost doubled from 40,497 in 1988 and 80,292 in 1998!

Further, the patent count in Tyler's book includes U.S. residents only.  The bottom chart above shows the total number of U.S. patents granted to both U.S. residents and non-residents, and illustrates a dramatic increase in patent activity in the United States since the early 1970s, when the Great Innovation Stagnation supposedly started.  In just an 11-year period between 1988 and 1999, the total number of patents granted more than doubled from 77,924 to 153,487.  The graph also shows that if there was any period that could be considered an "innovation slowdown" it would have to be the first half of the 20th century, the period that Tyler claims was a period of technological breakthroughs.  

To pick a few random dates, we could say that there were twice as many patents granted in 1915 (43,000) than 32 years later in 1947 (20,191), reflecting a 30-year period of stagnation in innovation.    

Bottom Line:  If there is a Great Stagnation or innovation slowdown, it's sure not supported by the U.S. patent data, especially when two random years are arbitrarily selected out of more than 100 years of patent data!


At 7/09/2011 12:59 PM, Blogger Benjamin Cole said...

The innovation boom is global, with technical data and papers transmitted immediately and globally by Internet.

There is not technical problem man cannot easily overcome, such as energy supply, food etc.

The problem is politics, and war-mongers.

At 7/09/2011 1:45 PM, Blogger morganovich said...

i'd be very careful assuming this is apples to apples.

20 years ago you were not getting the rafts of business model and process patents you get now.

you also have a patent office that is happy to grant damn near anything and let the courts sort it out which is making for terribly thickets of suits and countersuits over overlapping I that should have been caught at the prior art search stage and never granted.

i'm not arguing that innovation has stopped, but these numbers are not really comparable historically.

At 7/09/2011 5:37 PM, Anonymous Anonymous said...

Let me start off by saying that patents are not a good measure of innovation, because of all the well-known ways in which the patent system is broken. However, it is obvious from looking at the full chart, that Tyler is wrong even according to his own measure. It is obvious why he picked the years he did, to make it seem like patent growth was flat by picking the oldest peak year he could find, 1966, then finding the latest year that still had less patents, 1993. This is such an abuse of the stats that he should be ashamed to include it in a book written in 2010. For all the attention his book has gotten, it is obvious that most of it doesn't stand up to scrutiny.

At 7/09/2011 11:05 PM, Blogger Buddy R Pacifico said...

G1, G2, G3 and now G4 and blogging from 30,000 feet; these are epoch changes for mobile communications. A plethora of recent patent activity has to do with enabling the lastest generation of wireless communication.

Certainly not stagnation, despite a very slow patent process that is probably a good example for Tyler Cowan's premise.

At 7/10/2011 7:36 AM, Blogger rjs said...

yep, including The Feather-Duster Fly-Strip Air Freshener - Ostensibly an indoor air purifier, this item is actually a standard space heater spangled in strips of flypaper, with a feather duster perched up top. The product was submitted without a standard safety file number from the Underwriters' Laboratories. Plus, the product's website did not include a disclaimer required for Energy Star certification. Last but not least, the garish photo submitted with the product's application portrays what is clearly a feather duster rigged to space heater.

At 7/10/2011 6:47 PM, Blogger Innovation rules said...

I appreciate Tyler's general point, but I believe large government is generally crowding out the economy.

It stifles new business, bars whole industry, makes any manager in a company of any size think very hard before they hire someone (in fact the barrage of paperwork and regulation incents outsourcing), threatens future property values, and in the current environment brings on the specter of not only higher taxes but retro-fits of existing property to conform to regulation with no ROI.

This has been building in earnest now for decades, and the horse is getting tired. It was one thing when educated labor in western Europe did not provide a decent alternative. And Japan crushed its own economic engine. But now that the fallen bamboo curtain is growing up, the world offers many alternatives in production and new sales.

USA isn't the only game in town anymore.

We could balance the budget tomorrow, but saner regulation would do more to jump start the economy.

At 7/13/2011 8:54 PM, Blogger VangelV said...

Sorry Mark but I am with Morganovich on this one. You now have patents granted on all kinds of silly things that would have been laughed off years ago. One click shopping, hand gesture controls, and other ideas should never be granted protection because they stifle innovation rather than enhance it.


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