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Indicators 2002
Introduction Overview Chapter 1: Elementary and Secondary Education Chapter 2: Higher Education in Science and Engineering Chapter 3: Science and Engineering Workforce Chapter 4: U.S. and International Research and Development: Funds and Alliances Chapter 5: Academic Research and Development Chapter 6: Industry, Technology, and the Global Marketplace Chapter 7: Science and Technology: Public Attitudes and Public Understanding Chapter 8: Significance of Information Technology Appendix Tables
Chapter Contents:
Highlights
Introduction
U.S. Technology in the Marketplace
New High-Technology Exporters
International Trends in Industrial R&D
Patented Inventions
International Patenting Trends in Two New Technology Areas
Venture Capital and High-Technology Enterprise
Chapter Summary: Assessment of U.S. Technological Competitiveness
Selected Bibliography
 
Sidebars
Appendix Tables
List of Figures
Presentation Slides


Click for Figure 6-22
Figure 6-22


Click for Figure 6-23
Figure 6-23


Click for Figure 6-24
Figure 6-24


Click for Figure 6-25
Figure 6-25


Click for Figure 6-26
Figure 6-26


Click for Figure 6-27
Figure 6-27


Industry, Technology and the Global Marketplace

Patented Inventions

U.S. Patenting
Patents Granted to U.S. Inventors
Patents Granted to Foreign Inventors
Trends in Applications for U.S. Patents
Technical Fields Favored by U.S. and Foreign Inventors
Patenting Outside the United States

Inventions have important economic benefits to a nation because they often result in new or improved products, more efficient manufacturing processes, or even new industries. To foster inventiveness, nations assign property rights to inventors in the form of patents, which allow the inventor to exclude others from making, using, or selling the invention. Inventors can obtain patents from government-authorized agencies for inventions judged to be new, useful, and not obvious.

Although the Patent and Trademark Office (PTO) grants several types of patents, this discussion is limited to utility patents only, which are commonly known as patents for inventions. Patenting indicators have several well-known drawbacks, including the following:

  • Incompleteness. Many inventions are not patented at all, in part because laws in some countries already provide for the protection of industrial trade secrets.

  • Inconsistency across industries and fields. Industries and fields vary considerably in their propensity to patent inventions; thus, comparing patenting rates among different industries or fields is not advisable (Scherer 1992).

  • Inconsistency in quality. The importance of patented inventions can vary considerably, although calculating patent citation rates (discussed later in this section and in chapter 5) is one method for mitigating this problem.

Despite these and other limitations, patents provide a unique source of information on inventive activities. Patent data provide useful indicators of technical change and serve as a means of measuring inventive output over time.[21] In addition, information on U.S. patenting by foreign inventors enables measurement of the inventiveness in those foreign countries (Pavitt 1985) and can serve as a leading indicator of new technological competition (Faust 1984).[22]

U.S. Patenting top of page

In 1999, more than 153,000 patents were issued in the United States, 4 percent more than that granted a year earlier. This new record number of patents caps off nearly a decade of growth during the 1990s. In 1995, U.S. patents granted fell just short of the previous year's mark, but the upward trend resumed with small increases in U.S. patents granted in 1996 and 1997 before a 32 percent jump in 1998.[23] (See figure 6-22 figure and appendix table 6-12.)

Patents Granted to U.S. Inventors top of page

During the mid-1980s, the share of U.S. patents awarded to U.S. inventors began to decline. Although some observers were concerned that this downward trend indicated a decline in U.S. competitiveness, patenting by U.S. inventors increased by the end of the decade, outpacing patenting by foreign inventors. This upward trend has continued throughout the 1990s, and in 1999, U.S. inventors were awarded nearly 84,000 new patents, an increase of about 4.5 percent over 1998. (See figure 6-22 figure.)

Inventors who work for private companies or the Federal Government commonly assign ownership of their patents to their employers; self-employed inventors typically retain ownership of their patents. Therefore, examining patent data by owner's sector of employment can provide a good indication of the sector in which the inventive work was done. In 1999, corporations owned 80 percent of granted patents.[24] See sidebar, "Top Patenting Corporations." This percentage has gradually increased over the years.[25]

After business entities, individuals are the next largest group of U.S. patent owners. Before 1986, individuals owned, on average, 24 percent of all patents granted to U.S. inventors.[26] Their share has fluctuated downward since then, to a low of 19 percent in 1999. The Federal share of patents averaged 3.3 percent of the total during the period 1963–85, eventually falling to 1.1 percent in 1999, the lowest level ever.[27] U.S. Government-owned patents were encouraged by legislation enacted during the 1980s that called for U.S. agencies to establish new programs and increase incentives to their scientists, engineers, and technicians for the transfer of technology developed in the course of government research.[28]

Patents Granted to Foreign Inventors top of page

Foreign-origin patents represented 45 percent of all patents granted in the United States in 1999, a share maintained since 1997.[29] During much of the 1980s, foreign-origin patents increased at a faster rate than U.S.-origin patents, reaching a peak of 48 percent of all U.S. patents in 1989. From the following year until 1996, U.S. inventor patenting increased at a faster pace than that of foreign inventors, dropping the foreign share to 44 percent. In 1999, two countries (Japan and Germany) accounted for just more than 58 percent of U.S. patents granted to foreign inventors. The top four countries (Japan, Germany, France, and the United Kingdom) accounted for about 70 percent. (See figure 6-23 figure and appendix table 6-12.)

Although patenting by inventors from the leading industrialized countries has leveled off or even declined, some Asian economies, particularly Taiwan and South Korea, have stepped up their patenting activity in the United States and are proving to be strong inventors of new technologies.[30] Between 1963 (the year data first became available) and 1985, Taiwan was awarded just 742 U.S. patents. During the 14-year period since then, Taiwan was awarded more than 19,000 U.S. patents. U.S. patenting activity by inventors from South Korea shows a similar growth pattern. Before 1986, South Korea was awarded just 213 U.S. patents; since then, it has been awarded more than 14,000 new patents. In 1998, Taiwan and South Korea surpassed Canada to become the fifth and sixth most active foreigner inventors in the United States. Sweden and the Netherlands also had large increases in U.S. patenting in 1998.

Trends in Applications for U.S. Patents top of page

The review process leading up to the official grant of a new patent may take as long as 2 years. Consequently, the examination of year-to-year trends in patents granted will not always reveal the most recent changes in patenting activity. The number of patent applications filed with the PTO provides an earlier, albeit less certain, indication of changes to patterns of inventiveness. Yet, current trends in new patent applications help to revise observations made from the more informative data, presented earlier, on trends in U.S. patents granted.

Patent Applications From U.S. and Foreign Inventors

Applications for U.S. patents reached 270,000 in 1999, an increase of about 11 percent over 1998. These latest data extend what has been nearly a decade of annual increases. During the past 11 years, the only significant decline in patent applications occurred in 1996. (See figure 6-24 figure and appendix table 6-13.)

U.S. resident patents represented 56 percent of all patents applied for in the United States in 1999, a share maintained since 1997. Because patents granted to foreign inventors have generally accounted for about 45–47 percent of total U.S. patents granted, it appears that the success rate for foreign-origin patents is lower than that for those applied for by U.S. inventors.

In 1999, two countries, Japan and Germany, accounted for nearly 44 percent of U.S. patent applications made by foreign inventors. Although patent filings by inventors from the leading industrialized countries have leveled off and have even begun to decline, other countries, particularly Asian countries with the exception of Japan, have stepped up their patenting activity in the United States. This is especially true for Taiwan and South Korea, and the data on recent patent applications indicate that this trend continues.

Since 1997, residents of Taiwan and South Korea have distinguished themselves in the number of applications for U.S. patents. In 1997, the number of patents applied for by residents of Taiwan and South Korea ranked them among the top five for the first time, replacing residents from France and Canada. Residents of Taiwan had moved up further in 1998 to become the third leading source for new U.S. patent applications. In 1999, residents of Taiwan applied for more than 9,000 new patents, an increase of 27 percent from a year earlier and more than 2,400 than that made by residents of the United Kingdom, ranked fourth. If recent patents granted to residents of Taiwan are indicative of the technologies awaiting review, then many of these applications will be for new computer and electronic inventions. Compared with the rising trend in Taiwan's U.S. patent applications, recent filings by inventors from South Korea have not continued at the same pace.

Although less dramatic than that demonstrated by inventors from Taiwan and South Korea, patent applications by inventors from Germany, France, and Israel also increased in 1999. Inventors residing in Israel were particularly active, increasing their applications for U.S. patents by about 39 percent from a year earlier. (See figure 6-25 figure.)

Technical Fields Favored by U.S. and Foreign Inventors top of page

A country's distribution of patents by technical area is a reliable indicator of both its technological strengths and its focus on product development. This section compares and discusses the various key technical fields favored by U.S. inventors and the top five foreign inventors patenting in the United States.[31] Patent activity in the United States by inventors from foreign countries can be used to identify a country's technological strengths as well as U.S. product markets likely to see increased competition.

Fields Favored by U.S. and Leading Foreign Inventors top of page

Although U.S. patent activity encompasses a wide spectrum of technology and new product areas, U.S. corporations' patenting emphasizes several technology areas expected to play an important role in the nation's future economic growth (U.S. Office of Science and Technology Policy 1997). In 1999, corporate patent activity reflected U.S. technological strengths in medical and surgical devices, electronics, telecommunications, advanced materials, and biotechnology. (See text table 6-3 text table.)

The 1999 patent data show not only Japan's continued emphasis on photocopying, photography, and consumer electronics technology but also its broader range of U.S. patents in information technology. From improved information storage technology for computers to visual display systems, Japanese inventions are earning U.S. patents in areas that aid in the processing, storage, and transmission of information.

German inventors continue to develop new products and processes in technology areas associated with heavy manufacturing, a field in which it has traditionally maintained a strong presence. The 1999 U.S. patent activity index shows that Germany emphasizes inventions for motor vehicles, printing, new chemistry and advanced materials, and material-handling equipment.

In addition to inventions for traditional manufacturing applications, British patent activity is also high in biotechnology and chemistry. Like the British, the French are quite active in patent classes associated with manufacturing applications and biotechnology. They share the emphasis of U.S. inventors in aeronautics and communications technologies.

As recently as 1980, Taiwan's U.S. patent activity was concentrated in the area of toys and other amusement devices. By the 1990s, Taiwan was active in communications technology, semiconductor manufacturing processes, and internal combustion engines. The data from 1999 show that Taiwan's inventors have continued to broaden their technology portfolio, emphasizing testing and measuring devices, audio systems, advanced materials, optics, and aeronautics.

U.S. patenting by South Korean inventors has also reflected that country's rapid technological development. The 1999 data show that South Korean inventors are patenting heavily in television technologies and a broad array of computer technologies that include devices for dynamic and static information storage, data generation and conversion, error detection, and display systems. (See text table 6-4 text table.)

Both South Korea and Taiwan are major suppliers of computers and peripherals to the United States, and recent patenting data show that their scientists and engineers are developing these new technologies and improving existing ones. These new inventions are likely to enhance their competitiveness in the United States and in the global market.

Patenting Outside the United States top of page

In most countries, foreign inventors account for a much larger share of total patent activity than in the United States. When foreign patent activity in the United States is compared with that in 11 other countries in 1985, 1990, and 1998, only Russia and Japan consistently had smaller shares of foreign patent activity. (See figure 6-26 figure.)

Although much attention is given to the level of foreign patenting in the United States, this tends to overshadow the success of U.S. inventors in patenting their inventions around the world. In 1998, U.S. inventors led all other foreign inventors not only in countries neighboring the United States but also in markets such as Germany, Japan, France, Italy, Brazil, Russia, Malaysia, and Thailand. (See figure 6-27 figure and appendix table 6-14.) Japanese inventors edge out Americans in China and dominate foreign patenting in South Korea. German inventors are also quite active in many of the other countries examined.






Footnotes

[21] See Griliches (1990) for a survey of literature related to this point.

[22]  It should also be noted that there is concern that patents and other forms of intellectual property may discourage research, its communication, and the difffusion of new technologies. The question arises whether in some respects the extension of intellectual property rights have proceeded too far. To provide answers to guide IPR policy over the next decade and beyond, the Science, Technology and Economic Policy Board (STEP) of theNational Research Council (NRC) has undertaken a project to review the purposes of the IPR legal framework and assess how well those purposes are being served. The Board will identify whether there are current or emerging problems of inadequate or over-protection of IPRs that need attention and will commission research on some these topics.

[23]  Although patent applications have been rising, PTO attributes most of the increase in 1998 to greater administrative efficiency and the hiring of additional patent examiners.

[24]  About 2.2 percent of patents granted to U.S. inventors in 1999 were owned by U.S. universities and colleges. PTO counts these as being owned by corporations. For further discussion of academic patenting, see the chapter 5 section, "Patents Awarded to U.S. Universities."

[25]  From 1987 to 1997, corporate-owned patents accounted for between 77 and 79 percent of total U.S.-owned patents. Since 1997, corporations have increased their share each year and, by 1999, represented 82 percent of total U.S.-owned patents.

[26]  Before 1986, data are provided as a total for the period 1963–85.

[27]  Federal inventors frequently obtain a statutory invention registration (SIR) rather than a patent. The SIR is not ordinarily subject to examination and is less costly to obtain than a patent. Also, the SIR gives the holder the right to use the invention but does not prevent others from selling or using it as well.

[28]  The Bayh-Dole University and Small Business Patent Act of 1980 permitted government grantees and contractors to retain title to inventions resulting from federally supported R&D and encouraged the licensing of such inventions to industry. The Stevenson-Wydler Technology Innovation Act of 1980 made the transfer of federally owned or originated technology to state and local governments and to the private sector a national policy and the duty of government laboratories. The act was amended by the Federal Technology Transfer Act of 1986 to provide additional incentives for the transfer and commercialization of federally developed technologies. In April 1987, Executive Order 12591 ordered executive departments and agencies to encourage and facilitate collaborations among Federal laboratories, state and local governments, universities, and the private sector—particularly small business—to aid technology transfer to the marketplace. In 1996, Congress strengthened private-sector rights to intellectual property resulting from these partnerships.

[29]  Corporations account for about 80 percent of all foreign-owned U.S. patents.

[30]  Some of the decline in U.S. patenting by inventors from the leading industrialized nations may be attributed to the move toward European unification, which has encouraged wider patenting within Europe.

[31]  Information in this section is based on PTO's classification system, which divides patents into approximately 370 active classes. With this system, patent activity for U.S. and foreign inventors in recent years can be compared by using an activity index. For any year, the activity index is the proportion of patents in a particular class granted to inventors in a specific country divided by the proportion of all patents granted to inventors in that country. Because U.S. patenting data reflect a much larger share of patenting by individuals without corporate or government affiliation than do data on foreign patenting, only patents granted to corporations are used to construct the U.S. patenting activity indices.



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