1) The number of patents granted each year in the US has been exponentially increasing over the past 150 years, with foreign applicants now receiving over half of US patents, led by companies from East Asia. 2) Top patent-receiving industries have shifted from chemicals and machinery in the 1970s to pharmaceuticals and computer/IT technologies today. 3) While many areas of innovation were dominated by large US and European companies in the past, the rankings are now led by international technology companies like IBM, Samsung, and Canon.

1. BH Report: US Patents
2014/12/8

2. Context
There is an urban legend that a commissioner of US Patent and Trademark Office (USPTO) in 1899 suggested to the president that he should shut down the office because "everything that could be invented has been invented."
This story is basically proven to be apocryphal, but the joke is still funny because we most certainly encounter this kind of sentiment all the time – "Look at us. We have everything cool that people 20 years ago couldn't even dream of. People back then had it so easy, it is so much more difficult to innovate nowadays, because everything we are at the height of all innovations"
In this report, I tried to explore the following by looking at statistics to US patents (acknowledging that this is imperfect approach as the "value" of one patent is never exactly the same as another patent)
•Are we registering more patents? or less patents?
•How has the trend changed?
–US vs. foreign countries
–Company
–Area of technology
1
2
3

3. The first US Patent law was set back in 1790
•Patent Act of 1790 was the first "federal1" patent law enacted on April 10th, 1790
–Defined US patent as “any useful art, manufacture, engine, machine, or device, or any improvement thereon not before known or used”
–Granted the patent owner with "sole and exclusive right and liberty of making, constructing, using and vending to others to be used" of the invention
•The timing more or less also coincides with the creation of modern French patent system in 1791
•Back in the days, the fee for obtaining the patent was roughly ~4-5 dollars (which would be equivalent of ~100-130 dollars today)
•First patent was granted to Samuel Hopkins on July 31st, 1790 for an improvement "in the making of Pot ash and Pearl ash by a new Apparatus and Process."
1. There were independent patents granted at each colony/state level
Source: USPTO; Wikipedia

4. Number of patents granted each year has been
exponentially increasing
12,301
3
277,835
1
100
10,000
1,000,000
100,000,000
1780 1800 1820 1840 1860 1880 1900 1920 1940 1960 1980 2000 2020
+2% (~23x)
+11%
Number of Utility patents granted each year (log scale)
Dip due to
WW II
Note: Only included Utility patents (i.e., does not include design, plant patents)
Source: USPTO; web analysis
2% CAGR for the last 150 years (or 23x growth)
Average cost for
obtaining utility patent
said to be ~$20,000,
implying the market size
of $5.6B in 2013

5. More than half the patents granted in the US today are by
foreign countries today
81
75
66
62
57
53 55 55 51 49 48
19
25
34
38
43
47 45 45 49 51 52
0
80
60
40
20
100
Foreign countries
1990 1995
% of Utility patents granted each year, by country of origin
1965 1970 1975 1980 2000 2005 2010 2013
US
1985
Note: Only included Utility patents (i.e., does not include design, plant patents)
Source: USPTO
1 US vs. foreign countries

6. Key foreign contributors shifted from W. Europe (~20%
today) to E. Asia (~60% today) over the 50 years
20 20 20 19
15 14 13 14 15 14
7 8
5 8
6
10
10
13
23
28
39
44
49
45
44
42 38
7
6
5
5
4
7
6
6
5
4
11
11
10
9
8
7
6
21 19
12 10
8
7
5 5 4
27 26 24 24 22 4 4
18
15 13 13 11 10
16
5 4
3
6
4 4
4
5
4
4
4 4
4
5
0
80
40
20
60
100
3
2
3
China
1995 2000 2005 2010 2013
Germany
% of Utility patents granted each year (foreign countries only), by country of origin
2
1 1
All other
UK
1965 1970 1975 1980 1985 1990
France
Switzerland
Canada
Japan
South Korea
Taiwan
2
1
2
Note: Only included Utility patents (i.e., does not include design, plant patents)
Source: USPTO
1 US vs. foreign countries

7. Number of granted patents by player somewhat corresponds with the business trends of each decade
70's
80's
90's
2000's
2010-2013
#1
GE
GE
IBM
IBM
IBM
#2
AT&T
Hitachi
Canon
Samsung
Samsung
#3
IBM
Toshiba
Toshiba
Canon
Canon
#4
US Navy
IBM
Mitsubishi Denki
Matsushita Electric
Microsoft
#5
Westinghouse Electric
Canon
Hitachi
Micron Technology
Sony
#6
DuPont
Philips
NEC
Intel
Panasonic
#7
General Motors
Siemens
Motorola
Sony
Toshiba
#8
Philips
AT&T
Eastman Kodak
Hitachi
LG
#9
Bayer
Westinghouse Electric
GE
Toshiba
GE
#10
Eastman Kodak
Bayer
Matsushita Electric
Fujitsu
Fujitsu
•Mostly large US industrial players and German chemical companies
•Appearance of some Japanese players (Hitachi, Toshiba, Canon)
•Rise of IBM to the top, and the fall of GE
•Predominantly Japanese companies for the rest
•Emergence of Korean player (Samsung), slow down of certain Japanese companies (Hitachi, Toshiba)
•Continued trend – more Korean, less Japanese
Note: Only included Utility patents (i.e., does not include design, plant patents)
Source: USPTO
2
Company

8. Pharmaceutical and computer/IT are two leading categories for patents granted today
Note: Only included Utility patents (i.e., does not include design, plant patents)
Source: USPTO
3
Area of technology
70's
80's
90's
2000's
2010-2013
#1
Organic Compounds
Organic Compounds
Drug, Bio-Affecting and Body Treating Comp.
Drug, Bio-Affecting and Body Treating Comp.
Drug, Bio-Affecting and Body Treating Comp.
#2
Synthetic Resins or Natural Rubbers
Synthetic Resins or Natural Rubbers
Synthetic Resins or Natural Rubbers
Semiconductor Device Manufacturing: Process
Multiplex Communications
#3
Drug, Bio-Affecting and Body Treating Comp.
Drug, Bio-Affecting and Body Treating Comp.
Organic Compounds
Active Solid-State Devices (e.g., Transistors)
Active Solid-State Devices (e.g., Transistors)
#4
Measuring and Testing
Stock Material or Miscellaneous Articles
Stock Material or Miscellaneous Articles
Multiplex Communications
Telecommunications
#5
Stock Material or Miscellaneous Articles
Measuring and Testing
Chemistry: Molecular Biology and Microbiology
Chemistry: Molecular Biology and Microbiology
Semiconductor Device Manufacturing
#6
Metal Working
Internal-Combustion Engines
Active Solid-State Devices (e.g., Transistors)
Organic Compounds
Multicomputer Data Transferring
#7
Fluid Handling
Radiation Imagery Chemistry
Semiconductor Device Manufacturing: Process
Synthetic Resins or Natural Rubbers
DP: Fin, Biz Practice, Mgmt. or Cost/Price Determination
#8
Radiation Imagery Chemistry
Metal Working
Surgery
Telecommunications
DP: Database and File Management or Data Struc.
#9
Adhesive Bonding and Misc Chemical Manufacture
Liquid Purification or Separation
Radiation Imagery Chemistry
Stock Material or Miscellaneous Articles
Computer Graphics
#10
Liquid Purification or Separation
Radiant Energy
Measuring and Testing
Computer Graphics
Image Analysis
•Mostly chemistry- heavy categories
•No significant change from 70's
•Rise of the pharmaceutical innovations
•Appearance of semiconductor/ solid- state devices
•Continued growth of semiconductor/ solid- state device
•Growth of telecom and other IT related areas (imaging)
•Continued trend

9. Disclaimer
This document is provided for general information only and nothing contained in the material constitutes a recommendation for the purchase or sale of any security. Although the statements of fact in this report are obtained from sources that I consider reliable, I do not guarantee their accuracy and any such information may be incomplete or condensed. Views are subject to change on the basis of additional or new research, new facts or developments.