a H53 9i. : Highlights in Patent Activity ^ ^ADEV^ DEPARTMENT OF COMMERCE U.S. Patent and Trademark Office ^HBM Highlights in Patent Activity \ states o** *^dew^ DEPARTMENT OF COMMERCE U.S. BarbaraHackmanFranklin Secretary Patentand TrademarkOffice Douglas B. Comer ActingAssistantSecretary andActingCommissionerofPatents and Trademarks October 1992 ^^M i ^M Contents Highlights in Patent Activity 1971-1991 1 Sources ofPatent Data at the USPTO 2 Trends in Patent Activity--U.S. Inventors 3 Applications and Grants 3 Ownership 4 Geographic Distribution ofPatent Activity- All U.S. Resident Inventors 4 Independent Inventors 5 Trends in Patent Activity-Foreign Inventors Who Patent in the United States 8 Applications and Grants 8 Foreign Ownership 9 Sources ofForeign PatentActivity in the United States 9 Technological Emphasis ofPatent Activity 10 Financing the United States Patent System 12 Patent Operating Costs 13 Patent Application Filingand Issue Fees 14 Maintenance Fees 15 Comparative Cost of Patenting in the United States, Europe and Japan 17 Summary 18 Appendix Tables 19 Highlights in PatentActivity Highlights in Patent Activity 1971-1991 The UnitedStates PatentandTrademarkOffice Figure 1. (USPTO) has been challenged duringthe past Application Filings and Patent Grants, two decades by significant growth in patent U.S. Inventors, Rates per 100,000 U.S. activity and the impact of this growth on USPTO Population, 1971-1991 operations. Adramaticriseinthepatentactivityof U.S. inventors and foreign inventors who obtain patent protection in the United States has resulted in a 60 percent increase in the number of patent 40t applicationfilings. Morethan 164,000utilitypatent 35- applications are now filed each yearatthe USPTO, 30- Applications/^ compared to only 105,000 applications in 1971.1 \ \ In response to this growth, the USPTO increased £3 25- ^-^ staff and reduced the average length of time re- <§. 20- ..- quired to examine a patent application from 24 S / months to 18 months. Mzyor changes to the Qo_ 15- " Grants financial aspects of obtaining a patent have re- ID- sulted inthe successful implementation ofamain- S' tenance fee structure, similar to other countries, that provides for continued patent protection for 1971 19I75 197iI9 198II3 19Ii87 199iI1 the 17-year life of the patent. Today, the cost of obtaining and maintaining a patent in the United Statescontinuestobemostcompetitivecompared to other countries. IndependentInventors Continue to Playa Major RoleIn U.S. Patenting. Patent activity of U.S inventors and foreign inventors who patent in the United States is high- The numberofpatentsgranted to independent lighted in this section. References to figures and U.S. inventors increased by more than 70 percent appendix tables in succeeding sections are also from 7,561 patents in 1983 to 13,193 patents in provided. 1991. While U.S. corporations continue to receive nearly three-fourths of utility patent grants for U.S. Since 1984 thepatentactivityofU.S. inventorshas inventions, independent inventors have increased dramaticallyrisen tonearrecordlevels. theirshareofutilitypatentgrantsfrom23percentin 1983to 26 percentin 1991 (seeAppendixTableA- In 1990 and 1991, the per capita application 2.) 3 filingratesbyresidentsoftheUnitedStateswerethe highestin 20years.2 Morethan 36 patentapplica- Patentactivityin the UnitedStates increasedin tions per 100,000 U.S. population were filed in moststatesbetween 1971 and 1991. 1990 and slightly less than 35 applications per 100,000 were filed byU.S. residents in 1991. The Theconcentrationofpatentactivityincreasedin resurgence in patent activity since 1984 follows a 32 states between 1971 and 1991; 12 of these general decline in patenting from 1971 to 1983 states were located in the south and 9 others were when only25 applications per 100,000 U.S. popu- located in the west. Independent inventor activity lation were filed. (See Figure 1.) has also become more prevalent in the western — 1 Utilitypatentsaregrantedforinventions about92percentof 2 TheidentificationofU.S. versusforeign inventionsis basedon patentgrantsareutilitypatents. Othertypesofpatentdocuments theresidenceofthefirst-named inventor. Domestic, U.S. patent include plant, design, and reissue patents, plusStatutoryInven- activity includes applications and grants with the first-named tion Registrations. This report only describes trends in utility inventora resident ofthe United States. patent activity. 3 Patentactivityofindependentinventorsrepresentspatentsthat wereeitherunassignedorassignedtoanindi\idualatthetimeof issue. Highlights in PatentActivity UnitedStateswhere7 outof9stateswith higherconcen- mid-1970's, notable increases in activity by inven- trations of independent inventor activity are located. tors from other Asian countries have occurred (See Figures 3 and 4.) recently. The UnitedStatesgranted morethan400 patents to South Korean inventors in 1991, com- Thecostofobtainingapatentin the UnitedStatesis pared to only 45 patents granted in 1986. During mostfavorablecomparedto thecostofobtaininga thesametimeperiod,thenumberofpatentsgranted patentIn othermajorpatentingcountries. to Taiwanese inventors grew from 208 patents to more than 900 patents. (SeeAppendixTableA-5.) The cost (as ofOctober 1992) ofobtaining a utility patent and maintaining patent protection forthe life of Thetechnologicalemphasisofpatentgrants to U.S. the grant is approximately $7,500 in the United States, inventorsandtoinventors from themajorforeign comparedto$7,866inJapan. Considerablyhighercosts patentingcountriesisonleadingedge technology. are associated with patenting in the European Patent Office (EPO). Typical filing, issueand maintenance fees Thesetechnologies include biotechnology, chemis- foran EPOpatentcan rangefrom$12,883forprotection try, communications, informationsystems, andaeronau- in one designated European country to $34,218 for tics. However, technologies that are emphasized by protection inthreedesignated Europeancountries. (See inventors from one country are less likelyto be empha- Figure 13.) Despite recent increases in the cost of sized by inventors from other countries. For example, obtaining and maintaining a U.S. patent, there has not information storage and retrieval technologies are more beenanysustained, negativeimpactonpatentactivityin emphasized by Japanese inventors who patent in the the United States. United States than by inventors from other countries. (See Figure 7.) Nearlyhalfofallutilitypatentsareforinventionsby residentsofforeignnations whoapplyforpatent About83percentofutilitypatentsremainin force protectionin the UnitedStates.4 followingpaymentofa fouryearmaintenancefee. In 1971, only 29 percent of all utility patents were Utility patent protection typically lasts for 17 granted to residents of foreign countries; by 1991 this years. However, patent owners are required to figure had grown to 47 percent. Thisgrowth reflectsthe make periodicmaintenance fee paymentstomain- increasingimportanceofinternationaltradeandthehigh tain this protection past4, 8 and 12 years from the value placed on United States markets. Because patent date of issue. About 83 percent of utility patents rightsdonotconveyfromonecountrytoanother, foreign remainin forceafter4yearsand63percentremain inventorsare likelytoobtain patentprotection in several in force after 8 years. (See Figure 11.) countries, particularly if the invention has significant commercialvalueinthosecountries. Byobtainingpatent Sources of protectionintheUnitedStates,theforeignownerhasthe USPTO right to exclude all others from making, using orselling Patent Data at the the patented invention in the United States. Foreign inventorswhoseekpatentprotectionintheUnitedStates The USPTO maintains one ofthe largest, most are more likelyto resideinJapan, Germany, the United comprehensive collections of technological litera- Kingdom, France, Canada, Switzerland, Italy, Sweden or ture in the world. More than 5 million patents the Netherlands. (See Appendix Tables A-l and A-5.) granted by the United States comprise a virtually continuous record of new invention and discovery ThecountriesofAsiashowincreasinglevelsof that covers more than 200 years of United States patentactivityIn the UnitedStates. history. While Japanese inventors have dominated for- The who, what, where and when of each new eign patent activity in the United States since the invention are disclosed in patent grants that span 4Trendsin foreign patentactivityare notnecessarilyrepresenta- tiveofallcountries,sinceforeignpatentingintheUnitedStatesis dominated by Japan, which received 46 percent of all foreign patents granted in 1991. Many other countries have shown decreasedactivityintheUnitedStatesatvarioustimes;however, thisisnotreadilyapparentfromtrendsintotal foreign patenting, due tothestrength and growth ofJapanese patenting. U.S. Patentand Trademark Office 1 the entire spectrum oftechnology. As technology functions is available to the general public.5 continuestoexpand, patentgrantsareaddedtothe USPTO collection at the rate of nearly 100,000 MoniFtionralilnyg, (tPhAeLMP)asteynstteAmppisliucsaetdiobnyatnhde ULSoPcaTtOiotno patents peryear. trackthestatusand location ofpatentapplications. Traditionally, the patent collection has served The TAF data base, APS and PALM are the primary the information needs ofinventors, theirattorneys sources of data used to identify the patent activity andagents,andpatentexaminersinvolvedindeter- trends described in this report. miningthepatentabilityofnewinventions. In more recentyears, however, thepatentfilehasbecomea valuable resource for a much larger community of Trends in Patent Activity-U.S. users who research patent data from a decidedly Inventors different perspective. Within numerous academic andprofessionaldisciplines,thereisgrowingrecog- nition that trends in patent activity, observed over Trends in patent application filings and grants time and involving large numbers of patents, can showthetechnologicaloutputofU.S. inventors has indicate a great deal about the status ofsocial and steadily increased during the past decade. The economicforcesthatguideandinfluencetheinven- record numbers ofpatent applications received by tive process. the USPTO in three of the past four years are a testament to the increase in inventive activity that The development of computerized data bases has occurred amongindependentaswell as corpo- and retrieval systems at the USPTO has stimulated analysis of trends in patent activity and technical rateinventors. Equallyimportantistheobservation development. Enormous quantities ofpatent data that inventive activity is increasing in geographic have now become readily available for analysis. regions of the country not previously considered centers of technological development. Trends in Threedatabasesin particularhaveassistedthe applicationsandgrants,ownership, andgeographic USPTO in its mission to administer patent law, to distribution of U.S. inventors are described in this disseminatepatentdataandtofurtherthecompeti- section. tivenessoftheUnitedStatesintheworldtechnology market. USPTO's TechnologyAssessmentForecast ApplicationsandGrants. program (TAF)databasecontainsbibliographicand status information on U.S. patents issued since The per capita increase in U.S. inventor patent 1963. These data provide the basis foranalysis of activity since 1984 reverses a general decline in domesticandforeignpatentactivityandtechnologi- patent activity from 1971 to 1983. Between 1971 cal development. Statistical summaries and trend and 1983, the application filing rate of U.S. inven- analyses are disseminated to public and private tors fell from 35 applications per 100,000 U.S. organizations, othergovernmentagencies, and the population to 25 applications per 100,000. This general publicthrough the useofstandard publica- represented a drop in the number of U.S. inventor tions and customized reports. application filings from more than 70,000 in 197 In addition, rapid access to the technical infor- to less than 60,000 in 1983. mation disclosed in patent documents is provided Beginning in 1984, application filing rates by through USPTO's Automated Patent System (APS). U.S. inventorsbegantorisesteadily. In 1990, when The APS contains the images of all patents issued more than 36 applications per 100,000 U.S. popu- since 1790 and the full text ofmore than a million lation were received—the highest application filing patentsissuedsince 1971. In addition to itsuse by rateinmorethan20years. Inactualnumbers,more patentexaminerstoperformtextsearchandclassi- than 90,000 applications from U.S. inventors were fied image searching, access to APS text search received in 1990. (See Appendix Table A-l.) The 5APStextsearchcapabilitieshavebeenavailabletopatronsofthe USPTO Public Search Room since 1989; more recently, tert search access has been available to patrons ofselected Patent and Trademark Depository Libraries. Highlights in PatentActivity 1991 application filing rate dropped slightly to 35 Figure2. applications per 100,000; however, this decline may represent only a temporary fluctuation in the Number of Utility Patent Grants by data.6 Thedeclineinapplicationfilingsin 1991 may Ownership Type, U.S. Residents be partly response to the substantial increase in 1971-1991 patentapplicationfeesin 1991 (from$495to$800 for small entities 7 and from $990 to $1,680 for large entities). An unusually large, but temporary drop in application filings in 1983 also coincided with a substantial increase in application fees. The USPTOexpanded itsstafftoreduce "patent pendency time" (i.e., the period between applica- tion filingand patent issue orabandonment bythe applicant) from 25monthsin 1984to 18monthsin 1990. In 1984, ab—out38,000patentsweregranted 10- to U.S. inventors equivalent to 16 patents per U.S.Government 100,000 U.S. population. Despite yearly fluctua- 1071 1975 1970 1983 1987 1991 tions in the number of grants issued, the general trend in patent grants has been upward; by 1991, more tha—n 51,000 patents were issued to U.S. dent U.S. inventors increased from 23 percent in inventors equivalent to 20 patents per 100,000 1983 to 26 percent in 1989. U.S. population.8 Patenting by the U.S. Government declined steadilyfrom 1971 when 4 percentofutilitypatent Ownership. grantswereissuedtotheU.S. Government,to 1987 whenonly2percentofutilitypatentswereissuedto Mearlythree-fourthsofallpatentsissuedtoU.S.- resident inventors are owned by corporations and the U.S. Government. 9 The U.S. Government has other private organizations. (See Figure 2.) The continuedtoreceiveabout2percentofutilitypatent grants each yearsince 1987. remainingpatentsareownedbyindependentinven- tors(i.e., individuals)orU.S. Government organiza- tions. Between 1971 and 1991, corporations re- GeographicDistributionofPatentActivity-AllU.S. ceived 70to74percentoftheU.S. inventorpatents ResidentInventors. issued eachyearandthisshare hasremained at 72 percent for the past three years. (See Appendix Patent activity in the United States is concen- Table A-2). trated in the northeast, north central and, to some — extent, western states particularly California. 10 ThedistributionofU.S. inventorpatentsgranted Historically, greaternumbers ofpatentgrants have toeachtypeofownerhasbeenrelativelystableover been issued to inventors residing in those states time, although independent inventors (the second than to inventors in other states. The number of largestgroupofpatentowners)appeartobemaking patentgrantsissued isan importantindicatorofthe small gains in the total share ofpatentgrants. The amount of inventive activity within a particular shareofU.S. inventorpatentsassigned to indepen- geographic area. Moreover, by measuring patent 6Application filings increased at theend offiscal year (FY) 1982 inventorsmatureintopatents(basedonan unpublishedUSPTO/ inanticipationofincreasedfilingfeesatthebeginningofFY 1983. TAF Report). The numberof patentgrants can also showshort term fluctua- 9 Thedecline in patentingbythe U.S. Government isdue in part tions, due to the USPTO budget, policyand staffresources. For tothe increased useofStatutoryInvention Registrations (SIR) by example, insufficientresourcestoprint patentsin 1979 resulted theGovernment. SIRsaresometimesusedbytheGovernmentin in a temporary drop in the number of grants issued that year. lieu of patents to disclose the technological information about Generally, however, patentgrantdataare more likelythan appli- newinventions. Restrictionsonthemanufacture,useandsaleof cation filingdata to show temporary fluctuations. patented inventions do not applytoSIRs. 7 Small entities consist of independent inventors, small busi- 10Asearlyas 1900,Californiawasoneofthemoreactivepatenting nesses with less than 500 employees and non-profit organiza- states, ranked 10th out of 45 states in the number of patent tions. grants, (USPTO, TechnologyAssessment&Forecast,7thReport, 8Percapitagrantratesarelowerthanpercapitaapplicationrates, March 1977) since only about 57 percent of applications from domestic U.S. Patentand Trademark Office