SCIENCE & ENGINEERING INDICATORS

Key takeaways:

• New and improved products and processes emerge from the U.S. science and engineering (S&E) enterprise through an interconnected system of invention, knowledge transfer, and innovation. This system is characterized by both competition and collaboration.
• Intellectual property registration data, such as patents and trademarks, provide indicators of invention and the introduction of new products; they are growing in number as digitization increases the importance of intellectual property protection. Patent and trademark applications more than doubled globally between 2008 and 2017, with middle-income countries worldwide rapidly increasing their participation in this activity.
• Engineering-related patents, both electrical and mechanical, made up about half of all patents granted by the U.S. Patent and Trademark Office (USPTO) in 2018. Two areas of information and communication technologies (ICT)—computer technology and digital communication—grew quickly since 2000 and received particularly large numbers of patents. Patent-intensive industries in the United States are also research and development (R&D) intensive; that is, these industries spend higher proportions of their sales on R&D.
• Patent family data provide an internationally comparable count of inventions, notwithstanding variations in strategic interests and patent standards. In 2018, China received about half (334,000) of these global patents, an eightfold increase over the prior decade. Inventors from the United States, the European Union (EU), Japan, and South Korea each receive a smaller number of these patents than those from China.
• Universities and federal labs invent and patent as well as transfer knowledge and technology through research collaborations, technology licensing, and support for startups. These activities are aimed at bridging the risky steps of invention, financing, development, and commercialization.
• Venture capital provides external funding to finance the introduction of viable new technologies and products into the market. The large economies of the United States and China receive the greatest amounts of this funding. The EU and the rest of Asia receive significantly less.
• One in six U.S. firms with five or more employees report having introduced an innovation between 2014 and 2016. Industries active in the digital economy have an outsized impact on innovation rates. ICT-producing industries report some of the highest rates of innovation.

Innovation brings new products and technologies into society through an interrelated system of activities by the business sector, universities, government entities, and individuals. Relationships among institutions underpin the environment in which ideas become innovations and diffuse through society. This innovation system environment is complex, encompassing financing, public infrastructure, tax and regulatory policies, intellectual property protection, and social attitudes toward risk. Three distinct but interrelated components of this environment are invention, knowledge transfer, and innovation. This report covers the composition and trends of these components. The report primarily uses U.S. and international statistical and administrative data including data from the USPTO, National Center for Science and Engineering Statistics, Bureau of Labor Statistics, National Institute of Standards and Technologies, and, internationally, the Organisation for Economic Co-operation and Development and the World Intellectual Property Organization.

Patents are indicators of invention that cover part of inventive activity. Companies choose a variety of strategies to protect their inventions, including trademarks and trade secrets; many inventions are also shared through open access. Growth in patenting also reflects both inventive activity and an overall trend toward increased importance of intellectual property protection, especially for information that can be digitized. Globally, as economies participate in increasingly digital international trade activity, intellectual property protections in middle-income countries have risen.

The USPTO issued over 300,000 patents in 2018, almost double the amount issued in 2008. Engineering-related patents, both electrical and mechanical, comprise about half of all USPTO patents. Computer technology and digital communication, both ICT-related areas within electrical engineering, receive notably large numbers of patents.

Of the 309,000 patents issued by the USPTO in 2018, more than half (53%) were granted to foreign inventors, growing from about 46% in 2000. Japan and the EU continue to account for the largest numbers of foreign USPTO patent grantees, followed by South Korea. Although inventors from China account for a relatively small number of USPTO patents, they have seen a rapid increase in the numbers of these patents granted.

As in the United States, about half of the patents granted in any recognized national or regional jurisdiction (patent families) worldwide are electrical or mechanical engineering patents. In this global measure, China receives about half of the patent families issued; inventors from the United States, the EU, Japan, and South Korea receive a smaller number of these patents than inventors from China.

Trademarks protect the names and symbols used with products in national and regional markets and historically have primarily been an activity of high-income economies. With the rapid worldwide growth of trademark applications since the turn of the century, this has changed. Middle-income countries Brazil and China make up much of this growth, with China’s contribution large and fast growing.

The USPTO registered 273,000 trademarks in 2018, including 184,000 to U.S. assignees. USPTO trademarks to foreign assignees make up an increasing share of total trademarks; the number of foreign trademarks has grown 37% over the last decade, compared with a 17% increase in the number of trademarks to U.S. assignees.

Knowledge transfer is a key component of the U.S. innovation system; this takes place through market transactions and licensing as well as through formal and informal collaboration activities of universities, federal labs, and researchers in the business community. Technology transfer programs focus on bridging the risky steps of invention, financing, development, and commercialization.

Researchers from universities and federal labs collaborate with business-sector researchers directly through joint research and publications; both the number and share of these articles have increased over the last decade. The U.S. business sector coauthored 27,000 S&E articles with U.S. academics and 7,000 with government authors in 2018. The number of internationally coauthored articles by U.S. business authors tripled over the same time. Research transfer can also be less direct: two-thirds of citations to research articles in patent applications are to articles with academic affiliations.

A second indicator of knowledge transfer is the sharing of university and federally developed technology and inventions through collaborative agreements and licensing of technology. Universities reported 46,000 active licenses in 2017 as well as over 1,000 university-affiliated startups using licensed technology. Many startups continue to survive as ongoing businesses, with universities reporting more than 6,000 startups still in operation in 2017. Federal labs reported almost 9,000 active licenses in FY 2016. Federal agencies directly support technology transfer of their research through awards to small businesses for innovation, commercialization, and technology transfer; this amounted to over $3 billion to over 5,000 awardees in 2018.

As new technologies develop, venture capital flows play a key role in transforming ideas into innovation—the actual introduction of new or improved products and processes. Over the last decade, the venture capital market has shifted from a U.S.-centric structure toward a more globalized market with the Asian region growing rapidly. The United States received 44% ($119 billion) of total global venture capital funds, followed by China with a global share of 36% ($97 billion). Within the United States, two-thirds of this venture capital investment is focused in ICT and health care. ICT-producing and health care–related industries in the United States report introducing new products and processes at a higher rate compared with the U.S. average of one in six (between 2014 and 2016).

Over time, the overall impact of innovation and S&E knowledge in society extends well beyond innovating firms. In terms of economic output, new products and processes can increase output or decrease costs for others outside the firm. The speed and direction of the changes in ratio of outputs to inputs can be measured as multifactor productivity. This measure has risen more slowly in the United States and other high-income countries in the last decade relative to earlier decades.