Executive Summary

Key takeaways:

  • U.S. patenting and trademark activities are concentrated in certain areas of the country, with the highest rates on the east and west coasts, around the Great Lakes, and in parts of the Southwest.
  • U.S. patents are increasingly global. Inventors residing in the United States are named on fewer than half of U.S. Patent and Trademark Office (USPTO) patents.
  • Inventors from Japan and the European Union make up the largest shares of USPTO patents granted to foreign inventors.
  • While inventors from China account for a relatively small number of USPTO patents, over the last decade, these have increased more than 10-fold. More than half of these are in electrical engineering.
  • Together, biological and biomedical sciences and health sciences are major drivers of U.S. patenting activity; these are the top cited publication fields in USPTO patents across all U.S. sectors—academia, business, and federal government.
  • Based on patenting across national jurisdictions, patenting activity is increasing in many parts of the world and particularly China; in 2020 inventors from China were granted almost half of all international patents.
  • Electrical engineering is a strong area of invention activity with nearly half of all international patents granted to U.S. inventors in 2020 in this area.
  • Coauthorship of peer-reviewed publications shows that U.S. businesses collaborate extensively with U.S. academic researchers and with foreign authors.
  • Academic research and licensing of the resulting technology leads to new startup firms, which are most often founded within the state of the university producing the technology.
  • Federal agencies contribute to technology transfer through licensing and research partnerships as well through the sharing of open-source software.
  • Innovation rates were much higher for firms that manufacture communications equipment or publish software, where two-thirds of these firms introduced a new product or process, compared to the 27% overall rate for firms in the United States.
  • Venture capital continues to spread globally, and investors from China are increasingly providing capital both in China and internationally.
  • U.S. venture capital continues to flow to information technology firms, a sector that includes innovation intensive hardware, software, and communications services. This investment increased 31% from 2019 to 2020.
  • Women and underrepresented demographic groups are increasing their participation in patenting and firm-level innovation.

Invention, knowledge transfer, and innovation are three interrelated concepts that form the organizing framework for assessing the U.S. and global science and engineering (S&E) enterprise in this report. Using indicators of activity and output by sector, industry, and technology area, this three-part approach highlights trends, strengths, and opportunities.

Patenting and trademark data represent early and late stages of innovation activity. Both show that these activities are geographically concentrated in the same regions of the United States, suggesting opportunities for these activities to become more broadly distributed throughout the country. Consistent with the trend of increasing internationalization, of the 354,000 utility patents awarded by the USPTO in 2020, about half were awarded to foreign inventors. Among utility patents awarded to a U.S. entity, businesses accounted for 85%, individuals for 8%, universities for 4%, and the government for 1%.

Analysis of the literature cited in patent applications provides insight into knowledge transfer across sectors, fields, and international boundaries. Peer-reviewed publications from U.S. academic institutions accounted for almost a third (31%) of the citations in USPTO patent applications to S&E literature in 2020. Furthermore, articles in biological and biomedical sciences and health sciences received the most citations, indicating that publication is a major output of these areas and that they are drivers of innovation. Additionally, U.S. business-authored publications are increasingly coauthored with U.S. academic researchers; more than half (56%) of U.S. business-authored publications share a U.S. academic coauthor. International collaboration is also increasing, with 40% of business-authored publications having one or more authors from another country. Both international collaboration and collaboration across sectors within and between countries contributes to globally important innovation activity.

Similar to publications, technology transfer represents a mechanism to evaluate the transfer of knowledge from academic and government sectors to the industry sector. Universities reported a continued increase in patenting and technology licensing activity, including through licensing to startup firms. About a fifth (19%) of the almost 8,000 new university licenses or options on licenses went to startup firms in 2019. Through the federal government, the Small Business Innovation Research (SBIR) program and its newer partner, the Small Business Technology Transfer (STTR) program, provided support to more than 4,000 firms in 2020.

Two new topic areas, citizen science and open-source software (OSS), provide insight into efforts by the federal government to promote public participation in and understanding of science and distribution of federal research output into the public sector. By engaging individuals or organizations in organized scientific projects, citizen science activities transfer knowledge to the public. In 2020, there were 268 federally supported citizen science projects. In the last decade, knowledge transfer has been increasing according to data on the use of OSS. In 2009, only the Department of Energy (DOE), the Department of Commerce (DOC), and the National Aeronautics and Space Administration (NASA) used open-source platforms to share software with other users; by 2019, 21 federal departments and agencies did so.

Innovation intensity is a measure of the share of all firms within a group that report any innovation—the release of a new product or process—within a given period. Based on data from 4.6 million firms that responded to the Annual Business Survey (ABS) regarding the introduction of a new product or process from 2015 to 2017, the software publishing industry has a high rate of innovation (66%). This greatly exceeds the average innovation intensity of 27% for all U.S. firms and is matched by two industries that are part of the manufacturing industry. Firms that manufacture communications equipment (66%) or instrumentation (64%) have similar innovation intensities to that of the software publishing industry. Chemical manufacturing also has a higher-than-average innovation intensity at 55%, which is largely driven by the innovation intensity of the pharmaceutical industry.

Firm owners reporting their ethnicity as White make up 86% of the total companies and had a 26.5% innovation intensity. Thus, innovation by firms owned by Whites largely drives the overall innovation rate of 27%. However, the innovation intensity survey data suggest that women and underrepresented minorities are making marginally more frequent contributions to innovation in business than male and White firm owners, respectively. From 2015 to 2017, majority-female-owned firms reported slightly higher innovation intensity (27.5%) compared with majority-male-owned firms (26.2%). However, these slightly higher innovation intensities have a limited impact on overall innovation intensity because majority-female-owned firms represented 21% of all firms. For the same 3-year period, 28.0% of firms whose owners reported their race as Black or African American and 28.7% of business owners who reported their ethnicity as Hispanic or Latino reported an innovation.

Although most aspects of the economy reflected pandemic-related disruptions, as indicated by newly registered trademarks in the United States, innovation activity related to COVID-19 was strong. Newly registered USPTO trademarks, which can indicate release of a new product into the market, dropped 9% from 2019 to 2020. This decline contrasts with the previous decade of consistent growth. In contrast, the swift development of COVID-19 vaccines demonstrated the value of invention and knowledge transfer based on basic research and development (R&D) to facilitate the rapid distribution of vaccines using a novel technology.