Useful Stats: US patents: A shift towards foreign-owned IP?

Patents serve as a powerful tool that promotes the disclosure and diffusion of new innovations while allowing inventors an exclusive period to commercialize and profit from the technology. The U.S., while a hub for innovation and a leader in patents, has experienced stagnation in the growth of Patent Cooperation Treaty (PCT) applications and USPTO-granted utility patents in recent years. Ever since 2021, China has surpassed the U.S. in PCT applications, and more than half of all USPTO utility patents are owned by foreign entities, including Japan and the European Union. 

This edition of Useful Stats explores U.S. Patent and Trademark Office (USPTO) and PCT patent data compiled from the National Center for Science and Engineering Statistics and data from the Business Enterprise R&D (BERD) survey. These data provide a background for how the patent landscape across the U.S. has changed over the past few decades.

USPTO is the federal agency responsible for granting U.S. patents and registering trademarks. Patents issued by USPTO are valid only within the U.S. and its territories and do not provide any legal protection abroad. USPTO issues three main types of patents: utility patents protect innovations themselves, design patents protect the design or look of an invention, and plant patent protects new and distinct plant varieties that have been artificially created. This article focuses primarily on utility patents.

Patents under the PCT, an international agreement which streamlines the process for inventors seeking patent protection across multiple nations, allow for an international comparison of patent data.

The Globalization of Innovation

From 2000 to 2020, the U.S. maintained its lead as the largest producer of PCT applications despite its numbers remaining fairly stagnant, as shown in Figure 1.

China, on the other hand, has seen explosive growth over the same period, surpassing the U.S. in 2021. In 2000, China had just 200 PCT applications, leaping to over 10,000 in around one decade and over 60,000 in two. China’s 2022 value of over 68,000 applications represents an over 27,000% increase since 2000. For reference, the U.S. grew just 71% over the same period. 

Other nations, such as Japan and South Korea, have also seen rapid growth over the past decades, increasing 544% and 2,029% respectively from 2000 to 2022.

Figure 1: PCT applications for selected nations, regions and/or economies, 2000-2022

While PCT data are for applications, it provides an international comparison of data that avoids double counting across jurisdictions. Note that due to the nature of the PCT, there will be fewer applications than each jurisdiction’s home issuer (e.g., USPTO), as many inventors do not require international protection. Refer to the NCSES coverage for more details on the data and associated notes.

Breakdown of USPTO utility patents by ownership

Shifting now to the U.S.’ domestic patenting authority, the USPTO, this section explores utility patent data by sector and owner’s nationality.

Since 2002, the earliest available year of data, there has been a positive trend in the number of utility patents granted by USPTO but a shift in the makeup of patent holders.

While those of foreign nationality have consistently held the largest percentage of USPTO utility patents, they now make up the majority; in 2022 foreign owners accounted for 54% of USPTO utility patents, up from 47% in 2002. Japan and the European Union have consistently been the largest owners of foreign USPTO utility patents, followed by China and South Korea.

When one piece of the graphical pie grows, another shrinks. While foreign owners have increased their relative share of USPTO utility patents, U.S. individuals and businesses have seen a decrease, down four percentage points and two points, respectively, from 2002 to 2022.

A decrease in share does not always mean a decrease in number. In the case of U.S. businesses, there has been a large increase in granted patents—in 2002, U.S. businesses were granted approximately 70,000 utility patents, while in 2022, they were granted nearly 130,000 (+83%). 

On the other hand, U.S. individuals experienced a decrease from 2002 to 2022, falling by over 1,250 (-9%), but with relatively large fluctuations. Granted patents were as high as nearly 15,160 in 2019 but as low as 9,200 in 2008 and 2009. 

Figure 2: Utility patents granted by USPTO to owners, by nationality and U.S. sector, 2002-2022

Breakdown of US-based business patents by employment and industry

Diving deeper into the data and looking at companies located within the U.S. that performed and/or funded R&D provides important context surrounding the domestic patent landscape.

In 2022, the most recent year of available data, the majority (69%) of issued patents captured by the BERD survey were for manufacturing industries, led by computer and electronic products, which include semiconductors and communications equipment. Transportation equipment followed, which includes aerospace products and parts and motor vehicles, bodies, trailers, and parts.

On the other hand, information leads the nonmanufacturing industries, followed by professional, scientific and technical services.

Note that the BERD survey includes only companies that performed or funded at least $50,000 of R&D and have 10 or more employees. Refer to the BERD data release for more details on the data and any associated notes.

These data and more are available in Figure 3, an interactive tree map of BERD survey patent data. Clicking on either “Manufacturing industries” or “Nonmanufacturing industries” will reveal another layer of data at the sectoral level, and clicking again will reveal the industry level within that sector. Hovering over any sector or industry will reveal the metric (e.g., patents issued) for the respective box. 

Figure 3: US patent metrics for companies located in the US, by industry, 2022

But what types of companies own these patents? BERD survey data reveal that the vast majority of these patents come from large companies employing at least 250 people, with the largest companies (25,000 or more employees) holding the largest share of issued patents. For more detail, refer to Figure 4 below.

Figure 4 includes the same patent metrics as Figure 3. To view the value associated with a given employment size or strata, hover over the respective slice of the figure.

Figure 4: US patent metrics for companies located in the US, by employment size, 2022

This page was prepared by SSTI using Federal funds under award ED22HDQ3070129 from the Economic Development Administration, U.S. Department of Commerce. The statements, findings, conclusions, and recommendations are those of the author(s) and do not necessarily reflect the views of the Economic Development Administration or the U.S. Department of Commerce.