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Affluent Christian Investor | August 23, 2017

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America Rules the Innovation World

By some metrics, China may already be the world’s biggest economy. But America is still #1, and by a long shot, in an equally important field: number of patents registered. Patents may not animate as many discussions as GDP or jobs, but they too are an important measure of economic strength.

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A patent, in short, is government protection of intellectual property. Inventors register their idea, and are granted the exclusive right to benefit from the products or processes that are developed from it. If others copy the idea or its applications, even if only in part, they risk prosecution. By the protection it offers, the patent system makes the research and development that precedes an invention, often a costly and lengthy process, worthwhile. Patents are typically limited in time, giving the inventors an advantage in establishing a market presence, while eventually also allowing others to compete and profit from the invention.

This patent system has been a major engine of technological progress, from the 19th century to this day. It remains especially relevant for hi-tech businesses, where the ability to capitalise on innovation means the difference between success and failure. Two recent examples of patents in the news:

– Apple has patented a screen technology capable of reading fingerprints that does not require a dedicated sensor. The design feature is rumored to be included in the upcoming iPhone 8.

– And a Texas court has ordered Google to pay $20 million plus future royalties to the holders of three patents for a system that protects computers from malware. The court ruled that Google had breached the patent by using part of that system for its web browser Chrome.

As the graph above shows, the dominant position of the U.S. in the world of patents is such that many of the states by themselves outshine most of the runner-up countries – Japan is the only country that comes close to equalling the U.S. as a whole.

The individual U.S. states are shown in the circle at the center of the graph, each with the number of patents held by inhabitants of that state. The states are also scaled to reflect the total number of patents, and colored to reflect the number of patents relative to the number of inhabitants. The figures are provided by the U.S. Patent and Trademark Office, and refer to all patents granted from 1977 to 2015.

States Where Most Patents are Created

1. California (638,358 patents)

2. New York (222,328)

3. Texas (193,631)

4. Illinois (142,416)

5. New Jersey (140,358).

That puts California ahead of Germany, with 365,627 patents the second-placed foreign country after Japan. New York and Texas each outshine South Korea, third on the foreign-country list with 166,353 patents. All by itself, Illinois beats the UK, fifth-ranked foreign country, with 140,227 patents. And New Jersey does better than France, sixth with 139,866 patents.

Rounding out the U.S. top ten are:

6. Michigan (132,542)

7. Massachusetts (127,045)

8. Pennsylvania (123,764)

9. Ohio (123,505)

10. Florida (96,787)

Both Michigan and Massachusetts have more patents than Canada (#7); Pennsylvania and Ohio both have almost double the patents of Italy (#8); and Florida has almost double the number of patents held in the Netherlands (#10).

The fact that the ten ranking states in the U.S. for holding patents beat all but the first of the next ten patent-holding countries says a lot about American leadership in this field. But not as much as the total figure itself: all fifty states combined hold a total of 3.03 million patents. That is almost three times as much as Japan, with 1.07 million. And more than eight times as much as Germany.

Countries Where Most Patents are Created

1. United States (3,030,080 patents)

2. Japan (1,069,394 patents)

3. Germany (365,627)

4. South Korea (166,353)

5. Taiwan (162,732)

6. United Kingdom (140,227)

7. France (139,866)

8. Canada (123,904)

9. Italy (62,148)

10. Switzerland (57,135)

States Where Most Patents are Created per 1000 People

While California may lead the nation in absolute terms, the state with the most patents relative to population is Massachusetts. Ranked by ‘invention quotient’ (# of patents per 1,000 inhabitants), here is the U.S. top ten:

1. Massachusetts (19.4)

2. Connecticut (18.8)

3. Vermont (18.2)

4. Idaho (17.8)

5. California (17.1)

6. Minnesota (17)

7. Delaware (17)

8. New Jersey (16)

9. New Hampshire (14.3)

10. Michigan (13.4)

Countries Where Most Patents are Created per 1000 People

1. United States (9.3)

2. Japan (8.4)

3. Taiwan (6.9)

4. Switzerland (6.9)

5. Sweden (5.1)

6. Germany (4.5)

7. Israel (4.3)

8. Finland (4.2)

9. Canada (3.5)

10. South Korea (3.3)

And where in all of this is China? Not high enough to figure on this map, but still fairly decent: 12th in the international ranking for total number of patents. That puts it before Israel and after Sweden. But with no more than 45,366 patents registered in the People’s Republic, that would place it between Georgia and Virginia in the U.S. states ranking, in the middle of the pack – and just about nowhere on the global invention quotient ranking.

If patents truly are a measure of technological advancement and future economic success, then it will be a while yet before China overtakes the U.S.

Originally published on How Much, a cost-information website.

 

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