Armonk, N.Y.-based IBM was the most innovative company in the world, taking back the top spot from Korean electronics behemoth Samsung. The U.S. Patent Office granted the information technology giant 9,043 patents last year, nearly triple the number of patents it received a decade ago.
In an interview with 24/7 Wall St., Larry Cady, a senior analyst with IFI Claims Patent Services, explained how and why a single company can be granted so many patents in a single year. When companies like IBM come up with an innovative product or concept, not only do they patent that specific product, but also they build a so-called “patent wall” around it. Cady used the hypothetical example of a company inventing a new kind of 3D printer. The company would “imagine all possible variations of that particular 3D printer and patent each one of them. So one patent on a 3D printer becomes 100 patents, and then those become 1,000 patents,” Cady said.
No matter the company or the industry, creating new concepts and products worthy of a patent is contingent on research and development. “Patents track very closely with corporate R&D spending,” Cady said.
How much a company allocates to R&D often can be dictated by factors outside of its control. In periods of economic stagnation, for example, companies may not have the resources to allocate to R&D, and innovation can slow as a result. Since it typically takes the Patent Office several years to issue a patent after it is submitted, there can be a lag.
To illustrate this point, Cady referenced the decline in U.S. patents from 2014 to 2015. “When we say that U.S. patents declined in 2015, that really means that patent applications and R&D declined in 2009 and 2010,” Cady said. The country was suffering from the worst effects of the Great Recession during those years. Steady economic growth in the United States suggests the patent grants will continue to climb for at least the next few years.
Growth in the total volume of patents does not tell the whole story. Trends also emerged within each industry and country. For example, though Chinese companies accounted for only 3.5% of all U.S. patents in 2017, the number of patents granted to Chinese companies was up 28% from the previous year.
The growth in patents granted to Chinese companies was driven by several factors. “[Chinese companies] are moving from being contract manufacturers to trying to do their own R&D,” Cady said. “They are also very serious about moving into the US market.” Chinese companies with the most U.S. patents include Huawei, a telecommunications company that was granted 1,616 patents last year, a 19.4% increase from the previous year.
The fastest growing technologies, as measured by patents grants in 2017, include machine learning, autonomous vehicles, and aerial drones. Companies that are driving much of that growth include IBM, which received 11.8% more patent grants in 2017 compared to the year before; Toyota, which received 30.3% more patents; and Boeing, which received 11.6% more patent grants.
To identify the 50 most innovative companies, 24/7 Wall St. reviewed the 1,000 companies receiving the most patent grants U.S. Patent and Trademark Office grants in 2017, according to data provided by IFI Claims Patent Services. IFI produces this data based on the entity listed as holding the patent, and that entity often is a division or subsidiary of the larger company. In order to arrive at a figure that more closely reflects a company’s total, 24/7 Wall St. combined the grants awarded to a company and its subsidiaries. It is important to note that while IFI Claims Patent Services provided the data based on USPTO grants, 24/7 Wall St. aggregated the grants of multiple entities under the same parent corporation. This number is therefore an estimate as it excludes any patent-holding subsidiaries of a company that do not share the company’s name, and as it does not include companies outside of the top 1,000 patent grantees.