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In the numbers

 

Using patent output to gauge Illinois' innovation trajectory

 

Utility patent output1 is one of the leading indicators of innovation, reflecting several factors: the concentration of companies in innovation-focused industries such as semiconductors or pharmaceuticals; the level of public and private sector R&D funding; and partnerships between the private sector and research institutions. As a product of these economic assets contributing to entrepreneurship and high-tech employment, patent output is a good comparative measure of the relative robustness and dynamism of specific innovation ecosystems. As this month’s Index reveals, Illinois has consistently ranked among the top ten states for patent output, and targeted efforts to support innovation can help Illinois maintain its position.

 
 

A broad base of innovation

Over the past five years, 579 private and public organizations from Chicago have been granted patents, including 407 in 2010—more than any year since 2006. From 2006 to 2010, Chicago ranked seventh among metropolitan statistical areas (MSAs) by patent output, with 2,933 patents granted in 2010 alone.

Companies such as Motorola, Lucent Technologies, Abbott Laboratories, UOP, and Illinois Tool Works have led the region, generating steady levels of patent output since the mid-1990s. More recently, Caterpillar, University of Illinois, and Trading Technologies International have joined the list, emerging as significant contributors to Illinois’ innovation ecosystem.

 

Staying competitive

With a 9 percent growth in patent output from 2006 to 2010, Chicago is one of the top MSAs for innovation. However, when compared with MSAs such as Boston, New York, San Diego, and San Jose, which have surpassed their 2006, pre-recession level of patent output by 24 to 35 percent, Chicago’s growth has been relatively flat. The rapid growth in patent output in other major MSAs is driven by large clusters of biopharmaceuticals and telecommunications companies. In smaller MSAs such as Austin and Minneapolis, semiconductor patenting has been particularly strong.

Communications is a major industry in Chicago despite a decrease in patenting output, especially in multiplex communications,2 which dipped from 174 patents in 2006 to 117 in 2010. Meanwhile, Boston, Los Angeles, New York, and San Francisco have seen substantial growth in multiplex communications―the fastest growing subclass of communications technology by number of patents.

Growth in some Chicago industries has offset decreases in others. For example, financial and data processing expanded more rapidly than any other industry in the Chicago MSA, growing from 29 patents in 2006 to 199 by 2010. Similarly, MSAs such as New York and Los Angeles expanded rapidly in data processing patents focused on proprietary analytical technologies in the finance industry. This technological subclass of patents has become a major contributor to patent output in the most innovative MSAs.

Boosting the region's prospects

In an analysis of patent growth and diversity, McKinsey & Company categorized Chicago as a “silent lake”—an innovation stage characterized by low growth and dominated by very large established companies. In that study, Chicago scored low on momentum but demonstrated strong diversity in a handful of sectors, particularly communications and advanced manufacturing.

In some cases, a powerhouse innovator can boost a state’s output so significantly as to skew its place in the rankings, as Microsoft has in Washington, where it accounted for more than 3,000 patents, or two-thirds of the state’s total.3 Illinois’ patent landscape is not dependent on a single company or industry; the state has a broad base that can serve as a dynamic source of innovation—an integral component in continued growth.

Maintaining performance and catalyzing new growth

Similar to Chicago, Illinois has high total patent output but its growth is slowing. Since the early 1960s, Illinois has ranked in the top ten states by total patent output, and from 2006 to 2010 it ranked seventh by number of patents granted. In spite of this strong performance, Illinois’ position has slipped over the past decade. Illinois’ total patent output decreased 5.7 percent from 2000 to 2010, and the state has yet to exceed its high water mark for the decade of 3,832 patents in 2000.

Illinois’ patenting activity has expanded far beyond its base of manufacturing and agriculture to include business services, life sciences, education, and other industries. A few of Illinois’ tech-based clusters—biopharmaceuticals, information technology, and aerospace—also showed growth from 1998 to 2009.4 However, greater output in these and other high-growth industries would translate to greater overall patent activity. One initiative promoting growth in research, product development, and company acceleration is the Illinois Science and Energy Innovation Trust, which will provide $22.5 million in capital and resources to support or utilize innovative technologies or other methods of modernizing the state's electric grid.

World Business Chicago's recently released Plan for Economic Growth and Jobs includes strategies to support the region’s entrepreneurial community and strengthen the connection between research institutions and private industry to boost innovation. The recent OECD report on the Chicago tri-state metropolitan area featured in this issue’s News section, as well as CMAP’s GO TO 2040 plan, have also concluded that Chicago and Illinois need to do more to support cooperation between private industry and local research institutions.

1 Patents can be classified as design, plant, or utility patents. Utility patent trends are commonly used as an indicator in innovation research. According to the U.S. Patent and Trademark Office (USPTO), a utility patent is “granted to anyone who invents or discovers any new, useful, and non-obvious process, machine, article of manufacture, or composition of matter, or any new and useful improvement thereof.” All mentions of patent output in this issue refer to utility patent output only.

2 Technologies that allow for multiple sources of analog signals or digital data to be combined into one signal. This communication technology is essential to digitization.

3 Matthew Finnegan, "U.S. claims record number of patents in 2010, IBM leads," Techeyenet.com, January 10, 2011. (http://news.techeye.net/business/us-claims-record-patent-numbers-in-2010-ibm-lead)

4 See the November edition of the Innovation Index for more information on Illinois' clusters.

Access all of the MSA patent data

Access all of the state patent data

 
 
  Brought to you by:  
  Chicagoland Chamber of Commerce  
  Chicago Metropolitan Agency for Planning  
  Illinois Science & Technology Coalition  
  World Business Chicago  
  In partnership with:  
  Illinois Innovation Network  
 
 
  News and events  
  OECD Study Recommends Regional Cooperation to Realize Innovation Potential  
  On March 9, 2012, the Organisation for Economic Co-operation and Development (OECD), in tandem with the Chicagoland Chamber of Commerce, released The Chicago Tri-State Metropolitan Area, United States report, the 23rd OECD territorial review and the first of its kind in the United States.

At the report release event, OECD Secretary-General Angel Gurría noted that the region derives its economic power from a strong manufacturing base and capacity for innovation, as well as human capital that is young, ethnically diverse, and educated. The secretary-general noted, “One thing we’ve learned: what happens in the Chicago region affects the economy of the entire country.” However, the region faces several challenges―most acutely, its consistently high unemployment and a lack of dynamism to propel the economy forward.

The tri-state study classifies the Chicago region as a high-performing “Industrial Production Zone” but reveals that Chicago falls short compared with other areas it labels “Knowledge and Technology Hubs.” The region could achieve higher levels of success by increasing investment in R&D and patent activity and improving coordination among entities within the tri-state region.

Read more here
 
     
 
  Spotlight  
  Chicago Innovation Mentors  
  Chicago Innovation Mentors (CIM) connects the Chicago area’s leading universities, innovative scientists, talented students, and research funds with the technology-driven needs of today’s market. Founded by Northwestern University, the University of Chicago, the University of Illinois, and the iBIO® Institute, CIM helps to catalyze the commercialization of university technology in the Chicago area. CIM’s ultimate goal is to help ventures obtain patents, license intellectual property, raise capital, form partnerships, and launch companies that offer viable products and services.

Launched in 2010 with an initial focus on biomedical and healthcare opportunities, CIM matches experienced and supportive mentorship teams with innovators at a wide range of stages, from earliest idea to company formation. Prospective mentees―a faculty member, graduate/post-graduate student, or business manager affiliated with one of the sponsoring universities―serve as lead project director. Mentors work on a voluntary basis and include founders, CEOs, chief technical officers, and directors of companies. CIM addresses a perceived gap in the ability of entrepreneurs to commercialize technologies from Chicago’s universities on a consistent and wide-ranging basis. To date, CIM has matched 78 mentors with 33 active ventures. CIM will eventually add other institutions to build a more robust pipeline of translational research projects.

Read more here
 
  IllinoisVentures  
  IllinoisVentures is a seed and early-stage technology investment firm conceived and launched by the University of Illinois in 2006. Current investments reflect targeted practice areas in energy, device physics, advanced materials, biotechnology, medical devices and instrumentation, homeland security, and software. The firm brings together leading researchers and entrepreneurs to develop and articulate concepts, vision, and intellectual property including patents in dynamic companies with high growth potential. IllinoisVentures uses work conducted at Midwest universities and federal laboratories to start and build companies. Since being founded, the firm has led or collaborated on the initial funding for more than 40 new ventures focused on scientific and technological innovation across multiple domains.

Read more here
 
     
 
  Did you miss last month's newsletter on industry-funded R&D?