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Of places and patents : Tracking changes in the geography of U.S. innovation

Summary:
View on GeoFRED® The first U.S. patents were granted over 225 years ago, with three granted in 1790 according to the U.S. Patent and Trademark Office. Since then, these exclusive rights for inventions have become much more common and have expanded to cover a greater variety of inventions. In 2015, nearly 300,000 U.S. inventions received patents. The growth in patents has gone hand in hand with growth in innovation, but its geographic distribution has varied over time and continues to change. The map above shows the number of patents assigned in U.S. counties for the month of October 2016. The counties with more patents (shown by darker colors) tend to be clustered around urban centers such as Los Angeles, Phoenix, Denver, Miami, and Chicago. This distribution could be due to the

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The first U.S. patents were granted over 225 years ago, with three granted in 1790 according to the U.S. Patent and Trademark Office. Since then, these exclusive rights for inventions have become much more common and have expanded to cover a greater variety of inventions. In 2015, nearly 300,000 U.S. inventions received patents. The growth in patents has gone hand in hand with growth in innovation, but its geographic distribution has varied over time and continues to change.

The map above shows the number of patents assigned in U.S. counties for the month of October 2016. The counties with more patents (shown by darker colors) tend to be clustered around urban centers such as Los Angeles, Phoenix, Denver, Miami, and Chicago. This distribution could be due to the higher population density in these urban counties—that is, more patents may occur simply because there are more residents. Many of these cities are also home to universities that promote research and development in technology.

Regional patent approvals can rise and fall, and some regions can surpass others. The graph above shows monthly patent approval numbers for a specific geographical region that includes Los Angeles County and nearby Santa Clara County, colloquially known as Silicon Valley. Patents in Silicon Valley began to surpass those in Los Angeles as early as 2001. The graph below (of patents per capita) shows that population growth in Santa Clara County was not the cause of its spike in patent approval. The number of patents per thousand residents was nearly identical in both counties in the early 1980s, but now Silicon Valley’s is 15 times higher than Los Angeles’s.

What explains the rise of one county’s innovation over its neighbor’s? Silicon Valley has been a leader in technological development since the early 20th century thanks to its longstanding location for (i) U.S. Navy research, (ii) Stanford University and its graduates’ jobs in computer production, and (iii) robust venture capital investment. Since about 1995, however, Internet-based firms in Silicon Valley (Google, Apple, Amazon…) have been propelled to the forefront of the tech economy. The types of inventions these companies produce, such as software processes, have been covered by patent law only fairly recently. As these companies gained prominence and profit, the number of patents they were granted increased as well and the trends seen in these graphs came to light.

NOTE: We did notice the steep drop in Santa Clara County’s patent approvals over the past six data points. It is likely due to the time it takes to grant a patent, currently averaging 24 months. Washington, DC, has a similar drop-off in new patent assignments.

How these graphs were created: Go to GeoFRED and click “Build New Map” in the upper right. From the “Tools” menu in the upper left, select “County” for the “Region Type” and type “patent” in the “Data” section’s search bar. Select “new patent assignments by county,” and then select the desired date in the “Date” menu. For the first graph, search FRED for “patents Los Angeles” and select the relevant series. From the “Edit Graph” section, under the “Add Line” tab, search for and select “patents Santa Clara.” Change the frequency of both series to “Quarterly.” To transform the first graph into the second: For the Los Angeles series, use the “Edit Line 1” option in the “Edit Graph” section to search for “population Los Angeles” in the “Customize Data” search bar. Select that series and click “Add.” In the formula bar, write a/b and click “Apply.” Repeat this process with Line 2, searching for “population Santa Clara.”

Suggested by Maria Hyrc, Diego Mendez-Carbajo, and Katrina Stierholz.

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FRED Blog
The Federal Reserve Bank of St. Louis is the center of the Eighth District of the Federal Reserve System. This District includes Arkansas, eastern Missouri, southern Illinois and Indiana, western Kentucky and Tennessee, and northern Mississippi.

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