Patent output by product field and R&D 

 intensity. Patents can also serve as an indicator 

 of the inventive output of specific industries. An 

 approximate correspondence exists between 

 product fields of patent activity and the in- 

 dustries which produce the patented invention. 

 The correspondence is less than perfect, since 

 many companies in a specific industry may be 

 active in a number of diverse product areas. An 

 invention produced by the electrical equipment 

 industry, for example, may have its principal 

 application in the aircraft product field. -'^ 



The relationship between patent output and 

 R&D intensity is shown in figure 4-13.'-' Those 

 industries which devote the largest proportion 

 of their resources to R&D (Group I industries) 

 are by far the largest producers of patented 

 inventions, accounting for 67 percent of all U.S. 

 patents granted between 1963 and 1973. Group 

 II industries — lower in R&D intensity than 

 Group I — produced about 29 percent of the 

 patents over the period, while the least R&D- 

 intensive industries (Group III) produced only 4 

 percent.-'^ During the same period (1963-73), 

 Group I industries were responsible for 80 

 percent of the total expenditures for industrial 

 R&D; Group II industries, 16 percent; and 

 Group III industries, 4 percent. 



Technological innovation 



Technological innovation occurs when new or 

 improved products, processes, or services em- 

 bodying advances in technology are introduced 

 into the market. Although R&D has a major role 

 in the process, innovation takes place in a broad 

 context in which economic, social, and political 

 factors may be crucial. '^ It has been estimated, 

 for example, that of every ten products emerg- 



-'- The lack of correspondence, however, was reduced by 

 grouping industries according to their R&D intensity; these 

 groups produced patented inventions which tended to be 

 utilized by industries within the same group. 



'-' For a concise review of the relationship between R&D 

 and patents, see Dennis Mueller, "Patents, Research and 

 Development and the Measurement of Inventive Activity," 

 ]oumal of buiuilnal Economics. Vol. 15 (November 1966), 



•'■' The patent totals upon which these percentages are 

 based include some multiple counts, but only those which 

 occur across the three groups. The extent of this multiple 

 counting is approximately 8 percent of the total patents 

 granted. 



35 P. Kelly, et al.. Technological Innovation: A Cnlical Review of 

 Current Knowledge, (Atlanta: Georgia Institute of Technology, 

 1975). 



Figure 4-13 



U.S. patents granted for inventions in 

 major product fields by groups of 

 R&D-intensive industries, 1963-73 



(Percent of Patents) 



100 



90 



60 



40 



30 



20 



10 — 



Group I 



Group II 



Group III 



T---r' 



J \ [ \ L 



1963 '65 '67 '69 71 73 



SOURCE Office of Tecfinology Assessment and Forecast, U.S. Patent Office. 



ing from R&D, five fail in product and market 

 tests, and only two become commercial 

 successes.'"^ 



Technological innovation is integral to the 

 operation of many industries and crucial to their 

 survival and growth. Innovation in these 

 industries may be the principal means for 

 acquiring new markets and maintaining existing 

 ones, as well as for improving internal produc- 

 tion processes and reducing costs.'" Other 

 industries, while producing few major in- 

 novations themselves, purchase goods which 

 embody innovations from the first group of 



3" E. A. Pessemier, New Product Decision: An Analytical 

 Approach. (New York: McGraw-Hill, 1966). 



'" For a review of factors which determine a firm's 

 effectiveness in innovation, see James M. Utterback, 

 "Innovation in Industry and the Diffusion of Technology," 

 Siifiiif, 'Vol. 183 (February 15, 1974), pp. 620-626. 



99 



