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Chapter 07

Public Investment

Government funding and the Bayh-Dole Act

A key dimension of the patent landscape concerns the role of government funding in generating patented inventions. While earlier chapters characterized the overall volume, quality, and technological composition of US patents, the source of funding for the underlying research reveals a distinct and consequential pattern. Public investment in research and development is widely regarded as a contributor to innovation ecosystems, and the patent system provides a window into the scale and distribution of that investment.

Figure 1

Government-Funded Patents Rose From 1,294 in 1980 to 8,359 in 2019 After the Bayh-Dole Act

Annual count of utility patents acknowledging government funding interest, tracking patenting trends following the 1980 Bayh-Dole Act.

Number of utility patents acknowledging government funding interest, by year. A marked increase is evident after the 1980 Bayh-Dole Act, which permitted universities and small businesses to retain patent rights on federally funded inventions.
Government-funded patents are often associated with higher citation impact in the academic literature (e.g., Azoulay et al., 2019; Jaffe & Lerner, 2001, in Innovation Policy and the Economy, Vol. 1, MIT Press; Mowery et al., 2001, Research Policy 30(1), 99–119; Sampat, 2006, Research Policy 35(6), 772–789), supporting the role of public R&D investment in generating foundational innovations. This interpretation is drawn from prior research rather than directly computed from the PatentsView data used in this chapter.

The A 1980 US law that allowed universities and small businesses to retain patent rights from federally funded research. University patenting increased substantially in the years following its passage. of 1980 fundamentally altered the landscape of government-funded patenting by permitting universities and small businesses to retain rights to inventions developed with federal support. The resulting acceleration in government-acknowledged patents is evident in the data, though government-funded patent counts have declined somewhat since their 2019 peak of 8,359.

Figure 2

HHS/NIH Leads With 55,587 Patents, Followed by Defense (43,736) and Energy (33,994)

Federal agencies ranked by total number of associated government-interest patents across all years.

Federal agencies ranked by total number of associated patents (all time). The Department of Health and Human Services/NIH, Department of Defense, and Department of Energy account for the largest share of government-interest patents.
Federal agencies such as NIH/HHS, the DoD, and DOE fund research associated with thousands of patents, often representing foundational technologies that precede subsequent waves of commercial innovation.

Federal agencies — particularly the Department of Health and Human Services/National Institutes of Health, the Department of Defense, and the Department of Energy — fund research that is associated with thousands of patents each year. These government-interest patents are often associated with foundational technologies that precede subsequent commercial innovation.

Agency × Technology Field Matrix

Beyond aggregate patent counts, the technological composition of each agency's portfolio reveals how federal funding priorities map onto the Cooperative Patent Classification — a hierarchical system jointly managed by the USPTO and EPO that categorizes patents by technology area (e.g., H = Electricity, G = Physics). classification system. Some agencies concentrate their funding in a narrow set of technology fields — the Department of Energy, for example, is heavily weighted toward Chemistry & Metallurgy (Section C) and Physics (Section G) — while others, such as the Department of Defense, spread funding across a broader spectrum of sections. The heatmap below decomposes each agency's patent portfolio by CPC section, revealing both expected specializations and surprising cross-field reach.

Figure 3

13 Federal Agencies Span All 7 CPC Sections, but Differ Markedly in Technology Concentration

Agency × CPC section matrix of patent counts. Each cell shows the number of government-interest patents in a given agency–field combination.

SourcePatentsView 2025-Q1Norm.Raw countClass.CPC
Heatmap of government-interest patent counts by federal agency and CPC section. Darker cells indicate higher patent concentrations, revealing each agency's technology field specialization.
Figure 4

CIA Achieves the Highest Citation Depth (1.91) While Broader Portfolios Average Lower Impact

Each bubble represents a federal agency. X-axis: technological breadth (Shannon entropy across CPC sections). Y-axis: citation depth (mean cohort-normalized citations). Bubble size: total patents.

Scatter plot of agency breadth (Shannon entropy across CPC sections) versus depth (mean cohort-normalized 5-year forward citations). Bubble size is proportional to total patent count. Agencies with broader portfolios may trade off citation impact per patent.
Agencies that spread funding across many technology fields tend to achieve lower mean citation depth per patent, suggesting a breadth-depth tradeoff in public R&D portfolio strategy.
Figure 5

Government-Funded Patents Score 1.019 on Normalized Impact versus 1.000 for Non-Funded Patents

Cohort-normalized citations and top-percentile shares: government-funded versus non-funded patents, 1980–2020

Comparison of cohort-normalized citation metrics between government-funded and non-funded patents, 1980–2020. Metrics include average normalized citations, top-decile share, and top-1% share.

Government Contract Patent Concentration

Beyond agency-level aggregates, individual government contracts reveal where public R&D investment concentrates most heavily. A small number of large-scale contracts — predominantly from the Department of Energy's national laboratory system — account for thousands of patents each, reflecting the long-term, mission-oriented nature of federally funded research.

Figure 6

Department of Energy Contract DE-AC04-94AL85000 Leads With 2,152 Patents, Consistent With National Laboratory Dominance

Top 30 government contracts ranked by total patent count.

Government contracts ranked by total associated patent grants. The Department of Energy dominates the top positions, with contracts supporting Sandia, Lawrence Livermore, and Argonne National Laboratories generating the largest patent portfolios.
The concentration of government-funded patents in a small number of DOE national laboratory contracts underscores the role of sustained, large-scale federal investment in generating foundational technologies.

This chapter concludes ACT 1: The System, which has examined the US patent landscape from overall volume and quality through technology fields, convergence, legal frameworks, and public investment. The next act shifts focus from the system level to the organizations that operate within it. Chapter 8: Assignee Composition opens ACT 2: The Organizations by examining the corporate, foreign, and country-level composition of patent assignees.

Data coverage: January 1976 through September 2025. All 2025 figures reflect partial-year data.