The Most Innovative American Companies, Based on Patents

In business, if you’re not moving forward — you’re falling backward. Even the most traditional companies must innovate to stay relevant and competitive through changing times. A company that never changes its product is a rare thing — while the list of companies that failed or fell behind because they didn’t innovate includes some big names.

McKinsey & Company defines innovation as the “systematic practice of developing and marketing breakthrough products and services for adoption by customers.” They found that more than 80% of executives rank innovation among their top three priorities — while only 10% reckon that their company is getting it right. Perhaps that level of dissatisfaction is healthy. Only by striving for better products and fresher ways to make and sell them can a business remain sharp.

Patents are the currency of business innovation. When a patent is granted, it gives the applicant “an exclusive right to a product or a process that generally provides a new way of doing something, or offers a new technical solution to a problem,” according to the World Intellectual Property Organization.

This may buy the company time to develop a product or monetize an idea by licensing it to other companies. As we will see below, some companies file hundreds or thousands of patents each year, partly to protect their ideas but often as a lucrative source of revenue.

To determine which companies and regions are at the sharp end of the U.S. innovation economy, OnDeck found which companies were granted the most patents in 2023 and which parts of the country had the highest proportion of inventors.

How We Conducted This Study

We determined which American companies received the most patent grants at the U.S. Patent Office (USPTO) in 2023 and noted the inventor’s location for all patents granted to U.S.-based inventors in 2023. Finally, we combined these figures with population figures from the U.S. Census Bureau and ranked states and cities by the number of patent grants from local inventors per 10,000 population.

Key Findings

• IBM is America’s most innovative company, with 3,953 patents granted in 2023.
• California is the most innovative state, with 11.8 patents granted per 10,000 residents in 2023.
• Palo Alto, CA, is the most innovative city, with 216.6 patents per 10,000 residents in 2023.
• Redmond, WA, is the most innovative city outside of California, with 104.7 patents per 10,000 people in 2023.
• New York’s most innovative city is White Plains, where 24 patents per 10,000 people were granted in 2023.

IBM Is Still the Most Innovative Company in America

We found that the International Business Machines Corporation — better known as IBM — had more patents granted than any other American company in 2023. This is a common occurrence: IBM boasted the most annual patents in the U.S. of any company globally from 1993 until 2022. Korean firm Samsung finally knocked IBM off that throne, but IBM continues to get more U.S. patents than any U.S. company.

IBM actually announced, at the start of 2020, that it would “take a more selective approach to patenting” and refocus its “talent and resources towards achieving high-quality, high-impact advancements in the specific areas of hybrid cloud, data and AI, automation, security, semiconductors, and quantum computing.”

IBM’s announcement may indicate a new direction in intellectual property (IP) and idea development. The statement suggests that a more progressive approach to IP might involve “contributing to open source, or creating entirely new markets, like the work we are doing to build a quantum industry.” It’s an attitude seen more recently in Google’s open model approach to artificial intelligence.

However, IBM still secured 3,953 patents in 2023, while Google’s parent company, Alphabet Inc., was granted 2,579 patents. Some 14 of the 30 companies with the most patents are in tech, with 22,490 patents between them — suggesting that for all the idealistic statements about open source innovation, IP protection remains a crucial part of business.

Ranking the Most Innovative U.S. Cities in 2024

Next, we looked at where the inventors behind these patents are based (their place of residence rather than their employer). We found that 12 of the 20 cities with the most patents are in California.

A further four are in Washington state. Washington is home to Boeing and Microsoft, both among America’s top 30 most innovative companies, and the state would “be the 26th-largest economy in the world” if it were a country, according to former state governor Gary Locke.

Those 12 Californian cities include all of the top five. Palo Alto is the most innovative city of all, closely followed by its Silicon Valley neighbors in Mountain View, Cupertino, Sunnyvale and Santa Clara. Companies based in Palo Alto include Hewlett-Packard (HP) and Google Nest (Google proper is in Mountain View).

Tesla moved its HQ from Palo Alto to Texas in 2021 but maintains premises in the Californian city. Further, Elon Musk announced that “Tesla’s global engineering headquarters” would occupy the former HP’s former headquarters in Palo Alto. “This is a poetic transition from the company that founded Silicon Valley [HP] to Tesla,” said Musk in February 2023.

The Most Innovative Places Across America, Based on Patents

Finally, we looked from state to state to find the most innovative areas in the U.S., based on the residence of the inventors whose names are on the patents. We began by looking at the most innovative city in each state.

In Massachusetts, the city of Cambridge is the biggest hitter — with 78 patents per 10,000 residents in 2023. The Cambridge institutions of MIT and Harvard attract top talents and provide the resources and protective hub to develop new ideas. And then there’s the special chemistry that occurs when pulling together powerful minds from across the U.S. and the world. In the past, patents from MIT have included ideas as diverse as Three-Dimensional Imaging Using a Single Camera, a System and Method for Collision Avoidance in Underwater Vehicles and a Pelvis Interface.

California and Massachusetts are America’s most innovative states, with 11.8 and 11.1 patents per 10,000 people annually. However, this figure is far below the proportion of patents granted in these states’ most innovative cities, which drags up the average for the whole state. The same is true of Washington, America’s third most innovative state; it can thank the city of Redmond for inflating the state average. Redmond is home to Microsoft and has a major Amazon and AT&T presence.

New York is not an innovative state — at least as measured by patents granted. It has only the 17th highest number of patents per 10,000 people of any state. The most innovative city in New York is White Plains, with 24 patents per 10,000 residents. White Plains is an inner suburb of New York City, and many major companies have been headquartered in or near White Plains over the years. Today, local innovators include bio-material leather company Uncaged Innovations and White Plains Hospital.

The latter won the Corporate Innovation Award for 2021, a prize from Silicon Valley health tech accelerator Plug and Play Health. “Partnering with startups in the digital health and medical device space has given us access to newly developed equipment and tools,” said the hospital’s Chief Innovation Officer, Jonathan Bandel, “such as wearable devices for passive remote patient monitoring, at-home urinalysis testing, medication adherence devices, and artificial intelligence algorithms to identify patterns in large data sets to improve management of chronically ill patients and enhance the patient experience.”

An Innovative Way of Life

Innovation is not a fixed result but an ongoing practice. A mindset, even. That’s one reason that some companies file so many patents each year. Many are ideas that have not yet come to fruition but which may prove critical to future developments. Others include the discoveries made along the way — some of the most successful inventions were found while the inventor was trying to invent something else.

McKinsey suggests that innovation consists of both company culture and strategic goals. And while thousands of patents per year are not necessary nor even desirable — even for IBM! — patents are at least a sign that your business is going in the right direction. Which is to say, not falling back but moving forward, stronger and smarter than ever.

Methodology

To label the most innovative American companies, we determined which had received the most patent grants at the U.S. Patent Office in 2023 based on the IPO and Harrity Analytics report.

Next, we explored USPTO’s data to record the inventor location for all patents granted to U.S.-based inventors in 2023. We considered the first inventor (in case there were multiple) as the primary inventor.

Combining these figures with population figures from the U.S. Census Bureau, we ranked states and cities based on the number of patent grants from inventors in that location per 10k population.

The data was collected and analyzed in February 2024.

Additional Sources

Gil, D. (2023). Why IBM is no longer interested in breaking patent records–and how it plans to measure innovation in the age of open source and quantum computing. fortune.com
Insights. (2023). IBM Patents – Key Insights and Stats. insights.greyb.com
IFI Insights. (n.d.). IFI Insights: Opening the Patent Picture on Generative AI. ificlaims.com
McKinsey & Company. (2023). Reinvesting in America. mckinsey.com