III. Conclusions

In 1979, the Bayer Corporation purchased Miles Laboratories, who continued to produce 55% of the patents issued in Elkhart County up until 1994. In 1992, Bayer established it Miles US headquarters in Pittsburgh, Penn., and proceeded over the next several years to move most of its operations to that location. After 1994, Miles Laboratories did not produce a single patent.For the purpose of this report, we will use Miles Laboratories' departure as the dividing line between the "Miles Era" (1976-1995) and the "Post-Miles Era" (1996-2006), in order to measure how the Elkhart County economy coped with Miles' departure.

A. Key Points

1. An Innovation Leader in the State of Indiana: Elkhart County is the second highest producer of patents in Indiana, producing 2,008 of the 23,104 patents issued to Indiana since 1976. That's 8.6% of the state's total patents with just 3% of the total population. The County has maintained its leadership in the state in the Post-Miles Era. (see IV.C.1.)

2. New and old companies are filling the huge gap left by Miles: Of the top 50 patent producers in the Post-Miles Era, 56% did not produce a single patent before 1996. The largest patent producer in the County, CTS Corp., doubled the number of patents produced between the two Eras, and currently holds 42% of the total patents produced since 1996. Several other companies, including Dometic Corp., Environmental Test Systems, and Reese Products, have all substantially increased the number of patents they're producing. Bayer Corporation continued to file patents in Elkhart County up until 2002, but not at near the pace that Miles had before. (see V.A.1.)

3. Smaller companies are producing more patents: In the Miles Era, the top 5 patent producers created 72% of the total patents produced. In the Post-Miles Era, the top 5 produced 64% of the total patents. This trend, which is also occuring at the state level (37% to 34%) shows that more, smaller companies are creating patentable innovations. (see IV.A.2. and V.A.2.)

4. Elkhart County continues to produce more patents: Patent filing increased in the Post-Miles Era, after having remained fairly steady since 1979. Good data is not available past 2002, however, due to the lag time between filing a patent and the USPTO issuing the patent. This trend follows state and national trends of increasing numbers of patents being filed. (see IV.B.1., V.B.1., and the USPTO)

5. Elkhart County adds a unique innovation mix to the state: The types of patents produced by Elkhart County are different than the mix produced by the state. This adds strength to the overall state economy by adding economic diversification. Following is a chart showing the top 10 growing classifications of patents produced in Elkhart County and at the state level. (see IV.D.2. and V.D.2.)

Rank	Elkhart County Class & Description		Indiana Class & Description
1	H01. BASIC ELECTRIC ELEMENTS	1	A61. MEDICAL OR VETERINARY SCIENCE; HYGIENE
2	H03. BASIC ELECTRONIC CIRCUITRY	2	C07. ORGANIC CHEMISTRY
3	B60. VEHICLES IN GENERAL	3	A01. AGRICULTURE;FORESTRY; ANIMAL HUSBANDRY; HUNTING; TRAPPING; FISHING
4	G01. MEASURING; TESTING	4	G06. COMPUTING; CALCULATING; COUNTING
5	E04. BUILDING	5	B60. VEHICLES IN GENERAL
6	G09. EDUCATING; CRYPTOGRAPHY; DISPLAY; ADVERTISING; SEALS	6	F21. LIGHTING
7	B62. LAND VEHICLES FOR TRAVELLING OTHERWISE THAN ON RAILS	7	F02. COMBUSTION ENGINES; HOT-GAS OR COMBUSTION- PRODUCT ENGINE PLANTS
8	G05. CONTROLLING; REGULATING	8	A47. FURNITURE; DOMESTIC ARTICLES OR APPLIANCES; COFFEE MILLS; SPICE MILLS; SUCTION CLEANERS IN GENERAL
9	H05. ELECTRIC TECHNIQUES NOT OTHERWISE PROVIDED FOR	9	B25. HAND TOOLS; PORTABLE POWER-DRIVEN TOOLS; HANDLES FOR HAND IMPLEMENTS; WORKSHOP EQUIPMENT; MANIPULATO
10	C08. ORGANIC MACROMOLECULAR COMPOUNDS; THEIR PREPARATION OR CHEMICAL WORKING-UP; COMPOSITIONS BASED THERE	10	E04. BUILDING

6. Patents are the tip of the iceberg: When a company creates something new, they have the option of patenting that innovation, which makes it publicly available but protected for 20 years, or keeping the innovation a trade secret, simply by maintaing tight security and not allowing competitors to learn about it. Many times, companies will patent a product and keep the process used to create that product a trade secret. There is currently no good method to measure trade secrets; therefore, it's difficult to quantify the total level of innovation ocurring in Elkhart County.

B. Expert Opinions

In business since 1988, Serim Research Corporation operates a fully integrated research & development/manufacturing center in a new, state-of-the art, 32,630-square-foot, FDA-registered facility certified to ISO 9001and ISO 13485 (specific for medical devices). (Photo credit: Deneen Studios)

Mr. Robert Boguslaski, Ph.D.
President, Serim Research Corporation, Elkhart, Ind.

For many years, I have been aware of the substantial amount of entrepreneurial business activity that exists in the county. However, I was very pleasantly surprised to learn how much of this activity is based on the substantial patent portfolio held by county businesses. The number of patents clearly demonstrate that many of our businesses are based on high caliber scientific and/or engineering efforts. The creativity, which is an essential element in being awarded a patent, is the engine that drives many of the county's businesses to increasing levels of success, and to increased employment and prosperity for the county's work force. We are truly fortunate to be blessed with these innovative, risk-taking ventures, for they are creating a bright future for Elkhart County.
- RCBoguslaski, Ph.D.

Thomas J. Mauch
Patent Attorney, Baker & Daniels LLP, Elkhart, Ind., (574) 296-6000

Background

I have reviewed the information compiled relating to patents filed and issued to assignees located in the State of Indiana and Elkhart County, specifically. The information reviewed included a summary of the number of patents issued to assignees of various sizes, the number of patents issued to assignees within various Indiana counties and the number of patents issued to assignees of cities in Indiana. In addition, the information I reviewed contains details as to the classes of the patents which have issued within Indiana and, generally, to the goods that the patents cover.

Patents Issued Historically

The comparison of Elkhart County patents to the remainder of the state reveals that Elkhart County has approximately the same distribution with respect to the size of the assignees as the state. This distribution for both the state and Elkhart County remains relatively symmetrical from the period of 1976-1995 vis-à-vis the time period of 1996-2006.

A review of the graphs illustrating the number of patents filed per year from 1975-2006 and the number of patents issued from 1975-2006 shows a general increase in the number of patents filed and issued within the state of Indiana. Conversely, the number of patents filed and issued within Elkhart County remains relatively constant. In reviewing this data, I have discounted any patent information prior to 1975 for both Elkhart County and Indiana in general due to the incomplete information available on the Patent Office website. In addition, I am also ignoring data relating to patents filed within the last three years for both the State of Indiana and Elkhart County as this information can only be garnered from issued patents. Since patents may pend within the patent office in excess of three years, data relating to patents filed in both Indiana and Elkhart County before 2003 may not be reliable.

In addition, I note that the patent filing data may not be entirely accurate if this data came from issued patents. This data would not reflect applications filed but never issued as patents. Moreover, prior to 2001, the Patent Office did not publish patent applications and, accordingly, applications remained private. Thus, the number of applications filed, but not issued, would be difficult to ascertain before that time.

Statewide

A review of the graph of patents issued in the State of Indiana reveals that through the late 70's until the early 90's the number of issued patents remained relatively constant, fluctuating somewhere between 450-550 patents issued per year. Starting in the early 90's, the number of patents issued by the Patent Office began to increase in 1991-1992.

This trend remained in effect until approximately 1998-1999, when the number of patents issued in Indiana by the Patent Office plateaued slightly and eventually decreased. The numbers of patents issued in Indiana seem to correspond in general with swings in the national economy. For example, more patents issue to state corporations following good economic times and less patents issued following economic downturns. This relationship with issued patents and the economy may be a function of business capital available to corporations. For example, corporations may cut back on legal budgets or R&D expenses in tough economic times, which both affect patent filings.

The last three years demonstrate a significant decrease in the number of patents issued statewide. Approximately 400 patents issued in 2005, which is the lowest number issued by the state since 1979. This number also represents a significant decrease in 2002, in which 1600 issued statewide.

Elkhart County

Elkhart County has a similar distribution to that of the state, although the curve is not as smooth. Year over year, Elkhart County has seen multiple changes in the number of patents issued. However, in general, the number of patents issued in Elkhart County tracked with the economy, wherein from the late 70's to the late 90's, an approximate average of 60 patents per year issued to assignees within the county. In the late 90's, the numbers increase substantially, reaching, in 2001, the high mark of approximately 110 patents issued. Since 2001, the number of patents issued to assignees in Elkhart County has steadily declined.

U.S. patent number 6,094,870, issued to QC Metal Fab, Inc., on August 1, 2000 for a Locking Device for Slide-out Rooms. (Credit: USPTO)

Types of Patents

The issued patents considered in this analysis were broken up into eight categories including (1) human necessities; (2) performing operations/transporting; (3) chemistry and metallurgy; (4) textiles/paper; (5) fixed constructions; (6) mechanical engineering, lighting, heating, weapons, blasting; (7) physics; and (8) electricity. The patents were then grouped in two categories: patents issued from 1976-1995 and then patents issued from 1996-2006 for both the State of Indiana and Elkhart County. It is worth noting that in analyzing these categories, the first period does relate to a 20 year window, whereas the second time period analyzed relates to only a 10 year window.

State

The state distribution of types of patents issued remains relatively constant. In the state, each of the categories discussed above shows a slight decrease in the number of patents issued, except for the category of human necessities. In the 20 year period from 1976-1995, approximately 5,000 patents issued in the human necessities category. In the 10 year period of 1996-2006, almost 6,500 patents have issued in that category within the state. This is the only category, which shows an increase from the first 20 years analyzed to the last 10 years analyzed.

The remainder of the categories appears to show the same significant decrease, except for the category of electricity. In the electrical category, a significant decrease between the patents issued from 1976-1995 vis-à-vis the patents issued from 1996-2006 is observed.

Elkhart County

Elkhart County, conversely, shows significant decreases in many of the categories analyzed. For example, in the human necessities category, chemistry and metallurgy category, and physics category, Elkhart County shows a significant drop in the number of patents issued in the 1996-2006 window vis-à-vis the 1976-1995 window. On the positive side, however, Elkhart County has increases in two of the categories, specifically, in the performing operations transporting category and the electricity category. More patents have been issued in the past 10 years than in the previous 20 years for both of these categories.

In general, it would appear as if in Elkhart County that the number of patents issued for higher science categories, such as chemistry, metallurgy and physics, appears to be decreasing over the last 30 years. In addition, the human necessities category shows a substantial decrease. Accordingly, one can only surmise that these industries are slowing down and/or fading from Elkhart County. However, the increase in the number of patents issued to the performing operations transporting category and electricity category provide insight into the type of businesses currently seeking patent protection within Elkhart County. It is likely that the issuing of patents under these categories relates to the manufacturing base present within Elkhart County, along with CTS' patents, as explained below. Thus, it would appear that in some respects these businesses and their suppliers are driving the intellectual property of the county.

In Elkhart County, two companies own the majority of patents issued within the last 10 years. CTS owns 42.3% of the patents issued in Elkhart County from 1996-2006 and Bayer owns 11.21% of the patents issued within that time frame. Added together, these two companies hold 53.51% of the U.S. patents issued in Elkhart County.

A significant number of companies within Elkhart County own between two and five patents issued within the last 10 years. Accordingly, a majority of companies that have sought patent protection within Elkhart County have less than one patent issued per year, in the last ten years.

Conclusion

Within the state of Indiana and Elkhart County, the number of patents issued by the patent office has decreased tremendously in the last five years. The subject matter of the patents issued within Elkhart County reflects the strong manufacturing base of the County. In addition, the issued patents reflect protection of keystone ideas for various companies. The recent decrease in patent filings, coupled with the relatively small number of issued patents may suggest a resistance to the patenting process or a belief by Elkhart County businesses that patent protection does not provide value to the business. This understanding is also buttressed with the manner in which patent filings appear to decrease in lean years and increase in better years economically.

It would appear, based upon present information, that the majority of companies within Elkhart County do not understand the manner in which to structure an intellectual property portfolio. Generally, the value of two or three patents over a 10 year period directed toward different inventions is significantly less than an effective portfolio with multiple patents covering each invention. In addition, the relatively small number of patents per company within Elkhart County may be an indication that smaller Elkhart companies may have a single keystone product for which patent protection has been sought.