FEDERAL INVENTION INDEX – MARCH 2025

The Invention Index measures a country’s or state’s innovation output by comparing GDP growth with patent production growth. 

Federal Invention Index March 2025: 1.32% (B- grade)

Federal Invention Index over the last year:

Anything over C grade is positive sentiment; anything under C is negative outlook/sentiment. Using that sentiment, it is possible to observe trends over time, and also compare states/countries. In doing so we can predict which states have the best chance to recover economically from the pandemic (or any other economic incident that may occur).

Federal Invention Index scores from September 2024 to March 2025:

Analysis

The most recent Invention Index score for March 2025 is 1.32%, showing a decline compared to February (1.42%) and January (1.54%). This marks a third consecutive monthly decrease, suggesting a short-term downward trend beginning after December 2024.

Looking at the broader six-month period, the scores peaked in October 2024 at 1.86%, followed by a sharp drop in November to 1.22%. After rebounding in December (1.63%), the index has steadily declined through to March 2025. This pattern indicates an overall gradual decline in invention activity or recognition after the October high.

The most significant change occurred between October and November 2024, where the index dropped by 0.64 percentage points. This sharp decrease represents a notable shift in trend following the October peak. Another key movement was the rebound in December, which partially offset the earlier decline.

In context, the March 2025 score of 1.32% is below the six-month average and continues the declining trend seen since December. While not as low as November’s 1.22%, it remains on the lower end of the observed range, suggesting either a normalization post-October peak or a sustained downturn. Without further data, it’s unclear whether this decline is temporary, but the consistent three-month decrease is notable and warrants continued observation.

Discussion:

In March, the Federal Invention Index scored a positive sentiment which was lower than the previous year’s average and underperformed the downward trend for the year. This is in contrast to the prior 12 months, which experienced an upward trend. As the world continues to recover from the height of the Covid-19 pandemic, it is unclear if there is any backlog of applications awaiting approval or if the department has fully caught up. If approvals are not yet caught up, we may see a decrease in approvals – and a reduced Invention Index – in the coming months/years as the state feels the full economic impact of companies closing and/or being forced to minimize their staffing and therefore minimize their R&D work hours.

Learn more about the Invention Index here.

Are you thinking of patenting any of your bright ideas? Did you know your research work could be eligible for the R&D Tax Credit and you can receive up to 14% back on your expenses? To find out more, please contact a Swanson Reed R&D Specialist today or check out our free online eligibility test.

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Swanson Reed is one of the U.S.’ largest Specialist R&D tax advisory firms. We manage all facets of the R&D tax credit program, from claim preparation and audit compliance to claim disputes.

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