In looking around for something to write I stumbled across a press release from August 10, 2010, issued by Your Baby Can, LLC. This is the company that advertises almost non-stop on Sirius/XM every morning, at least on ESPN Radio, claiming that all you have to do is put your children in front of the video and they miraculously learn to read. I have often joked about the commercial and how unrealistic and almost comical it seems, but when I noticed a copyright/counterfeiting angle I was immediately intrigued.

Center for Functional Nanomaterials at
Brookhaven National Laboratory, USA.

According to a new report from Lux Research, global funding for nanotech increased only 1% (relative to 2008) to $17.7 billion in 2009. The publication of patent applications and number of granted patents rose at a more impressive rate, 11% and 5%, respectively. The report also found that the United States, Germany and Japan are still home to the most nanotech innovations in terms of absolute number, but that smaller markets such as Taiwan, Singapore, Israel and South Korea are more focused on nanotech and are more adept in commercializing such technologies. The report also indicates that despite impressive investments and attempt to become significant havens for nanotechnology, China and Russia are still far from threatening the status quo.

Liz Claman, Fox Business News

This past Sunday there was a brief but very interesting segment on Fox New Sunday that actually discussed the plight of the United States Patent and Trademark Office and how the enormous backlog of inventions in the queue at the USPTO is preventing organic job growth at a time when our economy desperately needs job creation.  Sitting in for Chris Wallace was Brett Baier.  He was interviewing Mark Zandi, who is Chief Economist for Moody’s Analytics, and Liz Claman, an anchor on the Fox Business News channel.  The topic for this 11:54 second segment was the health of the U.S. economy and what can and should be done by our leaders in Washington, DC.  Surprisingly, at least to me, Claman brought up the USPTO as an ideal opportunity for “instant stimulus.”

David Kappos told CBS the biggest problem is the backlog and the PTO needs more money. "It's no taxpayer dollars at all-- all the fees we collect come from patent applicants."

Straight from the “it’s about time” department comes breaking word that the so-called popular press are finally identifying the most under reported news story of this recession.  The United States Patent and Trademark Office is foundering and it needs more money in order to do its job.  That alone ought to be newsworthy, but add the fact that the Patent Office is the one agency of government with the ability to recognize assets out of whole cloth and have industry organically grow as a direct result and without ANY taxpayer dollars.  The fact that the Patent Office can without any taxpayer dollars directly influence and creation of new, high paying jobs makes it virtually criminal that the elite press, who has reported on virtually every angle of this recession, has ignored the engine that could get us out of this mess.

David Kappos, Under Secretary of Commerce and USPTO Director

On Monday, July 19, 2010, I was granted behind the scenes access to the United States Patent and Trademark Office, and was allowed to follow USPTO Director David Kappos throughout the day as he went from meeting to meeting. I have already chronicled much of the events of the day in the previous article– Behind the Scenes: A Day in the Life of David Kappos. At the end of the day I was granted a 30 minute interview with Director Kappos, which appears below.

In this interview Kappos discusses with me his management style, his famously long hours, how he manages to inspire the Office to work harder than ever before, his efforts to get funding for the Office, how the USPTO can help innovators create new businesses and new jobs, and how to inspire young people to do public service. We also learn that he and Judge Rader share the same favorite movie (see Judge Rader Interview at the end), he likes Star Trek and Star Wars equally (an astute political answer no doubt) and the famous American inventor he would like to meet is a “Mount Rushmore” inventor.

Chief Judge Paul Michel, CAFC (ret.)

On July 9, 2010, I interviewed the recently retired Chief Judge of the United States Court of Appeals for the Federal Circuit, the Honorable Paul Michel.  Judge Michel and I talked on the record for 1 hour and 40 minutes at the University Club in Washington, DC, where he is a member.  This is Part 2 of a 4 part series.  In Part 1, On the Record Interview with Chief Judge Paul Michel, Part 1, we discussed judicial ethics and how cloistered members of the federal judiciary are, his role in investigating President Nixon in Watergate and his role as lead prosecutor investigating many Members of Congress in the Koreagate investigation, among other things.

In this installment we start out talking about Judge Michel’s work for Senator Arlen Specter and how today there seems to be a slow and steady decline in the checks and balances intended to be a part of the federal system.  This lead us into talking about the Founding Fathers and how they viewed intellectual property, and patents in particular, as critically important.  We discussed how the Patent Office used to be held in such esteem by the Founding Fathers and many generations, and how that seems to be a relic of the past.  We also discussed how Judge Michel would like to become “public nuisance #1″ and a trouble-maker as he attempts to proselytize for the patent system and a more responsible federal government.

Earlier today the Wall Street Journal gave front page space to a story relating to the United States Patent and Trademark Office.  Widely regarded as one of the “papers of record” in the United States, one might expect that the Wall Street Journal had brought its considerable clout to an important issue plaguing our time, such as an horribly under funded Patent Office that is holding innovation hostage, costing America perhaps millions of jobs.  NO!  Rather than educate itself and others, thereby exposing in real terms for the everyday observer the plight of the Patent Office and what it means to the United States economy, the Wall Street Journal wrote a front page article on the errant creation of a trademark class associated with medical marijuana.

Don’t get me wrong, every tabloid should have front page news story about pot, medical marijuana and have an image of a VW bus over the tag “the Canny Bus,” as the Journal did earlier today.  Call me crazy, but I expected more from the Wall Street Journal.

Congressman Conyers seems interested in providing funding to the USPTO

Recently the United States Patent and Trademark Office released its draft Strategic Plan for FY 2010 – 2015.  This may seem odd given that FY 2010 is almost over, ending on September 30, 2010.  So it is probably a better title to call it the FY 2011 – 2015 Strategic Plan, but there is no doubt as you read the document that under the guidance of Director David Kappos the USPTO has already well launched the short term Strategic Plan.  Now if Congress would only be wise enough to grant funding for the Patent Office to actually accomplish what needs to be done!

Truth be told, it would be enough for Congress to just (1) stop siphoning off money from the USPTO through fee diversion; (2) grant the USPTO fee setting authority; and (3) stand out of the way.  So my message to Congress would be this: put the pocketbook down, slowly step back and raise your hands over your head so we can see them!

Madison Building, USPTO Headquarters

Draft plan sets priorities to strengthen the USPTO, drive innovation and support economic growth

Washington – Under Secretary of Commerce for Intellectual Property and Director of the United States Patent and Trademark Office (USPTO) David Kappos announced today that the USPTO’s draft Strategic Plan for fiscal years (FY) 2010-2015 is posted for public review and comment on the USPTO Web site at www.uspto.gov.

The draft 2010-2015 Strategic Plan sets out the USPTO’s mission-focused strategic goals: to optimize patent quality and timeliness; to optimize trademark quality and timeliness; and to provide global and domestic leadership to improve intellectual property (IP) policy, protection, and enforcement worldwide.

Over the last couple weeks I have been giving more thought to open source software and what, if any role it has to play with respect to the economic future of both start-up companies and established giants.

My belief is that open source can and should play a vital role in innovation, but the way it is by and large carried forward today does little to forward innovation and an awful lot to significantly disadvantage start-up companies.  The horribly bad advice that pervades the open source community and the utter lack of knowledge or familiarity about patent law is staggering.  I don’t begrudge anyone who doesn’t like the patent system, but can you please at least not like it for a valid reason?  With the myths and disinformation spewed by those who are either clueless and loud, or those who know better and have an agenda, are drowning out rational debate and significantly impeding progress and innovation.

Kappos delivers speech at Center for American Progress, 6/2/2010

Earlier today the Center for American Progress hosted a speech given by David Kappos, Undersecretary of Commerce for Intellectual Property and the Director of the United States Patent and Trademark Office.  The speech was open to the public, RSVP was required and space was limited.  A light lunch was served.  I was lucky enough to be present as a member of the Press, and unlike the United States Supreme Court which requires members of the press to sit in partial view seats behind the tall pillars with an extremely large diameter, the Center for American Progress reserved front row seating for the press.  Not that such front row treatment is required, but it sure does make taking pictures far more easy, but I digress.

A packed room of at least 200 individuals, including the newly retired Chief Judge Paul Michel, former USPTO Director Q. Todd Dickinson, former USPTO Director Bruce Lehman and others listened to Kappos give an impassioned speech about how innovation can create jobs, how the Patent Office is unfortunately continuing to hold jobs hostage due to a staggering backlog of pending patent applications and how American economic security depends upon development of a comprehensive national IP strategy.  This is something near and dear to my own heart, as readers of IPWatchdog.com know I have been beating that drum since before Kappos was appointed (for example see this, this, this and that; and more recently here and here, among many others).  But can Director Kappos persuade Members of Congress and others in the Executive Branch of the truth we all know?

Thomas Edison, perhaps the greatest US inventor.

To hear some people tell it, Thomas Edison was nothing but a scurrilous “patent troll.” That, at least, is the impression given in a recent article in Corporate Counsel magazine entitled ITC Rolls Out the Welcome Mat for Trolls that equates technology licensing with patent trolling.

The issue at the heart of the article was a recent decision by the International Trade Commission (ITC) reaffirming its long-standing policy of allowing firms that license rather than manufacture their own technology to enforce their patent rights before the ITC and seek injunctions barring the importation of infringing products into the U.S. In its article, Corporate Counsel singled out Tessera, a $300 million technology development and licensing firm, as one of the companies involved in this decision. But by using the terms “licensing firms” and “patent trolls” interchangeably, the magazine also implied that Tessera itself was a “patent troll.”

It seems pretty clear that under the direction of David Kappos the United States Patent and Trademark Office is pursuing an “all of the above” strategy to cutting into the backlog and ultimately reducing the pendency of patent applications.  It is easy to criticize any one of the initiatives that the USPTO is pursuing, but that would be to miss the forest for the trees.  The reality is that unless and until Congress steps up to the plate and does something, which seems extraordinarily unlikely, the Patent Office will be left to attempt to piecemeal together solutions.  So while no one solution can or will solve all of the problems plaguing the patent system, if cascading solutions are employed at least some applicants can be helped and at least some applications can be accelerated.  Of course, the name of the game today is job creation, so I propose a creative way to accelerate patent applications out of order upon proper showing that jobs will be created, and focus my suggestions on those companies that are most likely to create jobs; namely those 5 years or younger and with 99 or fewer employees.

Last week David Kappos, Undersecretary of Commerce and Director of the USPTO, told a packed room of people at the BIO International Convention that innovation produces high paying jobs and patents are a critical component of the innovation to commercialization to job creation cycle. He didn’t receive any disagreement, but lets face it, he was preaching to the choir. As Jim Greenwood, President & CEO of BIO told me, “the only thing [most biotech companies] have is intellectual property… They start off with that and then they have to raise money to even begin to have microscopes and bricks and mortar and staff. It is on the strength of that intellectual property that they have to raise all of those dollars for a very long time.”  So without patents the biotechnology sector simply wouldn’t exist, and that means many tens of thousands of jobs, if not hundreds of thousands of jobs, wouldn’t exist.  So the BIO Convention was well in tune with the message Kappos delivered, but preaching to the choir is only so helpful.  With that in mind allow me to take a stab at explaining how vital the US patent system is to the economy, why ignoring the USPTO has directly lead to this recession lasting far longer than it should have, and why properly funding the USPTO is critical to job creation and the US climbing out of this horrible economic crisis.

First, allow me to point out the reality that so many want to ignore.  We can all pretend that innovation simply happens without funding, and the naysayers and anti-patent advocates will just assume that is true, but the unspeakable reality is that innovation requires funding.  Without funding there can be no innovation, period!  Anyone that believes otherwise is ignoring reality and akin to the quacks that run around claiming they have discovered the secrets of a perpetual motion machine.  Perpetual motion machines don’t exist, and neither does unfunded innovation.  Even if you are operating in an area where innovation doesn’t require enormous capital investment, it always requires the investment of time, which comes with opportunity costs.  So please save me the ridiculous, head-in-sand ravings that innovation doesn’t cost.  It does, and the overwhelming majority of investors want to see issued patents.  It really is that simple.

Robert Reich at the Progressive Governance Conference 2009

Today in the Wall Street Journal Robert Reich, a Professor of Public Policy at the University of California at Berkeley and former Secretary of Labor under President Clinton, painted a bleak picture of the future of the US economy over the next decade.  Reich explains that the latest job numbers are a positive sign relatively speaking, but that “the bleeding hasn’t stopped.”  While the economy added some 162,000 jobs in March, 40,000 were temporary jobs thanks to the ongoing census.  That means 112,000 “real new jobs,” as Reich calls them, were created, which is below the 150,000 needed on a monthly basis just to keep up with US population growth.  Reich blames outsourcing in large part, and says that even with robust job growth of 300,000 jobs per month it would take between 5 to 8 years to return to pre-recession levels of employment.

As a former Labor Secretary Reich knows a thing or two about the economy and employment in particular.  I don’t frequently agree with him on policy, but it is hard not to notice the man’s intelligence and grasp of issues, even if you oppose him philosophically or ideologically.  The reality he paints is altogether true, unfortunate and extremely unnecessary.  He concludes that “those who have lost their jobs to foreign outsourcing or labor-replacing technologies are unlikely ever to get them back. And they have little hope of finding new jobs that pay as well.”  This may be true, but I know that it doesn’t have to be that way.  The outsourcing of jobs is largely in violation of US export laws and that seems to me to demonstrate the reckless disregard for the American worker rampant in Washington, DC.  The US government is not doing anything to enforce US export laws on the books and stop outsourcing that is in violation of US law.  Sadly, this is not a Democrat problem or an Obama Administration problem, rather it is a government problem.  The same US export laws were ignored under President Bush and when Republicans controlled Congress.

Earlier this week, on Tuesday, February 16, 2010, TiVo, Inc. (NASDAQ: TIVO) was granted US Patent No. 7,665,111, titled Data storage management and scheduling system.  This patent is indicative of what I suspect will become a growing problem in the years to come, which is a resurgence in so-called submarine patents.  This patent matured from a patent application filed on October 20, 1999, which means it was pending at the United States Patent and Trademark Office for over 10 years.  Amazingly, according to the Patent Office no patent term extension is owed.  Exactly how can a patent remain pending for over 10 years and not be entitled to an extension in the term?  I really don’t know to be perfectly honest, but it seems that this patent will apply to pretty much any and all DVRs currently on the market, so even if there is no patent term extension granted it could produce a choke-hold on the industry through October 20, 2019, which should create a tidy sum of royalty payments for TiVo, at least over the near term.  Of course, it will also spark a rush to innovate around the TiVo patent, thereby causing innovation to march forward, much to the chagrin of anti-patent advocates who are already proclaiming this patent to be evidence that patents harm innovation.   In any event, a patent that issues after 10+ years suggests problems, even if the intended march of innovation is encouraged, which will of course be the case.

Back in November of 2009, I wrote Obviously Non-obvious and Patentable Inventions Part I.  I have for some time wanted to return to this and continue with Part II, which really is implied explicitly if you are going to call something Part I.  In any event, Part I was a combination of a rant about KSR tied together with frustration that the NCAA and otherwise brilliant (or so they tell us) University President’s cannot figure out a way to concoct a Division I (I refuse to call it Football Bowl Subdivision) playoff for College Football. Obviously, a Division I College Football playoff must not be obvious because it if were you would think a bunch of bright people in ivory towers would have figured out how to make it work, particularly given that there would be more money to be made off the labor of unpaid (except perhaps for USC players) amateur college athletes. With there being college playoffs for every other sport, including in other divisions of college football, the conclusion must be that a Division I playoff must not be “common sense” and, therefore, must be non-obvious. Picking up on this theme and focusing on things that at first glance seem incredibly obvious but must not be at all obvious given that those who are exceptionally smart can’t figure them out, I thought with tax season right around the corner it might be worthwhile to explore method of stimulating the economy by cutting taxes.

Earlier this week Mike Drummond, the Editor in Chief of Inventors Digest, authored an article titled US Senate Votes to Leave Patent Office Underfunded for 2010.  In this article Drummond explained that over the weekend, while no one was paying attention, the Senate voted to leave USPTO funding at the same level in 2010 as it was in 2009, which is bad enough because the Patent Office desperately needs more resources in order to tackle the problems left over by the previous regime.  Worse, the Senate vote would re-institute fee diversion, which means that if the Patent Office were to collect revenues over and above the amount allocated by Congress those additional fees would not be able to be used by the Patent Office to improve operations, or even for just handling the increased work generated by additional filings.  Rather, fees received over and above the allocated amount would be stripped from the Patent Office and diverted into the General Treasury account.  That is plain and simple a National Innovation Tax, and it is an enormously bad idea.

In the popular press there have been a number of stories over the last week or so regarding how the US is losing its edge in innovation as indicated by the drop in patent filings between fiscal year 2008 and fiscal year 2009.  The headlines have been sensational at times, claiming that the recession is affecting US innovation.  While such headlines no doubt grab attention, they largely mischaracterize what is really happening, which is unfortunate because in today’s sound-bite news culture such headlines could well sway the hearts and minds of the public, and more importantly sway those in Washington, DC who may otherwise be able to help.  The truth is that fiscal year 2009 saw more patent applications filed than any other year in the history of the United States, save only one year — fiscal 2008.  So while many will no doubt want to blame the dip in filings on the recession, doing so misses the larger picture and obfuscates the real problem, which has little to do with the recession and everything to do with what became an enormously dysfunctional US Patent Office during President Bush’s second term.

David Kappos addresses Inventors Conference 2009 at USPTO

I am just getting back from two days at the United States Patent and Trademark Office, having attended the 14th Annual Inventors Conference.  There is much to report, and much to write about, and I will continue to digest, analyze and write about what I saw and my impressions in the days to come.  It is, however, undeniable that there is a completely different tone at the Patent Office.  Senior level management, from Director David Kappos,  Deputy Director Sharon Barner, Patent Commissioner Bob Stoll and Deputy Commissioner Peggy Focarino, mingled with inventors and seemed genuinely happy to discuss issues and appear committed to revitalizing the patent system.  There were many, including myself, who wondered what direction the Patent Office would take under new leadership, and while it is early to give a grade, if we are going to be honest and give an interim report card the only fair grade to give at this point is an A.  From top to bottom there is an optimism that exudes from everyone I spoke to at the Patent Office.  Changes that ordinarily would take months are taking weeks, and the political leadership seems to REALLY understand the importance of innovation.  In fact, in video-taped comments played during lunch today Commerce Secretary Gary Locke said that the Obama Administration pledges to provide US inventors the strongest IP protection available anywhere in the world.  What more could we realistically ask for at this point?