Posts Tagged: "US Economy"

Innovation and how to foster next generation technologies is a topic of very active discussion within businesses across the country. But how can America continue to be one of the most innovative countries in the world? The rapid adoption of IP management and licensing platforms built around social collaboration seems to lead us to one answer – open innovation. Indeed, with today’s technology allowing for the seamless transfer of information – R&D departments have little to no choice but to begin to embrace the open innovation model and use it to their advantage. Understanding your intellectual assets and being able to capitalize on them in order to generate more revenue must be an important part of managing IP and fostering innovation.

News analysis and op-ed pieces following the $1 billion jury decision in Apple v. Samsung have been filled with reactive statements critical of the US patent system. Apple’s enforcement of its patents may “literally choke innovation” cried one law professor. A critic of the decision said that cases like this will require competitors to innovators like Apple to be much more mindful of patents and to “try to avoid or secure rights to [patents]” before bringing a product to market. What the critics have not explained is how making it easier for a foreign company like Samsung to steal US-born innovation is in our long-term national interest.

In part 1 of my interview with Stoll we discussed his adjusting to life in the private sector, the fact that he doesn’t enjoy the billable hour part of private practice (just like every other attorney I know) and we discussed politics a bit, as well as the U.S. economy and innovation policy. Part 2 of my interview, which appears below, picks up where we left off discussing Presidential politics and the buzz that engulfs D.C. every 4 years. We then move on to talk about how innovation drives the U.S. economy and I get his thoughts on why we haven’t seen a great new technology that has spawned an entirely new industry as we have coming out of so many recessions in the past. We then finish part 2 discussing changes to the patent examination process and how to streamline the examination process.

By SENATOR BIRCH BAYH — What should we say about a steward that manages billions of dollars in public research funds not aimed at finding commercial products and turns them in to hundreds of billions of dollars in economic impact while supporting millions of jobs? You would think that a sincere “thank you” was in order. But many are saying that the system producing such riches is broken. Remarkable. The Bayh-Dole Act created no new bureaucracy, costs taxpayers nothing, and decentralized technology management out of Washington. It’s widely touted as a key in turning the U.S. economy around.

Licensing U.S. intellectual property strengthens the economy and improves our trade balance. Section 337, the statute that regulates unfair practices in import trade, is a key element of the nation’s trade laws and ensures that American innovators, including licensing companies, will not be harmed by the importation of goods that infringe valid and enforceable U.S. patents. Importers of foreign made products – both U.S. based and foreign companies – have appealed to Congress for several changes to Section 337 that would, in effect, limit access to the ITC and/or weaken the powers of the ITC to deal with cases of unfair trade practices. Weakening the ITC’s jurisdiction would benefit foreign economies, foreign competitors, and other foreign manufacturers to the detriment of the U.S. economy.

Criminals on all levels — from opportunistic, small-time thieves to major drug cartels — are finding that the penalties for intellectual property crimes pale in comparison to the penalties they would receive for trafficking drugs and engaging in other illicit activities. At the same time, the profit margin for counterfeit software, as well as for other counterfeit goods, is extremely high. So the combination of great riches, relatively low penalties and a low likelihood of being caught and you can see why criminal enterprises, including terrorist networks, are becoming major players in the counterfeit software black-market.

But how exactly do patents do all of these wonderful things for companies? Unlike trademarks and copyrights, patents are incredibly difficult to acquire. But a patent, once acquired, grants the holder a fairly long monopoly over their creation. No other individual or corporation can use the patent holder’s creation without negotiating a license (or some other arrangement). Thus, patent holders have a huge advantage over the competition via exclusive use or a profit from licensing. Because, the technology companies heavily market new and cutting-edge products, there is a constant need to acquire new patents to stay ahead of competitors.

Today I attended the an event on Intellectual Property and the US Economy which was held in the Eisenhower Executive Office Building on the White House grounds. The purpose of the event was to unveil a study — Intellectual Property and the U.S. Economy: Industries in Focus — prepared by the Economics and Statistics Administration and the United States Patent and Trademark Office. The study found that intellectual property intensive industries support at least 40 million jobs in the United States and contribute more than $5 trillion dollars to U.S. gross domestic product (GDP). That is to say that 27.7% of all jobs in the U.S. were either directly or indirectly attributable to IP-intensive industries, and the amount contributed to the U.S. economy represents a staggering 34.8% of GDP.

At his speech at the U.S. Chamber of Commerce, Commerce Secretary Bryson outlined his top three priorities to help American businesses “build it here and sell it everywhere,” focusing on supporting advanced manufacturing, increasing our exports, and attracting more investment to America from all over the world. The key to emerging from the Great Recession is, of course, manufacturing. Manufacturing jobs have left the U.S. in favor of more business friendly climates in other countries, taking with them U.S. jobs and U.S. intellectual property. But moving into a Presidential election year will government be able to do anything that is at all likely to help?

The question, however, is whether this increased inventive activity is sustainable in light of the overwhelming backlogs faced by Patent Offices around the world. It is great to have a lot of inventive activity and interest in obtaining patents. That shows that there is increased interest in business activities because few, if any, pursue a patent for the sole purpose of obtaining a patent. There is almost universally some business goal with associated hopes, dreams and potential positive impact for the economy. Whether this increased innovative activity can and will be something that produces an associated economic boon remains to be seen and is largely, if not completely, dependent on the political machinations of those in Washington, DC and other capitals around the world. Talk about a depressing though!

My list is heavily dominated by California locations, and there are probably a couple surprises, but Albuquerque, New Mexico and Syracuse, New York? I make the case for the leading candidates and a few that definitely deserve short list consideration. In addition to the 9 criteria set out by the USPTO I have added a 10th of my own. If you look at the criteria it is hard to understand why Detroit was selected. Detroit doesn’t have a reputation as a particularly livable city, so will it really help retain and recruit examiners? It seems that there were some other considerations at play, and I can’t help but notice that traditionally blue Michigan is a swing state in 2012. With this in mind, I have a hunch that politics will play a big part of the awarding of satellite patent offices. Therefore, I am going to add a tenth criteria – From a purely political standpoint does the location serve a purpose?

It would be bad enough if politicians did nothing once elected, but it seems that they have a knack for doing those things that will do the most harm. That is why one of the recommendations in the interim report has me rather concerned. On page 21 of the report the Jobs Council recommends: “the Administration should test an ‘open source’ approach to tech transfer and commercializations.” What does that even mean? It might sound good to some, and certainly is the “in thing” to recommend I suppose. After all, “open source” is the solution to all the problems of the world, right? Never mind that the open source community has yet to identify a long term, stable business model that makes money.

Contrary to the tone of the Jobs Council report, U.S. academic technology commercialization made possible by Bayh-Dole is a world- wide recognized success. The law allowed universities and small companies to own and manage inventions arising from federally supported R&D. It decentralized technology management from Washington, allowing a market driven system to flourish. It did not create any new bureaucracy to select winners and losers. And it works in the hard, cold light of day.

The president says that’s the fault of recalcitrant Republicans in Congress. Republicans in Congress say it’s the fault of a president who is hostile to business. But the real reason we are not putting people back to work three long years into the recession is that Washington is afflicted with a totally-bipartisan cluelessness about how to create jobs.

Small businesses are the backbone of the nation’s economy and those that are most likely to engage in job creation. Unfortunately, the small businesses surveyed tell a tale of little or no job creation over the next 1 to 3 years, and in fact suggest there will be more layoffs coming. The respondents see too much uncertainty in Washington, DC, too many regulations and a number of other matters (i.e., the deficit, debt, health care and taxes) as significant impediments to job creation. This on the heels of a disappointing jobs report for June 2010, downward revisions of the number of jobs created in April and May, and unemployment rising to 9.2%, this Chamber survey only piles on the continuing terrible news for the economy. With Congress bickering over the obvious — namely that we simply cannot spend money we don’t have and need to start spending less than we bring in to cut the deficit — it doesn’t seem there is likely to be any good news on the horizon.