Innovation Lessons From a Billionaire

By Marshall Phelps
June 8, 2016

“I did not start out to be an inventor,” writes the billionaire inventor and spinal surgeon Gary K. Michelson in the preface to a newly-published book entitled The Intangible Advantage: Understanding Intellectual Property in the New Economy.

“I wanted to be a doctor,” he explained. “That’s all I ever wanted to be, ever since the day I sat at my grandmother’s kitchen table — I must have been seven years old — and smelled her flesh burning on the stove. You see, my grandmother suffered from syringomyelia, a crippling spinal disease that results in terrible back pain and the loss of sensation to pain and temperature in the extremities, especially the hands. When I saw the flames licking up through her fingers that day, I screamed, and she quickly doused her hand in the sink.

“‘Don’t worry,’ she told me. ‘One day you’ll become a doctor and you’ll fix me.’”

Gary MichelsonI don’t know if Dr. Michelson was ever able to “fix” his grandmother, but I do know that the spinal surgery tools and techniques that he invented over the course of his illustrious career have relieved the pain and suffering of millions of people.

But along the way, Dr. Michelson writes, “I quickly realized that I needed to patent my inventions to protect all the time, money, and effort that I had invested to develop them. If you don’t patent your inventions, especially in a competitive industry like medical devices, others will simply copy those inventions with impunity and sell them at a lower cost because they didn’t have to invest anything to develop them in the first place. That’s a great way to drive the innovators out of any industry and halt any further technical advances in that field.”

Eventually, Dr. Michelson obtained more than 950 patents worldwide for innovations that fundamentally changed the practice of spinal surgery. “Michelson tools” became so central to modern spinal treatment, in fact, that in 2005 the medical device company Medtronic purchased the majority of his patent portfolio of spinal surgery inventions for $1.35 billion.

Yes, you read that right — $1.35 billion dollars.

That’s when he retired from medical practice and devoted his energies (and his philanthropy) to inventing new solutions to problems outside the world of orthopedics.

Which brings me to that highly-innovative book I mentioned at the beginning of this article. The Intangible Advantage: Understanding Intellectual Property in the New Economy is the first-ever popular text on intellectual property (IP) written not for lawyers but for ordinary citizens, especially college students. It is being made available for free (or at nominal cost, for some versions) by the Michelson 20MM Foundation.

IP Book CoverFor the free iBooks version, go here or to your iBooks app store.

For the 99 cent Kindle version, go here or to the Kindle store.

For the $9.68 print on demand version, go here.

And for the main Michelson 20MM Foundation resource page for all versions of the book, go here.

The book also comes with the first-ever series of popular 3-minute animated videos answering such common questions as “Can I Patent That?”“Is it Fair Use or Infringement?” and “What If Someone Infringes Your Trademark?

Why is this such an innovative and important book?

As Dr. Michelson explains it, “Until now, intellectual property has been taught only in law schools or the occasional business school seminar. In today’s knowledge economy, however, this is no longer sufficient. That’s because over the last 40 years, intellectual property has grown from an arcane, narrowly-specialized legal field into a major force in American social and economic life. It comprises an astonishing 45 percent of total U.S. GDP today, and represents 80 percent of the market value of all publicly-traded companies in the U.S. “

Remember that scene in the 1967 movie “The Graduate” when Mr. McGuire (Walter Brooke) offers career advice to a young Benjamin Braddock (Dustin Hoffman)?

“Plastics!” he says. “There’s a great future in plastics.”

Half a century later, it’s intellectual property that is now the new watchword for almost any career of the future.

“Look around and you’ll see IP’s imprint everywhere,” writes Dr. Michelson. “The business pages are filled with headlines of corporate ‘patent wars.’ Art journals debate whether the artist Richard Prince’s appropriation of other people’s work is infringement or fair use. Music critics discuss the implications of the $7 million copyright infringement verdict against Robin Thicke and Pharrell Williams for allegedly borrowing certain musical themes from the work of soul singer Marvin Gaye. From Silicon Valley startups to Fortune 500 board rooms, from MIT engineering labs to Wall Street trading desks, and from college business seminars to debates in Congress over global trade policy, intellectual property issues now lie at the heart of almost every arena of modern life today.

“And as a result,” he insists, “any young person today who does not understand at least the basics of intellectual property — and its value and role in science, business, arts, and the professions — will find him or herself at a distinct disadvantage in the world of tomorrow.”

This book comes in several versions, suitable for different uses. The traditional ebook and print versions of The Intangible Advantage contain the full text — including the hidden history of the U.S. patent system as the world’s first democratized patent system — and is available in iBook, Kindle, ePub, and PDF formats.

There is also an enhanced interactive ebook version of The Intangible Advantage that contains the full text and links to the videos plus comprehensive learning assessment tools such as targeted Q&As for each section of every chapter.

Finally, The Intangible Advantage is also available as an online course for directed learners — whether they be college students in an intellectual property fundamentals course, users of the U.S. Patent and Trademark Office or the U.S. Copyright Office, executives working in corporate law and engineering departments, or entrepreneurs and independent inventors.

Principal author David Kline explains the hidden history and practical workings of the U.S. intellectual property system in popular and engaging prose. No doubt that has a lot to do with the fact that he’s not a lawyer but rather an ex-war correspondent-turned-business journalist who wrote “Rembrandts in the Attic,” the seminal work on patent strategy in corporate America published by Harvard Business Press.

(David Kline also coauthored my own book, Burning the Ships: Transforming Your Company’s Culture Through Intellectual Property Strategy published by Wiley in 2009).

Don’t think for a minute, however, that The Intangible Advantage is some dumbed-down short course in the vein of the “Dummies” series of books. This is a rigorous in-depth work that explains the complex practical workings of patent, copyright, trademark and trade secret law in easily-understandable (non-legalese) language. In fact, it’s so comprehensive and eye-opening that I guarantee you even IP lawyers and judges will learn things they never knew before about the hidden history and economics of intellectual property.

And although written by a non-lawyer, The Intangible Advantage has been closely vetted by an advisory board of leading intellectual property academics and practitioners including:

  • Former U.S. Undersecretary of Commerce and Director of the U.S. Patent and Trademark OfficeDavid Kappos, the executive editor of the book.
  • Chief Judge (ret.) Paul R. Michel of the U.S. Court of Appeals for the Federal Circuit, the nation’s main court for patent appeals.
  • Professor Richard Epstein, the Laurence A. Tisch Professor of Law at New York University, a senior fellow at the Hoover Institution, and professor emeritus and senior lecturer at the University of Chicago.
  • Professor Paul M. Janicke of the Intellectual Property and Information Law Program at the University of HoustonLaw Center.
  • Inventor and entrepreneur Louis Foreman, the founder and CEO of EdisonNation, an invention organization, and creator and executive producer of the Emmy Award-winning PBS TV show, Everyday Edisons.

This important book and video series is being made available for free under the auspices of his Michelson 20MM Foundation, which seeks to make higher education more accessible by offering textbooks as well as new forms of interactive educational content for free online to college students.

His other charitable ventures include the Michelson Medical Research Foundation, which he launched with a $100 million grant to fund cutting-edge medical research considered too avant-garde to receive funding from conventional funding sources. He and his wife Alya Michelson also donated $50 million to the University of Southern California for a convergent bioscience center to pursue medical breakthroughs in cancer and other diseases.

Intellectual property lies at the heart of modern economic and innovation policy, including America’s relations with China and other major powers. As such, IP is not just for lawyers anymore. The Intangible Advantage makes it accessible to everyone.

As Gary K. Michelson concludes in his preface:

“The Founding Fathers of America created the world’s first democratized intellectual property system for the common man. Now, the brightest minds in intellectual property have collaborated to democratize this once-inscrutable subject and bring you the world’s first intellectual property textbook, online course, and videos series for readers and learners like you. I hope you will find it enlightening — and useful.”

The Author

Marshall Phelps

Marshall Phelps is Vice-Chairman of the Center for Intellectual Property Understanding, a non-profit dedicated to increasing IP awareness and improving attitudes. Phelps is a seminal figure in IP history, having established IP as a business unit at IBM in the 1980s, and helping to generate some $2 billion in annual patent and IP revenues. Recruited in 2003 by Bill Gates to build Microsoft’s IP department, he took the company from a handful of licenses to over 600 when he left in 2010 and helped to build one of the most productive patent portfolios in technology. Phelps, who co-founded Intellectual Ventures, was elected in 2006 to the initial class of the IP Hall of Fame. Named one of the “World’s Top 300 Intellectual Property Strategists” by IAM Magazine, Mr. Phelps also writes a regular monthly column for Forbes on the challenges business leaders face in developing and implementing innovation-driven growth strategies.

Warning & Disclaimer: The pages, articles and comments on IPWatchdog.com do not constitute legal advice, nor do they create any attorney-client relationship. The articles published express the personal opinion and views of the author and should not be attributed to the author’s employer, clients or the sponsors of IPWatchdog.com. Read more.

Discuss this

There are currently 8 Comments comments.

  1. Charles Ankner June 8, 2016 10:08 am

    Keep innovating! Filing prudent patent apps early and often. Almost as important as voting, and spring from the same Constitutional Rights…

    https://www.linkedin.com/pulse/weaponized-cannabis-tm-charles-ankner?trk=mp-reader-card

  2. anon June 9, 2016 7:12 am

    “The Founding Fathers of America created the world’s first democratized intellectual property system for the common man.”

    Wrong. The Venetian Patent Statute of 1474 did that, followed by the UK 1624 Statute of Monopolies.

  3. Night Writer June 9, 2016 8:51 am

    I was reading an article about the music industry. Wow has it changed because they can’t enforce their IP.

  4. angry dude June 9, 2016 9:07 am

    Important clarification is in order:

    Patents are essential in industries like surgical devices where it is trivial to copy someones else’s product and equally easy to detect infringement.

    In many other industries trade secrets present much more attractive alternative, provided that underlying know-how can be kept secret for some time.
    Patenting means disclosing your know-how to the world and then having to jump through all the hoops detecting and prosecuting infringers.

    Why bother with patents when I can just encrypt my code and keep it’s inner working a trade secret for a long time, if not forever ?

    As far as I am concerned, we are back to Dark Ages (until they restore injunctions and punitive damages, at the very least)

  5. Anon June 9, 2016 10:21 am

    My dear namesake,

    Perhaps the emphasis on “common man” was missed in your haste to insert some historical context.

    After all, the US system was explicitly different than the preceding systems (notably including the English version) in that for the US, we wanted the property right not only to be fully alienable, but to NOT be a “game of kings” as to neither costs to partake, nor as to costs involved in the subject matter under consideration.

    And I would hasten to point out that these distinctions are not minor, nor are they not pertinent to many of the debates raging today on the nature of the US property that is created through the US patent system.

  6. Dkline June 9, 2016 10:42 am

    Exactly.

    Anon, you missed the word “democratized” in the article’s statement that “The Founding Fathers of America created the world’s first democratized intellectual property system for the common man.”

    In Britain, patent application fees were 11 times the per capita income of the average citizen. In America’s patent system for the masses, the fee was less than 5% of Britain’s.

    In Britain, the applicant had to get approval from seven different offices and then get the signature of the king — twice! This required the hiring of expensive patent agents. In America, you only needed approval from only a single office — and you could mail in your application from anywhere in the nation postage free.

    In Britain, “working requirements” limited patents to only those with the wealth and resources to open a factory to produce products based on the invention. In the U.S. even the poor could earn a living by inventing full time, then licensing their patent rights to manufacturers for commercialization (as Elias Howe and Thomas Edison did).

    Overall result? By the mid-19th century, the U.S. had four times the per capita patenting rate as Britain. And we were producing 5 times as many patented inventions each year as Britain, even though at that time our populations were roughly equal in size.

    That’s what they mean when they say the U.S. created the world’s first democratized patent system for the common man.

  7. Ternary June 9, 2016 1:22 pm

    The only thing I ever wanted to do was invent. I don’t even want to be a billionaire. Based on considerations of existing art, flaws or imperfections in theory and practice and a constant flow of novel ideas, there is almost no end to the inventions that I can generate. Instead, I am ending up in this Byzantine world of patent prosecution based on a “gotcha” philosophy where nothing is what it seems, rules are changed arbitrarily by rather dull bureaucrats with their own interests and scientifically uninterested judicial authorities and the reputation of being an inventor is being tarnished with the unsavory innuendo of being a troll. If I have one observation of the US Patent System nowadays, it is that the current system is absolutely not for the “common man.”

    In fact, I would recommend a common man to carefully assess the cost of pursuing patent protection. Pursuing patents for the common man is not worth the trouble and financial success in unlikely. In that regard the very commendable free book created at great cost and effort is very untimely, unless it is intended as a warning to the uninitiated.

  8. Dkline June 9, 2016 1:36 pm

    Ternary, I couldn’t agree more that the patent system has moved away from its roots and purpose. Patents for bona fide inventions are too costly and difficult to obtain, and in today’s legal and political climate, extremely difficult if not impossible to enforce — especially by small owners with limited resources. That spells trouble for America’s innovation capacity and competitiveness.

    But these things tend to move in pendulum fashion. In the mid-1970s, patents were viewed by the Justice Department through the lens of anti-trust, and Zerox was forced to give away its patents, giving low-cost Japanese manufacturers the edge and gutting the city of Rochester in the process.

    But witghin 10 years, the CAFC was formed, Bayh-Dole was passed, and patents were sighnificantly strengthened after policymakers realized that their anti-patent approach was hobbling U.S. competitiveness.

    I’m confident that the pendulum will within a few years swing back towards stronger and more enforceable patents, just as it did in the 1980s.

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