Posts Tagged: "economic growth"

The Fed has been oblivious to the mechanisms of market economics and technology investment driven by the degradation of patent rights in recent years. While the Fed focuses exclusively on inflation and the labor market, they have ignored factors driving technology investment and the disintegration of the patent system that has underscored the declining business investment trend. With a degraded patent system, investors have shifted to other asset classes or markets rather than investing in technology.

Make in India suggests that India is not empowering the nation to invent more or further but only to serve as a third wheel for other technological giants… India as a nation has a history of a glorious and innovative past. In our mythology, we have a knowledge bank of scientific thoughts related to flying machines, medicinal science and even genetic advancements. However, the current state of scientific and technological affairs is quite grim in India. India has failed to exploit its historical and scientific know-how to its fullest, and that has hampered the growth of the country in terms of its technological advancements.

I am particularly concerned about the impact this case law has on the patent application process. Instead of focusing on novelty and clarity, examiners and applicants alike spend time struggling to make sense of Section 101 jurisprudence. That is a serious misallocation of the limited resources of both patent examiners and applicants, leading to longer examination times and less reliable patent grants. Delays in patent review and patent grants can interrupt a startup’s lifecycle, negatively influencing employment growth, sales, and subsequent innovation. This is just one of several factors lengthening patent examination, but it is one that may warrant a congressional response.

The result of attacks on the patent system has been a concerted critique of key elements for protecting patent rights. These have included enabling the PTO to attack patent validity in a second window, attacking classes of inventions such as software and medical diagnostics, limiting access to the courts, increasing costs of enforcement by several magnitudes and restricting patent remedies. The totality of these attacks on the patent system, enabled in large part by the expenditure of vast sums to influence policy by technology incumbents in order to protect their historic monopoly profits, has been to fundamentally alter a democratized patent system to one that requires substantial capitalization. The net effect has been decline of investment in innovation particularly by small entities that require patents as a key tool for competition.

The declines in productivity growth in recent years are undisputed. There is some controversy over the causes of these declines, particularly, the sources of the declines in technology investment. However, the arguments of the present article elucidating a decline in the patent system suggest a clear and potent explanation for the declines in technology investment and in productivity growth…. The tech cartel has been relentless in denying opportunities for patent holders to enforce patents. The three main ways for attacking patents include instituting IPRs in the PTO, constraining enforcement in federal court and limiting damages. Each of these must be retuned.

While all economic views of productivity growth may have a grain of truth, I argue that all of these theories of productivity growth are fundamentally wrong. The economic evidence shows clear relationships between the trend of decline in productivity growth and the trend in declines of the U.S. patent system. As the patent system has been weakened in the last decade, there is less investment by start-ups in technology R&D. At the same time, the technology industry has become highly concentrated, with big tech incumbents dominating their industries. The combination of increasingly concentrated competitive configurations in the technology industry with the reduction in key rights embedded in patents, has resulted in substantially reduced incentives to invest in R&D innovations.

Fundamentally, patents facilitate access to VC financing, market entry and job creation. Without patents and an effective IP environment, the process stalls and, in some cases, firms may never emerge. Without adequate IP protection, innovators are unable to attract investments, business creation is slowed and jobs lost. Evidence suggests that this same story plays out, albeit with differing dynamics, across all sorts of firms and all nations. Economic prosperity relies on job growth, and it is clear that strong, effective IP rights have a role to play in creating both.

There is no credible evidence behind proposals to make the drastic changes embodied in the Innovation Act, the removal of discretion from judges to judge each case on an individual basis with mandatory stays and fee shifting, and new rules for pleading and discovery that would undermine the ability of legitimate inventors and patent holders from enforcing their rights against infringers.

The legal costs of the IP system should be measured against the value of intellectual capital in the U.S. economy, estimated in a study by Kevin Hassett and Robert Shapiro to equal between $8.1 trillion to $9.2 trillion… Weakening the US patent system harms economic prospects for middle income earners because it will stifle innovation, discourage patenting, reduce private investments in new technologies protected by patents, slow economic growth, increase unemployment, and harm consumers. The proposed reforms will reduce prospects for economic advancement for middle income earners because they damage entrepreneurship and small business and favor large incumbent firms over inventors and innovators.

The sensible response to all these new and evolving circumstances is not a rush to pass a bill, but a pause to evaluate the rapidly changing situation. Many expert leaders, including the former PTO Director David Kappos, have so suggested. So far Congress does not seem to be listening, but they should. The future of our economy and present job creation depend on a well functioning patent enforcement regime. Let’s make it more efficient, not eviscerate or hobble it.

Speaking without notes, Walker was in rare form. He spoke about everything from job creation to the need to allow innovators to benefit from the fruits of their labors… If you want an engine to create jobs you have to have inventors who bring value. “Make no mistake, at the core is invention and innovation, pick your term, they are one in the same,” Walker said. Without customers we don’t have jobs, and you cannot get customers without solving a problem and having some kind of competitive advantage. “If we don’t have a strong ecosystem that supports innovation we are going to have less of it. This isn’t rocket science,” he exclaimed. If we make something complicated we will have less of it.