Stewardship: taking good care of the resources entrusted to one

Circa 1980: Senator Birch Bayh (right) and Staffer Joseph Allen (left) in a Bayh-Dole hearing.

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.

A new study shows that this spinning of straw into gold is precisely what our academic research organizations have been quietly doing year after year.  The just released report “The Economic Contribution of University/Nonprofit Inventions in the United States: 1996-2010” provides a much needed dose of good economic news when we sorely need it.   It shows that the university/industry R&D partnership created by the Bayh-Dole Act of 1980 is essential to our economic growth while protecting public health and well-being.

Earlier today the United States Patent and Trademark Office tweeted the following: “Follow Einstein’s and Jefferson’s footsteps…become a #Patent Examiner. Apply to the USPTO by Nov. 1.” Yes, the USPTO is hiring more examiners, which is very good news.

The fiscal year 2011 results are now in and the backlog of untouched patent applications as of the end of FY 2011 was 669,625, so there is plenty of work to be done and hiring more patent examiners has to be a part of the solution.  But did you know that Albert Einstein was a patent examiner?  How about Thomas Jefferson?  Jefferson is largely regarded as the first U.S. patent examiner.  Thomas Jefferson (then Secretary of State), along with Secretary of War Henry Knox, and Attorney General Edmund Randolph, made up the first patent examination panel for the United States of America.  Einstein, on the other hand, worked for the Swiss Patent Office.  It was while working for the Patent Office that Einstein came up with his theory of relativity.

What should you expect from President Obama’s jobs speech tomorrow? Sadly, not much.

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.

As I argued in my “Labor Day Message for President Obama” in the Wall Street Journal last weekend, there is a great deal that the president and congress can do to create millions of new jobs quickly, if only they would stop their ideological bickering and instead “focus on a few practical, low-cost measures that we know will create lots of jobs quickly.”

The United States Senate voted 93 to 5 earlier this evening to end debate on patent reform, which should set up a vote on H.R. 1249 in the coming days.

The United States Senate first passed its own version of patent reform, dubbed the America Invents Act – S. 23, in February 2011. The House of Representatives took up patent reform in the Spring, ultimately passing H.R. 1249, also dubbed the America Invents Act. Because the House version of patent reform was not identical to the Senate version of patent reform the legislation pinged back to the Senate. Immediately before the Senate went out on its annual August recess Senate Majority Leader Harry Reid (D-NV) filed for cloture on H.R. 1249, scheduling the Senate’s first day back after the August recess as the day for the cloture vote. That cloture vote is what passed by a vote of 93-5.

The U.S. Chamber of Commerce conducted two small business focus groups on April 1, 2011, in Philadelphia, as well as a national survey of small business owners through interviews with 900 businesses April 8 – 12, 2011. The findings from this study make up the inaugural quarterly “Small Business Outlook Survey,” and paint an unfortunately bleak picture of the collective outlook of small businesses moving forward.

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.

Pat Choate and Hank Nothhaft, at the Met Club, June 14, 2011.

I was lucky enough to receive a review copy of Great Again several months before it became available. I have also had the pleasure of getting to know Hank Nothhaft and his co-author David Kline over the past year or so, frequently exchanging e-mails discussing a variety of innovation and patent related issues. It has been exceptionally difficult to keep quiet knowing what Hank and David were writing about, and then reading the nearly finished manuscript. Simply put, everyone in the innovation industry and patent community needs to read Great Again. Every Staffer on Capitol Hill and everyone working in the White House needs to read Great Again. While Members of Congress are no doubt busy with a great many things, they too should read Great Again, but at the very least Members of Congress and those in the Executive Branch, including President Obama, should at a minimum read the Introduction, which is just 12 pages long.

Congressman Paul Ryan

In a rather stunning development, key Republican leaders in the House of Representatives are opposing an adequately funded Patent Office.  Indeed, the opposition to appropriate funding for the United States Patent and Trademark Office is becoming a political matter, and the language used to describe the issues suggests that Republicans seem to believe they can score points against the Obama Administration by opposing USPTO funding.

In a letter sent to Congressman Lamar Smith (R-TX), two key Republican Chairmen are opposing the USPTO funding mechanisms currently in place in H.R. 1249, which mirror those passed by the Senate earlier this year.  Congressman Paul Ryan (R-WI), who is Chair of the House Committee on the Judiciary, was joined by Congressman Harold Rogers (R-KY), who is Chair of the House Committee on Appropriations, opposing provisions that would allow the Patent and Trademark Office to keep the user fees it collects, which are payment for services to be rendered.

Last week LinkedIn soared to unexpected heights as it debuted as a publicly traded company on the New York Stock Exchange.  Priced at $45, LinkedIn shares more than doubled by the end of its first day as a public company, spiking close to triple the $45 offering price before sliding back.  On Friday the stock closed over $93, but on Monday the stock opened at $86.45, and at mid-day it was bouncing around slightly north of $85 per share, and by mid-afternoon it started to climb once again toward $92.  See NYSE: LNKD.

It is still early to know whether this is irrational exuberance or whether this is a meaningful event for the companies that follow LinkedIn to IPO.  In all likelihood it is a little of both, namely a meaningful event that demonstrates at least some irrational exuberance.  With the economy and the IPO market having been in the tank for so long a little zeal never hurt anyone, right?  In any event, regardless of what LinkedIn does from here on out the fury of trading and interest suggests that good things are on the horizon for the economy and perhaps for job creation as well.

Counterfeiting and the theft of intellectual property rights is not just a matter for companies.  Such theft, or piracy as it is frequently referred to, is a major issue for the United States government.  Over the years the piracy problem has continued to grow in importance in both trade relations and in the war against organized crime and terrorists.  The United States needs to do what it can to prevent intellectual property theft because of the negative impact it has on job creation and our economy.  It is also imperative to shut off the flow of easy money to criminal enterprises.  Without money they become starved for resources, a big strategy in the fight against global terror.

On May 5, 2011, in prepared remarks in a speech to commemorate World Intellectual Property Day, U.S. Commerce Secretary Gary Locke acknowledged  that much still needs to be done regarding theft of intellectual property around the globe.  Secretary Locke said: “[W]hen over 80 percent of all software installed on computers in China is counterfeit and when first-run movies continue to appear on rogue web sites as soon as they show up in the theaters – then we know the problem is still grave.”

Sometimes the problems facing our nation truly are difficult to solve. Reducing the country’s out-of-control budget deficit and fixing our broken public schools systems, for example, each took decades to grow into serious threats to America’s future. And each requires more political vision and national unity to resolve than seem to exist right now.

But other problems are not that difficult to solve, if only our leaders would choose to use some common sense. Take job creation, which is supposed to be the Number 1 policy objective in America right now. The mechanics of job creation are hardly a mystery, after all. We know, for example, that all net new job growth in America comes from startup businesses, not Big Business (see research by the Census Bureau and the Kauffman Foundation).   And we also know that the vast majority of these startups need patents to get the funding from investors they need to start hiring people so they can develop their innovative new products and medical treatments for the public (see the Berkeley Patent Survey of Entrepreneurs).

Gene Quinn, at University of New Mexico, April 21, 2011

Patents are indeed the lifeblood of innovation. Of course, without innovation nothing else happens, or matters, but there is definitely a symbiotic relationship between innovation and patents. The innovation that we say we most want is that innovation that is cutting edge, not just an improvement upon what already exists; paradigm shifting innovation or technologies that could be characterized as disruptive in nature. It is with paradigm shifting, disruptive innovation that we see leaps forward. Those leaps forward lead to the formation of new start-up companies and frequently to the birth of entire new industries. It is with this type of highly desirable innovation that we see enormous job growth, which the U.S. economy could use right about now. Unfortunately, this type of innovation does not come cheap.

Funding for Fiscal Year 2011 has been a thorny issue for quite a while now.  Congress did not pass a Fiscal Year 2011 budget in the Fall of 2010, as they are supposed to do.  It is widely believed Congress punted on this responsibility because of the 2010 elections and fear of the electoral response to budget negotiations in the election cycle.  That, however, lead to a series of Continuing Resolutions that funded the government on a limited basis. The last Continuing Resolution (or CR) ran out on April 8, 2011, with an 11th hour agreement, which was ultimately passed by Congress and signed into law by President Obama the following week.  When the dust had settled the United States Patent and Trademark Office did not fare well at all, with $100 million be diverted from the Patent Office.  That lead to the Office today announcing severe austerity measures because they don’t have the funds available to operate as a going concern.