As I sat there this morning having breakfast and drinking my coffee I was reading Innovation, which has as its tag line America’s Journal of Technology Commercialization.

Really? I find it impossible to believe that a magazine that purports to be a journal of technology commercialization would publish the complete and utter nonsense that I read this morning.

Newsflash… Bayh-Dole is objectively positive and has been extraordinarily successful in its mission. The FACTS are overwhelming. Anyone who suggests Bayh-Dole is anything other than successful beyond anyone’s wildest dreams is simply not being honest and is ignoring factual evidence. Indeed, detractors frequently make arguments that fly directly in the face of facts. Many believe they simply lie or make up what they are saying to forward their own agenda.

The World Intellectual Property Organization (WIPO) publishes a yearly report of the worldwide intellectual property filings. World Intellectual Property Indicators 2012 estimates draw from approximately 133 Patent offices, and include direct national and regional applications and those received through the Hague system of international registration.

Design patent applications have experienced continuous growth for the past decade. Patent offices worldwide reported 344,700 new applications in 2004 and 775,700 in 2011. In the most recent years, the growth of design applications has accelerated, with a rate of 13.9% growth in 2010 and 16% in 2011. Of the top 20 origin countries, which are defined as the countries of residence of design patent applicants, nearly all saw growth in 2011. This trend reflects the overall growth of patents and trademarks, which reported a record year across the board. Despite economic uncertainty in recent years, IP growth has persisted.

In December 2012, the Information Technology and Innovation Foundation (ITIF) issued a report titled Why America Needs A National Network for Manufacturing Innovation. The report asserts, among many other things, that “[t]he federal government must play a catalytic role in bringing NNMI into existence.”

My own view of government precludes me from sharing the ultimate goal of a government should initiate a National Network for Manufacturing Innovation (NNMI). I tend toward the Jeffersonian view of government — that government which governs least governs best. I am also a big believer in the power of incentives. In all walks of life what is obtained is what is incentivized. If employees know how they will be evaluated, for example, even a mediocre employee can achieve high marks by performing tot the evaluation. Tax policy is another excellent example, as is the patent system.

For better or for worse, the United States has not incentivized manufacturing. In fact, the incentives associated with manufacturing are to off-shore manufacturing rather than do it in the United States. There are too many bureaucratic hurdles to opening a business in the U.S., particularly a manufacturing facility. Anyone who doubts this needs to read Great Again: Revitalizing America’s Entrepreneurial Leadership.

Todd Sherer, Ph.D. is the director of technology transfer at Emory University, and is also currently President of the Association of University Technology Managers (AUTM). Recently AUTM concluded its annual survey and found, not surprisingly, that University technology licensing has substantial positive impact on the U.S. economy. On the heels of that survey I reached out to my friends at AUTM and requested an interview with Sherer.

Our interview took place on Friday, December 14, 2012.  During our interview we talked about the nearly constant challenges to gut Bayh-Dole, which is the very foundation of university technology licensing and the piece of legislation called the most successful domestic legislation in the post World War II era by none other than The Economist. We also discussed what it is that universities do and how, despite what the critics say, the basic research done by universities is hardly ready for the marketplace. To read the interview from the beginning please see Part 1.

Without further ado, here is Part II (the finale) of my interview with Todd Sherer.

Todd Sherer, PhD, is Director of Technology Transfer at Emory University. Sherer and his staff in the Office of Technology Transfer manage more than 800 active technologies developed through basic research. But he is not just the Director of Technology Transfer. Sherer is also the current President of the Association of University Technology Managers(AUTM), which has as its core purpose the supporting and advancing of academic technology transfer both within the United States and around the globe.

On December 10, 2012, AUTM published the results of the AUTM U.S. Licensing Activity Survey: FY2011, and the AUTM Canadian Licensing Activity Survey: FY2011. Among the findings of the survey were that the 58 institutions (i.e., 31 percent of the 186 respondents) reported that 2,821 of their licenses paid $662 million in running royalties based on $37 billion in product sales, implying an average royalty rate of 1.8 percent.  The survey also contained very positive news about startups founded around university technologies. Some 66 institutions (i.e., 35 percent of the 186 respondents) reported employment of 24,653 by 1,731 operational startups, an average of 14 employees per startup.

Upon receiving the press release I set up an interview with Sherer, which was conducted on December 14, 2012, via recorded telephone call. What follows is Part I of our two-part interview.

A wide variety of credible sources confirm the existence of an inexorable link between the profound historical uniqueness of the American Patent System, the rate and quality of American innovation, the rate and quality of American business and job creation, and the profound historical uniqueness and evolution of the American economy.

Accordingly, changing the US Patent System has measurable and profound effects on the American economy just as surely as changing the Tax Code, the Antitrust Laws, or Trade Policy is routinely relied-upon public policy tools for regulating the American economy.

The verdict is not yet in on the constitutionality of the major changes mandated by the 2011 America Invents Act (AIA) as is reflected in the Constitutional challenge discussed in here and here. More importantly, however, is the fact that the smallest and most innovative entities which create most of the new jobs in America already know that the AIA will undermine the US Patent System, and adversely impact their innovation and their job creation in America. It is imperative that we all understand the impact of the implementation of the AIA in 2013 and particularly the ability of large deep-pocketed Multinational Mega-Techs to game the system in the areas of post-grant review, business-method patents, and enforcement. This should be a year where we take control of the AIA implementation and fix the problematic aspects of the law.

Pulling the plug and letting out the baby with the bath water is ridiculous, on that everyone can agree. What people can’t agree on, surprisingly, is selecting a path for the future from the playbook of winning plays. Time and time again any more “do-gooders” seem to want to call plays from the playbook of plays that have never succeeded. In what universe does that make any sense whatsoever? When will they realize that plays that have not worked have failed for a reason? Success is not overdue. Get a grip!

With a firm grasp of some alternate reality, critics of the patent system, and specifically the critics of software patents, would have the United States forfeit the future in favor of something that has never worked. Curtailing patent rights has never worked to produce more innovation anywhere it has been tried. The inconvenient truth is that there is no evidence that a weaker patent system fosters innovation, but there is overwhelming evidence that a strong patent system does foster innovation, leads to growth, investment from abroad and a growing more prosperous economy.  Indeed, weak patent rights virtually guarantee innovation simply won’t happen.

So what is fueling the anti-software patent hatred and ridiculous claims that software patents are somehow evil? It is a particular world-view or ideology that approaches religious zealotry.  It certainly isn’t anything that resembles factual truth or reality.

Innovation and entrepreneurship are integral to America’s economic strength, and the U.S. patent system has been critical to nurturing this innovation economy.  Yet, there are some who continually argue that patents are a hinderance to economic development and the march of innovation. It will come as no surprise to anyone that I don’t believe that to be true.  In fact, if you actually look at he hard, cold facts objective individuals would all agree that the a patent system fosters innovation.  Patents do not hinder innovation.

What may surprise many readers, however, is that there are actually several well regarded academics who actually agree that the patent system fosters innovation. Yes, that is nearly heretical. Legal academics frequently take positions that would lead to the whittling away of patent rights.  Those academics simply ignore the realities that exist in countries where there are no patent systems.  They also ignore the reality that innovators require a reasonable rate of return in order to pump money into research and development.  In some cases it is many millions, even hundreds of millions of dollars that need to be invested.  It is naive to believe that anyone would spend millions or hundreds of millions of dollars without any competitive advantage. If a free rider could just copy and sell for less the creator would lose everything. That is not a model for success.  It is a recipe for failure.

In any event, on October 24, 2012, Professor Adam Mossoff of George Mason University School of Law sat down for a conversation with Professor Richard Epstein of the New York University School of Law. The conversation was sponsored by the Federalist Society and is available as a podcast MP3 download for those who are interested.

A report assembled by the USPTO and the economics and statistics administration (ESA) states that intellectual property intensive industries account for 27.1 million jobs (18.8% of all employment). These same IP intensive industries, which are better defined in the report, also account for $5.06 trillion or 34.8% of the U.S. GDP. See also IP Contributes $5 Trillion and 40 Million Jobs to US Economy. Therefore, it is clear to see the importance of intellectual property within the economy of the United States.

“The first step in winning the future is encouraging American innovation,” said President Barack Obama explains almost two years ago in his State of the Union Address delivered to Congress in January 2011. Innovation is the process through which new ideas are generated and ultimately put into the marketplace.  Innovation is one of the main forces behind the growth of the U.S. economy — it spurs national competitiveness.

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. Others have asserted that holding Samsung accountable for its theft of Apple’s property will prove harmful to consumers.  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.

Only a few weeks prior to the Apple decision, another American jury handed down a $1 billion judgment in another patent infringement case brought by another American company against a competitor.   In that case (which the media ironically paid little attention to), Monsanto – the world’s leader in sustainable agriculture – prevailed in an infringement action involving the theft of its revolutionary seed technology.  Just as Apple’s vision and risk-taking in the consumer electronics market revolutionized the industry, Monsanto bet the company on its seed technologies and transformed the business of agriculture.  The verdicts in these two cases should not be treated as outliers.  Rather, they should be accepted by Americans as foreseeable and desired outcomes of a pro-IP industrial policy America has embraced for decades.

On July 19, 2012, I interviewed Bob Stoll, former Commissioner for Patents of the United States Patent and Trademark Office.  The interview took place in a conference room at Drinker Biddleon K Street in Washington, D.C.  After 29 years working for the USPTO and a total of 34 years working for the government, Stoll retired on December 31, 2011.  He then started his new, second career as a private citizen and all around patent specialist at Drinker Biddle in the firm’s Intellectual Property Group.

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.

 

Stewardship: taking good care of the resources entrusted to one

 

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.

Editor’s Note: What appears below are the prepared remarks of Bernard J. Cassidy.  Mr. Cassidy testified earlier today before the House Committee on the Judiciary’s Subcommittee on Intellectual Property, Competition and the Internet.  The Hearing was on “The International Trade Commission and Patent Disputes.”  Mr. Cassidy’s remarks are published here with his permission.

Chairman Goodlatte, Ranking Member Watt, and Members of the Subcommittee,

My name is Bernard J. Cassidy, and I am Executive Vice President and General Counsel at Tessera Technologies, Inc., which is headquartered in the heart of Silicon Valley, in San Jose, California.  We have facilities in Charlotte, North Carolina, Rochester, New York, and Arcadia, California as well as in Europe and Asia.  I deeply appreciate this opportunity to speak before you regarding the importance of the International Trade Commission to my company and our innovation economy.

Mention counterfeiting and what many ordinary citizens immediately think about is counterfeit currency.  Indeed, counterfeiting of money is one of the oldest crimes in history. Counterfeiting currency in the United States was a serious problem during the 19th century when banks issued their own U.S. currency, with approximately 1,600 state banks designing and printing their own notes. The adoption of a national currency in 1863 was believed to be the solution for the problem, but counterfeiting was so widespread that on July 5, 1865, the United States Secret Service was established to suppress counterfeiting.  Although substantially curtailed, counterfeiting of money still remains a threat to the U.S. economy.

Mention counterfeiting and what a person who specializes in intellectual property thinks about is the growing amount of counterfeit goods that flood the market costing hundreds of billions of dollars of damage to the 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.

Patent lawsuits and quarrels are not new, nor uncommon. It seems as of late that more and more lawsuits have surfaced, especially in big name companies. Is this a trend or are the big household names significantly overlapping in services and customers, leaving patent lawsuits as a last-ditch effort?

An eight-week jury trial began a few weeks ago to decide whether Google infringed an Oracle Java patent for technology incorporated into its Android software. The jury is in the midst of researching the claim and whether or not Google’s actions might be considered “fair use.” Were Java’s  APIs copyrighted? U.S. District Court Judge William Alsup might make that notion – in which case, all APIs will be copyrighted, leaving Google in violation with its Android creation. This isn’t really a case for the jury though, the decision rests on the judge.

Before that, a lawsuit was filed against Apple, RIM and Samsung by a small company over alleged infringements of a touchscreen patent. This stirred up all kinds of investor advice and customer loyalty.