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.

“This first of its kind report shows that IP- intensive industries have a direct and significant impact on our nation’s economy and the creation of American jobs,” said Commerce Secretary John Bryson. “When Americans know that their ideas will be protected, they have greater incentive to pursue advances and technologies that help keep us competitive, and our businesses have the confidence they need to hire more workers. That is why this Administration’s efforts to protect intellectual property, and modernize the patent and trademark system are so crucial to a 21st century economy that is built to last.”

Several weeks ago, on December 11, 2011, U.S. Commerce Secretary John Bryson set out his vision for how the Department of Commerce can best partner with the business community to support President Obama’s jobs agenda.  If the past is any indication of the future, President Obama and it senior team will do whatever they can leading into the new year to jump start the economy and get Americans back to work.

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?

A new report published by WIPO today shows that intellectual property filings worldwide rebounded strongly in 2010 after a considerable decline in 2009.  In fact, the recovery in IP filings was stronger than the overall economic recovery. This is probably to have been expected given that patent filings in particular are a leading indicator of the introduction of new technologies into the marketplace.  The question now is whether the patent systems of the world can actually process these increased patent filings in a releavant time frame so that entrepreneurs and small businesses, who are the engine of growth, can be the catalyst pushing toward economic recovery.

According to the World Intellectual Property Organization (WIPO), patent and trademark filings grew by 7.2% and 11.8% respectively in 2010 compared to growth of 5.1% in the global gross domestic product (GDP).  Not surprisingly China and the United States accounted for the greatest share of the increased filings.  With China you have a growing economy in a country with over 1.3 billion people.  With the United States you have the largest economy in the world and the rights granted are undoubtedly very strong given the fact that, for the most part, the U.S. judiciary is not anti-patent.  Not to be outdone, however, in Europe the growth of IP filings in France, Germany and the UK also far exceeded the GDP growth rate of these three European economies in 2010.

Just the other day the United States Patent and Trademark Office announced that they were seeking public input regarding where they should open 2 more satellite offices in addition to the one being opened in Detroit, Michigan sometime during 2012. The America Invents Act requires the Patent Office to open satellite locations provided funds are available. The Office sees the establishment of these satellite offices as an important factor in continuing efforts to recruit and retain a highly skilled workforce, reduce patent application pendency and enhance communication between the USPTO and the patent applicant community. But where should they be located?

In evaluating where to locate any new satellite offices the USPTO has set forth certain criteria that those submitting comments should keep in mind.  The factors specifically identified in the Federal Register Notice are: (1) Will the location increase outreach activities to better connect patent filers and innovators with the USPTO? (2) Will the location enhance patent examiner retention and provide a strong quality of life; (3) Will the location improve recruitment of patent examiners; (4) Will the location decrease the number of patent applications; (5) Will the location improve quality of patent examination; (6) Does the location have available office space; (7) Are there universities with strong engineering programs nearby? (8) Are there research facilities nearby? (9) Will there be a positive economic impact to the region?

Recently the President’s Council on Jobs and Competitiveness, otherwise known as the Jobs Council, issued an interim report outlining a number of suggestions and recommendations.  Some of the suggestions are quite good, although hardly revolutionary.  Indeed, one obvious recommendation is for Congress and the Obama Administration to explore tax reforms that would increase the competitiveness of businesses locating in the United States.  I guess it is that type of outside-the-box thinking that only a Presidential blue-ribbon panel could come up with!

Indeed, many of the ideas in the interim report are quite broad and vague, but on the tax issue there were at least a couple specific recommendations.  The Jobs Council recommends eliminating capital gains taxes on investments of $25 million or less in privately held companies where the investment is held for 5 years or longer (see page 19).  Also recommended is eliminating corporate taxes for the first year a company is in existence and reduce corporate taxes by 50% in the second and third year of existence (see page 19).  The thinking here is that by reducing tax burden during the first three years companies will be able to invest in growth and expansion, which seems reasonable and also calculated to lead to job creation given that start-ups disproportionately are responsible for creating new jobs.  Unfortunately, being reasonable and calculated to lead to job creation likely means that it has no realistic chance of being implemented.

Obviously, the universe enjoys irony. How else to explain the simultaneous issuance of the President’s Council on Jobs and Competitiveness interim report (see pages 21-22) with recommendations that would wreak havoc on university technology transfer, and an article in the Wall Street Journal crediting the same system as one of the Three Policies That Gave Us the Jobs Economy.

When asked how he felt about a blunder made by one of his politically appointed generals, President Lincoln said “It hurts too much to laugh, and I’m too big to cry.”  When considering these recommendations of the report, it’s easy to feel the same way.  If adopted, they undermine the Bayh-Dole Act, which allows universities and small companies to own and manage inventions they make with federal funds.  There is considerable evidence of the harm such an action would do to the US economy, undercutting the very objectives of the Council.

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 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.

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.

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.

The Subcommittee on Energy and Power held hearings earlier this month on “The American Energy Initiative.”  The hearings provided an overview of the challenges and opportunities for alternative transportation fuels and vehicles. The hearing explored a number of issues, including the current status of the Renewable Fuel Standard, and implementation challenges facing regulators, producers, and marketers of renewable fuels. The hearing also discussed the prospects for meeting future conventional and advanced biofuels targets under the Renewable Fuel Standard, and issues related to their incorporation into the gasoline supply, as well as the current status of efforts to expand the use of natural gas and electric vehicles, the cost of driving, the economy, jobs, and national security.

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).

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.