We have all made the arguments — the issuing of patents leads to job growth. The nay-sayers would have people believe, however, that the issuing of patents is a drag on the economy. The factual realities are stark and tell a clear and unmistakable tale: patents are good for the economy and promote job growth.
Those who are not fond of the patent system like to pretend that innovation is free and will happen despite funding. Purveyors of extremist anti-patent rhetoric even go to the extreme of saying that we can expect the same level of innovation as we enjoy now absent a patent system. There is always one who is a software programmer who says that he or she could just work non-stop for six months, suffer many sleepless nights and wind up with a killer application, program or service, all at no cost and despite any patent protection. Of course, this proves the point for those who believe in a patent system, which is clear to all rational thinkers. Nothing in life is free. Opportunity costs are costs, and exactly how do you plan on taking your application, software or service to market? At some point every business will need funding to grow, it is just that simple. Patents and the rights they provide are extremely attractive to investors, so attempting to grow a business without a strategic patent portfolio means you are building obstacles and hurdles to success rather than removing them.
I frequently ask myself why it is that patents continue to come under attack by those who want to pretend they are only a burden on society and provide no benefit. Believing patents provide no benefit to society demonstrates a failure to understand fundamental aspects of the patent system, disclosure and publication of applications, as well as the basic economic reality that to innovate requires funding. Innovation, particularly cutting edge innovation, requires quite a bit of funding, sometimes many millions or hundreds of millions of dollars of funding. Where will that money come if there is no reasonable expectation of recouping the investment? Free-riders are not innovators and policies that encourage free-riders at the expense of innovators are nonsensical.
News of Nathan Myhrvold’s Intellectual Ventures bringing a series of lawsuits should have displaced the above the fold headlines regarding the vague financial turmoil currently afflicting the U.S. and World Economy. Whereas one will pass, like kidney stones, with much watery eyed pain and gnashing of teeth, the other is far more insidious and potentially fatal to our collective future as a leading economy. Here’s why:
Just like in the story-line of Independence Day, where the alien death ships slowly but surely positioned themselves over each major city, with the eventual outcome well understood, so too is Intellectual Ventures (I.V.) slowly positioning itself as the patent overlord over many major industry segments. Just like in the movie, the eventual outcome is well understood. To wit: Complete usurpation of the U.S. Patent system. The outcome is a, gigantic tax/toll collector controlling the pulse of innovation in the U.S. or, like the movie, extermination of innovation.
Let’s be perfectly honest, the US patent system has stopped rewarding innovation and has started rewarding those who have the finances and ability to game the system. That is a huge problem and one that needs to be addressed far more quickly than any other problem facing us. I have been saying for years that the manufacturing jobs are not coming back and that we need to focus on those areas where we can grow jobs and the economy, and that space is the innovation space. Innovation is at the core of growth because discoveries lead to inventions which lead to new technologies which lead to the creation of new industry which leads to the creation of high paying jobs. A rising tide lifts all boats and the tide that is going to lift the US economy is the innovation tide, so we need to start focusing on that and putting in place an environment that will allow innovation to thrive. This of course means a functioning patent system that recognizes worthwhile inventions, but it also requires that we put a stop to patent trolling.
In the election yesterday the Republicans scored an enormous victory in the United States House of Representatives, gains of a still unknown number in the United States Senate, and gains in Governors’ races as well as State House and State Senate chambers across the country. Earlier this afternoon, at 1:00 pm Eastern Time, President Barack Obama held a press conference to discuss the election and answer questions. At times during this news conference it seemed that he was in denial, not wanting to acknowledge that Americans could have potentially repudiated his policies, and at times he also seemed conciliatory and willing to work with Republicans. President Obama even accepted blame for the frustration of voters with respect to the progress on the economy.
There was one exchange between he and Chip Reid, White House Correspondent for CBS News, that had to do with the difference between spending and investment, and which touched upon the importance of continuing to foster research and development and not taking a back seat to China. President Obama said he is also willing to listen to ideas to stimulate job growth that Republicans have historically supported and that are deficit neutral. Well Mr. President, if you are serious I have the answer for you, and it wouldn’t take more than a $1 billion up front payment and the passage of a bill that is a single sentence long. The solution lies with the United States Patent and Trademark Office.
The Biotechnology Industry Organization (BIO) filed an amicus brief in the U.S. Court of Appeals for the Federal Circuit on Friday, October 29th, in an appeal of a lawsuit brought by the American Civil Liberties Union on behalf of a number of plaintiffs against Myriad Genetics, the U.S. Patent and Trademark Office, and others. The brief, which was filed jointly with the Association of University Technology Managers (AUTM), supports the patentability of isolated DNA molecules, noting that invalidating the patentability of these molecules would discourage future biotechnological innovation.
Having just talked to law students about getting their resumes ready in case the economy does come back to life sooner than some expect, I thought I might write about my thoughts on the economy, where patent practice is headed, when we will get out of our economic malaise and how to prepare yourself in advance to be ready when the job market, and patent market, turns the corner, which we all know it will do.
Some will question me writing about tax policy, but the undeniable truth is that tax policy is enormously important to businesses of all sizes, including small businesses. Tax policy also affects job creation, because anytime businesses have to pay more and retain less that increases operating costs, which necessarily leaves less to reinvest in the business. This affects all sorts of things, including but not limited to lay-offs, a failure to create jobs and the investment in the creation of innovation. History shows us that when business is bad and revenues decrease businesses of all sizes typically cut back on activities necessary to innovate. When you look for less you find less, so this can and does negatively impact innovation. Innovation, job creation and a variety of matters important to small businesses are common topics here on IPWatchdog.com. With this backdrop I leap to take on the un-reported story relating to the fact that expiration of the Bush tax cuts will impact virtually all small businesses, not just the 3% of small businesses continually, and inaccurately, stated by the Democrats.
On Wednesday, September 8, 2010, the Wall Street Journal published commentary titled Want to Create Jobs? Certainly Don’t Rely on the USPTO, which was an attempted rebuttal of the NY Times op-ed written by Chief Judge Paul Michel and Tessera CEO Hank Nothhaft, which was titled Inventing Our Way Out of Joblessness. I say that it was an attempted rebuttal because simply stated the article was embarrassingly incorrect about virtually everything it stated as fact, and provably so. The fact that the Wall Street Journal published such complete and utter nonsense, which could have been proven to be factually incorrect had anyone even read the study relied upon by the authors, is quite sad. Those who don’t believe innovation leads to job creation have their heads firmly implanted in the sand and simply must choose to ignore history, which proves otherwise.
In looking around for something to write I stumbled across a press release from August 10, 2010, issued by Your Baby Can, LLC. This is the company that advertises almost non-stop on Sirius/XM every morning, at least on ESPN Radio, claiming that all you have to do is put your children in front of the video and they miraculously learn to read. I have often joked about the commercial and how unrealistic and almost comical it seems, but when I noticed a copyright/counterfeiting angle I was immediately intrigued.