Posts Tagged: "US Economy"

The magnitude of the problems facing our economy cannot be overstated. Neither can it be overstated that a coherent national innovation policy is the answer to what ails the U.S. economy. As Hank explains in the Introduction, “for the first time in our history, the connection between technological innovation and job creation has broken down. And for the first time also, the wealth created by innovation is going mostly just to a handful of founders and venture capitalists rather than to many thousands of employees, not to mention the community at large.” Through mismanagement and misapplication of tax, immigration and patent policies our leaders in Washington, D.C. have done us no favors. Speaking at the reception last night Nothhaft explained: “We live in the greatest country in the world and we seem bent on tying our arms behind our backs.” That has to change.

Despite the fact that Congressmen Ryan and Rogers would like this to be about the Obama Administration, the fact is that Senator Tom Coburn (R-OK) is the one who championed the amendment in the Senate that would give the Patent Office the ability to keep the fees it collects. Senator Coburn is known as “Senator No” for his staunch fiscally conservative stance on virtually all issues. So if you are willing to let facts influence your viewpoint there is absolutely no way that Patent Office funding within proposed patent reform can be an issue upon which Republicans can beat up Democrats. It was a leading fiscally conservative Republican in the Senate who brought the USPTO funding issue out of obscurity and to the top of the agenda.

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.

While many people believe that alternative energy is at least several decades away, what is clear is that if we do not set out about making that future a reality it will never been the future we realize. There is tremendous research ongoing relative to battery technologies, solar energy, biofuels, geothermal energy, wind energy, hydroelectric energy and much more. In all likelihood no one, single solution will replace our dependence on fossil fuels, at least not in the foreseeable future, but there does seem to be a light at the end of the tunnel. We only need to choose the path to obtain that reality.

Criminals 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 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. In fact, one of the most vicious drug cartels in the world makes an estimated $2.4 million per day selling counterfeit software.

Everywhere I go, I meet entrepreneurs whose ventures either failed or are slowly dying on the vine because of the outrageous delays they suffered in getting patents. Who would invest the huge sums needed to develop a new medical treatment, for example, without at least the promise of exclusivity and a return on their investment that a patent provides? But because of delays stretching up to seven or more years in getting a patent, these startups lost crucial funding opportunities—or in some cases, even went bankrupt—as a result of the backlog of 1.2 million applications now throttling America’s overburdened and underfunded “innovation agency.”

Discoveries that lead to scientific breakthroughs that lead to engineering feats that turn discoveries and breakthroughs into reality takes time; a lot of time. A lot of time spent researching, discovering and engineering means a lot of money. Just look at the path we are taking with respect to various clean, green, alternative energy technologies. It isn’t like we don’t know what we are looking for, or what the holy grail is. It will just take decades to get there. Similarly in the life saving technology areas, such as biotechnologies, companies can easily spent a decade sucking in money and not being profitable. Without funding that which society, our leaders in DC and the Judges wearing the black robes all want cannot come into being, period!

The last Continuing Resolution (or CR) ran out on April 8, 2011, with a 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.

For goodness sake, innovation is the key to a better economy, not raising taxes! Simply stated, taxing more at a time when individuals and businesses are doing less well is not the same as taxing more when individuals and businesses are doing better year after year. In one scenario the tide is rising and will remain high, although slightly less so with increased payments to the government. In the second scenario the tide is already lower and becomes even lower still with additional financial burdens owed to the government. It doesn’t take a rocket scientist to realize there is a fundamental difference between taxing a rising economy and taxing a falling, stagnant or sluggish economy.

Both the House and Senate bills create the opportunity for continual and constant challenges, one right after another. For example, challengers could tie up issued patents in post-grant review, followed by inter partes review and subsequently, or simultaneously, by challenges in one of the Federal District Courts. Thus, the settling of patent rights seems a distant dream if a well funded challenger wants to tie up a patent. The only hope for the patent owner is that with every subsequent challenge it becomes more difficult to challenge. That is what S. 23 sets up by having a “substantial new question of patentability” standard to initiate a post-grant review and then a much heightened “likelihood of success” standard to institute inter partes review.

Little impacts cascading together can have a large impact, but for the time being we need to realize that the technology is not where it needs to be to leverage alternative and renewable energy in an impactful way. That doesn’t mean we shouldn’t try, but it does mean we need to be perfectly honest with ourselves and realize that a silver-bullet green technology is unlikely. In the meantime as we incentivize innovators we need an all-of-the-above series of solutions.

Many people assume that there’s no way American manufacturers can compete with cheap Chinese labor. It’s just basic economics, right? Wrong. It’s the U.S. government’s myopic policy, not China’s lower payroll costs, that make our nation uncompetitive in the all-important solar and other high-tech manufacturing sectors. With manufacturing friendly tax policies and a permanent 20 percent R&D tax credit equal to what other nations offer China’s advantage drops to 1 to 2 percent, and that the U.S. can compete with.

While the market is recovering, I suggest finding something to keep your spirits up, and I do believe that it’s different for everyone, depending on personality. My advice to individuals seeking employment in this market, particularly this legal market, is to do good works that make you feel successful in at least one facet of your life. Take this time to focus on small things and improve yourself. Work on maintaining relationships with your friends and family. Work on your marriage. Reduce clutter in your home or apartment. Become more health conscious and physically fit. Learn a new skill. Find a way to excel in whatever professional capacity you are currently serving in. See the positive, navigate around the negative, and carry a pleasant expression on your face; no one wants to hire or be around a sourpuss. Howl to some Warren Zevon and watch some funny YouTube videos. Hold a puppy. Things will get better.

The log jam in patents issuances is not the only impediment to start-up job creation. Although it is certainly a big one. Tax and regulatory burdens on start ups have reached a critical mass in the last 10 years. A fact recognized by President Obama when he signed an Executive order last Tuesday ordering the removal of burdensome regulatory rules on business. Also a problem are the post 9-11 immigration policies that are driving many of the world’s best and brightest scientists and engineers to other countries. But the biggest job killer beside the patent backlog is the systemic destruction of our high tech manufacturing capacity.

While New Mexico is not the only institution fostering growth, they do on average participate in the start up of 5 to 8 new companies a year. Kuutilla said that STC.UNM has participated in licensing technology to start-up companies that have created multiple hundreds of jobs at an average annual salary of $80,000 per job, which is $30,000 higher than the average private sector salary in the United States. There is no doubt that jobs in the innovation economy are high paying and exactly the type of jobs we need to be fostering.