Building the Innovation Revolution

Under Secretary of Commerce for IP & Director of the USPTO David Kappos

July 18, 2011

President's Council of Advisors on Science & Technology

"Building the Innovation Revolution"

Draft Remarks as Prepared for Delivery

Good morning everybody - and thank you for that kind introduction. I want to thank the Director of the President's Office of Science & Technology Policy (OSTP) John Holdren, as well as PCAST Co-Chair, Eric Lander, for inviting me to participate in today's conversation.

The President's Council of Advisors on Science & Technology convenes at a time when our country, and indeed the world, stands at the crossroads of economic evolution. Determined to accelerate the pace of economic growth and job creation, government and business alike strive to do more while working with limited resources. The reality is that the economic security and vitality of the United States has been, and continues to be, deeply rooted in the power of innovation.

That means if we want a robust, high-growth economy, we need a robust, innovation-driven manufacturing sector that harnesses the power of this country's inventive spirit, ingenuity and innovation infrastructure. For generations of Americans, manufacturing was the ticket to a middle-class life. Across America's industrial heartland, millions clocked in each day at foundries and on assembly lines to make things. And the stuff we made-steel, cars, planes-was the stuff that made America what it is.

But for better and worse, revolutions in technology have transformed the way we live and the way we work. Businesses and industries can relocate anywhere in the world, anywhere there are skilled workers, anywhere there is an Internet connection. And yet, time and time again, the story of American growth is written by the daring drive of entrepreneurs, who are willing to roll the dice on a great idea. Those great ideas when built upon, protected and nurtured, are what will define the next generation of cutting-edge products and services. These pioneering ventures create 2 out of every 3 new jobs in our country, demonstrating that in a world of globalized markets, innovation continues to serve as the premiere source of competitive advantage. And in order for cutting edge ideas to see the marketplace-strong IP protection is critical.

Intellectual property is no longer just an arcane concept reserved for highly technical or specialized scientists. From songs in your iPod to spring allergy medicines; from the Post-It® Notes you jot reminders on, to the chips in your digital camera-IP permeates all fields of interest, all layers of society and all parts of our day. More fundamentally, intellectual property drives our innovation economy. It equips everyone from independent inventors to large enterprises, with the tools they need to protect their ideas, raise funds for research and development, and distribute cutting-edge products and tools to communities across society. This in turn grows today's industries and builds tomorrow's jobs.

But in this new century, we can't expect tomorrow's economy to take root in yesterday's infrastructure. In order to move new products from the drawing board to the manufacturing floor as swiftly as possible, we must invest in modernizing the United States Patent and Trademark Office-our nation's innovation agency. That's why President Obama, Secretary of Commerce Gary Locke and I have been working hard with a broad bipartisan coalition supporting comprehensive patent reform as is now nearly completed in Congress. This legislation enhances our patent system by offering greater certainty about patent rights and alternatives to expensive litigation when patent rights are disputed. Ultimately, the bill will provide the most sweeping reforms to the US patent system in 175 years.

And today it gives me great pleasure to say we stand at the precipice of a new era. Just 2 weeks ago, the House of Representatives demonstrated significant leadership in passing the America Invents Act-representing a major step towards transforming our patent laws to account for the modern stresses and expectations of a fast-moving 21st century global economy. While we are working to reconcile the bill with a version passed this spring in the Senate-we must recognize what this represents for our innovation system: a truly "Jeffersonian moment."

Creativity-invention-is at the heart of human progress. And patents are how we create value from invention-how we move invention to the marketplace. By working to re-engineer the process of securing IP rights from the ground-up, patent reform will allow small and independent inventors to move their ideas to the market place faster and the entire innovation value chain to function more effectively. By doing away with multiple sets of disjointed IP regulations, our new patent laws will streamline processes that optimize patent quality and minimize barriers to research, development and growth.

And if we get this right, we can equip the USPTO with the resources it will require to tackle our backlog of unexamined patent applications-which for far too long has been an enemy of progress. If we get this right, we can confirm the strength of patents efficiently-or even candidly let patent filers know that their claims are in fact not strong; and in any event do that much less expensively and more quickly than is currently possible. Either way, efficient processing grants independent inventors and large firms alike the assurances they need to move technologies and services forward. So patent reform at the end of the day is about business conducting business...without undue speculation or drawn out disputes.

Let me be clear-once this is signed into law, implementing a robust IP infrastructure around it will not be easy-but we are up for the challenge. Through judicious rule-making, and proactively advancing thoughtful interpretations of the new laws in the courts, we can proactively actualize American innovations, and not just leave them idling in the pipelines as jobs that "could have been."

Since we live in a world where information and commerce reach far beyond any of our borders, and innovators are constantly seeking to tap markets abroad-it is imperative that we also lead the charge in articulating the need for building a global IP system that offers consistent, cost-effective ways to obtain reliable patent rights in multiple jurisdictions. So reform is not solely about the United States patent system, it is part of a larger assertion of American leadership-and a larger cooperative effort with our global trading partners.

By signaling to our constituencies around the world that we are serious about coordinating our patent policies and serious about collaborating with other offices in devising real solutions that will cut down on workflow redundancies, the United States can lead the charge in re-igniting substantive patent law harmonization discussions. I know there are several Embassy representatives with us today who's country's we have been in direct dialogue with-and I applaud the leadership your government's IP offices have taken. But in order to optimize innovation, and truly give rise to a new golden-era of manufacturing and jobs-we must continue the clarion call for harmonization.

By meeting with Asian countries in March (APPC), engaging our European partners over the last three months (Brussels, London), following up with the world's largest patent offices several weeks ago in Tokyo, holding meetings in Munich last week, and securing the First Inventor to File transition in our own patent reform bill-the USPTO has demonstrated a strong conviction to ensure that the 21st century IP dialogue is a global one.

That American-led charge, inspired by a global ethic, is changing the dialogue, tenor, atmosphere and prospects of stakeholders engaged in all IP norm setting processes. It was reflected in our ability to engineer a change in tone around copyright discussions in Geneva in the last month, and it was reflected in our ability to gain widespread support for global harmonization dialogues at the APPC conference in Washington last spring. All of which indicates that US IP leadership in the Obama administration is not only about retooling the way we innovate at home, but also demonstrating our leadership abroad for larger economic and social opportunities for Americans and for people everywhere.

But even outside of legislation, we're tackling issues surrounding patent examination quality. By harnessing the Internet to bring the power of the global technology community to bear on the patent examination process, we established the Peer-to-Patent (P2P) pilot program. With members of the public afforded the opportunity to submit relevant prior art, not only is the scope of examination widened, but the quality of our review is heightened by crowd-sourcing additional efforts to get more brains involved with testing the robustness of a patent claim.

Moreover, in keeping with this Administration's commitment to open government, the P2P program helps expands the transparency of the American IP process-while allowing others to see how we go about reviewing prior art and evaluating patent claims. And, patent offices in other countries have followed suit, and began their own peer-to-patent pilot programs

While these steps are promising, ultimately the story of growth will be about the ideas and inventions that create jobs and find new ways to address social needs. It's the story companies like Calera in Los Gatos, CA, which is finding new ways to capture carbon dioxide (CO2) from the burning of fossil fuels and convert it into building materials such as cement. The ability to develop tools in the name of cause-based enterprising is an endeavor that may still require investment capital, but leaves the rest of the world inspired through human capital-and that's an example of the sort of nuanced innovation that continues to mark excellence in American leadership.

That's why the USPTO is also proud to play a role in accelerating socially conscious technologies. Under our Green Technology Pilot Program, patent applications involving reduced greenhouse gas emissions, energy conservation and environmental quality are accelerated in their review-at no cost to the inventor. And our users are taking notice! More than 1,900 petitions have been granted to green technology patent applicants since the pilot began in December 2009. And of those granted, the USPTO is proud to have just issued the program's 350th patent for a configuration of wind turbine housing mechanism.

By advancing a commitment to building a more sustainable energy future, the US Patent and Trademark Office is able to spur innovation and promote green collar jobs that provide our world with alternatives to harmful energy practices. This ensures that the US is not just the world's Chief Global Competitor, but also its Chief Global Citizen.

We're also working to make our processing more efficient, by divvying up the queue of applications in the pipeline. Through our Three Track examination program, applicants may determine the pace at which their ideas are reviewed. If an enterprise is in urgent need of IP protection it can accelerate the speed of review with a fee, and if ideas require a bit more incubation time it can opt for a slowed-down track.

This program puts tools in the hands of the innovation community to tier priorities and help manage the patent backlog. Even though recent Congressional budget decisions have prevented us from rolling out the first phase-the Track One program-as early as we'd like, we've putting all the structural and procedural resources in place to make this avenue available to the public as soon as budgets permit.

Regardless of its start date, however, the nature of the program reflects recognition on the part of the PTO that we live in an age where technological change can occur in the blink of an eye. So, the mandate is to create a smart, agile and nuanced patent and trademark architecture that can adapt to evolving business needs and leverage modern tools to address them.

That's why we're also working to develop a better information technology system for the PTO to make everyone's lives easier. From automated petition systems we rolled out this spring, to a community wiki to give office staff, practitioners and applicants alike a chance to share, update and pull down information to better inform their efforts, we are working toward a 21st century system that is smarter, better, faster and stronger for all stakeholders to benefit from-and for current stresses on the IP system to be relieved.

And I want to take a moment to acknowledge how vital modern IT systems can really be to government and innovative development. Because, when we examine what scrum development can do when it meets Web 2.0 and Cloud technologies-we immediately notice that what would have taken two years and $30 million to build a few years back, can now be built in a few months and with one coder. By leveraging new technology and development processes, we're not just making operations more efficient at the USPTO-we're actually allowing patented technologies to move quickly to service their target audiences. That means faster solutions-faster jobs-and faster growth-both for businesses, and for the American economy.

Ladies and gentleman, a changing world requires new partnerships and new solutions. As the government invests in the building blocks of innovation through new infrastructure and new research, we can establish an environment ripe for private sector investment and competitive markets, if we smartly invest in the innovation that will win America's future.

Boosts in R&D investment, public-private partnerships, and cause based technologies are all essential to 21st century business. And the Commerce Department and USPTO are leading in creating 21st century business opportunities in our country. But if there's anything you take away from our conversation today, please recognize that the end of these efforts is not just to manage innovation for innovation's sake. Instead, by cultivating technologies, by respecting them and protecting them, we give ideas the vehicles they need to spread across continents and societies.

All parts of the US innovation value chain must remain vibrant. And if amplified by good government policy, the current re-aligning trends can support one another to preserve American excellence in out-building, out-innovating and out-hustling our economic competitors. Thank you.