Innovating to Win the Future in the 21st Century

Under Secretary of Commerce & Director of the USPTO David Kappos

May 9, 2011

United Inventors Association - Inventor's Education Day

"Innovating to Win the Future in the 21st Century"

Draft remarks as prepared for delivery


Good afternoon everybody!

Let me begin by saying that I'm feeling tremendously lucky to be here addressing this year's United Inventors Association forum, and not just because I'm in Las Vegas. But because we get to hold today's conversation, which assesses the state of the current innovation economy, with the very creators and thinkers, doers and makers of our country.

As inventors, and scientists, and technologists, your commitment to the discovery and testing of new ideas improves our lives, drives our economy, builds an understanding of our environment and equips communities with new tools to tackle new challenges. So to be able to engage with you directly is not only an honor, but an important step as in identifying the barriers to growth you all face as inventors.

And as we think of the powerful force this conference represents in connecting people and ideas, I want to especially thank UIA Executive Director Mark Reyland, Warran Tuttle and the entire UIA staff for hosting today's event and helping put this conversation together.

The United Inventors Association mission resonates for me, because in about the late 1980's, a group of examiners and visionaries at the USPTO banded together with the common recognition that sometimes the patent system can be difficult to navigate; and all too often smaller enterprises and individuals don't have the necessary tools and resources to effectively leverage or commercialize their IP. Determined to empower the independent inventor community with the appropriate outlets and resources, UIA was born as an association committed to advancing IP education and stronger intellectual property rights. And 20+ years later UIA is carrying out that mission superbly, as your innovations continue to embody the source of American competitive advantage in the 21st century.

New inventions and new ventures create 2 out of every 3 new jobs in our country, demonstrating that your novel and disruptive ideas are the currency of the modern economy. And that fact is vital, because, we meet at a time where our country is at a crossroads in its economic evolution. Determined to accelerate the pace of economic growth and job creation, government, businesses, and research institutions alike are striving to do more while working with limited resources.

But the economic security and vitality of the United States has been, and continues to be, deeply rooted in the power of innovation. This country was founded by pioneers who developed new ways to cope with an unfamiliar environment; who cured disease and connected a country; who led the world into the age of flight; and who now transcend global borders through the power of information technology. 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. But in order for cutting edge ideas to get to the marketplace in time to address social needs, and in order for businesses to sustain themselves-strong IP protection is critical.

Since IP rights unleash American ingenuity and equip her with the tools to out-build our economic competitors, we in the IP community are not just in the IP business-we're in the economic development business, the growth business and the jobs business. So while the dynamics of our economic landscape may be shifting, the importance of intellectual property is not. To optimize the ability of entrepreneurs to thrive, the United States Patent and Trademark Office, the Department of Commerce and the Obama Administration are working to reduce barriers to development and accelerate success.

First and foremost, the capacity for growth of any inventor or entrepreneur rests in her ability to attract funding, raise capital and spur additional R&D, and ultimately production. That's why our Administration is taking concrete actions to improve the environment for high-growth innovation through the Startup America initiative. By building partnerships with the private sector, the Department of Commerce and the Small Business Administration match up to $2 billion for private funds that invest in early-stage R&D, invest in businesses in underserved communities, and invest in independent inventors that face difficult challenges in accessing capital. These nationwide partnerships not only help break down barriers that independent entrepreneurs may face in seeking funding, they also encourage and incentivize direct partnerships between venture capital firms and small companies.

Outside of federal matching grants, we also want to put the opportunity to connect with funders directly in your control. So this year we are working to host several "DC-to-VC" summits that will gather federal leadership, entrepreneurs, and early-stage-investors, to leverage targeted engagements in addressing emerging business opportunities.

Beyond funding, close collaboration and peer-to-peer partnerships are also essential for independent inventor and startups to learn best-practices and ascertain tricks of the trade. Groups like YCombinator and The Founder Institute offer forums to test new ideas and tap into a network of professional support. That's also why USPTO employees are running our Inventor Assistance Program to improve your access to tools that can help you efficiently secure patent rights, and that provide insights on transferring or commercializing your technologies. The program reaches out to inventors through workshops and seminars at conferences around the country, and it's the inspiration behind which Startup America is expanding its entrepreneurship education through additional mentorship opportunities that build networks of support between large companies, investors and your businesses.

But pivotal to toppling impediments to growth for inventors, is of course a more efficient and cost-effective United States Patent and Trademark Office. We are committed to providing the right incentives to protect creative genius. Whether large or small, independent or corporate, flush with resources or searching for capital: We'll provide patent protection to all who make novel inventions. But the truth is; the USPTO is struggling; it's not working efficiently for inventors-independent or otherwise. When the USPTO doesn't work; ideas flounder.

That's why President Obama, Secretary of Commerce Gary Locke and I have been working hard to build widespread, bipartisan support for comprehensive patent reform as is now under consideration 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 would provide the most sweeping reforms to the US patent system in 60 years-arguably 150 years.

Many patent-reliant industries, including those represented in this room, require timely and high-quality patents to secure resources for R&D and commercialization. A more simplified and streamlined process to acquire IP rights will enable inventors to bring their ideas to fruition faster and compete in global markets sooner. Having recently passed the US Senate with an overwhelming mandate of support, 95 to 5-and the House Judiciary Committee 32-3-the proposed reform balances IP rights and makes the USPTO a springboard for growth.

By establishing a "First Inventor to File" system in the United States, we are able to provide greater legal certainty about the validity and value of patent rights. Let me be clear - because I know there has been some concern - this is not a first to file system, it's the first inventor to file system. So there is no risk of someone who learns about your invention being able to beat you to the patent office; because they're not an inventor.

This FITF system is much simpler, more secure and cost-effective and enables you to avoid challenges from competitors at the relatively modest cost of $110 for a provisional patent application, as opposed to the cost of taking on an interference proceeding under the current system, which is around 2 million dollars. And the bill offers a more streamlined structure for re-assessing a patent when those rights aren't clear by creating a post-grant review process, within the USPTO, that is a faster and a significantly cheaper alternative to costly and protracted periods of litigation.

Moreover, this legislation puts our patent system more in line with the rest of the worlds-so the bill will level the playing field for independent inventors and small businesses seeking to participate in the global marketplace-enhancing American competitiveness. And in a globalized world, comprehensive patent reform will increase productivity by enabling greater cross-border work-sharing between the USPTO and other patent offices.

Through this legislation, the PTO is also empowered to retain the fees necessary to ensure high quality and timely patent reviews. This is particularly crucial because right now money you are paying into the USPTO is being diverted to other, non-innovation related programs, which ultimately short-changes society from the benefits of landmark ideas. And in a world where economic outcomes truly do turn on the quality and efficiency by which a patent is reviewed, adequate resources end up making the difference between: being able to run a USPTO that effectively turns ideas into jobs-or not. Passing patent reform gives us a chance to improve both the speed and quality of examination without adding a dime to the deficit, while also allowing the USPTO to actually use your fee payments to do the job you're paying us to do in the first place!

Last year, the United States Patent and Trademark Office was described in Harvard Business Review as the "biggest job creator you never heard of." As our country seeks to regain the 8 million jobs lost during the recent recession, the USPTO is a great place to start. Countless inventions that can spark new businesses are right there-sitting in our backlog of unexamined patent applications. And reducing that backlog is one of our Administration's priorities and my highest priority.

In the decade we've been debating patent reform, the system has largely moved sideways-with the exception of the good work the courts have done. So here we are, years later, and each patent application sitting idle in our backlog represents a job that could-have-been. Each file that hasn't been reviewed because of insufficient resources represents a market that could-have-been. So we need to - and we are going to - fix the system. But we need your partnership, your patience, and your support.

I can't tell you there is a silver-bullet that will fix all problems; but, what I can promise is we're going to be open and honest with you at each and every step of the way so we can continue to build on our efforts and work with independent inventors to build the gold standard 21st century patent system for the US. I know there will continue to be concerns, but that is why conversations like this are so vital, so we can continue a dialogue that solicits your input and guidance.

And I can promise that you'll continue to have access to information and to the senior leadership at the USPTO -- including myself. But the ambitious reforms we've got underway-and those we envision-will be possible only through collaboration with you, so we truly need your support to advance 21st century innovation.

And in truth, what all our efforts strive to do, is keep up with a new reality. In a single generation, revolutions in technology have transformed the way we live, work and do business. Today, just about any company can set up shop, recruit talent, and move their products wherever there's an Internet connection. They're also moving these products on an intellectual property backbone.

Meanwhile, nations like China and India realized that with some changes of their own, they could compete in this new reality. And so they started educating their children earlier and longer, with greater emphasis on math and science. So, yes, the world at times can appear staggeringly different, and the competition for jobs is real, and it is global.

But part of remaining competitive in this economy is recognizing that innovation is not measured simply by the number of patent applications filed or patents granted. Rather growth is measured by smarter, more nuanced technologies and trade associated with IP. According to the World Bank, in 2009 (the last reported year with available data), the revenues and royalties generated from the licensing fees for patent protected products in the US amounted to $89 billion dollars, far outpacing the next four most powerful economies combined.

A smart growth economy, therefore, isn't rooted in an infrastructure that just blindly pushes along IP for the sake of numbers, but rather one that adeptly incubates good ideas, creates partnerships between inventors and manufacturers-offers high quality reviews, and swiftly brings the best products to the marketplace. This smart innovation, and the infrastructure that makes it happen, writes the next chapter of American growth, and that's why we want to do everything possible to make sure smart IP infrastructure is available so your businesses can grow. Because ultimately that story of growth will be one that creates jobs and continues to find new ways to address social needs.

It's the story of Los Gatos company, Calera, 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. By patenting a process that accelerates the absorption of gas and minerals from harmful carbon emissions and turn them into sustainable building blocks for housing construction, companies like Calera are leading the way in using smarter technologies to address everyday needs, while reducing the risks from pollutants to citizens everywhere.

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. And at no cost to the inventor.

We're also working towards launching a Humanitarian Pilot Program that will reward companies for using their patented technologies as philanthropic vehicles to heal the sick, feed the poor and inspire hope in communities all too often forgotten by the rest of the world. By leveraging intellectual property for the benefit of others, the USPTO is leading the charge in demonstrating that the US is not just the world's Chief Global Competitor, but also its Chief Global Citizen.

One thing is apparent from all of you gathered in this room today: America is not lacking for groundbreaking ideas, nor are we short on entrepreneurs willing to take risks. What we need is to improve our ability at connecting our country's great creators and thinkers, our doers and our makers. Many research institutions are stewards, shuttling ideas from labs to the marketplace, but despite the unrelenting efforts of our universities, commercialization of federally funded technologies developed at universities is not as efficient as it needs to be. That's why forums such as this are so essential. They allow us to better understand how to balance the IP equation, distribute technologies and capture funding-all while addressing specific barriers to growth that you face daily.

Ladies and gentleman, a changing world requires new partnerships and new solutions. We can move forward together, and as we celebrate National Inventors Month in the month of May, I can't help but think that someday maybe one of you sitting here will join such independent inventors as Thomas Edison, Alexander Graham Bell, Steve Wozniak and Les Paul in the National Inventors Hall of Fame. Our vision for the USPTO prominently features the innovation of the independent inventor community. Ideas born from this community, and cultivated under the protection of the USPTO, represent the future of the American economy.

Today, someone in this room will have a great idea. As long as that's true, you'll find us, at the USPTO working to protect that idea, to foster innovation, to build the US economy and to create American jobs.

Thank you all for being here today. Thank you for making my job the best job in America. Thank you for your ingenuity and persistence. Thank you also for being engines of our economy and the vanguard of American competitiveness and growth.