Intellectual Property and Medical Entrepreneurship

Under Secretary of Commerce & Director of the USPTO David Kappos

April 13, 2011

Stanford University & USPTO Joint Conference

"Intellectual Property and Medical Entrepreneurship"

Draft remarks as prepared for delivery


Good afternoon everybody and thank you Dean Pizzo for that kind introduction.

It's always great to be back home in California, whether at my alma mater UC Berkeley, or here at Stanford. Let me begin by putting school rivalries aside and expressing my gratitude to the Stanford Law School and the Graduate School of Business for working with the United States Patent and Trademark Office to host today's conference. I'd also like to thank Stu Graham and Elaine Gin of the USPTO for their efforts in developing today's conversation. And I'd also like to acknowledge Mary Gorman of Stanford BioDesign, Jessica Patricia Meyer of the Center for Clinical and Translational Research, and the staff at the Office of Technology Licensing here at Stanford University for working to put this forum together.

Now I'm especially excited to be in the Bay Area, and not just because I'm able to reconnect with many California friends, but because of what this very forum, and all of you, represent for our country. At a time where government struggles to balance its checkbook, your dedicated research is unearthing new, cost-effective ways to tackle cancer and cardiovascular disease.

At a time where countries are grappling with generational challenges, your determination is harnessing data and the internet to more efficiently share information about pandemic disease across borders; And at a time where families around the country are faced with daunting financial decisions, like choosing between a mortgage payment and antibiotics, your partnerships are distributing medicines in ways that make it a little easier for Americans to find and access affordable, life-saving drugs.

Without a doubt, we meet at a crossroads in our country's economic evolution. But our willingness to convene here today underscores that while the 21st century continues to invent new challenges; their solutions lie in the innovative drive represented in this room. The growth-potential and vitality of the United States has been, and continues to be, deeply rooted in American 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 borders through information technology.

Universities, start-ups and small, high-growth enterprises have often played a crucial role in the development of new products in the biotech and medical device industry. Because of your adaptability, ability to identify market niches and huge innovative potential, your firms form a vital component of the healthcare industry worldwide. So not only does your unrelenting research inspire medical advances, transform the welfare of a community and afford us second chances in an all too fragile life-but it also attracts critical resources and capital needed to spur additional research & development, creating a host of new markets and new job opportunities.

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. It's the story of CyberHeart Inc. which is leveraging the power of robotic radiology to design non-invasive heart treatments, right next door in Menlo Park. It's the story of Therative, where a Livermore team is engineering state-of-the-art, mobile medical devices to transform the way consumers address dermatological needs. And it's also the story of Varian Medical Systems, which is delivering ultra-precise, yet low-cost, image-guided cancer treatments-through technologies developed within this very campus.

The entrepreneurial drive on display here is not only about making sure an ailing parent gets to see their grandchild graduate, or lending a patient a renewed sense of hope. In unleashing human creativity and genius to address our most human of problems, innovation is also being leveraged to drive our economy forward. Many early-stage ventures such as those gathered here today create 2 out of every 3 new jobs in our country. Your efforts, similar to the story of this country itself, represent the willingness to take a risk on a new cause, a new idea or a new invention. And that is the path by which the next chapter of American growth will be written.

That's why, in order to optimize the ability of entrepreneurs to thrive, the United States Patent and Trademark Office is working in concert with the Department of Commerce and the Obama Administration, to reduce barriers to medical device business development, and accelerate success.

First and foremost, the capacity for growth of any inventor or entrepreneur or new enterprise rests in their ability to raise capital, spur additional research & development, and ultimately bring their ideas to the marketplace. Recognizing that need, the 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 small entities that face difficult challenges in accessing capital. These nation wide 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 court. So in this year we are working to host several "DC-to-VC" summits that will gather federal leadership, entrepreneurs in the health care space, and early-stage investors, to leverage targeted engagements in addressing emerging business opportunities while also working to improve our country's health through better, more efficient care delivery.

The health care sector is particularly research intensive and requires regular investments at different stages in company development in order for enterprises to grow. And a majority of the small and medium sized companies here that drive innovation in life-saving therapies and techniques need accelerated means to acquire funds and get their businesses off the ground. Not only is their bottom-line at stake, but so too are lives and the welfare communities.

Now in the IP domain we also realize that the medical devices and indeed the health care innovation sector is highly dependent on effective patent protection. That's why the USPTO is working to create a more efficient and cost-effective patent system. Aiming to simplify the process of securing IP rights, we are currently building bi-partisan support in Congress to pass the America Invents Act that will allow small and independent inventors to move their ideas to the market place faster-while also reducing the need for cost-prohibitive litigation, which all too often ties up ideas in the courts-stifling innovation and choking job creation.

By processing patents in a shorter amount of time, medical device entrepreneurs will be able to use those intellectual property rights as vehicles to leverage even more funding. Through this legislation, the USPTO is also empowered to retain the fees and resources necessary to ensure high quality patent examinations. Not only does this enhance the quality of reviews without adding a dime to the deficit, but it allows the USPTO to actually use our funds to do the job you're paying us to do in the first place!

Now creating and sustaining a more robust IP system is especially important because the dynamics of the medical device industry are rapidly evolving. Historically, device development was grounded in the mechanical sciences. But as this industry continues to leverage the cutting-edge potential of digital technologies-it is becoming increasingly more cross-disciplinary. Great new products have one foot in neuroscience, another in software, and yet another in nano-tech. These kinetic realities demand intelligent engagement and a smarter infrastructure to keep up. By passing patent reform, we're infusing additional resources into the Patent Office, equipping our patent examiners with the appropriate tools needed to evaluate these new technological heights, and ultimately ensuring that tomorrow's innovation economy does not take root in yesterday's infrastructure.

And let me be clear: passing this bill is not about politics; it's about ensuring that we are doing everything we can to create a more efficient IP system, lift your businesses, spur growth in America and out-innovate our economic competitors.

Silicon Valley boasts some of the most impressive high-tech employment statistics in the nation. In fact, nearly a third of all private sector workers in this area are employed by high-tech firms. And among Stanford, the UC system and the national labs within California-public-private research partnerships generate a high share of cutting edge academic research compared to the rest of the country and indeed the rest of the world. This dense concentration of highly skilled tech workers in the Bay Area highlights the increasing trend of cross-disciplinary collaboration. It also highlights the fact that many technologists are increasingly working at the seams of unchartered industries, sciences and markets-where disciplines are overlapping in ways not seen in the past.

If this country is going to effectively unleash and harness the mite of these evolving fields, the scientific pioneers charting their murky terrain need all the support and guidance they can get. That's why, beyond funding and a strengthened intellectual property system, close collaborations and peer-to-peer partnerships are essential for new businesses to communicate best-practices to ascertain tricks of the trade. In this regard, groups in the Valley like YCombinator and The Founder Institute offer forums to test new ideas and tap into a network of professional support.

And that's the sort of collaborative work the Obama Administration is also working to tap into. Through the Startup America program, we're expanding entrepreneurship education by establishing additional peer-to-peer mentor programs that grow networks of support between large companies, investors, small high-growth businesses and startups. This gives innovators the chance to further fertilize their ideas and identify nodes of collaboration, expanding the innovation potential within their markets.

While the efforts I've mentioned are aimed at making the business environment ripe to grow products and services, the USPTO also recognizes that much of research and development involves a simple race against the clock. For medical device ventures committed to helping the sick, offering a new lease on life requires making treatments available as fast as possible.

To help you and your patients, USPTO is launching a new three-track acceleration program that allows applicants to determine the pace at which their ideas are reviewed for patentability. If an enterprise is in urgent need of IP protection to bring their product to the marketplace quickly, they can accelerate the speed of review dramatically simply by remitting a fee. And for ideas that can benefit from a bit more incubation time, applicants can opt for a slowed-down track.

This program, which will be moving forward this year, puts tools in the hands of the innovation community to tier priorities and help manage the patent backlog. And after hearing many concerns in the medical device community about the speed of review, I'm please to announce that the first part-Track One-is proceeding immediately, so you will be able to file patent applications for expedited processing as of May 4, 2011-less than a month from now. So start preparing those super-fast filings now, and look for 3 month first responses followed by 1 year to final disposition, for Track One applications.

By harnessing the power of cutting edge business tools, together with social enterprise, young start-ups are also building applications to tackle generational challenges. These innovations address everything from medical supply relief efforts in Japan, to micro-lending applications on Facebook that offer loans to health practitioners in rural parts of the world. 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. By advancing a commitment to building a more sustainable energy future, the US Patent and Trademark Office is able to spur additional innovation and promote green collar jobs that provide our world with alternatives to harmful energy practices.

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 today's conversation. 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.

By working together through for a like NACIE and DC2VC, we can break down those barriers. And we can address specific issues I know are important in moving technology from lab to marketplace like more comprehensive metrics for commercialization, additional support for Proof of Concept Centers, and shared approaches in adopting model-licensing agreements for research and commercialization initiatives. In truth, what all these efforts strive to do is simply keep up with a new reality. In a single generation, revolutions in technology have transformed the way we live, work and do business.

And, 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.

America's economic growth and international competitiveness depends on our capacity to innovate. And your cutting edge technologies not only impact our safety and quality of life-they also drive down health care costs for generations to come. Boosts in R&D investment, public-private partnerships, and cause based technologies are all essential to ensuring that new businesses flourish. And the Commerce Department and USPTO are committed to helping create 21st century business opportunities in our country.

But if there's anything you take away from my remarks 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 can give ideas the vehicles they need to spread across continents and help heal 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 for listening.