Remarks by Director Iancu at St. Louis Start-Up Week

Remarks delivered at St. Louis Start-Up Week

Director of the U.S. Patent and Trademark Office Andrei Iancu

November 4, 2019

St. Louis, Missouri

As prepared for delivery

Good morning everyone, and thank you, Ken (Olliff), for that generous introduction.

Thank you also to the Cortex Innovation Community for co-sponsoring St. Louis Start-Up Week!

It’s a tremendous honor to be here for this inaugural event, in a city that is the birthplace of some of America’s most successful companies, and is home to one of the country’s fastest-growing startup scenes.

Let me start by saying that I was truly inspired to meet all the students presenting their STEM projects at the back of the room. That is the future, and it is so important that you support and encourage their work. Maybe one day they will even apply for a patent or a trademark at the United States Patent and Trademark Office (USPTO)!

The history of the USPTO, the agency I am privileged to lead, goes back 229 years, to when President George Washington laid the foundation of the modern American patent system by signing the Patent Act of 1790. That act rested securely on these words, found in Article 1, Section 8, of the U.S. Constitution: “Congress shall have power…to promote the progress of science and useful arts by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries.”

The word “right” appears in the Constitution (without the amendments) only once—here, for securing intellectual property (IP) rights. Securing IP rights was that important to our founders.

But in practical terms, what does that mean?

Well, it means that the USPTO determines if applicants for patents and trademarks are entitled to IP protection under the law, and grants those patents and trademarks when they are so entitled. And through those rights, inventors and entrepreneurs are able to take the risks and make long-term investments that disrupt outdated norms and make life better in previously unimaginable ways.

From Thomas Edison to Steve Jobs, our country’s greatest inventors have always been backed by our patent system, and within the context of our patent system, they have literally changed the world.

Take, for example, Jack Kilby, a Jefferson City, Missouri-born electrical engineer who invented the first integrated circuit and was a pioneer in microchip technology. Born in 1923, Kilby was inspired by the work of his father, who ran an electric company that serviced rural customers.

After earning bachelor’s and master’s degrees in electrical engineering, Kilby began working at a division of the Globe-Union Corporation called Centralab.

While there, he led a team that was focused on ways to make electronics smaller by using transistors.

Before long, Kilby’s interest in microminiaturization led him, in 1958, to Texas Instruments, where his bosses enabled him to pursue the topic full time.

In his early days at Texas Instruments, Kilby first imagined the concept of an integrated circuit, in which all the components are made from the same piece of material. Realizing that such a circuit would enable numerous components to be featured on a tiny chip, since there’d be no need for wires or other external connectors, Kilby soon had a working postage-stamp-size prototype manufactured from germanium.

On September 12, 1958, Kilby presented the prototype to his superiors at Texas Instruments and on June 23, 1964, his invention of the integrated circuit received U.S. Patent No. 3,138,743. In his patent application, Kilby stated that his invention: "resulted from a new and totally different concept for miniaturization.”

And though Kilby went on to receive more than 60 patents—including one for the “Pocketronic,” the first pocket-sized calculator, and a thermal printer used in portable data terminals—it was his integrated circuit that provided the breakthrough for microelectronics as we know it today, and forever changed the world.

Kilby’s integrated circuit paved the way for devices like mobile phones, computers, televisions, and many other appliances. Some even argue that this is the most important invention of the 20th century. For his contributions to technology and indeed, the entire world, Jack Kilby was inducted into the National Inventors Hall of Fame, and in 2000, he received the Nobel Prize in physics.

Working within the context of our IP system, Jack Kilby is a prime example of the brilliance of American invention—and he is not alone!

Indeed, the results of our patent system over time—so carefully crafted and balanced—have been remarkable. Economists and other scholars have documented a number of important contributions from patents and other forms of IP to innovation and economic growth.

For example, our chief economist and his team—along with our colleagues at the Department of Commerce—issued a report on U.S. IP-Intensive industries, and some of the aggregate findings include: IP-intensive industries directly and indirectly supported 45.5 million jobs, nearly one-third of all U.S. employment. The share of total U.S. GDP attributable to IP-intensive industries is about 40%. And, importantly, workers in IP-intensive industries earned an average wage that is almost 50% higher than wages in non-IP-intensive industries in the private sector.

Additionally, a paper by a former USPTO Edison Scholar presents causal evidence that patents help startups create jobs, grow their sales, and reward their investors. The results suggest that patents act as a catalyst to growth by facilitating their access to capital. The paper also found that approval of a startup’s first patent application increases its employment growth over the next five years by a remarkable 36 percentage points on average, and the effect on sales growth is even larger.

Here, in the Gateway to the West, over 16,000 patents have been issued to St. Louis-based inventors and/or assignees since 2000. And in recent years, patenting in St. Louis has grown dramatically.

Indeed, from 2000 to 2009, an average of 645 patents were issued to inventors and assignees in St. Louis, and since 2010, this number has jumped to nearly 1,100 per year.

The top patent classes in St. Louis include genetics, drugs, new plants, or processes for obtaining them, chemicals, and electrical digital data processing. Since 2000, the top patent assignees include Monsanto Technology; Emerson Electric; Washington University; Time Warner Cable; and Solutia, a subsidiary of Eastman Chemical.

Clearly, innovation—and economic success based on innovation—are nothing new in St. Louis.

From Lewis and Clark’s expedition that opened the American West to today's tech-startup revolution, the St. Louis region has always been a place where people take risks and achieve big things. And thanks to its civic leaders, investors, entrepreneurs, financial institutions, and state and local government representatives, St. Louis is building one of the country's fastest-growing startup scenes.

Just over the last several years, in fact, community leaders in St. Louis have created several thriving incubators, including (and especially) the Cortex Innovation Community that extends from the city's urban core to the region's western suburbs. Founded by Washington University in St. Louis, Saint Louis University, University of Missouri, St. Louis, BJC Healthcare, and the Missouri Botanical Garden, Cortex is a nationally and internationally recognized innovation hub that supports all technology sectors.

Additionally, leaders throughout the city founded Arch Grants, a nonprofit organization that is building a new economy by providing $50,000 equity-free grants and pro bono support services to entrepreneurs who locate their early-stage businesses in St. Louis. There’s also the Ameren Accelerator, an innovative public-private partnership with the University of Missouri System and Capital Innovators, that assesses, mentors and invests in energy technology startup companies.

These are just a few among many efforts that I could point to, but the bottom line is this: by attracting and retaining innovative entrepreneurs, St. Louis is building a new economy, an innovation economy.

And while these and other endeavors are off to a great start, the ultimate return on the city's investment in startups may well be a few more years down the road. But perseverance is worthwhile, because the rewards are great. And we know what perseverance looks like: sustained collaboration between industry, academia, and government will continue to be key to the growth and economic development of the St. Louis region. Indeed, these three components—industry, academia, and government—are critical to the development of any innovation and entrepreneurship ecosystem. They are the three necessary components, and they must work together toward common goals.

Plus, to truly advance innovation here in St. Louis and throughout the country, we must also work to broaden the innovation ecosphere. Put differently, we need a higher percentage of our population to participate; and to do that, we need to focus on STEM and IP education, externships, and hands-on industry opportunities.

We must also identify appropriate role models for young people to excite them to look to futures in science, engineering and tech. In that regard, the USPTO plays a leading role. Later this morning and all day tomorrow, for example, many of the educators in this audience will have an opportunity to participate in a USPTO-designed workshop to help further inspire and encourage students to pursue science, technology, engineering and math fields and learn about the important role that IP plays in making America a global leader in technological innovations.

Why is this so important? Take for example, women inventors. Women constitute about half of the population of the United States, and about half of the American workforce. And yet, their participation in STEM jobs and the IP system lags far behind their male counterparts. In the United States, less than 25% of the STEM workforce comprises women. And the participation of women as inventors named on U.S. patents is even lower. Indeed, according to a study published by the USPTO earlier this year, the overall U.S. women inventor rate in 2016 (the last year measured) was 12%. In Missouri, by the way, the number was slightly higher, at 13.6%.

But as disappointing as these numbers are, they do point to significant potential for the United States. A recent Harvard study found that increasing invention rates among women, minorities, and those from low-income communities can up to quadruple the rate of U.S. innovation.

So, let’s do that!

Obviously, that is much easier said than done. At a minimum, we must start early. We should never forget that the wonder of discovery and the thirst for innovation begins at a young age, and it should be encouraged and developed before it is too late. This is why it is so exciting to see all the young students with their projects at the back of the room.

That’s also why the USPTO collaborates with a variety of organizations in novel outreach programs.

For example, we partner with the National Inventors Hall of Fame (NIHF), which offers unique STEM and invention education programs to over 160,000 students annually. Participants range in age from preschool to high school, all across the nation, including here in Missouri.

In fact, this past July, the Missouri University of Science and Technology in Rolla hosted two week-long Camp Invention programs for rising kindergarten through sixth graders. Importantly, more than 40% of NIHF’s Camp Invention participants are girls. Plus, nationwide, more than 50,000 underserved students receive scholarships to attend NIHF’s invention education programs.

Further, we hosted over 200 students at USPTO headquarters earlier this year for a “Girl-Powered Invention and Entrepreneurship Day.” We also hosted at the USPTO a two-day Women’s Entrepreneurship Symposium to connect women entrepreneurs with education, information, and resources to help start, build, and grow a business using their IP. Held in cities throughout the nation, these symposiums feature successful women inventors and entrepreneurs, such as Lori Grenier of “Shark Tank” fame, and Lisa Price, President of Carol's Daughter.

The bottom line is this: in today’s highly competitive global economy, it’s increasingly important to ensure that all Americans who are willing to work hard, persevere, and take risks have the opportunity to innovate, start new companies, succeed in established companies, and ultimately achieve the American dream. In other words, we need all hands on deck.

Additionally, we must all recognize that inventors and entrepreneurs are the engine of America’s growth and development. This is why we must share their stories and celebrate their work. Because when we do so, we will inspire the next generation and give children reasons to aspire to grow up to be like them, to become inventors and entrepreneurs. And in doing so, we’ll expose them to mentors who are relevant to them. So we need to tell their stories.

We need to tell the stories of entrepreneurs like Sarah Breedlove. Born in Delta, Louisiana, in 1863, Sarah was the daughter of two former slaves and only 7 years old when they died. Unschooled, married at 14 and widowed at 20, she worked as a laundress to support herself and her 2-year-old daughter. In 1888, Sarah left Louisiana to join her brothers in St. Louis.

While here, she met and married her second husband, Charles J. Walker, a journalist at the St. Louis Clarion. She also met Annie Turnbo Malone—a successful hair-care product entrepreneur—and soon, Sarah, who suffered from a scalp ailment that resulted in her own hair loss, began using, then selling Malone’s products.

Inspired by Malone, Sarah developed her own product, a sulfur-based ointment that helped heal scalp infections. After 17 years in St. Louis, Sarah moved to Denver with only $1.50 to her name and found work as a cook. While there, Charles helped her create advertisements for the hair care treatment that she was perfecting. In the advertisements, Charles encouraged her to use the more recognizable name "Madam C.J. Walker.”

Soon, Walker was selling her products door to door, then by mail order. And through hard work and relentless optimism, her business took off. She went on the road, holding demonstrations in other cities, and hired thousands of local sales representatives that were known as “Walker Agents.” She also opened offices in Pittsburgh and New York, as well as a beauty parlor and several beauty schools around the country, including one on Market Street here in St. Louis.

From that hardscrabble start, Walker went on to become a fabulously successful entrepreneur.

Indeed, Madam C.J. Walker became the first female self-made millionaire in American history, as well as one of the greatest African-American philanthropists in our nation’s history. And through her innovative beauty products, Madam C.J. Walker changed the world.

American history is filled with remarkable stories of inventors and entrepreneurs like Madam C.J. Walker who worked hard, took risks, persevered, dared to go where others would not, and ultimately overcame tremendous odds to succeed. This is, in fact, the story of America. And it is an inspiration.

For it to work, though, a robust IP system, as envisioned by the Constitution, is the critical component and driving force needed. The USPTO is the guardian of that IP system, which is the best in the world—a crown jewel, the gold standard.

But nothing happens without you, the inventors and entrepreneurs. The USPTO is here to support you, and to help in any way we can to ensure your success.

Thank you for the honor of being here with all of you today. I wish you much success, and I hope you enjoy Start-Up Week!