State of the Valley Conference
Director of the U.S. Patent and Trademark Office Michelle K. Lee
Keynote Presentation as Prepared for Delivery
February 12, 2016 @ 10:45 a.m.
San Jose McEnery Convention Center, San Jose, CA
Good morning and thank you, Chris for introduction and to Russ Hancock and team for inviting me to speak today. Love every opportunity to return to Silicon Valley. There is just something about being able to begin my day with a familiar walk to the Dish and then have some coffee cake at Hobee’s that lets me know that I am home. Of course, with the picturesque walk around the Dish comes getting stuck in traffic along Highway 101, which Stefan just spoke to a moment ago. Now some may yearn for the days of easy drives, when the 101 was surrounded not by high-tech companies, but by apricot orchards and eucalyptus groves. Not I. While I may not welcome traffic congestion, that traffic—and high housing prices and other challenges being discussed here at this conference—manifest from the Silicon Valley’s role as a primary engine of American economic success, fueled by exponential growth and unprecedented innovation. That growth fuels competition, job creation, new industries and technologies and products that revolutionize the world and the way in which we live.
As anyone from the Silicon Valley knows, this region has few, if any, equals when it comes to invention, innovation, and entrepreneurship. That’s what makes this region truly special, and why aspiring entrepreneurs from all over the world have flocked here for the past half century to start their companies. So, conferences like “State of the Valley” are important, because they allow us to come together to discuss the Valley’s opportunities and challenges as it works to continue to remain at the front of innovation, economic growth, and quality of life.
Exactly one month ago, President Obama stood before Congress and delivered his final State of the Union Address. While laying out his agenda for 2016, the President implored us all to not just remain active and focused on 2016, but to look beyond the next 12 months, and set a vision for the next five years, the next ten years. The future the president referenced and foresaw featured an economy driven by innovation, empowered by an educational system built to prepare all of our young people for the jobs of tomorrow. As the president himself said: “America is every immigrant and entrepreneur from Boston to Austin to Silicon Valley racing to shape a better future.” In so many ways, the president spoke about a future that is our present reality here in the Silicon Valley. So it’s no surprise that over the last seven years, Silicon Valley has been a driving force on national policy issues as well as cutting edge innovation. As this conference’s agenda highlights, all of society’s challenges—and opportunities—ultimately stem from the public and private sector working together so that each can excel at what it has set out to do.
Like many of the technologists and executives who brought their Silicon Valley-honed expertise to Washington, D.C. over the last seven years, I was drawn to public service and the opportunity to use my Silicon-Valley developed talents in service of our country. To wake up every day knowing that you are playing a small part in the mission to improve our government and the state of our society is both motivating and an honor. That said, leaving the Silicon Valley for D.C. has not been without its challenges. Some of these challenges, like a serious lack of Giants and 49er fans, or dealing with a recent blizzard that piled up more than two feet of snow in a brutal 24-hour period, are easily overcome with a little humor. Other challenges require some patience and direction. For instance, those of us who have worked here in the Valley get used to operating at internet speed, while some things in D.C. can move at closer to dial-up speed.
Nevertheless, in my third year in Washington, I’m seeing similarities between Silicon Valley and Washington where it matters most, namely, work ethic, dedication, and a vision that our future can be brighter than the present. Whether you are in DC or here in Silicon Valley, you’ll find workforces that are highly intelligent, super-educated, and, above all, motivated to change the world for the better – Silicon Valley through technology and DC through policy. But, the synergy between the Silicon Valley and Washington D.C. is so much more than mere human capital. It’s about a shared perspective that looks to the future, embraces innovation, and isn’t afraid to try something new.
You don’t have to look far to see how Silicon Valley’s innovations have influenced, not just Washington, but the nation. One obvious example- think about how a few California startups have influenced how the federal government communicates with its citizens. Whether it’s through Facebook, Twitter, or Snapchat, the White House, federal departments, and Congress are embracing social media to better reach the American public. Gone are the days of merely writing letters or holding press conferences. That change began here in Silicon Valley.
Likewise, on an assortment of issues, the Silicon Valley’s early recognition and leadership on cutting edge policy issues continues to make an impact on the national stage. From Big Data to Intellectual Property, Silicon Valley has made its voice heard on issues that affect both how we govern and how we innovate.
However, to continue to create a climate that fosters innovation and technological advancement, the Silicon Valley must continue to exert equal effort on issues of policy formulation as it does on invention. We already know that many of you in this room have founded companies or come up with ideas that you hope will revolutionize the world. But the more revolutionary and disruptive your technology and business model, the more likely you will be to run into legal and/or regulatory hurdles.
Every day we read about a new disruption—to existing industries, to consumer expectations, and sometimes to our existing legal and regulatory framework. Maybe your company deploys drones to take aerial views of the globe below, or. has a new take in the online gaming industry, or maybe you’re developing technology for driverless cars. Regardless of the space in which you are innovating, the laws, policies and procedures emanating from both the state and federal government impact your ability to develop these ideas, expand your business, or bring them to market, so, engage early and often with your legislators, policy makers and administrative agencies so they have the input they need on what your businesses need to survive and thrive. By engaging with the appropriate governmental and regulatory agencies, and leaning forward in the public policy process, you can help ensure a business environment in which your innovations and enterprises have the opportunity to thrive for the benefit of society.
These innovations, and the policy issues that surround them, are at the center of our modern economy- an economy where intellectual property and invention play a leading role. Fifty years ago, company’s most valuable assets were typically their tangible assets: its factory, equipment and inventory. Today, the most valuable assets of many of our most valuable companies are their intangible assets – its designs, brands, algorithms and processes – protected by intellectual property rights. The building blocks of IP —trademarks, copyrights, and patents —long a staple of Silicon Valley’s economy, are quickly becoming a cornerstone of our country’s economy.
According to one study, the entire U.S. economy today relies on some form of IP. IP-intensive industries support at least 40 million jobs, and more than a third, of our gross domestic product. Indeed, trademark registrations issued here in Silicon Valley reached a new record level in 2014. Patents, too, play a vital role in our economy. A paper just issued by one of the USPTO’s Edison Scholars, a program supported by the White House, further underscores the importance of patents to startups and small businesses. It presents causal evidence that patents help startups grow, create jobs, facilitate access to capital, and generate follow-on innovations. The paper also found that approval of a startup’s first patent application increases its employment growth over the next five years by an average of 36 percentage points and the effect on sales growth is even larger. Again, this state, and this region in particular, has been a leader, not a follower, in patents and patent-based innovation.
Let’s look at the facts. In 2015, almost 30% of all domestically-filed patent applications came from California. I repeat, 30% from California. As this year’s Silicon Valley Index shows, Silicon Valley residents produced nearly half (47.7%) of the patents granted to inventors from California. So, as we look ahead into the next five, ten, and 20 years, the USPTO is making sure we are advancing policies that: ensure that we continue to have a strong intellectual property system to enable today’s innovators in California and beyond, empower the next generation of innovators to achieve even greater success, while making sure our communities have the resources necessary to create an ecosystem where innovation can flourish.
As the leader of America’s “Innovation Agency,” I feel a responsibility to drive continuous improvement to our nation’s IP system, domestically and globally. In an increasingly global marketplace, where your first sale over the internet can just as easily be in Shanghai as in San Francisco, all companies, including startups, need to start thinking internationally from day one. Worldwide in 2014 alone, U.S. consumer goods and services accounted for almost $200 billion in exports.
This is big business for you and our nation’s economy. However, as we all know, the international landscape for business varies greatly from country to country. To ensure a level playing field when you enter foreign markets, the USPTO is working with policymakers overseas to ensure adequate protections of your company’s most valuable assets – its intellectual property- , and that there are sufficient legal remedies if it is stolen. From China to Brazil to the European Union, we are actively engaged in these issues and working with our foreign counterparts to foster an international business climate that is conducive to the export of American products and services abroad.
Second, we must empower the next generation of innovators by ensuring that they have the education and skills necessary to succeed in what you and I know to be a very promising future economy based on innovation. Just the other week, President Obama announced plans to “empower students from kindergarten through high school to learn computer science, equipping them with the analytical skills they need to be creators in the digital economy, not just consumers, and to apply their passion and enthusiasm to solving problems using technology.”
In 22 states, computer science still doesn’t count toward high school graduation requirements for math or science, and 75% of schools don’t yet offer a single high-quality computer science course. Even here in Silicon Valley, we know this disparity to be all too real. All of our kids, whether they live in Palo Alto or East Palo Alto, or whether their name is Isabel or Ahmed, need to have the skills necessary to succeed in our 21st century innovation economy.
At a time when your companies cannot hire enough technical talent to satisfy your business needs, it is an economic imperative, not just a social one, to develop and nurture all of our talent, across all geographic regions of this great country of ours and across all demographics. To this end, the USPTO is doing everything it can to spark that interest and passion for invention, creation, innovation and STEM in all of our youngsters.
In 2014, the USPTO launched right here at Mission College the National Summer Teacher Institute, designed to train and provide content to middle and high school teachers so they can share with our children stories about some amazing inventors, the innovations they made, the patents they obtained and the companies and industries they built based upon those inventions. All of this with the goal of lighting a passion for invention, making, entrepreneurship, STEM and computers. The USPTO would love for more kids today to say that they want to be an inventor and entrepreneur when they grow up! Our community, economy and society will be better for it! We also work closely with a non-profit called Invent Now to offer “Camp Invention,” a week-long summer-enrichment STEM program, every year to more than 100,000 elementary school-aged children from across the 50 states including those from underprivileged backgrounds. This amazing summer camp, gives the kids hands-on experience in designing, making, testing and then redesigning inventions. There are 13 Camp Invention programs right here in the Bay Area that reach more than 1,200 kids every year. Camp Invention is just one example of what the USPTO is doing to ensure that we develop and nurture all of our talent in whatever size, shape, color or background it may come.
Also, the USPTO has launched an “All in STEM” initiative, designed to recruit, retain and promote more women in STEM at the USPTO. If we're successful in providing more paths for all Americans to pursue education, training, and careers in the STEM fields, our nation will become even more competitive in the years ahead.
In this year’s State of the Union address, the President said “[t]he spirit of discovery is in our DNA.” To that end, I’d like every child throughout the United States to think about tinkering, inventing, building and entrepreneurship. After all, there’s no age requirement to get a patent, and why wouldn’t we want our children inventing sooner rather than later?
Finally, we at the USPTO are trying to do our part to make sure our local communities have the resources (not just the skills) they need in order to succeed in this changing economy. To that end, we are actively working to better serve the local innovation communities through our four, new regional offices – Detroit, Denver, Dallas and Silicon Valley. We like to call these offices our “Innovation Embassies,” because they’re hubs of innovation, education and outreach.
Last October, we celebrated the opening of our new, permanent Silicon Valley Office in San Jose City Hall, which makes it easier for the USPTO to engage more directly with those of you who live and work here or elsewhere in the region. I had the privilege of serving as the first director of the Silicon Valley United States Patent and Trademark Office. And, when Silicon Valley was selected for ¼ regional offices, I immediately recognized how the Silicon Valley Office would benefit the region’s innovation community. In fact, I was drawn to public service by my desire to help shape that office in a manner that would best serve the community that I grew up in and know so well. Now innovators up and down the coast have easier access to the USPTO’s many services. For the first time innovators at every stage will be able to have face-to-face conversations with their assigned patent examiners rather than having to travel to Alexandria, VA, or discussing the details of their applications via phone, walk-into our office to participate in educational and training programs on the basics of intellectual property (including patents, copyrights, trademarks and trade secrets) -- how file for it, how these tools can help your businesses and what steps you might want to take as you contemplate entering international markets, visit our office to use the search terminals to see if your invention might be new or already done by others.
In fact, just yesterday evening we hosted a Speed Dating for Startups workshop in our SV office here that provided a series of vignettes on a variety of important IP topics We believe this kind of engagement across the community will make a big difference, especially to smaller companies and individual inventors, which we know are so vital to our economy’s continued growth. This is your office. So use it and let us know what we can do to better meet your needs.
I mentioned the President’s State of the Union at the beginning of my remarks. During his address, President Obama urged all of us to “race to shape a better future.” The innovators and entrepreneurs of Silicon Valley have been a part of this race for a long time. So, when we gather here to discuss the “State of the Silicon Valley,” we gather to tell the story of entrepreneurs and innovators who have been leaders in their field for the last fifty years.
Some of their stories can be seen at our Silicon Valley Regional Office, which highlights local inventors whose innovations have created new industries and shaped our future. You’ll recognize the names. Some of them are Nobel Prize winners, some inductees into the National Inventors Hall of Fame, while others are our contemporaries. These catalysts of innovation serve as a constant reminder that there’s a spark of genius in all of us. All of us in this room play a vital role to help transform our society and indeed, the world. Each year, new office buildings rise up from land where apricot orchards used to grow and produce new leaders and new innovations that provide such great nourishment to our economy and our society.
We, from the Federal Government to the private sector, and from the Silicon Valley to Washington, D.C., must all continue to do our part. To lead on the policy issues that will impact the future of innovation and to nurture the next generation of inventors, innovators, and entrepreneurs so our nation can continue to unlock new technologies, new jobs, and new industries. Washington looks forward to partnering with you in this very worthwhile endeavor.