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Innovation Crisis: Job Creation Stalled by Patent Backlog, Says Pat Choate

Posted Sep 08, 2010 09:41am EDT by Stacy Curtin in Recession, Politics

Today President Obama is widely expected to reveal more of his plan to help revive the economy. In addition to the $50 billion infrastructure program announced Monday, the President will likely call for the following:

  • $200 billion in tax breaks for business investment in new plants and equipment
  • $100 billion to extend the research and development tax cut

But, many economists feel the President’s proposals are too little, too late.

Growth equals jobs and growth in this country is stagnant: GDP has slowed to less than 2% for the last few quarters and nearly 15 million people are unemployed -- according to the "official" tally. Millions of Americans have either lost their homes or are saddled with under water mortgages. 

There is another - less talked about - factor stifling job growth says Pat Choate, author of “Dangerous Business” and “Saving Capitalism.” 

The U.S. Patent Office is broken: There is a backlog of 1.2 million patents waiting for approval, Choate notes. "Patents are the basis for most innovation. People will not invest in new technology unless they can have a long period of exclusive use so that they can get their money back." 

If innovation is at risk, it also prevents business from spending and creating new jobs.

"The value of patents, copyrights and trademarks, which is called intellectual property, now makes up almost 80% of the total value of U.S. corporations,” says Choate. "I say the greatest store-house of unused, cutting-edge technology in the world are the patent office warehouses in Northern Virginia."

Many technologies "go obsolete" while waiting for approval, he tells Aaron in this clip. Meanwhile, many big companies use what's know as "efficient infringement," which is a fancy way of saying they calculate the benefits of stealing someone else's patents vs. the possibility of getting caught, tried in court and being forced to pay damages and penalties, Choate says. (This "strategy" may explain the rash of patent infringement suits in the tech sector such as between Apple-HTC, Intel-AMD and NTP vs. everybody.)

"The Patent Office granted Alexander Graham Bell's patent for the telephone three weeks after he submitted his application," Choate says. "Today, the Patent Office has such a backlog that it takes three years from the time an application is submitted until it is approved or rejected."

If President Obama’s tax credit for research and development actually spurs economic activity, will our new innovations stall in the three-year backlog at the U.S. Patent Office?

"As a country, this is very foolish," Choate says. "Spend another $1 billion, hire [more] patent examiners, make a patent cheap, do it quickly, and let’s get on with the innovation that we need for job creation in this country."

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83 comments

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    Deepsix Thu Sep 09, 2010 06:49 am EDT Report Abuse
    Mr. Obama, Detroit is burning again. Great example of populist/socialist mob greed, union entitlement, “command & control government, seizure of the rights of business owners, high local taxes, “trickle up poverty” etc. etc. etc. Sharp contrast to 100 years ago when with no onerous suffocating corporate tax, it attracted “people of enterprise, innovation & creativity” and paid the highest wages in the world. There was your middle class Mr. Obama. Zimbabwe is looking better and better, please some save the River Rouge plant as a testament to our once free markets.
  • 1 users liked this comment Please sign in to rate this comment up. Please sign in to rate this comment down. 0 users disliked this comment
    Yastrax Thu Sep 09, 2010 01:40 am EDT Report Abuse
    The biggest problem with the patent office is the patent abuse. People file patents for blatantly obvious things and describe it in overly broad terms to prevent the competitors from doing what they would normally be doing. If we could somehow filter out all the @#$% patents out there, the load on the patent office would reduce ten fold, and so would the waiting times. Here is an idea: reduce the number of patent clerks by half, and increase the pay for the remaining ones two times. The we'll get more qualified clerks, and that may solve the problem.
  • 0 users liked this comment Please sign in to rate this comment up. Please sign in to rate this comment down. 0 users disliked this comment
    Flyer1 Wed Sep 08, 2010 10:53 pm EDT Report Abuse
    Wait a minute! Hire more patent clerks! Socialist! We want a small ineffective government.
  • 0 users liked this comment Please sign in to rate this comment up. Please sign in to rate this comment down. 0 users disliked this comment
    Yahoo Bill Wed Sep 08, 2010 10:24 pm EDT Report Abuse
    Patents are obsolete for high tech and software. Most electrical circuits or software algorithms that are patented are completely obvious to anyone in the industry - yet patents are granted to big companies with the big law staff to fill out reams of frivolous patents for completely obvious ideas.
  • 0 users liked this comment Please sign in to rate this comment up. Please sign in to rate this comment down. 0 users disliked this comment
    Yahoo Bill Wed Sep 08, 2010 10:20 pm EDT Report Abuse
    What an absolute load of crap. The patent system is obsolete for high technology. Patents do not create or foster innovation. The primary beneficiaries of patents are lawyers.
  • 3 users liked this comment Please sign in to rate this comment up. Please sign in to rate this comment down. 0 users disliked this comment
    Jose Wed Sep 08, 2010 08:06 pm EDT Report Abuse
    When was the last time Steve Jobs was a "small inventor"? Steve himself has never denied having copied others ("steal"), most notably Xerox. Of course, this guy talking did not in fact say that with a straight face if you watch closely.

    Bill Gates, another "small inventor", is famously quoted as talking about how stifling software patents would have been if exploited last century; however, Microsoft, afterward, having reached monopoly status, started using patents as an anti-competitive weapon. Today, Bill Gates loves investing in patents. [Once a monopolist, always a monopolist.] Patents are used to protect the existing giants much more than they are used to help any small firm.

    Patents are a tax on consumers and on the majority of inventors and producers. Patents lead to industries that shrivel. Software does not need patents. Genes do not need patents (other people own my body!) And most industries would gain from reworking the entire patent monopoly system, preferably by dropping the stifling "monopoly" part.

    Today, life moves much faster than it did in 1790. Today we "need" 20 years of monopoly? I don't think so.

    The principle problem is the monopolies. The long MONOPOLIES on broad relatively easy ideas are the PROBLEM.

    Listen, where would physics, math, music, literature, etc, be if we had had patents in those areas? It's virtually impossible to make a great product without leveraging the geniuses and smart people of the past 20 years.

    Software inventions are virtual. They are mathematics combined with fiction in most cases. Mother nature does not pose limits or hide information from software inventions as is the case for every form of tangible invention. Manufacturing and distributing each new unit copy of a software product is $0 in time and money -- just check out all the software being produced this way. This means we have many many participating inventors (low bar to participate and recoup costs) who are hand-cuffed with every single software monopoly out there.

    Monopolists love software patents because they fear small firms and the great work being done and given away for free by many very smart individuals working together. You give a little away, but you gain a ship load being contributed by others. It's efficient advancement, highly exciting to those participating, very cheap for everyone, promotes small businesses (great for VCs and for most workers), and promotes those that don't require monopoly profits. If this nation was run by a small number of monopolists, very little would get done and most money would be in the hands of a very few at the top. Consumer products would stink.
  • 2 users liked this comment Please sign in to rate this comment up. Please sign in to rate this comment down. 0 users disliked this comment
    Jose Wed Sep 08, 2010 07:35 pm EDT Report Abuse
    A bunch of new patents are being filed as software inventions. This is garbage, both the idea that people are not innovating without patents and that a monopoly for 20 years is good (no, it stifles, especially with software where clearly the costs to develop, manufacture, and distribute are very very very low -- look at open source software). Patents destroy collaboration and penalize the many that cannot afford the time or money to patent their many ideas. Software patents are extremely broad and near useless in terms of revealing anything of worth ("one-click" patent).

    The people pushing patents (especially software patents) are (a) lawyers, (b) a small few that are willing and mentally capable to pursue patent litigation and don't care about economic progress by society, or (c) generally large companies that are afraid to compete.

    The US will eventually realize the foolishness of strong (broad) patent monopoly laws once other nations that currently collaborate much more pull ahead of us (as has already happened in some areas).

    Collaboration and the ability to compete and not have your own work made illegal is the key to a strong economy and R&D for the US. Honestly, monopolies are the way to progress?

    PS: the "bar" to getting a patent is creating something "non-obvious" to a person having ordinary skill in the art. Think about that. Your competition is given a 20 year monopoly because one of their people came up with an idea that was "non-obvious" to an average practitioner. Think about that, and why it should be clear our US patent system is stifling smarter than average (and also average, never mind genius) inventors. Your inventions will inevitably end up violating many of these "average" patents, and any one of them could send you packing or else into paying heavy fees structured to put you at a serious competitive disadvantage.

    Patents have no fair use or independent creation defense and are extremely broad. Very very bad.
  • A Yahoo! User
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    A Yahoo! User Wed Sep 08, 2010 07:03 pm EDT Report Abuse
    most get a patent pending status quick and thats it, the start the work, you can raise money and do whatever with a patent pending status, obviously a sane investor will do his homework to make sure you are not infringing on anyone else
  • A Yahoo! User
    0 users liked this comment Please sign in to rate this comment up. Please sign in to rate this comment down. 0 users disliked this comment
    A Yahoo! User Wed Sep 08, 2010 07:03 pm EDT Report Abuse
    most get a patent pending status quick and thats it, the start the work, you can raise money and do whatever with a patent pending status, obviously a sane investor will do his homework to make sure you are not infringing on anyone else
  • A Yahoo! User
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    A Yahoo! User Wed Sep 08, 2010 07:03 pm EDT Report Abuse
    There is another side to the story. Big corporations such as IBM overwhelm the Patent Office by filing patents for anything and everything. Software Patents are the most notorious and most difficult to analyze and grant.

    If you don't believe me just go and search how many patents IBM owns and has filed. Part of this is just about taking lesser companies out of the market.

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