Here's an interesting interview that discusses a few of the current problems around innovation: education and incentives (min 16:00).
This is a solution that could/should be further closely examined in both the US and in PR if both countries are serious about continuing (and introducing it in the case of PR) development of innovation in their respective economies.
Summary:
James Surowiecki speaks with Dan Vasella, the chairman and C.E.O. of the pharmaceutical company Novartis AG, about the current state of the industry, the company’s shift away from the traditional model of profitability, and the growing influence of countries such as China, where Novartis plans to open a billion-dollar facility. They met last month at the Harvard Business School.
Sunday, December 13, 2009
Recession's latest victim: U.S. innovation (CNN)
Patent filings fell in 2009 for the first time in 13 years, worrying Silicon Valley that it is losing its place as the leader in global innovation.
By David Goldman, CNNMoney.com staff writerLast Updated: December 11, 2009: 10:34 AM ET
NEW YORK (CNNMoney.com) -- U.S. innovation slowed this year for the first time in 13 years as the recession cut into budgets, and costs to protect inventions rose.
The number of patent filings in the United States fell 2.3% in 2009 to 485,500 from 496,886 last year, according to a preliminary estimate by the U.S. Patent and Trademark Office. That makes 2009 the first year since 1996 in which businesses and inventors filed fewer patents year over year.
"That's unfortunate because [patent filings] are a reflection of innovation," said David Kappos, director of the Patent Office. "Innovation creates so many jobs and so much opportunity for our country. It is absolutely key to our long-term success in the global economy."
At the same time, U.S. patents issued to inventors and businesses in foreign nations jumped 6.3% for the year. That's a worry for Silicon Valley, which has been a global leader for decades.
Most blame the recession for the drop in U.S. filings. As a result, many companies are opting to hold off on bringing new ideas to market until the economy improves substantially.
"Our patent filings were down 25% this year, and it was a direct macroeconomic issue," said Joe FitzGerald, deputy general counsel for tech security firm Symantec. "The overall company reduced spending, and patent filings are a very controllable expense. We might have filed four patents, but we filed three and made sure they were strategically significant."
"Once you have a patent, you also have to go out and defend your own turf," said Henry Nothhaft, chief executive of Tessera, a San Jose, Calif.-based company that licenses its electronic miniaturization technologies to consumer electronics companies. "That has become more expensive lately due to the complexity of technology and globalization of economy, and it has caused some products not to come to market."
It could also become disruptive to American businesses down the road as filings from abroad pick up.
"We are in a dire economic situation, so its not unreasonable for businesses to have to cut their budgets," said Vakil. "But this trend could spell financial ruin for some U.S. companies. We've lost our competitive edge, and other companies from other countries stand to benefit."
If that trend continues, it could also spell trouble for the American worker, especially given the weak U.S. labor situation. The Obama administration has contended that the economic rebound will rely on innovative U.S. companies to hire workers to develop new technologies and ideas like clean energy and smart transit systems.
"Our top priority is to see jobs get created, and we need patents to get through the patent office to help create those jobs," Kappos said.
The Patent Office does not receive any taxpayer money. It is completely funded by fees levied on patent filing, processing and awarding. The Patent Office also hasn't changed its fee structure in decades, so it continues to charge a flat rate (roughly $1,000) for patent applications, regardless of the idea's complexity or the amount of work that needs to go into processing the patent.
As filings have dropped off, so too has the Patent Office's revenue, which sank by $200 million in 2009. As a result, the Patent Office has initiated a hiring freeze, stopped all overtime, cancelled a necessary IT upgrade and has lost between 40 and 50 patent examiners every month this year, said Kappos.
That means longer wait times for patent approvals and a growing backlog of filings. Currently, there are 740,000 patents pending, with an average wait time for approval of 40 months. The Patent Office isn't even able to look at applications for three years because of the backlog. That's an eternity for tech inventions, which tend to cycle through product generations in a year or so.
Ultimately, it creates a vicious cycle, since a large lag time only further discourages patent filers.
"People are looking at the system as it is now, and they're saying that waiting 40 months for a patent may not be worth it," said David DiMartino, spokesman for the Coalition for Patent Fairness, a group representing major Silicon Valley companies' desires for patent reform.
Another discouraging trend has been the rise in patent disputes. By June, there were already 15% more "post-grant" patent reviews filed by competitors to the filing company than there were in all of 2008.
Those cases are expensive to defend, and are sometimes used by large companies to delay smaller companies' technologies from coming to market or to prevent them from being released at all, according to Brian Pomper, executive director of the Innovation Alliance, a coalition of mostly small high tech companies in support of strong intellectual property rights.
As a result, the Patent Office, lawyers and companies alike are clamoring for patent reform. Bills in the House and Senate, which are on schedule to be passed in the spring, would give the Patent Office the authority to adjust its patent fee structure and give juries direction on setting awards for patent disputes, among other reforms.
Some advocates argue that the bills are far from perfect, particularly because they could make it easier for big companies to repeatedly bring smaller innovators to court. But for the most part, businesses and government officials are eager for Congress to act.
"The American innovative spirit is stronger than ever. If we're able to get patent reform through, we absolutely can take processing times way down and get innovations through to the marketplace," said Kappos, who estimates that legislation will help reduce the average wait time to as little as one year.
The number of patent filings in the United States fell 2.3% in 2009 to 485,500 from 496,886 last year, according to a preliminary estimate by the U.S. Patent and Trademark Office. That makes 2009 the first year since 1996 in which businesses and inventors filed fewer patents year over year.
"That's unfortunate because [patent filings] are a reflection of innovation," said David Kappos, director of the Patent Office. "Innovation creates so many jobs and so much opportunity for our country. It is absolutely key to our long-term success in the global economy."
At the same time, U.S. patents issued to inventors and businesses in foreign nations jumped 6.3% for the year. That's a worry for Silicon Valley, which has been a global leader for decades.
Most blame the recession for the drop in U.S. filings. As a result, many companies are opting to hold off on bringing new ideas to market until the economy improves substantially.
"Our patent filings were down 25% this year, and it was a direct macroeconomic issue," said Joe FitzGerald, deputy general counsel for tech security firm Symantec. "The overall company reduced spending, and patent filings are a very controllable expense. We might have filed four patents, but we filed three and made sure they were strategically significant."
Cost constraints
The application, processing and legal fees average about $15,000 per patent, but the cost to defend those patents in court after they've been granted typically runs between $3 million to $6 million, according to Bijal Vakil, partner in White & Case's intellectual property team in Palo Alto, Calif. "Once you have a patent, you also have to go out and defend your own turf," said Henry Nothhaft, chief executive of Tessera, a San Jose, Calif.-based company that licenses its electronic miniaturization technologies to consumer electronics companies. "That has become more expensive lately due to the complexity of technology and globalization of economy, and it has caused some products not to come to market."
It could also become disruptive to American businesses down the road as filings from abroad pick up.
"We are in a dire economic situation, so its not unreasonable for businesses to have to cut their budgets," said Vakil. "But this trend could spell financial ruin for some U.S. companies. We've lost our competitive edge, and other companies from other countries stand to benefit."
If that trend continues, it could also spell trouble for the American worker, especially given the weak U.S. labor situation. The Obama administration has contended that the economic rebound will rely on innovative U.S. companies to hire workers to develop new technologies and ideas like clean energy and smart transit systems.
"Our top priority is to see jobs get created, and we need patents to get through the patent office to help create those jobs," Kappos said.
The system is broken
Pushing patents through the system is easier said than done: The decline in filings this year has brought to light a number of problems with the antiquated American patent system.The Patent Office does not receive any taxpayer money. It is completely funded by fees levied on patent filing, processing and awarding. The Patent Office also hasn't changed its fee structure in decades, so it continues to charge a flat rate (roughly $1,000) for patent applications, regardless of the idea's complexity or the amount of work that needs to go into processing the patent.
As filings have dropped off, so too has the Patent Office's revenue, which sank by $200 million in 2009. As a result, the Patent Office has initiated a hiring freeze, stopped all overtime, cancelled a necessary IT upgrade and has lost between 40 and 50 patent examiners every month this year, said Kappos.
That means longer wait times for patent approvals and a growing backlog of filings. Currently, there are 740,000 patents pending, with an average wait time for approval of 40 months. The Patent Office isn't even able to look at applications for three years because of the backlog. That's an eternity for tech inventions, which tend to cycle through product generations in a year or so.
Ultimately, it creates a vicious cycle, since a large lag time only further discourages patent filers.
"People are looking at the system as it is now, and they're saying that waiting 40 months for a patent may not be worth it," said David DiMartino, spokesman for the Coalition for Patent Fairness, a group representing major Silicon Valley companies' desires for patent reform.
Another discouraging trend has been the rise in patent disputes. By June, there were already 15% more "post-grant" patent reviews filed by competitors to the filing company than there were in all of 2008.
Those cases are expensive to defend, and are sometimes used by large companies to delay smaller companies' technologies from coming to market or to prevent them from being released at all, according to Brian Pomper, executive director of the Innovation Alliance, a coalition of mostly small high tech companies in support of strong intellectual property rights.
As a result, the Patent Office, lawyers and companies alike are clamoring for patent reform. Bills in the House and Senate, which are on schedule to be passed in the spring, would give the Patent Office the authority to adjust its patent fee structure and give juries direction on setting awards for patent disputes, among other reforms.
Some advocates argue that the bills are far from perfect, particularly because they could make it easier for big companies to repeatedly bring smaller innovators to court. But for the most part, businesses and government officials are eager for Congress to act.
"The American innovative spirit is stronger than ever. If we're able to get patent reform through, we absolutely can take processing times way down and get innovations through to the marketplace," said Kappos, who estimates that legislation will help reduce the average wait time to as little as one year.
Friday, December 4, 2009
delanceyplace.com 11/20/09 - innovation
And the question remains, what is Puerto Rico has done and is doing to ride this wave of innovation?
As to what PR has done? Evidently very little as more than 90% of what is consumed in PR is manufactured elsewhere. Additionally, the industry of intellectual property is virtually non-existent in PR.
As to what PR is doing? I haven't heard of any government policies to foster innovation or promote the manufacturing of local products.
As to what can be done? A good place to start could be Jane Jacob's concept of "import replacements" (more information here).
In today's excerpt - historically, 85% of the increase in per capita GDP (gross domestic product or wealth) in the U.S. economy has come from innovation - the
invention of new products and services or the invention of better ways to make existing products and services. It follows that any durable and sustainable
program to create jobs in an economy would focus foremost on innovation:
"Since the 1950s, economists have understood that innovation is critical to economic growth. Our lives are more comfortable and longer than those of our great-grandparents on many dimensions. To cite just three improvements: antibiotics cure once-fatal infections, long-distance communications cost far less, and the burden of household chores is greatly reduced. At the heart of these changes has been the progress of technology and business.
"Economists have documented the strong connection between technological progress and economic prosperity, both across nations and over time. This
insight grew out of studies done by the pioneering student of technological change, Morris Abramowitz. He realized that there are ultimately only two ways of increasing the output of the economy:
(1) increasing the number of inputs that go into the productive process (e.g., by having workers stay employed until the age of sixty-seven, instead of retiring at sixty-two), or
(2) developing new ways to get more output from the same inputs.
Abramowitz measured the growth in the output of the American economy between 1870 and 1950 - the amount of material goods and services produced - and then computed the increase in inputs (especially labor and financial capital) over the same time period.
To be sure, this was an imprecise exercise: he needed to make assumptions about the growth in the economic impact of these input measures. After undertaking this analysis, he discovered that growth of inputs between 1870 and 1950 could account only for about 15 percent of the actual growth in the output of the economy. The remaining 85 percent could not be explained through the growth of inputs. Instead, the increased economic activity stemmed from innovations in getting more stuff from the same inputs.
"Other economists in the late 1950s and 1960s undertook similar exercises. These studies differed in methodologies, economic sectors, and time periods, but the results were similar. Most notably, Robert Solow, who later won a Nobel Prize for this work, identified an almost identical 'residual' of about 85 percent. The results so striking because most economists for the previous 200 years had been
building models in which economic growth was treated as if it was primarily a matter of adding more inputs: if you just had more people and dollars, more
output would invariably result.
"Instead, these studies suggested, the crucial driver of growth was changes in the ways inputs were used. The magnitude of this unexplained growth, and the fact that it was exposed by researchers using widely divergent methodologies, persuaded most economists that innovation was a major force in the growth of output.
"In the decades since the 1950s, economists and policymakers have documented the relationship between innovation - whether new scientific discoveries or incremental changes in the way that factories and service businesses work - and
increases in economic prosperity. Not just identifying an unexplained 'residual,' studies have documented the positive effects of technological progress in areas such as information technology. Thus, an essential question for the economic future of a country is not only what it produces, but how it goes about producing it.
"This relationship between innovation and growth has been recognized by many governments. From the European Union - which has targeted increasing
research spending as a key goal in the next few years - to emerging economies such as China, leaders have embraced the notion that innovation is critical to
growth."
Josh Lerner, Boulevard of Broken Dreams, Princeton, Copyright 2009 by Princeton University Press, pp. 43-45.
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