Patents, the Lifeblood of Innovation

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Patents,the Lifeblood of Innovation

By Gene QuinnApril 21, 2011

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Innovators are the Rockstars of our Industry

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U.S. Utility Patents 1975 - 2010

1975

1977

1979

1981

1983

1985

1987

1989

1991

1993

1995

1997

1999

2001

2003

2005

2007

2009

025,00050,00075,000

100,000125,000150,000175,000200,000225,000250,000275,000300,000325,000350,000375,000400,000425,000450,000475,000500,000

Issued Filed

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Berkeley Patent Survey (2008)

• 76% of venture backed entrepreneurs indicated that existence of patents was an important factor VC investment decisions.

• 60% for software companies.

• 73% for biotech companies.

• 85% for medical device companies (85%).

• It doesn’t matter what industry you are in, significant percentages of VCs place a premium on patents when making funding decisions.

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VC love patents? All about exclusion.

The patent grant provides to the owner of the grant the right to exclude others from making, using, selling, offering for sale or importing in the U.S. anything that would infringe one or more of the claims contained in the patent. The patent right is an exclusionary right, which by its very nature means the owner of the patent has a competitive advantage. Without a competitive advantage capital intense start-ups cannot be justified from an economic standpoint, at least as far as investors are concerned.

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Why do we care about VC?

1. 60% of start-ups that undertake an IPO are venture backed firms.2. According to the National Venture Capital Association job growth

at VC-backed firms is 1.6% versus .2% at non-VC-backed firms, making VC backed firms roughly 800 times more productive at creating jobs.

3. According to the National Venture Capital Association, since 1970 VCs have invested roughly $500 billion in more than 27,000 start-ups, employing 12 million people today and contributing $3 trillion to the US economy, which is 21% of total US GDP.

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According to Hank Nothhaft (Tessera CEO)

“[E]very patent is associated with somewhere between 3 and 10 new jobs. In my previous company Danger, which had 100 issued and pending patents, the number was 4 jobs per patent and patent application.”

http://ipwatchdog.com/2011/01/02/why-patents-matter-job-creation-economic-growth/id=14170/



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An Agency in Decline: The USPTO

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Show me the money!!!!

1. Despite supplemental of $129 million not all FY 2010 fees collected stayed with the USPTO. $70 million collected was diverted.

2. Since 1992 nearly $1 billion in collected fees have been diverted from the USPTO.

3. $100 million diverted in recent FY 2011 WH budget deal.

4. Without resources not much can be done.

http://ipwatchdog.com/tag/pto-budget/


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PTO response to inadequate funding from Congress

1. All overtime is suspended until further notice.2. Hiring for new positions and backfills is frozen for rest of the year.3. Funding for employee training will be limited to only mandatory training

for the rest of the year.4. Opening of planned satellite office in Detroit is postponed indefinitely.

Consideration of other satellite offices also postponed indefinitely.5. Only limited funding will be available for mission-critical IT capital

investments. No funds for IT update.6. Track One expedited examination program postponed until further

notice.7. All business unites will be required to reduce all non-compensation

related expenses, including travel, conferences and contracts.



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Average time to get a First Office Action

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Average TRADITIONAL Pendency

When you factor in RCEs the average goes up to 41.6 months!

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Depressing Pendency Averages:

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Current number of applications awaiting action:

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Utility Patents Filed, Awaiting Action & Total Pending

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 20100

200,000

400,000

600,000

800,000

1,000,000

1,200,000

1,400,000

Utility FiledAwaiting ActionTotal Pending

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According to Hank Nothhaft (Tessera CEO)

1. Liberate entrepreneurs from start-up-killing tax and regulatory shackles.

2. Fix the patent office so we can stimulate invention and entrepreneurship again.

3. Offer meaningful incentives to bring high-tech manufacturing back to America.

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Would Apple be able to get funded today?

When asked whether Apple could get funded today as a start-up business Steve Wozniak replied:

“It would be much harder for that to happen today. It’s a changed battlefield. There’s so much money at stake now, and you’re competing against the whole world. It’s also harder to manufacture in the U.S. And the venture capital game is different, less willing to take [those risks]”

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Senator Birch Bayh (ret.) on how to get reform:

“[T]he fact of the matter is that we didn’t have the masses interested in the idea of Bayh-Dole at the beginning and I don’t think that you needed them to get Bayh-Dole. You don’t need to get the masses interested in funding the Patent and Trademark Office. You need to concentrate on three or four key members of the House and the same on the Senate, the appropriators, Chairman of the Appropriations Committee, get the universities to talk to them. It’s just sort of simple. The politicians do what’s in their interest and if you get people to raise enough hell that they know they got to respond…”

http://ipwatchdog.com/2010/11/15/exclusive-interview-with-senator-birch-bayh-part-2/id=13334/



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Senator Birch Bayh (ret.) on how to get reform:

“I remember talking to Pat Leahy. He wasn’t interested until he got a call from the technology people at the University of Vermont. He got interested in it rather quickly and why should he have been interested in it before? He didn’t know anything about it. Patent law, as you point out, is not the top of everybody’s interest list, but you look at all these figures that you have there, they make a pretty good case.”




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Rockstars get what they want!

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Patent Reform?????

1. Coalition for Patent Fairness (LOL)2. Big companies are not innovators!3. Entrepreneurs are the only group in

not to have representation in DC4. Senate Patent Reform S. 23, not

great, but OK. Would give PTO ability to keep 100% of fees collected and set fees.

5. House Patent Reform, largely identical to Senate, but with a couple poison pills (post-grant review; prior user rights)

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The End

Gene QuinnUS Patent AttorneyPresident & Founder of IPWatchdog.comEmail: [email protected] Phone: 703-740-9835

Patents, the Lifeblood of Innovation

Technology

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