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USPTO Director David Kappos was in the UK last week and I had an opportunity to sit down with him for an hour or so to talk over a few issues.
The interview began with Kappos handing over a hard copy of the recently published Intellectual Property and the US Economy , which the office put together with the Economic Statistics Administration. The main headlines from what is a very detailed piece of work are that on a conservative estimate around 40 million American jobs are either directly or indirectly supported by US IP-intensive industries, and that collectively these contribute something like $5 trillion annually to the country’s economy, which is over 30% of GDP.
The study is clearly something that Kappos is very excited about. Its genesis lies in testimony that IP Tsar Victoria Espinel gave in a Congressional hearing and the idea was firmed up in a subsequent meeting that involved her, Kappos and then Commerce Secretary Gary Locke. The research took about a year to do.
What Kappos is so keen on is that something as detailed as this has never been done in the US before. There have been various studies indicating IP’s importance, but nothing that has been so rigorous or encompassing. It has ended up confirming what many in the IP world already suspected, but could not readily prove: patents, trademarks and copyrights are not esoteric rights, they are fundamental assets that underpin industries, create well-paid jobs and contribute huge amounts in tax revenues. The survey shows, as Kappos said, that: “IP is where all the action is.” And, thanks to Intellectual Property and the US Economy, American IP policy can now be discussed and implemented in context.
In fact, so pleased is Kappos with the report that he said he would be happy to help in the creation of something similar for Europe. While this would be for something for the Europeans themselves to decide on doing and then to carry out, he said, given that the Americans have done a lot of groundwork in terms of developing data points and methodologies, there is a lot of input that the USPTO could provide if called upon to do so.
As luck would have it, Benoît Battistelli, president of the European Patent Office, was also in London last week, promoting the launch of a new EPO partnership with Logica. IAM journalist Jack Ellis put it to Battistelli that given the widespread IP scepticism that prevails in Europe such a report would be a good idea. But the president did not seem to be that enthusiastic. He said that the European Commission had already produced a number of studies showing the importance of IP to Europe's economy, while there was a rise in applications to the EPO last year. Everyone understands the link there is between innovation, patents and growth, he claimed.
All of which rather neatly encapsulates the alarming complacency of many inside the European IP bubble at a time when the Pirate Party in Germany is winning seats in elections and scepticism about IP across the continent is all too common. If the Commission has done work along the lines of Intellectual Property and the US Economy then they are keeping it remarkably quiet. To the best of my knowledge, the reality is that no detailed, accessible work on the contribution IP makes to the European economy has ever been published.
While those inside the European IP bubble may realise there is a strong link between IP and economic growth, those Europeans outside it – the overwhelming majority - clearly do not. And this fundamentally affects the debate about IP over here. If Europeans do not understand that IP equals jobs, investment and tax receipts, why on earth should they see what are essentially rights to exclude and monopolise as good things? If the EPO is not that interested in helping to challenge the growing anti-IP consensus in many parts of Europe, perhaps it is something for OHIM, an organisation currently awash with money, to have a look at.
Obviously, Kappos is not going to get himself into a situation in which he starts telling the Europeans what they should be doing. However, it was interesting to hear his observations on how the IP debate is conducted on either side of the Atlantic. I put it to him that American politicians have shown that they are not always as pro-IP as their rhetoric would suggest. Examples I cited were the decision to withdraw a permanent end to diversion from the American Invents Act and the extreme flip-flopping we have recently seen over SOPA and PIPA. Kappos did not concur. “Congress gets it,” he said, “and the Administration certainly does; but sometimes other dynamics come into play.”
With diversion, he stated, everyone agrees that the USPTO needs to be properly resourced, but there is also a belief that Congress should retain an oversight role. That is perfectly understandable, he said, and the final version of patent reform legislation reflected a compromise position. On SOPA and PIPA, he continued, what we are seeing is the democratic process, as messy as it is, at work. While almost everyone agrees with the principles that underlie the proposed legislation, there are significant worries about specific provisions. “Some measures have caused concerns for some parts of the technology community and we need to look at those. It’s a case of going back around and seeing which parts of SOPA and PIPA should be carried forward, and how,” he said. But, overall, “protecting IP is a strongly held belief in Congress”.
In Europe, Kappos observed, “there seem to be many more existential questions being raised about the efficacy of IP. We do not have that in the US.” In America, he stated, there is a cultural belief that IP and patents are good, and that they are facilitators of innovation. The many criticisms of some forms of patenting (software and busines methods, for example) and of the activities of NPEs do not seem to support such a claim, I argued; but Kappos again disagreed: “We have folks whose business models are more based on copyrights and trade secrets, and less on patents, so it is natural that they will pitch at the margins to reduce patent rights in favour of other forms of IP. I don’t see that as unhealthy, it’s the kind of tension you should have and it leads to, say, the strong copyright system we have in the US.”
As for those current criticisms of the patent system “we have seen that movie before,” he said. Kappos explained that many people look at the smartphone wars and say that this shows the system does not work. What they do not realise is that such patent battles have often happened in the past: from disputes in the UK over the steam engine in the late 18th and early 19th centuries; through the development of sewing machine technology; to the invention of the aeroplane. “It’s not about the patent system,” said Kappos, “but about basic breakthrough inventions that change people’s lives.” In such situations, he stated, competing products develop and that always leads to confrontations; but these are eventually resolved and the world moves on.
Overall, Kappos is positive about developments in the US IP marketplace: “Business, the media, even mums and dads, are recognising that innovation is where the action is; and that there is only one thing that prevents innovation from being nothing more than a donation - that is IP.” People are looking at IP-based companies, he continued, and seeing that they do better over the long-term than businesses that compete solely on pricing. “Smart and sophisticated companies are not going out and buying portfolios for no reason,” Kappos said. “They understand that they either have to do the R&D themselves or own assets that reflect R&D, because if they don’t they will be copyists and they will be sued.” New models of transacting, leveraging and exploiting IP are being driven by this self-evident truth. “All this is good for the IP market,” Kappos said.
As this is a blog, I will leave it there for now. But, among other things, we also talked about how Kappos believes patent reforms are beneficial to lone inventors and SMEs in the US, the importance of granting quality patents and what the USPTO is doing to ensure that this is what it does, recent proposals to raise many USPTO fees and the importance of persuading the Europeans to create a grace period for applicants. I’ll report on all these in another piece some time over the next few days.
IP management, IP politics, Brands, Copyright, Patents, IP business