April 20, 2010

Immediate Release

U.S. Department of Commerce Issues Report on Role of Patent Reform in Supporting Innovation and Job Creation

WASHINGTON – Reforming America’s patent system will accelerate economic growth and job creation, and expand America’s ability to innovate, according to a new report released today by the U.S. Department of Commerce. The paper, titled “Patent Reform—Unleashing Innovation, Promoting Economic Growth and Producing High-Paying Jobs,” was authored by the Commerce Department’s Chief Economist Mark Doms, the United States Patent and Trademark Office’s (USPTO’s) Chief Economist Stuart Graham and USPTO’s Administrator for External Affairs Arti Rai.

Highlights of the paper were first released today during a speech by Under Secretary of Commerce for Intellectual Property and Director of the USPTO David Kappos at the National Bureau of Research (NBER) “Innovation Policy and Economy” conference at the National Press Club in Washington, D.C.

“We stand at the precipice of passing patent-reform legislation in this session of Congress,” Kappos said in his speech. “By enhancing the ability of America’s innovators to secure high-quality patents with greater speed and certainty, this legislation will speed the delivery of innovative goods and services to market and fuel economic growth and job creation.”

Technological innovation is a key driver of the Obama Administration’s pro-growth, job-creating agenda. The report suggests there are significant economic benefits to patent-reform legislation that will support that agenda.

Among the key statistics presented in the report are:

• Technological innovation is linked to three-quarters of the nation’s post-WWII growth rate. Two innovation-linked factors – capital investment and increased efficiency –represent 2.5 percentage points of the 3.4 percent average annual growth rate achieved since the 1940’s.
• Innovation produces high-paying jobs. Average compensation per employee in innovation-intensive sectors increased 50 percent between 1990 and 2007—nearly two and one-half times the national average.
• Highly innovative firms rely heavily on timely patents to attract venture capital—76 percent of startup managers report that venture capital investors consider patents when making funding decisions.
• Delay in the granting of rights has substantial costs. Recent reports conclude that the U.S. backlog (currently at 750,000 applications) could ultimately cost the U.S. economy billions of dollars annually in “foregone innovation.”
• The fee-setting authority patent reform gives to the USPTO will contribute significantly to the agency’s planned 40 percent reduction in patent pendency.
• The enhanced post-grant review—the process by which a patent’s validity may be challenged through an administrative appeal in front of the USPTO—offers a cost effective and speedier alternative to litigation. The cost of such proceedings is expected to be 50-100 times less expensive than litigation and could deliver $8 to $15 in consumer benefit for every $1 invested.

The report can be found in its entirety on the Department of Commerce Web site here.

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