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U.S. Secretary of Commerce Delivers Remarks on New Initiatives to Strengthen Patent System and Support American Innovation

Thursday, February 20, 2014

As some of you know, I spent 27 years in business before becoming Commerce Secretary. The companies that I launched and led often relied on intellectual property protections. Therefore, I know first-hand that protecting and promoting our ideas-driven economy is essential to economic growth. IP protections serve as the foundation for new businesses, IP protections attract capital and investors, and IP protections lead to a steady stream of investment in R&D and innovation here at home.

In short, America’s intellectual property system is a catalyst for our thriving entrepreneurial spirit – which remains the envy of the world. As you know, the U.S. Patent and Trademark Office is part of the Commerce Department. Our PTO employees work every day to set the stage for American innovation to take root and grow – which is a key part of the Department’s Open for Business Agenda that I rolled out in November (at 1776, a local business incubator).

The Patent and Trademark Office traces its roots back to our Constitution. Article One, Section One, Clause 8 says: “The Congress shall have the power to promote the progress of science and useful arts by securing – for a limited time – to authors and inventors the exclusive right to their respective writing and discoveries.”

President Washington himself signed the first patent. That patent went to Samuel Hopkins, who invented a new process for making a fertilizer ingredient. That patent still exists in the collection of the Chicago History Museum in my hometown.

Since then, about 8 million patents have been issued. And our intellectual property system has become the world’s gold standard. Today, we must constantly look for ways to strengthen our intellectual property system.

In 2011, President Obama signed into law the Leahy-Smith America Invents Act, the first major reform to our patent system in nearly 60 years. The law harmonized our patent laws with those of other countries. The law supported cost-effective alternatives to litigation in patent disputes and more.

But the President recognizes that we still have work to do. That is why – last June – he issued four executive orders for the U.S. Patent and Trademark Office to build a smart intellectual property system for American businesses and to reduce the threat that patent assertion entities, commonly known as "patent trolls," often pose to cutting edge research & development.

First, we are creating more transparency in patent ownership. On January 24th, we published a proposed new rule to require patent holders to be public about who really owns the patent. This will have many benefits: a better competitive environment, more tech transfer, disincentives for abusive litigation, and more.

Second, we are tightening the level of scrutiny on patent claims that are too broad – particularly software patents. We beefed up training for patent examiners, with clearer guidelines to ensure the quality of these patents.

Third, we are helping Main Street businesses and citizens who unexpectedly find themselves facing patent litigation. Today, the Patent and Trademark Office is launching a new online toolkit that will help consumers and business who face litigation to understand their rights and get the answers they need.

Fourth, we are stepping up efforts with research and outreach. We are expanding a program for scholars who will study patent-litigation issues. And, with regards to outreach, we will actively engage more trade associations, business groups, advocacy organizations, and civil society leaders – people like you – to help you navigate the patent system and to ensure that our programs are keeping pace with industry.

Overall, the goal of these actions is clear: Innovation, not litigation.

America’s entrepreneurs and businesses want to focus their time and resources on R&D, growth, and hiring…not wasting money in the courtrooms. Why is it so important for the federal government to be proactive in this arena?

Consider this: In 2012, economists at the Commerce Department studied what we call “IP-intensive industries.” We found that these industries account for over one-third of our nation’s GDP, more than 60 percent of our exports, and nearly 28 percent of jobs.   

Clearly, IP protection is a pillar of the United States economy and we should be doing everything possible to ensure a smart, 21st-century patent system.

The last thing we need as our economy gains traction is for researchers, inventors, and small businesses in these industries to get distracted from what they do best: drive innovation, increase U.S. competitiveness, and create good jobs.

All of us in the Administration will continue to work with Congress on the legislative recommendations that the White House made last June.  

We need Congress to step up once again, as they did with the America Invents Act. The House has already passed a version of patent reform legislation with bipartisan support. We need the Senate to act.

At the same time, we will continue to move forward with new Executive Actions because our patent system simply must keep up with ever-evolving needs of industry.

That’s why I am pleased to announce three new executive actions.

First, we will harness the power of crowdsourcing by encouraging the innovation community to uncover and submit hard-to-find information – known as “prior art.” This will help patent examiners make better decisions about whether an invention is worthy of a new patent.  

Second, we will make it easier for engineers and technology leaders from companies and universities to help with technical training of our patent examiners. This will improve the quality of patent examinations and ensure that the knowledge base of our PTO employees stays strong, relevant, and up-to-date.

Third, we will dedicate more staff to provide pro bono support for inventors and small businesses who apply for patents but can’t afford to hire legal help. We will scale up our pro bono program, and hire someone to coordinate pro bono work in all 50 states. Our country simply must support the trailblazers who make breakthroughs in their garages and dorm rooms.  

In closing, let me emphasize that the Commerce Department will continue to champion American innovation. And we are 100% committed to serving our customers – entrepreneurs and businesses – who drive that innovation.

Let’s continue to create an environment where good ideas can turn into job-creating companies. Let’s set the stage for more innovation, not litigation, and let’s continue to ensure that the United States remains the world’s strongest ideas-driven economy in the 21st century.