New Column on HR 400 - Patent Sell Out.

New Electronic Design Column

Dear Readers: Those in Washington who are selling out our patent system to foreign interests are rushing a new bill (HR 400) through on a "fast track" basis. Because HR 400 will most likely be voted on before my new Electronic Design column can run, I am taking the unprecedented step putting it up on my page before it runs in the magazine. Here is an unedited preview copy of column #85.

John D. Trudel, April 21, 1997

We closed last time with a question: Where does innovation come from? Much as priests in the middle ages debated the metaphysical, this will likely be the key 21st century concern of government and industry leaders. In the new era, wealth will come not from machine age repetitive process or agrarian age natural resources, but from intellectual property.

If we define innovation as the development of technology for commercial gain, we invented it. So said Abe Lincoln, a patent-holder himself. "(It) began in this country, with the adoption of our Constitution. Before then, any man might instantly use what another had invented; so the inventor had no special advantage from his own invention. The patent system changed this; secured to the inventor, for a limited time, the exclusive use of his invention and thereby added the fuel of interest to the fire of genius, in the discovery and production of new and useful things."

Innovation, like liberty, has always been an American core value. President Harrison said so at the Centennial of the U.S. patent system. "It distinctly marked, I think, a great step in the progress of civilization when the law took notice of property in the fruit of the mind."

As I write this column it is unclear if this value will persist. Yesterday, our Congress came within a hair’s-breadth of passing the Japanese designed Patent Sell-Out legislation. Still, whatever the future holds, the notion of intellectual property was born in our cradle of liberty.

Note carefully that innovation comes from people, and that the U.S. has been a historic friend of innovation. Our patent laws are unique, since, as a new nation, we felt little need to protect entrenched interests. A study of the biographies of 121 members of the National Inventor’s Hall of Fame shows that though the inventors came from 24 countries, virtually all of their work (91%) was done in America.

One would think that large companies would produce almost all innovation, but one would be very wrong. Indeed, every large high-tech firm in the U.S. is ringed with spin-offs founded to commercialize innovations it rejected or ignored. I could almost say that all the founding executives in Silicon Valley came from larger firms.

The Venture Capital industry is unique to America. Without spin-offs or patents, it wouldn’t exist.

Innovation always threatens the existing order. "Every great advance in natural knowledge has involved the absolute rejection of authority," said Thomas Henry Huxley. "The most damaging phrase in the language is: It’s always been done that way," said Rear Admiral Grace Hopper.

Machievelli probably said it best. "There is nothing more difficult to carry out, nor more doubtful of success, nor more dangerous to handle, than to initiate a new order of things."

Machine Age business shares traditions and structures with the military. Suffice it to say that the mavericks -- from General Billy Mitchell, to Seymour Cray -- are rarely rewarded and often in peril. Indeed, those who succeed in creating enclaves of innovation often become folk heroes. (My early columns, then called Tales From a Skunk Works, discussed this. Reprints are available.)

Here are the stats. Of inventors awarded Hall of Fame status, 51% were entrepreneurs who started their own firms, 27% were corporate, 16% academic, and 5% were independents who licensed inventions. It takes exceptional leadership to preserve a firm’s innovation capability.

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