Harnessing the Flash of Genius

Thomas Edison’s famed light bulb is the symbol of American invention – so much so that we use its image to symbolize discovery and inspiration. When an idea flashes, a “light bulb goes off.” But Edison didn’t manufacture his improved “electric lamp.” Instead, he transferred his patent for it to the General Electric Company – and went on inventing.

Throughout America’s history, innovators have been building the national economy without necessarily building a product. These inventors – at small and large businesses, universities and national research labs – create the feats of science and engineering that become the features in our products. They just don’t always create the products themselves.

As Congress continues to consider legislation that would weaken intellectual property (IP) protections and threaten inventors, we need to remember: IP licensing is good for U.S. inventors and good for the U.S. economy.

To get their patented discoveries from paper to product, many inventors rely on IP licensing. By licensing – essentially leasing – their innovations to manufacturers, these inventors earn the financial return they need to continue their work. The manufacturers can build, ship and brand the design. And the inventors can get back to what they do best: inventing.

The organization I represent, the Innovation Alliance, is a coalition of research and development-based technology companies from a diverse range of industries. For many of them, their engineers focus on inventing, not on manufacturing and marketing. And by licensing their patented designs, the companies and their engineers can concentrate on making new technological breakthroughs.

Looking back, some of the greatest American inventors of the 19th and 20th centuries licensed their patented discoveries. Consider that Charles Goodyear licensed his vulcanized rubber patent to manufacturers, contributing to a dramatic expansion of the automobile industry and other manufacturing sectors.

Today too, IP licensing – which innovators rely on – has a large, positive impact on the U.S. economy. It’s like an innovation superhighway that connects universities, small businesses, and individual inventors – and importantly their patented discoveries – with manufacturers and everyday consumers.

Those reading a laptop or cellphone are likely relying on a licensed patent. A former engineer with Compaq Computers, Guy Fielder, developed a method to password protect Wi-Fi routers and licensed it to device manufacturers across the tech ecosystem. Today, billions of Wi-Fi routers – and likely the one blinking nearby – use it.

And look at American research universities. There isn’t an assembly-line factory next to the quad. These centers of innovation rely on IP licensing to monetize their discoveries, fund their research programs, and realize their designs. In fact, nearly 10,000 patented products sold today originated in academic research labs. And from 1996 to 2007, university licensing created over 279,000 jobs and contributed as much as $187 billion to the U.S. gross domestic product.

That’s just one part of the IP licensing economy. Overall, experts have estimated that patent licensing can add up to $200 billion in new growth to the U.S. economy each year.

Unfortunately, some in Congress appear to underestimate the importance of IP licensing to our economy. They are supporting misguided legislation in the form of H.R. 9, the Innovation Act and S. 1137, the PATENT Act, that would endanger inventors who license their IP. Even more, these bills would endanger the new products consumers demand and the innovation the U.S. economy needs.

Thankfully, there are voices in our government that recognize the value of IP licensing to the U.S. economy. Today, the U.S. Patent and Trademark Office is co-hosting an all-day conference titled: “The Economic Contribution of Technology Licensing.”  The conference is examining the “essential role” of licensing in commercializing new technologies and considering how the U.S. government can “promote and encourage” more licensing.

You don’t need a factory to be an inventor. Since the beginning of our country, IP licensing has turned flashes of genius into the shining glow of America’s innovation leadership. Let’s not pull the plug.

Brian Pomper is Executive Director of the Innovation Alliance.