Stimulating economic growth and creating high-paying jobs are key priorities for the Obama Administration. This paper provides data demonstrating that technological innovation is a key driver of a pro-growth, job-creating agenda. It further demonstrates that patent reform legislation, by accelerating the pace of growth and of job creation, will be a powerful and deficit-neutral mechanism for expanding America’s ability to innovate.
• Technological innovation is linked to three-quarters of the Nation’s post-WW II growth rate. Two innovation-linked factors – capital investment and increased efficiency – represent 2.5 percentage points of the 3.4% average annual growth rate achieved since the 1940’s.
• Innovation produces high-paying jobs. Average compensation per employee in innovation-intensive sectors increased 50% 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% of startup managers report that VC 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% reduction in patent pendency.
• The enhanced post-grant review provided by patent reform will substantially reduce the need for inefficient court challenges. The cost of such proceedings is expected to be 50-100 times less expensive than litigation and could yield $8 to $15 in consumer benefit for every $1 invested.