Remarks by Director Iancu at the Center for Strategic and International Studies Conference

October 23, 2018

Remarks delivered at the Center for Strategic and International Studies (CSIS) Conference

Club de Industriales

Director of the U.S. Patent and Trademark Office Andrei Iancu

October 23, 2018

Mexico City, Mexico

As prepared for delivery

Thank you, Richard (Miles), for that kind introduction. It’s an honor to be here with all of you this morning. And thank you to CSIS and COMEXI for organizing today’s conference.

Today’s topic, “How does a country become more innovative?” is an important one. As a preamble, I first believe that innovation is a critical component of a country’s development and a key driver of job creation and economic growth. And second, I believe that [intellectual property] IP is a necessary component for sustained innovation.

But to understand what I think are some of the key ingredients of innovative success for the future, it’s worth taking a brief look at the past. And I particularly want to go back in time 125 years—back to 1893.

This was a time when most of land transportation was still by horse and buggy, when there were no airplanes and no telephone systems to speak of. And this was a time when most of the world still had no electric power, and this meeting would have most certainly been conducted by candlelight.

It was at that time, over the course of six months in 1893, that more than 27 million people from around the world came to Chicago, when the United States hosted the World's Columbian Exposition—an astounding display of mechanical and cultural innovations.

Spread over 600 acres, the fair was a paradise in many respects, with pristine streets, well-mannered crowds, and the most advanced sanitary and transportation systems available at the time. There were many pavilions, each larger than a football field, and there was even a large lake between them. And although most of the world still did not have electric power systems in 1893, the grounds and surrounding neighborhoods at the Columbian Exposition were illuminated at night by giant searchlights, the largest ever made and said to be visible from 60 miles away. Large colored bulbs lit water that burst from the MacMonnies Fountain in the middle. All of the fair's walkways and neoclassical buildings glowed with lights, dazzling and delighting visitors who had never seen so many lights ignited in one place at one time. Indeed, many had not before seen any electric lights at all.

This awe-inspiring "City of Light" was the work of George Westinghouse and his company, backed by technology from inventor Nikola Tesla. Westinghouse beat out Thomas Edison and won the bid to illuminate the Exposition, and in doing so, enabled the public to observe firsthand the abilities of alternating current (or AC) power.

But the World's Columbian Exposition in 1893 was much more than simply the first all-electric fair in history. It also marked an end to the so-called "War of the Currents," as the fair made clear that Westinghouse's AC, and not Edison's DC, was the power of the future.

The "War of the Currents" started with a patent that had been issued 13 years earlier. After analyzing “no fewer than 6,000 vegetable growths” and “ransacking the world for the most suitable filament material,” Thomas Edison on October 21, 1879, completed 14 months of testing with an incandescent electric light bulb that lasted about half a day – more than 13 hours. And soon, he got a carbon-filament bulb to last 40 hours. Then on January 27, 1880, Edison was granted U.S. patent number 223,898 for his electric lamp, or light bulb, an invention he considered his "crowning triumph." But Edison's patented work was based on DC current. Westinghouse later started to compete with a different, AC-based system developed mostly by Tesla. And, with that different technology, Westinghouse "won" the War of the Currents.

But beyond technology, the famous battle between the two visions—AC vs DC—is heavy with meaning for the patent system. First, it obviously illustrates that intellectual property incentivizes original innovation, such as Edison’s, by protecting and rewarding one’s original ideas. Edison was an experienced inventor and patent owner, and the patent system acted as a significant incentive for him to invest so much time, effort and resources to develop the light bulb and electricity system.

And then, given Edison’s success, Westinghouse and Tesla were incentivized to create something new themselves—something different from Edison’s. If Edison’s original technology were not patented, would Westinghouse have invested so much time, effort and resources to develop an alternative (and perhaps better) technology? Hard to tell.

That pro-competitive combination—original and follow-on innovation—is the genius of a modern patent system. It creates a perpetual innovation machine.

Economic studies have confirmed the benefits of a well-balanced modern IP system. In 2014, for example, IP-intensive industries directly and indirectly supported 45.5 million jobs, nearly one-third of all U.S. employment. In 2014, workers in American IP-intensive industries earned an average weekly wage of $1,312, which was 46 percent higher than the weekly wages in non-IP-intensive industries in the private sector. Additionally, a paper by a former USPTO Edison Scholar found that approval of a startup's first patent application increases its employment growth over the next five years by 36 percentage points on average. And another study estimates that patent protection motivates U.S. companies to invest 33 percent more in R&D than they would if there were no patent protection.

So patent protection stimulates an economy in multiple ways. Among other things, it obviously incentivizes and grows domestic innovation. But, in addition, it also tends to attract increased foreign investments and businesses that can operate more confidently that their IP will be protected.

All this requires that the rights we issue from our respective offices be reliable, predictable, and meaningfully enforceable. This is what enables inventors and investors to rationally allocate their resources in the innovation ecosphere. Our responsibility as IP offices in our respective countries is to ensure these standards.

And to that end, one important factor is for our respective offices to cooperate towards these goals. The good news is that when it comes to IP, there has been long-standing cooperation between the United States and Mexico. Specifically, I am proud that the USPTO has a long-standing relationship with the Mexican Institute for Industrial Property—or IMPI. Over the years, our two offices have exchanged best practices, collaborated in capacity building programs, and worked together on various initiatives. For instance, we have a Patent Prosecution Highway program that facilitates faster patent determinations at both our offices.

The USPTO also has an Intellectual Property Attaché posted in Mexico City. Through our attaché, our two offices are able to maintain real-time communications about all manner of IP issues. For example, the USPTO has been able to participate in various outreach endeavors organized by IMPI, most notably, Expo-Ingenio—a semiannual roadshow taking place in multiple Mexican cities to increase IP awareness among inventors.

And yesterday, at the Benjamin Franklin Library in Mexico City, I had the pleasure of announcing—together with IMPI Director General Miguel Angel Margain and the National Inventors Hall of Fame (NIHF)—the first Club Invention to operate outside of the United States. This will be an after-school enrichment program for elementary school students. The USPTO is thrilled to partner with the U.S. Embassy, IMPI, ILCE, and the National Inventors Hall of Fame to bring this wonderful program to children in Mexico. Club Invention feature hands-on activities that foster creativity, problem solving, teamwork, and entrepreneurship. Plus, it features concepts of intellectual property, teaching children the meaning and benefits of strong IP protection from a very early age.

We hope the children who participate in Club Invention here in Mexico have fun and use their skills to become the next generation of inventors, entrepreneurs, and innovators. Because, in the end, this is what makes a country innovative from generation to generation: Children who love to tinker, to invent, to take risks and make something new; children whose heroes are inventors and entrepreneurs, and who will grow up to be like them; and children who grow up to understand the value and meaning of intellectual property rights.

And now, in addition to all of our joint efforts in the past, we hope to enhance our engagement with Mexico even further on the strength of the United States-Mexico-Canada Agreement. Because as you all know, the United States, Mexico, and Canada concluded a new trade agreement on October 1 of this year. And this new “USMCA” Agreement will ensure that in our region we have, among other things, strong and effective protection and enforcement of IP rights for the modern age.

The agreement creates a cutting-edge legal framework across North America for all forms of IP, including patents, industrial designs, and plant variety protection. The agreement will also ensure that new pharmaceutical products, like biologics, are afforded adequate regulatory protections. It also allows patent owners the possibility, under certain circumstances, of restoring lost patent term due to delays beyond their control. In short, the IP portions of this agreement represent a great advancement for all of North America that will enable our respective countries to work, grow, and be more innovative together.

The capacity of humans to innovate has no borders. We in the United States recognize the value of innovation generated by all who come before us. Take for example, Guillermo González Camarena. Born in Guadalajara, México, he invented an early color television transmission system. He was only 17 years old. His invention, for which he also received patent number 2,296,019 in the United States in 1942, was used not only for color television, but was also used on NASA's Voyager mission in 1979 to take pictures and video of the planet Jupiter.

Or, consider as another example, Ellen Ochoa, an American scientist, inventor and astronaut. Ochoa, whose father was Mexican, was the first Hispanic woman to go to space and served on a total of four space shuttle flights. Ochoa is co-inventor named on three optics-related U.S. patents and was the Director of NASA’s Johnson Space Flight Center from January 2013 to May of this year. The USPTO is extremely proud of all inventors and we do everything we can to encourage their imagination, creativity, and determination.

The progress humanity has made in the last couple of centuries, incentivized by modern intellectual property systems, has been remarkable. Spaceflight and television. Electricity and telephone. Medicines, surgery equipment, and cancer treatments. And so much more. The pace of human development in the modern era, backed by modern patent systems, far exceeds all development in all of the millennia of human existence combined.

Yet, as remarkable as all of the development to date has been, I firmly believe that the future will be even more exciting. For the world stands on the cusp of truly extraordinary scientific and technological progress: artificial intelligence, unmanned vehicles, biotechnology, quantum computing. And there will be technologies that we can’t even imagine yet. We are just getting started. To foster those future technologies, and ensure worldwide progress and economic growth, countries like ours must continue to work together in strengthening and improving our IP systems.

All of these efforts, combined with the creativity and ingenuity of American, Mexican, and Canadian inventors, will certainly lead to a more prosperous North America. I and the USPTO stand ready to assist in any way we can as we continue to work together to encourage innovation and create strong IP systems worldwide.

Thank you again for the invitation to speak here today, and I look forward to continuing the conversation.