US Patent Numbers Raise Hope of Inventive Resurgence
THE United States is holding on to a slim lead in the international race for American patents. Americans received 53.3 percent of the 96,727 US patents issued in fiscal year 1990 - the same share as in 1989. It marks the end of a long decline in US patent dominance - at least for the moment.
Some observers are now talking about an imminent American renaissance in innovation. "At the core of CEO issues this year is the determination of individual US companies to halt, and potentially reverse, the decline in US technology leadership," concludes a new Ernst & Young survey of 561 chief executives of US electronics companies.
According to the survey, 40 percent of the chief executives thought the nation's technology competitiveness would improve by 1995 - up from 25 percent a year ago.
"I would foresee the prospects that there would be increased creativity," adds Leonard Mackey, a New York patent attorney and president of the National Inventors Hall of Fame Foundation. The foundation was formed largely in reaction to rising concern that the nation was losing its creative edge.
The figures are startling. From 1963 to 1988, the share of US patents going to foreigners rose from 18.6 percent to 47.3 percent. As late as a year ago, some observers were suggesting the foreign share of patents would rise above 50 percent. Instead, that share declined slightly in 1989 to 46.7 percent and stayed there in 1990.
Patents give inventors 17 years to control the use of their inventions. Since its creation in 1790, the US Patent and Trademark Office has issued nearly 5 million patents on everything from the Wright Brothers' glider to the microprocessor.
US companies, which routinely grabbed the largest number of patents in the 1960s, have given ground in recent years. The top four US patent grantees last year were Japanese. Four US companies made the top 10 list: General Electric, Eastman Kodak, International Business Machines, and North American Philips.
As foreign competition has heated up, US companies have used their patents more aggressively. They are suing foreign firms for infringing patents and demanding bigger and bigger royalty fees from companies that license their technology. The strategy worked so well against foreign firms that these US concerns now are using similar tactics against domestic rivals, says John Barton, a law professor at Stanford University.
He and other patent authorities suggest that such tactics are squelching innovation by giving an unfair advantage to companies with deep pockets.
`BIG firms have money for R&D and patent litigation; small firms have to choose," says Michael Kirk-Duggan, a business law professor at the University of Texas at Austin.
Several Silicon Valley chipmakers - including Cypress Semiconductor, IDT, LSI Logic, VLSI Technology, Altera, and others - have formed a consortium to defend against patent suits.
But patents cut both ways - often giving small companies, even individuals, an advantage.
In one celebrated case last year, California inventor Gilbert Hyatt shocked the computer world by getting a basic patent on the microprocessor after a 20-year legal battle.
"The bigger companies are very afraid of the smaller companies right now," says Robert Sterne, senior partner of a leading patent firm in Washington, D.C., representing small and large technology companies. "In the past, a patent-infringement charge of any type was not that big a deal."
But patent enforcement improved after the creation of a special Court of Appeals for patents and changes in antitrust law in the early 1980s. Awards have increased dramatically.
Patent attorneys suggest that patent fights have become too costly.
"It would be wonderful if we could get the cost of litigation down," says Michael Blommer, executive director of the American Intellectual Property Law Association.
But these attorneys say the solution lies in using alternatives to court battles, such as mediation and binding arbitration, rather than changing the system.