Posts Tagged ‘innovation’

Newer Entries »

Has the America Invents Act been Beneficial or Harmful?

Monday, February 23rd, 2015

In September 2011, Congress passed and the president signed the Leahy-Smith America Invents Act (AIA) that changed the U.S. patent system to the party “first to file” instead of the “first to invent to bring the U.S. in line with other countries who adopted first to file patent systems years ago, supposedly to simplify the patent process for companies that file applications in multiple countries. Its central provisions went into effect on September 16, 2012 and on March 16, 2013. Let’s examine whether or not the America Invents Act has been beneficial or harmful to innovation by America’s inventors and small businesses.

At the time, supporters said it would improve patent quality by creating a new process for reviewing patents after they have been issued and allow third parties to provide information on other parties’ applications. Rep. Lamar Smith, who chaired the House Judiciary Committee (R-TX) said, “This bill is designed to help all inventors. The current system “seriously disadvantages small inventors and companies” because it can lead to years of costly legal challenges to their patents.” Another supporter, Rep. Mike Michaud (D-ME), said, “We need to make it easier for companies to innovate and make things here at home, and this bill does that.”

Opponents argued that there was no reason to change the U.S. system, and inventors and small businesses complained that switching to a “first to file” system would give large companies an advantage and hurt individual inventors.

Rep. Sensenbrenner (R-WI) and Rep. John Conyers opposed converting the U. S. patent system to a “first to file” system, but their amendments to strike this language were rejected. Rep. John Conyers (D-MI) said the legislation would “benefit large multinationals at the expense of independent inventors and small businesses” and would “harm jobs, harm innovation and harm our nation.”

Rep. Don Manzullo (R-IL) voted against the bill and stated, “This bill would weaken our strong patent system that has protected American entrepreneurs for centuries from overseas companies trying to pirate their inventions.” Manzullo said. “Any patent reform we undertake should focus on reducing the backlog in patent applications, not dramatically altering the system and giving multinational corporations advantages over American innovators. The last thing we should be doing right now is giving foreign companies an even greater opportunity to take our ideas and our jobs.”

What has happened in the last two and a half years since the American Invents Act went into effect?

Paul Morinville of www.USInventor.org, wrote, “An inventor is the odds on favorite to lose in today’s patent system. Since the America Invents Act created post grant opposition procedures (PGO), inventors have lost the large majority of patent cases. PGO’s invalidate patents at rates above 75%. Article III courts find patents invalid under the indefinable ‘abstract idea’ at similar rates. Today, inventors are losing more cases than at any time in the 224-year history of the U.S. patent system.”

He added, “An infringement suit can cost millions of dollars for each side. Prior to the AIA, even small inventions could be enforced. With the huge increase in inventor losses due to the AIA and the indefinable “abstract idea,” only inventions with exceptionally large damages can be enforced. It’s simple math, damages must exceed the cost of the case plus the cost of risk.”

Patent Agent David B. Waller, J.D. M.S., Patent Success Strategies, LLC, commented, “Recent changes in the United States Patent Laws under the America Invents Act have had beneficial effects for some and significant disadvantages for others. In particular, changing from a first-to-invent to a first-to-file system, while conforming U.S. patent law to a worldwide standard with respect to ownership, has significantly impacted the exclusive rights granted to inventors through the U.S. Constitution and simultaneously impacted collaboration among research groups. The new Post Grant Opposition (PGO) procedures now provide an avenue to invalidate issued patents with resulting costs significantly lower for the challenger than the patent holder. This presents a distinct advantage for those with substantial resources to challenge patents that may directly compete with their technology.

To compound an already problematic system, the Innovation Act that passed the House last year proposed provisions that while seemingly helpful to independent inventors, would have been detrimental. The provision that provided a losing party pay for an infringement suit created a substantial advantage for a party having the greater financial resources. This bill never passed the Senate, and in view of other potentially detrimental provisions of the AIA, it will be important to make changes in this law to readjust and balance the benefit for all inventors.”

Patent Agent George Levy explained some of the harmful effects of the America Invents Act: “The new law presents a terrible dilemma for the small inventor. He can’t talk about his invention until the invention is filed (any competitor could simply publish the inventor’s idea under the competitor’s name, thereby locking the inventor out, or even worse, file a patent in their own name, with or without improvements) – The so called grace period is worthless. He can’t file until he is funded, and he can’t be funded because potential investors are scared of post grant reviews invalidating the granted patent. He does not have the funding to protect himself from a post grant review.

The whole “troll” idea is a red herring. In fact the biggest trolls or non-practicing entities are the large corporations whose legal department make a point of erecting a picket fence around competitors. Note: “A well-known tactic to devalue a competitor’s patent is to create a “picket fence” around it. Using this tactic, a competitor attempts to surround the pioneering patent with many patents covering incremental innovations, thereby hindering freedom to operate or freedom to advance the technology along logical trajectories.”

Mr. Levy added, “A single patent is granted to an inventor who cannot practice it because of lack of funding, and large corporations won’t license the patent from him. However, if the patent interferes with the business of a corporation, the inventor is called a troll and his patent is subjected to post grant review…A large number of patents, called “picket-fence,” are granted to a large corporation and grouped around a competitor’s technology. The patents are specially designed to interfere with the competitor’s business. Such strategies are commonly used by corporate legal teams.”

At our San Diego Inventors Forum on February 12th, President Adrian Pelkus, said, “We are a nation of creators and builders living at a time when science and technology is exponentially enriching our quality of life. Disturbing the evolution of ideas disrupts our development as a society, and changes to our patent laws are doing just that. American inventors create new products and jobs. The more we enable inventors, the more our country prospers and the better our lives become. We can expect only the opposite if we if we stifle inventors by allowing laws to be passed by corporations pressuring our representatives to protect only their interests.”

Thus, my answer is that the American Invents Act has been harmful to American innovation, and the consequences demonstrate that once again our elected representatives in Congress sold out to the interests of multinational corporations at the expense of inventors and small businesses.

Tags:, , , ,
Posted in Innovation | No Comments »

Decline in Capital Investment is Threat to American Innovation

Tuesday, October 22nd, 2013

In early October, the Information Technology and Innovation Foundation released a report titled “Restoring America’s Lagging Investment in Capital Goods,” by Luke A. Steward and Robert D. Atkinson. The report analyzes trends in private sector investment in capital goods over the last three decades, investigates the causes of the current decline, and proposes policy reforms designed to spur increased investment growth. The authors warn that this serious decline in capital investment over the last decade is a key threat to economic growth.

The authors state, “Private capital investment is the primary means through which innovation, the key driver of economic growth, diffuses throughout the economy.” Business investment in equipment, software and structures grew by only 0.5 percent from 2000 and 2011 compared to an average of 2.7 percent between 1980 and 1989 and 5.2 percent per year between 1990 and 1999.

The authors make a strong case about why capital investment matters in developed, knowledge-based economies like the United States. While innovation powers long-run economic growth, the mere act of innovating is not sufficient to grow an economy. Innovation must diffuse through the economy by being adopted by other companies that seek to improve productivity or the quality of products or services. It is the purchase of machinery, equipment, and software by companies that is capital investment that spreads the innovation throughout the economy.

“Capital investment acts as a diffuser of innovation because innovation is embedded in new investment”  Industrial equipment such as engines, metalworking machinery, and materials handling equipment; transportation equipment like trucks and aircraft; construction machinery, agricultural or mining equipment are now “infused with highly advanced technologies, and each new generation is better than the last.”

After a comparison of neoclassical economies and neo-Keynesian economies with innovation economies such as the United States, they conclude that innovation economies require high rates of capital investment in order to be utilized. This innovation economy is also referred to as “the new growth theory, in which investment in new machinery, equipment and software spreads innovation. By high rates of investment, they do not mean a high amount of equipment, software and structures. They “mean that the capital stock is refreshed and replaced with newer and more productive machinery, equipment and software.” They write, “The value of investment is not in acquiring more machinery and equipment; it is in acquiring newer and more productive equipment… A high rate of investment enables innovations to swiftly spread through the economy, bestowing their economic benefits upon their users.”

The authors show that a second reason why “capital investment matters is that it has substantial ‘spillover’ benefits—that is, benefits not just for the firm making the investment, but also for the rest of society…Many economists acknowledge that investments in the production of innovation (such as R&D) have spillovers, and that this is why policies like the R&D tax credit are important. But fewer recognize that investments in new machines, equipment and software also have spillovers.”

The report continues with an analysis of capital investment trends, focusing on information processing equipment and software (IPES). While IPES assets grew at the very rapid rate of 681 percent compared to the next highest, transportation, at 69 percent from 1980 to 2011, the growth rate of even IPES stagnated in the decade of the 2000s.

The authors conclude: “This stagnation means that business investment rates are actually falling relative to the size of the economy…As a share of GDP, fixed investment was higher in the early 1980s—around 13 percent of GDP—than in any subsequent year. In 2011, fixed investment accounted for less than 10 percent of GDP. Given that it is investment that drives productivity growth, these statistics are sobering. Out of all the fundamental components of GDP—consumption, investment, government, and net exports—a fall in the relative magnitude of investment is the most worrying in terms of future economic performance.”

While equipment investment is far more important than investment in structures (buildings), in 2011, “the number of new manufacturing structures is no longer keeping pace with the depreciation of existing manufacturing structures, which, in turn, means that the real quantity of manufacturing facilities in the United States is shrinking…Between 2001 and 2011, the net stock of manufacturing structures fell by more than nine percent, a fall which, given investment’s continued decline, will also undoubtedly continue.”

A decline in value of manufacturing structures in the United States is only a symptom, not a driver, of a decline in the international competitiveness of the U.S. manufacturing sector. The decline of “investment equipment and software investment is more of a driver of competitiveness, and thus its decline is far more ominous.”

Total business investment in equipment and software grew in the 1980s, boomed in the 1990s, and then stagnated in the 2000s. Between 1980 and 1991, equipment and software investment increased by 37 percent compared to just 2 percent between 2000 and 2011. This means that investment in equipment and software is falling relative to the size of the economy just like total investment.

The picture looks even worse when the IPES assets are removed from total equipment assets, leaving only assets such as industrial machinery and transportation equipment. “Instead of merely stagnant growth, non-IPES investment has declined over eight percent since 2000.”

The next section of the report compares investment in equipment and software by industry, showing that “the composition of investment went from being spread over a broad base of sectors, especially in the 1990s, to being concentrated in a few select sectors in the 2000s.” Industries such as trade and transportation, health, and management and professional services expanded slightly. “Manufacturing led in the 1980s and 1990s but was displaced in the 2000s by finance and real estate, much of that made in the ramp up to the financial collapse of 2008.”

Not only did business investment stagnate in the 2000s, but investment is “now much more concentrated in a few select domestic-serving services industries, and industries that once powered U.S. investment growth and global competitiveness are now falling behind,” such as computers and chemical products.

The investment trends in the computer and electronic products industry are even worse than other manufacturing sectors:  “a 36 percent decline in equipment and software investment since 2000.”

The authors propose two possible reasons for the causes of investment stagnation:

  1. Decline in the competiveness of U.S. traded-sector businesses on the global market that has been occurring, particularly over at least the past decade
  2. “Short-termism”—the obsession with the upcoming financial report rather than long-range planning—that pervades publicly traded businesses facing stockholder pressures

Numerous other reports have described the U.S. competitive decline over the past decade so this report just summarizes a few of the key points that have been made in other reports and previous articles I have written. The end result is that the United States has lost its attractiveness as a production location for manufacturing, and when those businesses move offshore to other countries, they take their investment along with them. In addition, fewer foreign firms are making investments here in the United States. Thus, investment declines in one industry sector after another.

With regard to “short-termism,” the authors mean “the pressure on companies by Wall Street to achieve short-term profits has all too often come at the expense of long-term investment.” In other words, executives are willing to “delay new investment projects in order to meet short-term earnings targets, even if it meant sacrifices in value creation.”

Atkinson and Steward urge policymakers to put in place new policies to encourage the private sector to restore investment rates and stem the decline and stimulate new investment and productivity growth. They recognize that the first step to addressing market short-termism is for Congress and the Obama administration to acknowledge and take the problem seriously, and the next step is to begin a detailed analysis of the problem. They recommend the following actions:

Establish a Task Force to Study Market Short-Termism and Recommend Policies to Ameliorate It ?  The White House should establish a task force, led by the National Economic Council, bringing together members of the Council of Economic Advisers and the Treasury Department, to study the causes and nature of short-termism and draft a set of recommendations to ameliorate it. “The task force should analyze all potential options for reigning in market short-termism, ranging from changes to tax law to corporate governance solutions to encouraging changes in the U.S. corporate cultures within business schools, corporate boardrooms and ‘Wall Street.’”

Establish a Tax Credit for Investing in Equipment and Software ?  Congress should enact an investment tax credit (ITC) to provide a 35 percent credit on all capital expenditures made above 75 percent of a base amount. The ITC would be modeled on the Alternative Simplified Research and Experimentation Tax Credit (ASC).

This report proves that as investment declines, economic growth declines, and as economic growth declines, the capital available for investment and demand for new investment declines. If this trend continues, innovation will slow, competitiveness will continue to decline, and productivity growth will weaken. I agree with the authors that “it is essential that policymakers make challenging this problem a top priority. The authors’ policy recommendations may not be the only solutions to the problem, but “many countries have similar policies in place already—they will at least put the United States on a more equal f

Tags:, , ,
Posted in Innovation, National security, Taxes/Regulations | 2 Comments »

Protecting Intellectual Property is Critical to our Economy

Tuesday, September 10th, 2013

The U. S. economy has been the innovator of virtually all major technologies developed since World War II. The innovative technologies that American inventors and entrepreneurs have invented and developed have benefitted Americans in all aspects of their lives. American manufacturers have been responsible for more than two-thirds of all private sector R&D that led to these innovative new technologies. More than 90 percent of new patents derive from the manufacturing sector and the closely integrated engineering and technology-intensive services.

Innovation is the hallmark of U. S. manufacturing, and it requires a certain mass of interconnected activities, which like a snowball rolling downhill grows in size as it proceeds towards end users. Substantial R&D is required to keep the innovation ball rolling to ensure more successes than failures.

Manufacturing is an incubator for technology and science, so it is important that R&D be conducted in close proximity to manufacturing plants where innovative ideas can be tested and worker feedback can fuel product innovation.

Innovation and production are intertwined. You need to know how to make a product in order to make it better. “Most innovation does not come from some disembodied laboratory,” said Stephen S. Cohen, co-director of the Berkeley roundtable on the International Economy at the University of California, Berkeley. “In order to innovate in what you make, you have to be pretty good at making – and we are losing that ability.

In his book Great Again:  Revitalizing America’s Entrepreneurial Leadership, Hank Nothhaft, retired CEO of Tessera Technologies, writes that “In our arrogance and our own naiveté, we told ourselves that so long as America did the ‘creative’ work, the inventing, we could let other nations do the ‘grunt’ work – the manufacturing. We did not yet understand that a nation that no longer makes things will eventually forget how to invent them.”

Most cutting edge or break-through technologies are not generated by established, larger companies. They come from the creative innovations of entrepreneurs starting up companies. However, most of these entrepreneurs don’t startup their companies in a vacuum; they are most often started by people who have gained knowledge and experience at existing companies in a technology/product field and leave the company to develop their own innovative new product in that same field.

These entrepreneurs need to have protection for the intellectual property of their new technologies via the patent system in order to raise the investor funds they need to move forward in developing the technology into a marketable, producible end product. Angel investors and venture capital investors invest their monies in a combination of the entrepreneurial team and the innovative, even disruptive technology. If the intellectual property is not secured through a “patent pending” or issued patent, there is nothing in which to invest.

Economist Pat Choate, author of Saving Capitalism: Keeping America Strong, emphasized how important the protection of Intellectual Property is to the future of American manufacturing at the “Making California Thrive” Manufacturing summit last February facilitated by the Coalition for a Prosperous America. He said that the U. S. is the most innovative country in the world and issues more patents than any other country. However, the recent passage of the America Invents Act converting the U. S. from a “first-to-invent” to “first-to-file” is hurting our innovation. Most growth comes from “disruptive” technology developed by inventors/entrepreneurs of small companies, and the “first-to-file” favors large companies that can file a challenge against these small companies in the hopes of bankrupting them to avoid disruptive technology from harming their business.

In the last two decades, the competitive status of U. S. manufacturing has been increasingly challenged by the state-of-the-art technologies being developed by established nations such as Japan, Germany, Korea, and Taiwan. While emerging economies, such as China, are acquiring advanced manufacturing capability through R&D tax incentives and incentives for direct foreign investment, they still rely heavily on counterfeiting, pirating, and theft of American intellectual property to compete unfairly.

In the July 12th article in The Hill, Stephen Ezell, a senior analyst with the Information Technology and Innovation Foundation, wrote “IP-intensive industries are foundational to the U.S. economy. They contribute over $5.1 trillion in U.S. economic output, accounting for nearly 35 percent of U.S. GDP in 2010, as the U.S. Department of Commerce found in its report Intellectual Property and the U.S. Economy: Industries in Focus. At the same time, IP-intensive industries exported more than $1 trillion worth of goods and services in 2011, accounting for approximately 74 percent of total U.S. exports that year, and supported at least 40 million jobs, or 20 percent of all U.S. private sector employment.”
He criticized the testimony that the Government Accountability Office (GAO) provided to the House Committee on Energy and Commerce Subcommittee on Oversight and Investigations regarding Insights Gained from Efforts to Quantify the Effects of Counterfeit and Pirated Goods in the U.S. Economy because it ignored previous reports of the International Trade Commission and the IP Commission.

Instead of providing new data, the GAO report laments the fact that “quantifying the economic impact of counterfeit and pirated goods on the U.S. economy is challenging primarily because of the lack of available data on the extent and value of counterfeit trade.”

He pointed out that the ITC report, “China: Effects of Intellectual Property Infringement and Indigenous Innovation Policies on the U.S. Economy, estimated that in 2009 alone Chinese theft or infringement of U.S. intellectual property cost almost one million U.S. jobs and caused $48.2 billion in U.S. economic losses due to lost sales, royalties, or license fees. The report found that, ‘Of the $48.2 billion in total reported losses in 2009, approximately $36.6 billion (75.9 percent) was attributable to lost sales, while the remaining $11.6 billion was attributable to a combination of lost royalty and license payments.’”

He added that the more recent “IP Commission Report, a report from the Commission on the Theft of American Intellectual Property, found that the impact of international IP theft on the U.S. economy exceeds $320 billion annually, comparable to the level of U.S. exports to Asia.”

On June 20, 2013, the White House released the 92-page 2013 Joint Strategic Plan on Intellectual Property Enforcement. The press release states, “Since the first Joint Strategic Plan was released in 2010, the Administration has made tremendous progress in intellectual property enforcement. Coordination and efficiency of the Federal agencies has improved; U.S law enforcement has increased significantly and we have successfully worked with Congress to improve our legislation. We have increased our focus on trade secret theft and economic espionage that give foreign governments and companies an unfair competitive advantage by stealing our technology. We have pressed our trading partners to do more to improve enforcement of all types of intellectual property.”

It’s outrageous that the plan takes 92 pages to describe actions that are either the same as actions in the 2010 plan or are so ridiculously vague or redundant that they are virtually worthless, such as:

  • Support small and medium-size enterprises in foreign markets.
  • Coordinate international capacity-building and training.
  • Improve transparency in intellectual property policymaking.
  • Examine labor conditions.
  • Assess the economic impact of intellectual property-intensive industries.
  • Use legal software.
  • Educate authors on “fair use” copyright doctrine

What inventors and entrepreneurs need most is enforcement of current laws. Thus, the most useful actions in the new plan are:

  • Improve IPR enforcement efficacy by leveraging advanced technology and expertise.
  • Increase focus on counterfeits shipped through international mail and work with express carriers.
  • Evaluate the enforcement process of exclusion orders issued by the U.S. International Trade Commission (ITC).
  • Promote Enforcement of U.S. Intellectual Property Rights through Trade Policy Tools

I seriously question whether this plan will enhance protecting America’s Intellectual Property. In addition, how will we know if it is successful if we don’t have current data on the extent of Intellectual Property theft and the damage it is causing to the American economy?

I agree with Mr. Ezell that the above plan “must be effectively implemented and the federal government needs to make it clear that it will no longer tolerate foreign entities counterfeiting or pirating U.S. goods, stealing trade secrets, copying digital content, or otherwise taking U.S. property without paying for it.”

Since innovation and creativity are part of the foundation of our country’s economy, we need to have effective enforcement of intellectual property rights to promote economic growth, ensure our global competitiveness, and protect the health and safety of our citizens. If we want to remain at the cutting edge of technology and innovation and maintain the critical mass of our manufacturing industry, we also need to protect the key to our future security as a nation and keep the R&D that fuels innovation and the subsequent manufacture of products within the United States.

 

Tags:, ,
Posted in Innovation, Manufacturing | No Comments »

Innovative Products Featured at Annual San Diego Inventors Forum Contest

Wednesday, June 19th, 2013

On June 13, 2013, over 100 people gathered at the conference center of AMN Healthcare for the annual inventors contest of the San Diego Inventors Forum demonstrating that innovation is alive and well in the U. S. Ten contestants were selected out of 28 applicants to present their latest inventions for the audience to pick the top three inventions. The products ranged from those that make cooking in the kitchen easy to items to make smart phones more functional and easy-to-use products that provide portable solar power and feed the world. Applicants were limited to those that had attended the Inventors Forum three or more times in the past year and had an invention that was either already patented or was “patent pending” in addition to having a  working model or being ready for sale to the marketplace.
Adrian Pelkus won the first place prize of $1,000 for his patented O2MislyTM CWT, Chronic Wound Treatment System, which uses Vaporous Hyperoxia Therapy, oxygen infused with a vapor to deliver an anti-microbial to the affected area. Diabetic foot ulcers, bedsores, and other wounds that have not healed in as long as several years are being healed in weeks. In clinical trials, nearly every patient showed 50% wound reduction in two weeks. Treatment is now available on a private pay basis in San Diego, but will be expanded nationwide in the future. For further information, email Adrian at apelkus@iyiatechnologies.com.

Phyllis Davis won the second place prize of $500 for the patent pending Portable Farms™ Aquaponics Systems’ Modular Aquaponics Systems. Aquaponics University (AU) was created to teach individuals the skills, procedures and techniques for used for growing chemical-free food and fish in a system with minimal use of power, water and labor. Aquaponics University (AU) offers the Portable Farms™ Aquaponics System Course© that teaches individuals how to grow chemical-free food and fish in a closed-loop system. After completing the course, participants will receive one Portable Farms Kit to be able to build their own Portable Farms™ Aquaponics System that feeds up to eight people forever. For further information, contact Phyllis at pdavis@aquaponicsuniversity.com.

Jon Doogan won the $250 third place prize for the Aculief Wearable Acupressure that was launched at the Natural Products Expo West in March 2013. Aculief is a patented wearable acupressure device for active lifestyles, designed for anyone suffering from tension, health imbalance or discomfort. Aculief applies pressure to the LI4 acupressure point, located between the thumb and forefinger. The LI4 has been used for thousands of years in traditional Chinese medicine to relieve tension and to promote your body’s natural flow of energy. Aculief is currently available through their online store, www.amazon.com, www.Pharmaca.com or in Pharmaca’s 24 retail locations throughout the US.

Other presenters (in no particular order) were:
William Benn for his patented SunLight Harvester ? a mobile, renewable energy solar electric generator and power storage system. It is designed for southwest Sunbelt residents living in the reduced living space of townhomes and condominiums with patios, duplexes, with small backyards, and homes without a south facing roof that want an affordable, clean, and environmentally friendly renewable energy source of electricity. For further information, contact Ben at wmpb72y@gmail.com.

Randall J. Kendis for his patent pending iPhone Hat Cradle ?  a removable cradle to hold an iPhone or other Smartphone on a hat with a brim to provide a platform for hands-free, real-time video transmission and recording without hindering free movement and mobility. The cradle can be quickly switched from one hat to another. For further information, contact Randall at rkendis@gmail.com.

Sia Malek for his patent pending Window Blind Remote Control ? a simple battery-operated device that will turn your current horizontal or vertical window blinds into a remote controlled system. It takes only a couple of minutes to install and can be maintained and relocated easily. For further information, contact Sia at siamalek@hotmail.com.

Judith Balian for her patented system to promote positive thinking. The system acts as a gentle personal trainer to help people become aware of their thoughts and to use the law of attraction to their advantage. While many people know about the power of using affirmations and intentions, few are able to control their wandering minds to harness the greatest potential of this natural law. This system helps users develop the habit of positive thinking to create what they want in live. For further information, contact Judith at jbalian@excoveries.com.

George Octavio Flint for his patent pending Uni-Mattress ? three air mattresses in one ? twin, full, and queen so you can fit the right sized mattress into your available space. For further information, contact George at goflint@gmail.com.

Joshua D. Mackenroth for his Gravity±Seat ? is a revolutionary new bicycle suspension seat post that provides greater control and better handling for a faster, smoother ride.  The radical design is far superior to any of the off-road suspension seat posts in the market today. It is also the first suspension seat post in the world intended for the road bike market as well. Gravity±Seat is true crossover technology that lowers the center of gravity for road bikes and increases the amount of usable suspension travel for off-road bikes. The patented reverse angle design allows the seat to travel downward to lower the center of gravity while the damping shock absorbs sharp impacts. This gives riders the ability to drop down and back toward the rear of the bicycle through rough sections and steep down hills rather than being thrown over the handlebars. The end result is better handling, better traction, faster cornering, and a smoother ride. For further information, contact Joshua at sdlawyerhelp@gmail.com.
Gene McGuinness for his Wave – Fat-Free Cooking aids designed to form and cook taco shells, tortilla chips and bowls without any fat, oil, or grease in your own microwave. For further information, contact Gene at president1956@gmail.com.

If you are ready to turn that idea into a product, let us help you get started at the San Diego Inventors Forum. You will get motivated by hearing successful local San Diego inventors speak how they developed their marketable products. You will be able to network with fellow creative people and get guidance and encouragement to take your first or next steps necessary to turn your ideas into a reality. You will have the opportunity to meet “mentor” inventors and professionals in many fields. First-time attendees are invited to introduce themselves and briefly describe their idea/invention. At the end of the meeting, the “who needs who” period  provides the opportunity to express a need for help with such issues business structure, licensing, marketing, funding, legal and engineering questions.

We members of the SDIF steering committee invite all innovators, inventors, engineers, artists and start-up entrepreneurs to attend our monthly meetings, held the second Thursday of the month from 6:30pm to 7pm for networking and 7pm to 8:30pm for the meeting at the conference center of AMN Healthcare in San Diego.

Now that the annual contest is over, the 2013-2014 topics schedule begins again in August. August’s topic will be “Innovation and Entrepreneurship” – harnessing your creative mind, and September will continue with “IP 101” – when, why and how to search for patents, trademarks and copyrights. During the course of the year, topics covered include marketing, licensing, branding, networking, and funding. I will be giving my annual presentation in the fall on “Manufacturing 101” – how to select the right manufacturing processes and sources to make your product. For further information, the San Diego Inventors Forum can be reached at http://www.sdinventors.org or by calling Forum president Adrian Pelkus at 760-591-9608.

 

Tags:, ,
Posted in Innovation | No Comments »

Chinese Innovation Mercantilism is Hurting American Manufacturers

Tuesday, December 11th, 2012

On Wednesday, December 5, 2012, Robert D. Atkinson, President of the Information Technology and Innovation Foundation (ITIF), testified before the House Science Committee Subcommittee on Investigations and Oversight in a hearing on “The Impact of International Technology Transfer on American Research and Development.” His testimony was based on his book, Innovation Economics: The Race for Global Advantage (Yale University Press, 2012) and the ITIF report, “Enough is Enough:  Confronting Chinese Innovation Mercantilism,” released February 2012.

Atkinson began his testimony by stating, “A nation’s investments in research and development (R&D) are vital to its ability to develop the next-generation technologies, products, and services that keep a country and its firms competitive in global markets. Until recently, corporate R&D was generally not very mobile, certainly not in comparison to manufacturing. But in a “flat world” companies can increasingly locate R&D activities anywhere skilled researchers are located…. the United States has seen its relative competitive advantage in R&D and advanced technology industries decline. While the United States still leads the world in aggregate R&D dollars invested, on a per-capita basis it is falling behind.”

He testified that the “decline in America’s innovative edge is due to a number of factors, not the least of which are failures of federal policy, such as an unwillingness to make permanent and expand the R&D tax credit, limitations on high-skill immigration, and stagnant federal funding for R&D. But the decline is also related to unfair practices by other nations that collectively ITIF has termed as ‘innovation mercantilism.’”

The ITIF report cited above states that these policies “include currency manipulation, relatively high tariffs (three times higher than U.S. tariffs), and tax incentives for exports.” In addition, “some policies help Chinese firms while discriminating against foreign establishments in China. These policies include “discriminatory government procurement; controls on foreign purchases designed to force technology transfer to China; land grants and rent subsidies to Chinese-owned firms; preferential loans from banks; tax incentives for Chinese-owned firms; cash subsidies; benefits to state-owned enterprises; generous export financing; government-sanctioned monopolies; a weak and discriminatory patent system; joint-venture requirements; forced technology transfer; intellectual property theft; cyber-espionage to steal intellectual property (IP); domestic technology standards; direct discrimination against foreign firms; limits on imports and sales by foreign firms; onerous regulatory certification requirements; and limiting exports of critical materials in order to deny foreign firms key inputs.”

The report explains that “in the last decade China has accumulated $3.2 trillion worth of foreign exchange reserves and now enjoys the world’s largest current account balance. In 2011, it ran a $276.5 billion trade surplus with the United States. This ‘accomplishment’ stems largely from the fact that China is practicing economic mercantilism on an unprecedented scale. China seeks not merely competitive advantage, but absolute advantage. In other words, China’s strategy is to win in virtually all industries, especially advanced technology products and services… China’s policies represent a departure from traditional competition and international trade norms. Autarky [a policy of national self-sufficiency], not trade, defines China’s goal. As such China’s economic strategy consists of two main objectives: 1) develop and support all industries that can expand exports, especially higher value-added ones, and reduce imports; 2) and do this in a way that ensures that Chinese-owned firms win.”

The report states that “because China is so large and because its distortive mercantilist policies are so extensive, these policies have done significant damage to the United States and other economies…The theft of intellectual property and forced technology transfer reduce revenues going to innovators, making it more difficult for them to reinvest in R&D. The manipulation of standards and other import restrictions balkanizes global markets, keeping them smaller than they otherwise would be, thereby raising global production costs…if Chinese policies continue to be based on absolute advantage and mercantilism…the results will be more of the same: the loss of U.S. industrial and high-tech output, and the jobs and GDP growth that go with it.”

Chinese mercantilist policies are unprecedented in their scope and size. Atkinson testified, “A principal arrow in China’s innovation mercantilist quiver is to force requirements on foreign companies with respect to intellectual property, technology transfer, or domestic sourcing of production as a condition of market access. While China’s accession agreement to the WTO contains rules forbidding it from tying foreign direct investment to requirements to transfer technology to the country, the rules are largely ignored.”

He added, “Rather than doing the hard work to build its domestic technology industries, or better yet focus on raising productivity in low-producing Chinese industries, China decided it would be much easier and faster simply to take the technology from foreign companies… China’s government unabashedly forces multinational companies in technology-based industries—including IT, air transportation, power generation, high-speed rail, agricultural sciences, and electric automobiles—to share their technologies with Chinese state-owned or influenced enterprises as a condition of operating in the country.”

The ITIF report explains that in 2006, “China made the strategic decision to shift to a “China Inc.” development model focused on helping Chinese firms, often at the expense of foreign firms. Chinese leaders decided that attracting commodity-based production facilities from multinational corporations (MNCs) was no longer the goal…The path to prosperity and autonomy was now to be ‘indigenous innovation’…”

The document “advocating this shift was ‘The Guidelines for the Implementation of the National Medium- and Long-term Program for Science and Technology Development (2006-2020)’…to ‘create an environment for encouraging innovation independently, promote enterprises to become the main body of making technological innovation and strive to build an innovative-type country.’”

Some 402 technologies, from intelligent automobiles to integrated circuits to high performance computers were included so that China could seek the capability to master virtually all advanced technologies, with the focus on Chinese firms gaining those capabilities through indigenous innovation.

However, China is not alone in trying to force the transfer of technology and R&D from foreign multinationals ? Indonesia, Malaysia, India, Portugal, and Venezuela have the same goal.

Why do so many nations engine in innovation mercantilism? Atkinson testified that there are two principle reasons. “First, these nations have embraced a particular and fundamentally limited model of economic growth that holds that the best way to grow an economy is through exports and shifting production to higher-value (e.g., innovation-based) production. Moreover, they don’t want to wait the 20 to 50 years it will take to naturally move up the value chain through actions like improving education, research capabilities, and infrastructure, as nations like the United States did. They want to get there now and the only way to do this is to short-circuit the process through innovation mercantilism. This explains much of China’s economic policies. The Chinese know that to achieve the level of technological sophistication and innovation that America enjoys will take them at least half a century if they rely on only their own internal actions. So they are intent on stealing and pressuring as much of American (and other advanced nations’) technology as they can to their own companies. If you can’t build it, steal it, is their modus operendi.”

Atkinson added that the second reason why these nations do this is because they don’t believe in the rule of law and the principles of free trade like Western nations and much of Europe do. These nations also “work on the ‘guilt’ of Western, developed nations. The narrative goes like this: the West has used its imperialist powers to gain its wealth, including at the expense of poor, developing nations and now it wants to “pull the ladder” up after it. This means turning a blind eye to intellectual property and giving our technology, including pharmaceutical drugs, to nations almost for free. After all, we are rich and they are poor because we are rich.”

The reality is that forced technology transfer is enabling China and other nations to gain global market share. It is doing “considerable harm to U.S. technology companies and to the U.S. economy, if for no other reason than reducing their profits and ability to reinvest in the next wave of innovation.”

Atkinson posed the question, “So what should the U.S. government do? He responded that “this is a difficult question because if there were easy solutions, they would have been done by now.” He recommended the following actions:

  • Try to do more through conventional trade dispute channels and expand funding for the U.S. Trade Representative’s Office (USTR) so it can do more.
  • Ensure that future bilateral trade and investment treaties (BIT) contain strong and enforceable provisions against forced technology and R&D transfer.
  • Congress should make it clear that it will not judge any administration by whether a BIT with China is concluded, but rather by if the United States made a strong effort to conclude a treaty that provided full protection against mercantilist practices like forced transfer of R&D.
  • Congress should pass legislation that allows firms to ask the Department of Justice for an exemption to coordinate actions regarding technology transfer and investment to other nations.
  • Congress should exclude mercantilists from the Generalized System of Preferences (GSP).

Finally, he recommended that the United States actively explore alternatives to the WTO and  pursue a two-pronged trade strategy, continuing as best it can to improve conventional trade organizations like the WTO, but also creating alternative “play-by-the-rules” clubs of like-minded countries.

He concluded his testimony stating, “Pressured or mandatory technology transfer by other nations has, is, and will continue to negatively impact American R&D and innovation capabilities. It’s time for the federal government to step up its actions to fight this corrosive mercantilist practice.”

Curbing Chinese mercantilism must become a key priority of our trade policy if we want to address this serious threat to American manufacturers and the U. S. economy.

 

Tags:, , , ,
Posted in Economy, Innovation, Manufacturing, National security, Outsourcing, Trade | 2 Comments »

How Some Manufacturers are Successful in Competing Globally

Tuesday, December 4th, 2012

While attending the FABTECH Expo in Las Vegas last month, I interviewed several companies that all or the majority of their manufacturing in the U. S. to find out what they are doing to successfully compete in the global marketplace.

The first company was Laserstar Technologies, located Riverside, RI, and I interviewed Peter Tkocz, Regional Sales Mgr., southwestern States. Laserstar makes laser welding and marking equipment using the “free-moving” concept they development, enabling users to eliminate costly fixturing devices, benefit from pin-point accuracy, increase the range of assembly and repair applications and minimize the potential hazards of heat damage. Peter told me that the company is 55 years old and started making jewelry. When jewelry making went overseas in the 1990s, he said that the company had to reinvent itself and get into new markets to survive. They set a goal to enhance the quality, performance, and innovation of their products, programs and services on a continuing basis and became a “lean” manufacturing company.

Since, then, they have developed a diverse customer base of six major markets:

  • Medical – cardiac pacemakers, defibrillators, guide wires, catheters, hearing aids, orthodontic appliances, prosthetics and surgical tools
  • Dental – crowns and bridges, partial and implant fabrication and repair.
  • Electronics – a wide variety of different materials, component parts or final assemblies
  • Aerospace
  • Micro technology – wide range complex applications for laser welding and marking
  • Tool and die repair – ideal for modifications and repairs on molds, tools and dies as the process is quick, precise and will not damage surrounding surfaces.
  • Jewelry – a fast fix to repair jewelry and eyeglasses, and their new Fiber star machine can weld down to 12 microns, which is critical for high-end gem stones

LaserStar’s Research & Development laboratory is focused on inventing new technologies that change markets and create business opportunities, utilizing input from customers. Laserstar sells through learning centers vs. distributors, and the three learning centers at their headquarters in Rhode Island, California, and Florida. Their laser education courses provide a solid foundation of fundamental laser welding and laser marking skill sets to immediately gain a revenue impact for the new or existing iWeld, LaserStar or FiberStar laser welding or laser engraving system.

I next interviewed Dan Moiré, Sr. V. P. Sales of TRYSTAR, located in Faribault, Minnesota. TRYSTAR is a leading domestic manufacturer and international distributor of portable and permanent power solutions, industrial cables and power accessories. The company began operations as Bridgewater Tech, an industrial cable wholesaler founded in 1991. It wasn’t long before they realized there was room for innovation and improvement in the safety and performance of the products they were selling. As a result, they began manufacturing their own welding and grounding cables under the TRYSTAR brand in 1993.

As the superiority of TRYSTAR cables became evident throughout the industry, they expanded operations to offer customers greater versatility and reliability in the field, and as the brand became well known, the company transitioned from Bridgewater Tech to TRYSTAR.

Dan Said that today, TRYSTAR offers a wide range of capabilities specifically designed with the end-user in mind. They provide efficient, customized solutions, made with only the highest quality raw materials, manufactured on site, and serviced by their own professionals. Their factory is as vertically integrated as possible, and they provide customers with a full range of professionally packaged industrial products and services. They even extrude their own cable and do sheet metal fabrication and welding in-house.

TRYSTAR was the first to…

  • introduce sequential foot-marking to the welding cable industry, reducing the chance of waste
  • introduce custom-printed, colored cable, reducing the chance of theft on the job site
  • market a color-coded, insulated inner safety liner, designed to alert the cable’s user to any damage or wear and minimize problems in the field
  • produce a true Arctic weather cable that remains flexible to -57°C
  • introduce an improved clear-sheathed grounding cable that is flexible from -40°C to +105°C, allowing for safer grounding of high power lines during outages
  • introduce environmentally responsible, recyclable packaging for cable products
  • provide direct-to-market, completely assembled cable products, with unique and specific job identifiers, delivered directly to the job site

Kevin Duhamel, Product Sales Mgr at Gorbel was my next interview. Gorbel has over 30 years experience providing overhead handling solutions to customers in a wide range of industries. They have a comprehensive line of Crane Technology products, including work station bridge cranes, patented track cranes, I-beam jib cranes, gantries, and work station jib cranes. They also have an exciting line of Ergonomic Lifting products, featuring our G-Force® Intelligent Lifting Device, our Easy Arm® Intelligent Lifting Arm, and our G-Jib®. Their newest line, Tether Track Fall Arrest Safety Systems, provides a turnkey fall protection solution that exceeds OSHA safety standards. –

They have been in business since 1977 and are the largest U. S. manufacturer of lifting devices and cranes. Kevin said that their G-Force unit can lift up to 1320 lbs with higher speed and precision than chain hoists. They have two manufacturing plants in the U. S. – Fishers, NY and Pell City, AL – and sell to Europe, Canada, Mexico, and South America from their U. S. plant. They have a plant in Tianjin, China to market to customers such as John Deere and Caterpillar that have plants in China. About 90% of their business comes from North America and Mexico. They are very vertically integrated and qualified to have their product stickers say “Made in USA.”

I met and spoke to several of the top executives at TigerStop, located in Vancouver, WA, including president and founder Spencer Dick. Spencer founded TigerStop in 1994 and focuses on developing new product lines and enhancing their current products to simplify production processes for their customers.

TigerStop® LLC, is the global leader in stop/gauge and pusher systems that includes precision measuring systems, saws, and material handling equipment. National Sales Mgr., Erland Russell, told me that their products can easily integrate with most machinery used in the woodworking, metal, fenestration and plastics industries. He said that one of their models can measure and precisely saw material up to 20 ft. in length. TigerStop maintains an aggressive research and development program with over 100 patents awarded or pending.

TigerStop’s manufacturing is very vertically integrated in their Vancouver plant, but they also have an additional manufacturing and distribution facility in Wierden, Netherlands. The TigerStop distribution network spans six continents and their products are supported in five languages. TigerStop provides world-class customer support through experienced service technicians, on-going dealer training, and online technical resources.

Next, I interviewed Mike Albrecht, National Sales Mgr., at the Scotchman Industries booth. Scotchman Industries, Inc. is a leading manufacturer of metal fabrication equipment, accessories, and custom tools, such as ironworkers, cold saws, band saws, tube and pipe notchers, and measuring systems for nearly half a century.

Art Kroetch founded Scotchman Industries in the early 1960s to make and sell farm-related products, such as pickup stock racks, corral panels, gates and chutes. In 1966, Scotchman Industries purchased the patent for a hydraulic ironworker, the first machine of its kind in the world, and began manufacturing ironworkers. This machine, using hydraulic pressure, created up to a 35-ton force that could punch, bend and shear metal.

In 1978, Scotchman Industries purchased Excel Manufacturing Ltd. of Winnipeg, Manitoba, Canada, and was able to provide a line of ironworkers that ranged from 30-ton to 90-ton capacities for the world market. Today, Scotchman Industries, Inc. has a complete line of thirteen different ironworkers, ranging in capacities from 45 to 150 tons, with component tool design, and a fully integrated European style; both are available in either single or dual operator models. Scotchman has successfully acquired and maintained a large portion of the ironworker market.

Scotchman Industries is proud to be an American manufacturer who has always been export-minded. The company was given the President’s “E” Certificate for Exports in 1981 by the Secretary of Commerce, for excellence in its increased exporting of products. Today Scotchman Industries continues to export their products to many countries around the world.

Scotchman is located in Philip, SD; Mike said that all of their products are manufactured in the USA. They have donated equipment to the Workshops for Warriors located here in San Diego, CA.

Finally, I interviewed Heather Gaynor, Marketing Communications Mgr., at Swagelok, located in Solon, OH. Swagelok is a privately-held company that manufactures designs, manufactures, and delivers an expanding range of the highest quality fluid system products and solutions, such as tube fittings, valves, regulators, hoses and other products that are vital to fluid system solutions in industries such as power generation, oil and gas production, chemical processing, biopharmaceutical, research, semi-conductor manufacturing and more. They manufacture everything in the U. S. and are very vertically integrated.

Swagelok products and services are delivered locally through a network of more than 200 authorized sales and service centers that support customers in 57 countries on six continents.

While the products and services of the companies I interviewed are quite different, there are common threads:

  • All of the products are sold to other businesses (referred to as B-B) instead of to consumers.
  • The products fill specific needs and requirements of other manufacturers.
  • All of the companies manufacture their products in America.
  • The companies export their products to other companies

In addition, three of the six companies are privately held so that that management isn’t under the pressure to maximize quarterly profits and can focus on long-term company goals.

What this shows is that American manufacturers with unique products that satisfy customers’ needs can compete successfully in business-to-business global markets where the predatory mercantilist countries of China, Korea and India haven’t targeted to take over the market and destroy their American competition. If American manufacturers truly had a level playing field provided by “smart” trade agreements instead of the current lopsided, dumb agreements we have in place now, they would be able to compete successfully in the global marketplace. It is time to address the predatory mercantilist practices of these countries. Designating China as a currency manipulator would be a good start!

 

Tags:, ,
Posted in Innovation, Manufacturing, Trade | 1 Comment »

Newer Entries »