State of Innovation

Patents and Innovation Economics

Free Kindle Version of The Decline and Fall of the American Entrepreneur

Get your free Kindle version of the book that explains why the US has lost its innovation engine – The Decline and Fall of the American Entrepreneur: How Little Known Laws and Regulations are Killing Innovation.   This offer is valid through Sunday, June 24th.   The book provides simple, inexpensive suggestions for how to rev up the US’s innovation engine.

This book explains how little known laws passed within the last decade have crippled America’s innovation.  This resulted in the stagnation in median family income that was a major contributor to the housing crisis.  The evolving sovereign debt crisis, which promises to make the housing crisis look trivial by comparison, is also being exacerbated by this dearth of innovation.  The book provides simple, inexpensive suggestions for how to rev up the US’s innovation engine.

 

What Reviewers are saying about The Decline and Fall of the American Entrepreneur: How Little Known Laws and Regulations are Killing Innovation. 

 “Dale Halling’s Decline and Fall of the American Entrepreneur makes a compelling case for the need to reform regulatory and other policies that hamstring entrepreneurial innovation in our country. Everyone concerned about the decline in American innovation should read this book.”

David Kline, Coauthor of “Rembrandts in the Attic” and “Burning the Ships”

 

I do not review books on the Net unless I find them well-written and especially informative, which certainly applies to Dale B. Halling’s The Decline and Fall of the American Entrepreneur.

Nonetheless, I do have a criticism directed towards the publisher. My copy did not contain a vita of the author, which in this case is a major omission. Mr. Halling is a physicist, lawyer and an expert on patents and entrepreneurship, all of which comes through in his book. This author delivers the goods. A vita in subsequent printings would be useful.

Mr. Halling combines two topics — the impediments to entrepreneurship that have been created by theU.S. government as an unintended consequence of its pursuit of other goals and the systemic weakening of theU.S. patent system by the U.S. Supreme Court and the Congress.

The resulting technological stagnation is a major reason theU.S. has gone from producing 25 percent of the World’s Gross Product in the mid 1990s to about 20 percent today. The loss is significant – about $3 trillion of U.S. GDP in 2009 alone.

He demonstrates in clear terms the linkages between economic growth, productivity, and income. And he lays out how technological advancement has always been the American advantage in global competition, an advantage that theU.S. is squandering.

He explains how the Sarbanes Oxley Act cut off the waves of venture investment that did so much to stimulateU.S.growth in the 1980s and 1990s, and he also explains how shifts in accounting rules as per stock options directed many of our most creative people into less than innovative activities.

His final chapter contains some straight forward recommendations that involve no direct-cost regulatory changes that would once again stimulate more innovation, investment and job creation inAmerica. Amazingly, Congress is now considering a so-called “patent reform” legislation that would further diminishU.S.innovation. The author convincingly explains how this would damageU.S.innovation. He also explains the consequences of recent Supreme Court decisions on patent law. My observation is that theRoberts Courtis the most anti-patent set of Justices inU.S.history. Once Congress understands what the Court has done, their decisions need to legislatively overturned.

In sum, this is well-written, jargon-free, 137-page book that is a quick read. It evidences smart and practical thinking by an author with real world experience. I highly recommend it.

Dr. Pat Choate, economist, former Vice Presidential running mate of Ross Perot 1996, Director of the Manufacturing Policy Institute, Phd. Economics University of Oklahoma.

 

The Decline and Fall of the American Entrepreneur presents the issues facing technology start-up companies in today’s environment.  The book sheds light on the underpinnings of these issues and is enthralling.  Halling’s tight, accessible and personal style make this a fast and compelling read.  His book is a political clarion call that should be heard now.

Greg Jones

Former President Ramtron International (RMTR) and CEO Symetrix Corporation.  Both companies founded on IP.

 

This book conclusively establishes the link between innovation and per capita income, and shows that we have recently entered into a time in which innovation is under assault.  This assault has resulted in a predictable loss of income and contributed significantly to the economic woes we are experiencing right now.  The book’s sound policy recommendations suggest a way to turn the economic ship around to set a course for a return to prosperity.

Peter Meza, Patent Attorney – Counsel Hogan & Hartson, Attorney for Alappat –  In re Alappat

 

 

 

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June 21, 2012 Posted by | Patents | , , , , , , , , | 4 Comments

My Book: The Decline and Fall of the American Entrepreneur Now Available on Kindle

The The Decline and Fall of the American Entrepreneur: How Little Known Laws and Regulations are Killing Innovation , is now available in Kindle format for only $7.99.

Book Highlights:

*New US laws since 2000 are killing US Innovation

*Explains why the venture capital model is dying.

*Innovation is key to creating high quality jobs

*Innovation is key to increasing real per capita incomes of Americans

*How to make the US the innovation leader of the world again

 

What others are saying about the book

Mr. Halling combines two topics — the impediments to entrepreneurship that have been created by the U.S. government as an unintended consequence of its pursuit of other goals and the systemic weakening of the U.S. patent system by the U.S. Supreme Court and the Congress.

The resulting technological stagnation is a major reason the U.S. has gone from producing 25 percent of the World’s Gross Product in the mid 1990s to about 20 percent today. The loss is significant – about $3 trillion of U.S. GDP in 2009 alone.

He demonstrates in clear terms the linkages between economic growth, productivity, and income. And he lays out how technological advancement has always been the American advantage in global competition, an advantage that the U.S. is squandering.

Dr. Pat Choate, economist, former Vice Presidential running mate of Ross Perot 1996, Director of the Manufacturing Policy Institute, Phd. Economics University of Oklahoma

 

“Dale Halling’s Decline and Fall of the American Entrepreneur makes a compelling case for the need to reform regulatory and other policies that hamstring entrepreneurial innovation in our country. Everyone concerned about the decline in American innovation should read this book.”

David Kline, Coauthor of “Rembrandts in the Attic” and “Burning the Ships”

The Decline and Fall of the American Entrepreneur presents the issues facing technology start-up companies in today’s environment.  The book sheds light on the underpinnings of these issues and is enthralling.  Halling’s tight, accessible and personal style make this a fast and compelling read.  His book is a political clarion call that should be heard now.

Greg Jones, Former President Ramtron International (RMTR) and CEO Symetrix Corporation.  Both companies founded on IP.

This book conclusively establishes the link between innovation and per capita income, and shows that we have recently entered into a time in which innovation is under assault.  This assault has resulted in a predictable loss of income and contributed significantly to the economic woes we are experiencing right now.  The book’s sound policy recommendations suggest a way to turn the economic ship around to set a course for a return to prosperity.

Peter Meza,Patent Attorney – Counsel Hogan & Hartson, Attorney for Alappat –  In re Alappat

 

October 4, 2011 Posted by | Innovation | , , , , , , , , , | Leave a comment

Great Again: Corp Tax Rate Driving Jobs Overseas

The excellent book Great Again by Henry R. Nothhaft with David Kline, points out that 2000 was the year in which the tax and regulatory burden in theUS reached a tipping point compared to other OECD (First World) countries.  2000 was also the year in which average corporate tax rates of OECD countries fell below theUS’s.  TheUS now has highest marginal corporate tax rate in the world (in most states) and our effective tax rate is 50% higher than the European Union average.  Is there any wonder why the US is losing high quality jobs to other countries?

The book’s identification of the year 2000 as the tipping point is ironic since this is also the year that I identified in my book as the tipping point for anti-technology startup regulations.  The book Great Again calls the decade from 2000-2010 the lost decade, let’s hope it is only a single lost decade.  Besides the negative effects of the US corporate and capital gains tax rates, the US has also significantly weakened our patent system and made it extremely difficult for startups to raise capital because of Sarbanes Oxley (although Dodd Frank only makes this worse).  The major asset of startups is their patents – legal title to their inventions.  Weakening our patent system has undermined this asset.

Some other interesting points made by the book include that a SBA (Small Business Administration) study showed that 1% cut in the corporate tax rate increases the number of start-ups by 1.5% and decreases the rate of failure by 8%.  A World Bank study showed that 10% increase in the effective tax rate results in 2.2% reduction in investment to GDP.

The policies necessary to grow high quality jobs and get our economy growing are clear.  The only conclusion is that the US is not interested in growing the economy, it is only interested in growing government power.

Great Again: Revitalizing America’s Entrepreneurial Leadership, by Henry R. Nothhaft with David Kline

May 19, 2011 Posted by | Featured Videos, Innovation | , , , , , , | Leave a comment

Edison was a Patent Troll

The excellent book Great Again by Henry R. Nothhaft with David Kline points out that in the middle 19th century:

Foreign observers attributed much of the country’s (U.S.) rapid technological progress to its distinctive patent system.  Quite revolutionary  in design at inception, the U.S.patent system came to be much admired for providing broad access to property rights in new technological knowledge and for facilitating trade in patented technologies.  These features attracted the technologically creative, even those who lacked the capital to directly exploit their invention  . . . and also fostered a division of labor between the conduct of inventive activity and the application of technical discoveries to actual production.  It is no coincidence that Britain and many other European countries [later] began to modify their patent institutions to make them more like those of the Americans. (emphasis added)

They point out that in the U.S 85% of all patents were licensed by their inventors, while only 30% of patents in Britain were licensed.  In the late 19th centuryU.S. inventors were increasingly operating as independent inventors who extracted returns from their discoveries by licensing or selling their patent rights.  Among these inventors were Edison, Bell, Tesla, etc.  “An astonishing two thirds of all America’s great inventors in the nineteenth century were actually NPEs” (Non-Practicing Entities).  But today’s modern Luddites would call these great inventors trolls.  They claim all value is created by production and marketing or if they are economists they claim all value is create by manipulating monetary instruments and deny the source of all human values, the mind.  They denigrate inventors who demand a return on their efforts as imposing a tax on innovation.  Invention is the only source of per capita increases in wealth.

The book asks:

 Does it really make sense to consider Edison a “patent troll” just because he licensed most of his inventions rather than commercializing them himself?  As the inventor of electric light and power, the phonograph, and many other world-changing new technologies, his contributions toAmerica’s economic progress are beyond dispute.

Is there any evidence of a patent litigation (troll) explosion?

Judge Michel former head of the CAFC, the court which hears all patent appeals, points out that the number of patent suits filed each year has remained constant at less than three thousand.  Only about 100 of these suits ever go to trial.  In a technology based economy with over 300 million people and 1 million active patents this is trivial.

The reality is the Patent troll/ litigation crises is a very clever marketing ploy by large multinational companies that want to be able to steal U.S.inventors’ technology.  The America Invents Act will put the final nail in the coffin of U.S.innovation if it passes, by making it even easier to steal U.S. innovation.  It is a product of these same multinational companies that are not interested in vitality of the U.S.economy, but in their short term profits.

May 8, 2011 Posted by | Patents | , , , , , , , , , | 3 Comments

Could Apple Get Funded Today?

This intriguing question and its implications for US economic policy are tackled in the groundbreaking book Great Again, by Henry R. Nothhaft with David Kline.  They answer the above query with a series of questions:

Could a twenty-year-old college dropout, just back from six months in an ashram somewhere, attract funding for a capital-intensive venture based on the manufacture (yes, the manufacture) and sale of a $2,500 consumer product unlike any that had ever been bought by consumers before?  One whose potential uses were at best unknown, and possibly nonexistent?  And one for which the total current market size was exactly zero?

Not only could Apple not get funded today, it probably could not go public. Nor would Apple have received its first patent (USPN 4,136,359) in only 20 months.  The book asks “how many of today’s Apples are not getting a chance?”

The authors use the above example to make a broader point that theUSis failing economically and technologically because of the policies we are pursuing.  They show that all net new jobs created in theUSsince 1977 (and possibly longer) were created by startups like Apple.  All increases in real per capita income are due to new technologies and most revolutionary/disruptive technologies are created by startups and individual inventors.  So what are the policies that have undermined our economy, by undermining technology startups?

The book examines five areas:

1.Role of regulations.  The Authors show that our tax policies, Sarbanes Oxley and our indifferent (some might say arrogant) regulators’ application of well meaning regulations to startups is driving them either overseas or out of business.

2. Underfunding the patent office. This is costing theUS millions of jobs and billions in GDP.  According to the authors, each issued patent is worth 3-5 jobs on average, particularly patents issued to startups.

3. Manufacturing policies in the US.  Manufacturing is key, particularly in a world that does not respect property rights in inventions, to ensuring that theUS profits fromUS innovation and not other countries.  TheUS is also losing the global battle for human talent.

4. Battle for global talent. Our restrictive immigration policies are depriving theUS of talented entrepreneurs such as Andy Grove, founder of Intel.

5. Funding for research.  The book shows that our spending on basic science and engineering is not only declining as a percentage of GDP, but the system has become short-term oriented and bureaucratic.

While this book tackles complex issues, it is a quick easy read.  It is full of interviews from entrepreneurs, venture capitalists, and technologists who built America’s technology startups over the last three decades.  Great Again provides numerous real life examples to illustrate its points.

This pioneering book shows how the US can create jobs and increase per capita income.  The policy prescriptions are based on solid science.  Just cutting government spending (balancing the budget) will not cause theUSeconomy to grow vigorously, we need pro-growth policies.  The authors are some of the few people that understand what policies are needed for the US to be GREAT AGAIN.

Great Again: Revitalizing America’s Entrepreneurial Leadership, by Henry R. Nothhaft and David Kline

April 18, 2011 Posted by | Innovation, Patents | , , , , , , , , , , , , , , , | Leave a comment

More on the Myth that Patents are Monopolies

David Kline, author of Rembrandts in the Attic, has added the following insight from history on the idea that patents are monopolies.

“The condemnation of monopolies ought not to extend to patents, by which the originator of a new process is permitted to enjoy, for a limited period, the exclusive privilege of using his own improvement. This is not making the commodity dearer for his benefit, but merely postponing a part of the increased cheapness (or excellence) which the public owe to the inventor, in order to compensate and reward him for his service.”

John Stuart Mill, “Principles of Political Economy,” 1848

“The dawn of the right of inventors has been actually [contemporaneous] with the destruction of monopolies odious to the common justice of men; and the common sense of mankind has marked a distinction between such monopolies and the exclusive rights conceded to inventors. Their rights, under patents, are called ‘monopolies’ only from the poverty of language, which has failed to express in words a distinction which no less clearly exists.”

Louis Wolowski, Chair of Industrial Economics, Conservatoire des Arts et Métiers, 1864

“How can the exclusive right of an invention be compared with a monopoly in trade? How can the exclusive privilege to sell salt in Elizabeth’s time, which added not one bushel to the production, but which enriched the monopolist and robbed the community, and the exclusive right of Whitney to his cotton gin, which has added hundreds of millions to the products and exports of the country, be both branded, with equal justice, with the odious name of monopoly?”

George H. Knight, 1891

A patent is a property right, it is not a monopoly.   For more information see The Myth That Patents are Monopoly.

September 30, 2010 Posted by | -Philosophy, Patents | , | 1 Comment

Patents and Jobs

According to business and patent expert David Kline and Henry R. Nothhaft, CEO of technology miniaturization firm Tessera, Inc. in the Harvard Business Review:

The U.S. Patent and Trademark Office (USPTO) may be the single greatest facilitator of private sector job creation and economic growth in America. It is this agency, after all, that issues the patents that small businesses — especially technology startups — need to attract venture capital investment, develop new products and services, and serve their historic role as the primary source of almost all new net job growth in America. According to one recent study, 76 percent of startup executives say that patents are essential to their funding efforts.

 David Kline is an expert in this area.  He is author of ground breaking book, Rembrandts in the Attic , on patents in business.  He is also author of Burning the Ships  that explores how Microsoft used patents to transform their business.  According to the authors, “The costs of the forgone innovation resulting from patent delays in the many billions of dollars annually.”  I think they are underestimating the cost of patent delays. 

Please read the full article at  http://blogs.hbr.org/cs/2010/05/the_biggest_job_creator_you_ne.html

May 6, 2010 Posted by | Innovation, Patents | , , , , , , , | 1 Comment

Burning the Ships: Intellectual Property and the Transformation of Microsoft

This book explores the business strategies of patents in the context of Microsoft’s attempt to remake its image this decade. The authors of the book are Marshall Phelps, the architect of IBM’s successful patent licensing program, and David Kline, the author of Rembrandts in the Attic – the standard against which all books on patent business strategy are measured.

The book describes how Microsoft used its patent portfolio to build relationships with its customers, like Toshiba. The vehicle for it to accomplish this goal was patent cross licensing deals. However, before Microsoft could make any progress in these deals they had to drop their non-assertion of patents clause. Microsoft had invented this clause in order to compensate for their weak patent portfolio in the 90s. Continue reading

December 11, 2009 Posted by | Business Models, Uncategorized | , , , , | Leave a comment