Nigeria Content Online

As
President Barack Obama and Congress search for ways to jump-start job
creation in our stalled economy, their best strategy may be right under
their noses – in the voluminous backlogged files of the United States
Patent and Trademark Office.

This is the agency,
after all, that issues the patents that technology start-ups and other
small businesses need to attract venture capital to pay salaries.

Three-fourths of
executives at venture-capital-backed start-ups say that patents are
vital to getting financing, according to the 2008 Berkeley Patent
Survey, a national study of patents and entrepreneurship. And start-ups
are responsible for almost all the new jobs created in the United
States since 1977, according to a study by the Kauffman Foundation.

Unfortunately,
since 1992 Congress has diverted more than $750 million in patent fees
to other purposes. That has left the patent office itself underfinanced
and burdened with a backlog of 1.2 million applications awaiting
examination, more than half of which have not had even a first review.

To revitalize
America’s engine of entrepreneurship, and to create as many as 2.5
million jobs in the next three years, Congress should, first, give the
patent office a $1 billion surge to restore it to proper functioning.
This would enable the agency to upgrade its outmoded computer systems
and hire and train additional examiners to deal with the threefold
increase in patent applications in the past 20 years. Congress should
also pass pending legislation that would prohibit any more diverting of
patent fees and give the office the authority to set its own fees.

Once the patent
office is back to operating effectively, the backlog of 1.2 million
applications should yield, judging from history, roughly 780,000 issued
patents, about 137,000 of which would go to small businesses. Then,
going forward, the agency could grant an additional 88,000 patents
within three years. By 2013 small businesses would have received some
225,000 patents that they could then use to secure financing to build
their businesses and hire more workers.

To be sure, not
every patent creates a job or generates economic value. Some, however,
are worth thousands of jobs – Jack Kilby’s 1959 patent for a
semiconductor, for example, or Steve Wozniak’s 1979 patent for a
personal computer. It’s impossible to predict how many new jobs or even
new industries may lie buried within the patent office’s backlog.
However, according to our analysis of the data in the Berkeley Patent
Survey, each issued patent is associated with 3 to 10 new jobs.

So our guess is
that restoring the patent office to full functionality would create,
during the next three years, at least 675,000 and as many as 2.25
million jobs. Assuming a mid-range figure of 1.5 million, the price
would be roughly $660 per job – and that would be 525 times more cost
effective than the 2.5 million jobs created by the government’s $787
billion stimulus plan.

To encourage still
more entrepreneurship, Congress should also offer small businesses a
tax credit of as much as $19,000 for every patent they receive,
enabling them to recoup half of the average $38,000 in patent-office
and lawyers’ fees spent to obtain a patent; cost, after all, is the No.
1 deterrent to patent-seeking, the patent survey found.

For the average
30,000 patents issued to small businesses each year, a $19,000
innovation tax credit would mean a loss of about $570 million in tax
revenue in a year. But if it led to the issuance of even one additional
patent per small business, it would create 90,000 to 300,000 jobs.

Taken together,
fully financing the patent office and creating an innovation tax credit
could mean as many as 2.5 million new jobs over three years, and add as
many as 600,000 more jobs every year thereafter.

It only makes sense
to help innovative small businesses make their way to the patent office
and, once there, find it ready to issue the patents that lead to new
jobs.

(Paul R. Michel is
a former chief judge of the United States Court of Appeals for the
Federal Circuit, which handles patent appeals. Henry R. Nothhaft, the
chief executive of a technology-miniaturization firm, is a co-author of
the upcoming “Great Again.”)

© 2010 The New York Times