The Future of American Innovation:
Sector Innovation,
Small Companies andCollaboration
Cynthia Cannady, IP*SEVATokyo, February, 20171

Why I am here: Silicon Valley law practice, 17 years atFenwick law firm and Apple.
 2001-2007 UN agency, WIPO, Director
responsible for innovation strategy, technology
licensing and patent drafting training, networks
 Mission: “IP Assets” as an empowering tool.
 Since 2008, IP*SEVA, innovation strategy,

technology contracts and IP education,
concentrating on sustainable energy andenvironmental technology
2Innovation StrategyAn effective innovation system
1. Addresses sectors that meet a public or
market need and provides public funding forearly stage research;
2. Supports a vital role for “IP asset richventures” (small companies);
3. Promotes collaborative development of newtechnologies; andIs periodically evaluated in a critical, practical andtruthful way.
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The R-D-C Continuum

ResearchDevelopment

Commercialization

4Overview of this Presentation

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Some Active Technology
Sectors in the U.S. Today•

Molecular biology
Gene editing (CRISPR)• Protein engineering (e.g. computationaldesign)• Pharmaceutical applications•6Some Active Technology
Sectors in the U.S. Today (2)•Energy storage
Batteries for EV’s
• Distributed energy••

Liquid fuels
Critical problem of aviation fuel• Biofuels (2d generation cellulose)• Artificial photosynthesis••

Water and toxic remediation
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Some Active Technology
Sectors in the U.S. Today•Materials, synthetic polymers, crystals
Aviation (civilian and military)• Transportation• Buildings and lighting• Medical devices• Electronics• Batteries• Textiles•

8Some Active Technology
Sectors in the U.S. Today•

Robotics, automation and A.I.
Manufacturing• Drones and aviation• Transportation (driverless cars)• Hazardous and contaminated areas• Health (e.g. DNA “Nanobots”)• “Quality” of life appliances (e.g. humanoidservants) (?)• Data management in era of big data•9

Challenges for American Innovation#1: Declining and inconsistent researchfunding in critical technology sectors• Flat or declining federal government
funding for R&D in universities, nationallabs, Advanced Research Projects Agency
for Energy (ARPA-e)• Push for military funding and other sectorsthat may not reflect critical needs andmarkets over medium to long term.
10Challenges for American Innovation#2: Premature pressure on research tomove quickly to development andcommercialization stages +Pressure on universities to conduct appliedresearch, conduct sponsored research fromprivate donors, and provide job opportunities
for their students.

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Challenges for American Innovation#3: Researchers low knowledge of how touse the IP system What can be protected in their field (subject matter) When to file Consequence of lack of protection in foreign markets
 How to use the non-user-friendly IP system What you do with patents—just a check off item for VCs?

 What is an IP strategy?
 How technology contracts work? What are the different

types of technology contracts?
12#4: Cost for small ventures
to use the IP system
 Patent drafting to filing roughly= $US15K to $20K.

Followed by office actions over 2-3 years
 International filing via Patent Cooperation Treaty (PCT)
and direct filing in other countries adds about $4000 for
PCT fees, plus huge atty fees, plus expense of eachnational phase translation, filing, local attorneys.
 PCT applications lapse if not completed or withdrawn
and become public domain information.
 Few links to IP professionals; no IP networks.
 University TTOs do not usually cover these costs
PLUS the AIA’s first to file and post grant challenge
provisions.
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#5: Low bargaining powerof the highly innovative!
Weak contract negotiation with potential partners• Funding shortfalls from government grants,
VCs and other sources• In green tech sectors, relative higher cost ofgreen tech development• Lack of patent power

Consequence: small tech ventures become
service providers, not IP owners.
14#6: Collaboration
Consortia• Pre-competitive R&D Consortia• Important but difficult to form and operate• Rules are complex and require simplification• Standards consortia• Risks violation of antitrust/competition law• Needed for interoperability of technologies but notfor price fixing, output and patent abuse.
• “Roadmaps”(e.g. SEMATECH and the ITRS International
technology roadmap for semiconductors)
15#6: Collaboration (2)• Technology development collaboration

contracts are complex• Equity joint ventures are difficult to manage• Cultural and legal differences can hamper
international transactions.
• Lack of norms for understanding whencollaboration is needed and how to domilestones.
• Many companies still resist open innovation• Collaboration requires relatively equal partners
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#7-Access to Information
 As more money is invested in the collectionof information, there is a push to own theinformation itself.
 Also a push to own content (images, music,even contracts)
 Big data means big control This is NOT consistent with the philosophyof IP—creativity, invention. So there is apush to bend traditional legal concepts.
17Evaluation Metrics for InnovationBig picture: GERD/GDPWhat is the return on R&D investment?

Filing of domestic patent applications
Licensing data (how to get) to show how patents
get used.
Grant as a % of applications
Direct foreign and PCT applications and grants
to address international market
% of PCT apps that lapse
Cost data on PCT and direct filing
IP in practice: Contract models and results
18Recent Developments

19Trump and Innovation
 Destruction of the Environmental Protection

Agency (EPA)?
 Privatization of Education, Betsy deVos Department of Energy and National Labs runby Texas Governor Rick Perry Information controls-Gag Rule
 Abolish Office of Science and Technology?
and replace with “Science Advisor”
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Science Advisor Candidates
 William Happer“I don’t agree with all the hysteria about climatechange” – David Gelernter

Anti-intellectualism Advocates putting all knowledge in a data base
 Critique of public education
21

Public Response

22Conclusion
 Innovation systems are complex but important!

 Innovation at the national and company levels

must be evaluated—is it working?
 Knowledge is power!
Who owns IP? Who controls it?

 Free access to information is necessary toscience and innovation.
 In troubled times, can collaboration save us?

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Arigatou gozaimasu!
Cynthia Cannady
cannady@ipseva.com