Giachino (00:05.0239 - 00:29.0569)
Welcome to IP Protection Matters. I'm your host, Renee Giachino. Today, we are joined by Karen Kerrigan. She's the President and CEO of the Small Business and Entrepreneurship Council. We will be talking today about IP and small businesses. Karen, welcome to the program. Before we dive into the topic, tell us a little bit more about some of the important work that you guys are doing at the SBE Council.
Kerrigan (00:29.0670 - 01:39.0260)
Of course. Thank you for having me today, Renee. We protect small business and promote entrepreneurship. That's what we're all about. For over 30 years we've worked on a range of private and public policy initiatives to strengthen the ecosystems for strong startup activity and small business growth - every issue that touches small business from creating a really sound startup ecosystem that promotes investment and capital formation, lowers barriers to entry, to regulation, technology policy, intellectual property, trade, the cost of health care, tax reform and government spending on programs. The issues that we address and have been working on have been quite extensive, particularly over the last three years given the extent of work and activity that's taken place in the regulatory agencies.
Giachino (01:39.0959 - 02:19.0479)
I want to make sure that our listeners are aware of where they can go to learn more as we discuss today technology and intellectual property - SBEcouncil.org.
There's this saying that all politics is local. And I think this applies equally well when we talk about the impact of patents in that the real impact, at least initially, seems to fall at the feet of startups and small businesses. What impact do you see patents having on startups and small businesses?
Kerrigan (02:19.0559 - 04:24.0420)
It is extraordinary. The bulk of firms in this country that have patents, create patents and want to protect their patents are small businesses. Small businesses and entrepreneurs are the font of innovations and discoveries, whether it's patents, trademarks, copyright or trade secrets. And as entrepreneurs and business owners have become more sophisticated and they have more tools at their disposal - whether its technology tools or digital tools - they are creating new things and new ways of doing things, including new methods or processes. Protecting these patents is critical to these businesses as it really does create the sustainability, the defensibility and their value over the long term.
For startups, having that patent and that protection for that patent is so critical to raising money. We see this on Shark Tank. You get the Sharks asking the startup: “Is this an invention or is this a creation that you have, is it protected? Is your IP protected? Do you have a patent, or have you applied for a trademark? Is your trade secret protected?” So yes, for small businesses that want to grow and want to compete with bigger businesses and employ more people - these businesses are really important for the vibrancy and the competitiveness and growth of our country. Protections for patents, trademarks, copyrights and trade secrets have become even more critical to that end.
Giachino (04:24.0910 - 04:52.0359)
When you talk about the growth of our country and when we think about IP protection, oftentimes what first comes to mind is what you've talked about, protecting the property rights of the inventors and the investors. But there are benefits that you've written about as well that go much further to benefit our youth. What opportunities do you see IP protection providing for a better future for our youth?
Kerrigan (04:53.0130 - 05:50.0290)
Employment and good paying jobs. If you look at IP-intensive industries in this country, they are responsible for 62 million jobs. IP-driven industries - technology, biopharmaceutical and various other industries - the growth of those industries is really dependent on protecting that IP as industries grow and becoming international leaders in not only existing industries, but the industries of tomorrow. The most wonderful thing about technology, AI and the future is that we don’t know what the industries of tomorrow are going to be.
Kerrigan (05:50.0299 - 06:47.0470)
Protecting IP creates opportunities for more young people to start businesses. We have this new creator economy that is booming. A lot of young people are very interested in being creators, being their own employers and becoming business owners. That in and of itself offers incredible opportunity for younger people to work for them themselves and to use their creative talents to start businesses. But also as employees of companies in IP-intensive industries that, with the right protections and the right policies, will continue to grow and create opportunities for everyone in every corner of the country.
Giachino (06:47.0929 - 07:14.0980)
On that note of the right protections and the right policies, let's first go back a couple of decades to 1982 and 1992, respectively, when Congress established the Small Business Innovation Research and the Small Business Technology Transfer Programs. What impact did these laws have to further harness and propel the productivity of these small businesses?
Kerrigan (07:15.0339 - 10:14.0940)
Between those small business programs, the innovation programs and also the Bayh-Dole Act, there was this understanding or bipartisan belief that we needed to further harness innovation and creativity and take the best minds in this country and incentivize ... the entrepreneurs and startups - to give them an opportunity to really take those ideas to the marketplace and help the country become more innovative and grow. The foundation of those two programs was incredibly important in driving innovation forward and developing technologies and really a startup culture in this country that has gotten us to where we are today. You have Silicon Valley. But not only just Silicon Valley. Now you have various different hubs of innovation that have spread all over the country. All that culture started with those type of programs and the type of mindset that we needed to support entrepreneurs with innovation, the protection of their ideas and creations and to leverage capital in order to get those ideas and inventions into the marketplace. So they were very important.
We now have this general sort of mindset, even though there have been threats to IP and IP protections over the past 4 to 5 years, we brought about the power of private capital and investment in these new ideas, technologies and inventions. It is why the United States of America is the innovative powerhouse of the world. Obviously, we have a lot of competition now globally, but for policymakers up on Capitol Hill and for the White House, they need to recognize and understand that we do have people not only nipping at our heels and maybe moving beyond us in certain areas, but that we really need to double down and protect IP even more. We need to protect U.S. IP abroad and encourage innovation, investment and entrepreneurship even more.
Giachino (10:15.0190 - 10:49.0500)
Let's dive a little deeper, if we can, into some of the threats. Starting even internally, the internal threats. There is an effort that's underway to allow the federal government agencies to invalidate patent licensing agreements. Officials claim that the guidance will give them a new tool to reduce drug prices. Elaborate a little bit more for us on the impact that this will have on small businesses and help us better understand that this extends far beyond even the pharmaceutical industry.
Kerrigan (10:49.0599 - 11:58.0760)
It does. The bipartisan Bayh-Dole Act, going more than 40 years now, really has been one of those programs that has had extraordinary impact on startup activity and innovations. Because of the Bayh-Dole Act - basically allowing universities and startups working with universities to own their own IP (the government doesn't own that IP) - universities own that IP and it doesn't sit on the shelf anymore like it used to pre-Bayh-Dole. There were great ideas that were coming up in university settings that were sitting on the shelf. Because of Bayh-Dole and the IP protection given to those inventions, there have been over 17,000 startups that are directly tied to the Bayh-Dole Act.
Kerrigan (11:58.0049 - 13:42.0630)
Now we have the Biden Administration wanting to turn back the tide under the guise of lowering drug prices, and saying if the price of a drug is too high and this drug was created using some type of government grant or government support, that we're just going to march in, take back and invalidate that patent. What many people don't understand is that it is not just about drug prices. That in and of itself would be bad. Taking back a patent for a drug, because, as we've argued in a lot of our papers and up on Capitol Hill, the biopharmaceutical industry is dominated by small to mid-size businesses. Individual entrepreneurs and small businesses are creating the new drugs of tomorrow. This will not only disincentivize and really harm the development of life-saving drugs, but this applies to all inventions, all creations, all technologies that were developed using government grants as seed money. So this is pretty dangerous. With Bayh-Dole, there was nothing ever in Bayh-Dole saying that if we deem a price to be unreasonable, and that's not even defined in this guidance, that we will take back this patent - that we will seize or invalidate this patent.
Kerrigan (13:47.0950 - 14:50.0789)
It goes beyond just drugs. It does affect every patent that was started with government grant money. Even though it might have been a small amount of government money. And then because of that patent and IP protection that was given, maybe billions more was raised in the private sector to bring that to market. So this is very dangerous. It's a very bad policy. And not only that, I do think that if they tried to shove this down our throats in the startup ecosystem that this would be taken to court. And I think it would be tossed out because price is not even mentioned or used as a rationale to seize or take back a patent.
Kerrigan (14:50.0070 - 15:23.0890)
So very bad. We're hoping that we could beat this back. But I think they've gone down this road far enough now where they might try to push something through. But we'll be watching that, Renee. And we'll continue to fight it until it goes away just like some of the other things that we've been fighting against over the past few years, either through legal action or the Congress overturning something to invalidate that bad policy action.
Giachino (15:24.0169 - 15:44.0119)
Our guest is Karen Kerrigan, President and CEO of the Small Business and Entrepreneurship Council - SBE Council. Karen, one final question. How likely do you think it is that IP rights will be addressed during the upcoming Presidential and Congressional elections? We know they should be, but are you anticipating those conversations happening?
Kerrigan (15:44.0630 - 17:23.0718)
I don't think so. We're pushing for it as we do a lot of other issues, Renee. The whole issue of small business isn’t out there as much as it should be. If people are worried about the economy - most Americans are - you would think the candidates should be talking about the importance of small business and that we have the right policies in place, including IP protections to encourage this sector to grow. It might get occasional mention here and there, but it's just not one of these top line issues that will be discussed. We think that's a shame.
We do think there could be some action in Congress that will be coming up on two important bills that we're working on - the Patent Eligibility Restoration Act (PERA) and Promoting and Respecting Economically Vital American Innovation Leadership (the PREVAIL Act). We're hoping those will get some action over on the Senate side. But it's just one of these issues that does not get a lot of attention at the presidential level. It does get a lot of attention in the business community, particularly in the small business community, because it is so important to entrepreneurship and the future of small businesses. So we'll keep pushing it. I doubt it will get the type of attention that we want, but that's not going to stop us from asking the candidates to take a position on these issues and to talk about them.
Giachino (17:23.0938 - 17:42.0119)
Karen, thank you for taking a position on these issues, for talking about them, for continuing to fight the good fight as it relates to why IP protection matters and the impact that it has on small businesses and on startups. We greatly appreciate your time today and we'd love to have you join us again.
Kerrigan (17:42.0130 - 17:44.0020)
Will do. Renee, thank you for all you're doing.
Giachino (17:44.0069 - 17:47.0390)
Thank you for listening to IP Protection Matters.