Giachino (00:04.0920 - 00:31.0000)
Welcome to IP Protection Matters. I'm your host, Renee Giachino.
Today we are joined by Mark Schultz, the Goodyear Tire and Rubber Company Chair in Intellectual Property and Director of the Intellectual Property and Technology Law Program at the University of Akron School of Law. We'll be talking today about intellectual property and the startup economy.
Mark, welcome to IP Protection Matters. It's a pleasure to have you join me.
Schultz (00:31.0001 - 00:33.0000)
Thanks for having me, Renee.
Giachino (00:33.0001 - 00:53.0000)
If you will first give us a little bit of background about the organization that you work very, very closely with. I had the pleasure of attending IPPI's 2026 winter institute conference that was titled “IP and National Success.” Tell us about the wonderful work being done by IPPI.
Schultz (00:53.0001 - 02:00.0760)
Thanks. I am the faculty director of the IP Policy Institute here at Akron. We're dedicated to trying to balance the scholarly discussion of intellectual property to ensure that people consider some of the value of intellectual property and how it can lead to flourishing individual lives and national economies.
We work with a wide network of scholars around the world to promote evidence-based scholarship about how it can promote better economies, support the efforts of innovators and creators, and how policymakers can create sound policies that really benefit their own economies. One of the important things we think is that good scholarship ought to impact public policy. So that's what we try to do. We try to bring good scholarship into the public policy discussion of intellectual property and innovation.
Giachino (02:00.0760 - 02:33.0526)
Very often that starts with education - educating the general public, educating legislators. If you don't mind, I want to start with kind of a basic point about intellectual property rights generally and patents more specifically. At the winter conference, I thought it was quite interesting that you concluded your panel discussion by emphasizing that patents must be treated as property. Can you elaborate on this for us? Should intellectual property be distinguished from other forms of property in your opinion?
Schultz (02:34.0126 - 04:37.0721)
Not in the broadest sense. Being a professor, I have to say every kind of property has its own unique aspects, entitlements and conditions on it. But the important thing about a property right is that it gives somebody exclusive control of a particular resource. In giving them exclusive control, it creates the incentive for them to develop it, to use it well and properly, and to share it with others and work with others. I think people don't really understand how important it is to have that security in property rights so that people can invest in developing creative works and developing innovative works like medicines and technology.
Without that security, it's just really impossible to make that investment in bringing stuff to the world, bringing great new medicines to patients, or bringing terrific movies to the public. These things don't happen without the security of property rights. With the security of property rights, I think what the American founders understood is there's a really close connection between life, liberty and property. And without property rights, you really can't support yourself and your family. You can't really be free.
It's so important for us to have free speech and to have really entrepreneurial innovators out there in our economy. Without property rights, we're not going to get those things. We're not going to benefit from them and those individuals aren't going to thrive on their own. That's why it's essential for both economic and moral reasons that we treat intellectual property rights as property and keep them secure.
Giachino (04:38.0342 - 05:07.0529)
You mentioned this idea of exclusive control. I think that quite a few folks are confused about what's meant by that exclusivity. Thinking that it's lifetime exclusivity to that patent and it not being able to be a future innovator or not being able to use that innovation to build upon it, which is absolutely not the case. Correct?
Schultz (05:07.0910 - 07:18.0250)
Yeah, that's not the case. First of all, patents only last 20 years. That's all they can last. Second of all is they don't really create a monopoly. People throw that term around with regard to patents. It's really imprecise and unfortunate because you don't have a monopoly over a patented invention any more than you have a monopoly over your house.
In a sense, when you own a house, houses are unique. It might be in a unique location or unique architecture. So it may be one of a kind, but there are many other houses. It's the same with patented inventions. The fact that they exist, first of all, shows people something is possible. It often inspires other innovators to innovate around that patent, which is what we call the “design around” function of patents. It shows people the way, teaches them how to either build on the invention, or invent their own thing that's similar to it, but eventually not only do we learn from the patent, but eventually it enters the public domain.
A great example of this is generic drugs. Every drug on the market today, every generic drug, and over 90% of prescriptions in the United States are filled by generic drugs. Every one of those started as a patented drug, and they don't stay exclusive very long. The average exclusivity is about 12 to 14 years because it takes a long time to develop a drug and get it approved. So the deal we get as the public is for 12 to 14 years we have a brand name drug that cost more, but after that it's a generic. We wouldn't get any of those generics without brand name drugs that are patented. It just would never happen. So this innovation, the patented innovation, is a pipeline to teaching people how to do things, and it's a pipeline to inexpensive public domain inventions that we all benefit from.
Giachino (07:18.0989 - 07:52.0179)
I think it's very clear that innovation requires investment. Like most things in life, venture capital investors like certainty. We have enjoyed tremendous innovation in the United States, no doubt about that, and thanks in large part to investment.
But that landscape market seems to be changing, unfortunately, in part due to policy and due to some litigation decisions that have disincentivized investment. Where and how do we need to improve this situation in your opinion?
Schultz (07:52.0459 - 09:30.0690)
Over the last two decades, patents have become harder to get because we've narrowed the subject matter of patents - in a way too that creates uncertainty because people aren't exactly sure what the rules are because the Supreme Court's decisions have been so muddy. So patents are harder to get. They're harder to enforce because it's harder to get an injunction. They're less certain to keep because there are easier ways to invalidate them.
This kind of uncertainty, whatever the good intentions of the policy changes and legal rulings that got us to this state of things, we've made these property rights less secure. Venture capital investors, they don't expect certainty, but what they want is when they invest in something, they want the possibility of a return. They don't want it yanked out from under them because the patent gets invalidated for example. That kind of loss is something that's hard to tolerate. They're already tolerating a very high likelihood of failure.
Most startup investments don't succeed, but what they can't tolerate is losing an otherwise successful investment at the end. It's just the more you increase that risk, the more capital goes to other things that are less risky.
Giachino (09:31.0179 - 10:21.0979)
You mentioned the Supreme Court muddying the water, certainly going back a couple of decades to the eBay decision. I think we can start there with it becoming particularly muddy. We've got other decisions and things happening at the U.S. Patent and Trademark Office with PTAB. All of that has to come back to our legislature.
What role does Congress play in the need to continue to support a strong and effective patent system so technology and treatments can get to the marketplace sooner? Is it time or beyond time for Congress to step in? There have been a multitude of legislative efforts over the last couple of years, most of them stalling out, in fact, but thankfully keep getting reintroduced. What do you believe is Congress's role in this?
Schultz (10:22.0150 - 11:46.0890)
Congress plays an essential role because some of the court decisions have created a lot of uncertainty. The Supreme Court has so far signaled that it's not willing to fix things, particularly with patentable subject matter. I'm not quite sure the court is capable of doing that. I think Congress needs to step in to clarify what can be patented. Also the ability to get an injunction is so important. It's essential to the core of what a property right is - the ability to use it exclusively. It's not just an opportunity to sue for damages, but something that you can enforce and keep exclusive.
It would be great if the Congress could step in and fix that. If not, perhaps maybe an injunction is something we could try to convince the Supreme Court to fix, to clarify, but it would be much quicker for Congress to do it if we could get Congress to act. I'm not sure we will though, but that is the challenge. If Congress values American competitiveness, Congress should act to repair the patent system and bring it back to something that's much more reliable and predictable.
Giachino (11:47.0380 - 12:05.0000)
Along the lines of American competitiveness and coming back to something you referenced in the beginning of our discussion related to free market principles. A frequently asked question is whether intellectual property law conflicts with free-market principles. How do you respond to that?
Schultz (12:05.0002 - 14:28.0419)
This is a question that I think certainly some in the more intellectual and ideological corners of the American conservative movement, particularly libertarians, have questioned. Some on the left question it too. I go back to something I said before that is intellectual property does not prevent competition. It prevents copying. So just like I said, if one owns a house, there are other houses to buy. My ownership of a house does not stop you or stop real estate developers from developing new houses. It doesn't stop others from selling their houses.
I think it's quite the same with inventions and creative works. Just by protecting those rights does not impede competition. In fact, what it tends to do is create more competition in the long run. In fact, the intellectual property is needed most by those who are disruptive and by the smaller players entering the market to do new things because they're the ones most likely to get copied. They're the ones most likely to get interfered with.
If you're a big, enormous tech company, you don't necessarily need to rely on patents and copyrights to the same degree as smaller innovators and creators do. You can use your size and your ability to control market share and your ability to fight things out in the courts such that you don't need that kind of protection. It's the startups. It's the disruptors that need IP rights the most because they are the most vulnerable. Ensuring that those folks can continue to do the good work they do in driving economic growth, in creating new things that benefit us all, or that we all enjoy in the case of creative works, is really important. So no, IP rights are essential to the free market, especially in a modern economy.
Giachino (14:29.0000 - 14:44.0030)
You may have answered this, but I'm going to ask it in another way. One of the biggest myths that we hear with respect to intellectual property is that it unfairly benefits big companies. True or false?
Schultz (14:44.0570 - 15:54.0000)
That's false. As I said, big companies don't rely on it the same way. Certainly there are big companies that got big from intellectual property and big companies that use intellectual property well. Great creative giants like Disney or great innovators like Apple, but it's not only the big companies. These companies got where they were because Walt Disney came up with a cartoon mouse that he was able to commercially develop and enjoy the benefits of.
You don't get to be a big company without something you can invest in and develop. In the modern economy, those things tend to be intellectual creations that we need to protect with intellectual property. So it's not just the big companies. It's the wannabe big companies. It's the little guys who are competing who could just get squashed by the big guys if they didn't have these rights to protect them.
Giachino (15:54.0739 - 16:15.0099)
I generally start with this question, but I did not in our discussion because I wanted to dive right into the work of IPPI. So, I'm going to finish with this question. Looking back at our title “IP Protection Matters,” in a few short words can you sum up for us why IP protection matters?
Schultz (16:15.0820 - 17:26.0660)
IP protection matters both for individuals and for the economy. For individuals, it allows them to secure opportunities to use their talents as best as they can to do some of the most important work that humans can do - creative and innovative work. For the economy, it creates the kind of security that helps drive investment and ensures that we enjoy the kind of powerhouse economy we do today in America.
If we want to keep our creative and innovative individuals working hard, if we want to bring those people from all over the world and attract that talent here, and if we want those best and leading companies to continue to develop here, we need an effective, predictable IP system. I'm afraid we could be losing that lead because we're not appreciating the importance of that these days.
Giachino (17:27.0040 - 17:58.0810)
Mark, I thank you for all of the work that you are doing, that IPPI and your colleagues are doing, to help support all of these hard efforts to make sure that the United States can maintain its role as an innovation leader.
You've been listening to IP Protection Matters. Our guest has been Mark Schultz, Faculty Director and Senior Scholar at the IP Policy Institute of the University of Akron School of Law. To listen to more of our podcast, please go to IPProtectionMatters.org.
Mark, thank you again for your time today. We greatly appreciate it.