Seeing the Round Corners

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May 12, 2020

Today’s column continues with the question, “Has the reader observed implementation of the recommendations made by the National Academies titled Rising Above the Gathering Storm:  Energizing and Employing America for a Brighter Economic Future.

 PROSPERING IN THE 21ST CENTURY                   November 12, 2012
Continuing with the study/report made at the request of the National Academies titled Rising Above the Gathering Storm:  Energizing and Employing America for a Brighter Economic Future – today’s edition presents the final and most challenging of the four recommendations, in this writer’s opinion.

Recommendation D: Ensure that the United States is the premier place in the world to innovate; invest in downstream activities such as manufacturing and marketing; and create high-paying jobs that are based on innovation by modernizing the patent system, realigning tax policies to encourage innovation, and ensuring affordable broadband access.

D-1:  Enhance intellectual property protection for the 21st century global economy. The study emphasized the necessity for protection of patents and intellectual property that underlie the emerging knowledge economy, but would also allow research to enhance innovation. The Committee on Prospering in the Global Economy specified four types of reform that should be made to the patent system:

  • make intellectual-property protection more timely, predictable and effective, and provide adequate resources to the Patent and Trademark Office to do so;
  • switch the U. S. Patent system to a “first-inventor-to-file” system and institute administrative review after a patent is granted, thus bringing the U. S. System into alignment with patent systems in Europe and Japan (note, no explanation was provided as to why switch the U. S. system to the European/Japanese system, rather than theirs to ours);
  • must provide a shield for research uses of patented inventions from infringement liability – the long-assumed ability of academic researchers to use patented inventions for research is jeopardized by recent litigation; and
  • change intellectual-property laws that act as barriers to innovation in specific industries such as pharmaceuticals and especially information-technology industries, also those which increase the volume and unpredictability of litigation.


D-2:  Enact a stronger research and development tax credit to encourage private investment in innovation. U. S. tax credits are not competitive with other countries. The Research and Experimentation Tax Credit should be made permanent, increased from 20 percent to 40 percent and not be restricted to a base amount calculated from a company’s spending in previous years. Extending the tax credit to companies consistently spending large amounts on research and development would mean the companies would no longer be subject to the current de facto penalties for previously investing in research and development.

D-3:  Provide tax incentives for United States-based innovation. Alternatives to current economic policies such as changes in overall corporate tax rates, provision of incentives for the purchase of high-technology research and manufacturing equipment, treatment of capital gains and incentives for long-term investment in innovation should be considered. Comprehensive analysis by the Council on Economic Advisers and the Congressional Budget Office should examine how the United States compares to other countries. Said analysis could be beneficial for ensuring the United States offers the most attractive place in the world for long-term innovation-related investment. The Committee noted that from a tax standpoint, “that is not now the case.”

D-4:  Ensure ubiquitous broadband internet access. Innovation in the 20th Century was driven by access to the telephone, interstate highways and air travel – broadband access for home, school and business will similarly drive innovation in the 21st Century. The Committee recommended that Congress and the Administration (at the time George W. Bush) take whatever actions were necessary to ensure widespread affordable broadband access in the near future, primarily in the regulatory arena and in spectrum management, noting that several other nations are well ahead of the U. S in providing broadband access.

Next week’s edition will present subsequent results of the 2007 “revisit” to Rising AboveThe Gathering Storm by the Committee on Prospering in the Global Economy of the 21st Century, and what if any progress has been made.

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