Patent Report: Is U.S. Innovation in Decline?

There seems never to be a dull moment when it comes to patents. Depending on how you look at them, they can be milestones along the road of continuing innovation, or canaries in mines signaling the presence of unseen toxic conditions that will kill off innovative effort. That defenders of both views exist, even prosper, today is not surprising, since the popular sentiment, at least in the U.S., is that innovation, and the new devices and services they bring, is roaring ahead at a pace that is unsettling to most of us. It is a matter of faith that Innovation, particularly reflected in the week after week awarding of new patents, continues upward at a level of significant impact to our lives, but there appears to be a shift in perception about the benefits. This shift is being represented by the increasing use of the word “disruptive” to describe the impact of innovation.

Then there is the zone of urban legend surrounding patents and innovation. I admit to having been lazy when it came to the acceptance of the received wisdom of the masses in the popular story of the Commissioner of Patents who, in 1900, resigned, stating that there was no new things to invent. Whatever else you may think about the Internet, it is a means to allow people like me to validate or invalidate such urban legends from the comfort of my home, to understand the real reason why some saying was associated with an event, a person or an institution.

The Commissioner of Patents in question was Charles Duell. There is a considerable body of research that has built up around the veracity of his statement, especially his reason for resigning the position. As with so much of urban legend, his name was linked to the comment in error. One researcher found a post in the July 30, 1900 edition of The New York Times offering a more practical reason for Duell’s resignation:

“Mr. Duell’s purpose in resigning is said to be that he may be able to devote his entire time to his patent business. The salary of the Commissioner of Patents is $5,000 a year, but Mr. Duell’s patent practice, when he is able to give it his entire attention, is understood to be considerably above that figure, so that there is no financial consideration which would warrant him in retaining the office.”

Money “talked” as loudly then as it does now, it would seem.

The greatest surprise that I encountered as I researched the apocryphal quote was that his actual view of innovation was completely misrepresented. After leaving the post of Commissioner of Patents, he was quoted in a 1902 edition of The Friend, offering this view of the future of innovation as it would be reflected in the grant of patent awards in the years to come:

“In my opinion, all previous advances in the various lines of invention will appear totally insignificant when compared with those which the present century will witness. I almost wish that I might live my life over again to see the wonders which are at the threshold.”

Here is a man of positive vision about the future of innovation, not the naysayer that he has been made out to be. However, his words, viewed from our present time, represent a dichotomy. Of course, the “present century” to which he was referring was the 20th century, of which much of the evidence supporting the decline of U.S. innovation in the 21st century is cited by one of the two professors featured in a recent front page story in the Wall Street Journal. Yet, his positive vision of a future of significant innovation supports the position of the other professor, hence the dichotomy.

Published on June 16th, the article was entitled, “Has All the Important Stuff Already Been Invented?” It centered on two Northwestern University professors and their continuing debate over the state of innovation in the U.S. Professor Robert Gordon articulated the position that innovation in the 21st century, particularly in the U.S., was in trouble because what is being invented – and patented – is nothing more than enhancements to the life-changing innovations patented in the 20th century. Examples that he cites are cell phones as a refinement of the telephone, and today’s home kitchen being a refinement of the one you found in 1955.

His opponent in the debate, Professor Joel Mokyr, sees a “coming age of new inventions” that will equal the impact of those in the 20th century, citing genetic therapies and bio-engineered seeds that can feed the world without the need for fertilizers.

This debate is between two economists, and that is significant, because as the article states, it is a matter of economic orthodoxy in the U.S. that growth is driven by new technology. Citing Nobel economist Robert Solow as the originator of the concept, economic growth became tied to innovative progress, with the resulting impact on stock market behavior.

Equally important to the prevailing economic orthodoxy is Joseph Schumpeter’s concept of “creative destruction” that comes from the displacement of old technologies and their businesses by newly innovative technologies and their emerging businesses.

I spoke above about the shift in perception of the benefits of innovation from positive to disruptive. “Disruptive” is the mantra for technology CEO’s and their critics, displacing all other descriptions of technology innovation. Good luck finding investors if your product is not “disruptive”!

In a brilliant essay by Jill Lapore in the June 23rd issue of The New Yorker, entitled “The Disruption Machine,” this shift is not only explored in detail, but the author brings to light the flaws in the primary literature that gave rise to the notion of innovation as disruptive. In fact the subtitle of the article is “What the Gospel of Innovation Gets Wrong.” She deconstructs one of the most influential sources of the argument, The Innovator’s Dilemma, and in the process reveals that the case studies used to support the argument were flawed. Her contention is that “Disruptive innovation is a theory about why businesses fail. It’s not more than that. It doesn’t explain change. It is an artifact of history, an idea, forged in time…It makes a very poor prophet.”

As I said before, people tend to accept the received wisdom of the masses because it is convenient and there is safety in numbers. Current beliefs in the nature and direction of innovation fall victim to this tendency. They will change as economic geopolitical conditions change. The shape and significance of innovation will remain the subject of intense debate.

However, one thing can be said with certainty: Patents will be awarded in great quantity on every Tuesday of the year.

By | 2014-06-23T21:27:19+00:00 6/23/2014|

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