Innovation Crossroads: “We have to set policies and pass laws that allow technology to flourish”

Guest Blog by UC San Diego Extension, John B. Freeman

What are the best ways to ensure that technology continues to grow and prosper in San Diego? How do federal policies hinder that growth?

Those were major themes discussed in the first “Innovation Crossroads: Creating a Policy Climate for Global Innovation in San Diego,” a two-hour panel session held Saturday, May 31, at Qualcomm Hall.

The invitation-only forum featured two of the region’s hi-tech visionaries, Paul Jacobs, executive chairman of Qualcomm; and Greg Lucier, former chairman and CEO of Life Technologies, now chairman of the Sanford-Burnham Medical Research Institute in La Jolla.

Joining them was Congressional Rep. Scott Peters (D-San Diego), with Steve Clemons, editor-at-large of The Atlantic magazine, serving as moderator.

The event was co-presented by UC San Diego Extension and CONNECT.

The spirited discussion gave Jacobs and Lucier free reign to reflect on how far their respective companies have come, along with San Diego’s ascendency as a world-wide tech sector.

Back in the mid-1980s, when Qualcomm was first started by Jacobs’ father, Irwin Jacobs, virtually all it took to lure top hi-tech talent to San Diego was a trip to the beach amid sunny skies, said Jacobs.

“As long as we did that and kept them away from real estate agents,” he said, “we would get them. And actually, that still works for San Diego because the price of real estate looks pretty attractive compared to other places [around the world].”

Federal and state taxes, however, don’t look so attractive to Jacobs, especially for companies such as Qualcomm that have large oversees operations. Current policy requires that federal taxes be paid if that income is brought back into the U.S.

Qualcomm employs two-thirds of its workforce in the U.S., largely in San Diego, with 95 percent of revenues generated outside the US.

Lucier heartily agreed with Jacobs that offshore tax laws needed to be changed by Congress.

“The system we have today was fine 25 years ago,” he said, “but now it’s a global economy. U.S. companies are making tons of money oversees and they have no incentive to bring that money back to the United States. … It’s so freakin’ simple, it’s unbelievable.”

Peters decried what he termed “anachronistic laws,” adding, “In a lot of ways, government hasn’t caught up with technology. We have to set policies and pass laws that allow technology to flourish.”

Other headache-inducing issues for Qualcomm and other locally-based global firms are strict post-911 immigration policies that prevent the world’s best and brightest minds from coming to San Diego – and staying.

Said Jacobs: “The world still comes here [but] then they go back because we don’t let them stay.” He added that top executives of overseas firms often encounter roadblocks to freely traveling to San Diego for business.

“They say, ‘Look, if you don’t want me here, then I’m not gonna come. Why should I do business with you?’” he said. “It’s a perfect storm of really stupid policy.”

Added Lucier: “The problem isn’t with students coming to the United States. The issue is, they’re not staying here once they get a degree.”

One surprising theme focused on an oft-heard complaint among local commuters: snarled traffic around Qualcomm’s lineup of buildings on Sorrento Mesa.

Qualcomm likely won’t build another facility in San Diego because of worsened traffic in recent years, said Jacobs, citing Austin, Texas as a possible alternate locale. “We’re having employees being forced to leave early because of the traffic. It’s a loss-of-productivity issue.”

Peters assured Jacobs that he would look into the matter with local officials.

– John B.B. Freeman

CONNECT ANNOUNCES AEROSPACE & ADVANCED MANUFACTURING WIN

On behalf of a San Diego regional initiative to attract manufacturing investment to San Diego, CONNECT is pleased to announce that the U.S. Department of Commerce has selected Southern California as one of 12 manufacturing communities to receive the Investing in Manufacturing Communities Partnership (IMCP) designation. The Southern California partnership, Advanced Manufacturing Partnership Southern California (AMP SoCal), was led by USC and includes the Counties of San Diego, Orange, Los Angeles and Ventura. This designation will open preferential access to $1.3 billion in federal assistance for local aerospace and advanced manufacturing in Southern California and will be a great tool for not only for our regional job creation efforts but across the four counties.

CONNECT led the San Diego County initiative which includes, Biocom, City of San Diego, CleanTECH San Diego, East County Economic Development Council, North County Economic Development Council, San Diego Regional Economic Development Corporation, San Diego Workforce Partnership, Sapphire Energy, South County Economic Development Council, UC San Diego, and Unified Port of San Diego.

The Investing in Manufacturing Communities Partnership (IMCP) initiative is a U.S. Commerce Department-led program designed to accelerate the resurgence of manufacturing in communities nationwide by supporting the development of long-term economic development strategies that help communities attract and expand private investment in the manufacturing sector and increase international trade and exports. Over 70 applications, including one from Northern California, were submitted and the 12 were selected by an interagency panel, based on the strength of their economic development plans, the potential for impact in their communities, and the depths of their partnerships across the public and private sector to carry out their plans.

The San Diego partnership of AMP SoCal will focus on workforce development and training, creating a robust supplier network, development of new enterprises that manufacture products for the future, commercialization and access to capital for technologies originally developed for defense purposes, and infrastructure and trade development.

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CONNECT has assisted in the formation and development of more than 3,000 companies in the San Diego region and is widely regarded as one of the world’s most successful organizations linking inventors and entrepreneurs with the resources they need for commercialization of innovative products in high tech and life sciences. The program has been modeled in more than 50 regions around the world. CONNECT has been recognized by Time, Inc. and Entrepreneur magazines and in 2011 won the national State Science and Technology Institute’s 2011 Excellence in Tech Based Economic Development Award for Building Entrepreneurial Capacity. In 2010 CONNECT was the recipient of the Innovation in Economic Development Award from the U.S. Department of Commerce for creation of Regional Innovation Clusters. CONNECT manages the San Diego, Imperial Valley, Inland SoCal Innovation Hub (iHub) designated by the state of California Governor’s Office of Business & Economic Development in 2010. Key to our success has been the unique “culture of collaboration” between research organizations, capital sources, professional service providers and the established industries. For information on CONNECT or its programs, contact us at (858) 964-1300 or visit connect.org

 

Updates on Medical Device Tax and Patent Reform

Medical Device Tax

Based on discussions with Senate staff, it is now certain there will be no amendment vote to postpone/repeal the device tax on the extenders legislation this week. Senator Hagan talked to Majority Leader Reid about it directly, and was shut down immediately. Republicans have tried to push Reid on it, but he has drawn a hard line around anything ACA related on extenders. There are already almost 60 votes for cloture on the extenders package w/o any amendments. It is expected that Wyden and Reid will make “related” changes to the package to get past 60, so, all that is left at this point is a messaging exercise. The goal will be to have Senator Klobuchar file the amendment, Hatch will cosponsor, and supporters will try to get other Ds and Rs signed on. While the floor process and debate time is still uncertain,  Seantors Hatch and Klobuchar will push to carve out time to raise and discuss during the debate on the extenders package.

Patent Reform 2.0

For the first time in weeks, the Senate Judiciary Committee schedule for the week ahead didn’t list a markup for a patent reform measure. It’s too soon to rule it out entirely, but several industry representatives have said they’re not expecting the committee to schedule a vote on the effort again until next week at the earliest. And at the very least, we know that any markup would not happen at the usual Thursday morning time this week, since Chairman Patrick Leahy will be at a wreath-laying ceremony for National Police Week at that time. That’s not stopping outside groups from continuing to push, however: The Main Street Patent Coalition is sending yet another letter up to the committee this morning, with a specific emphasis on their support for the litigation reform compromise brokered by Sens. Chuck Schumer and John Cornyn.

Rep. Peters Welcomes USPTO Official for Stakeholder Roundtable in San Diego

SAN DIEGO, CA – Today, the Office of Congressman Scott Peters (CA-52), CONNECT, and Business Forward welcomed Andrew Byrnes, Chief of Staff at the United States Patent and Trade Office (USPTO), to San Diego. Mr. Byrnes attended a roundtable event with local industry leaders to hear about the unique innovation economy growing in the San Diego region.

“San Diego is home to a growing number of companies and researchers who are developing innovative technologies and therapies,” Rep. Peters said. “I’m glad Mr. Byrnes was able to get out to San Diego to hear from regional leaders about the work that is happening in our area. During my time in Congress I’ve consistently been working to find ways to showcase San Diego to policymakers and administration officials in Washington, D.C., and this continues that effort.”

“We greatly appreciate Congressman Peters’ efforts in arranging this meeting. CONNECT is pleased to host what will assuredly be an interesting exchange of views on current proposed legislation as well as the new regulations proposed by the USPTO,” said Gary Klein, VP of Public Policy, at CONNECT.

“Today’s briefing allowed some of America’s most successful inventors to brief the PTO on how reforms enacted by the America Invents Act are affecting their research and their business decisions,” said Jim Doyle, president of Business Forward. “With further reforms being debated on Capitol Hill, new trade deals in negotiation in Asia and Europe, and new technologies disrupting industry after industry, PTO counts on feedback like this more than ever.”

Mr. Byrnes spoke at the roundtable event with business leaders at the CONNECT headquarters in La Jolla. This event gave San Diego stakeholders an opportunity to discuss how to build a smarter set of intellectual property laws for the 21st century, and get updated on key actions being taken to help businesses focus on innovating, not litigating.

Patent legislation could hurt San Diego economy

CONNECT CEO Greg McKee and San Diego Regional Economic Development Corporation (EDC) President and CEO Mark Cafferty wrote an op-ed on patent reform legislation currently being considered in the U.S. Senate. They note the importance of patents to the San Diego innovation ecosystem, from technology, to life sciences, to biotech/genomics and how intellectual property contributes to job growth and the overall economy. Additionally, they point out that the current bills being considered are far too broad to deal with the problem of so called “patent trolls” and will have severe unintended consequences, particularly the devaluation of patents making it more difficult for inventors and investors to take the risk on what might have been a promising, life -enhancing technology. They urge Sen. Feinstein and Sen. Boxer to carefully review the legislation and take steps to preserve innovation in San Diego. The complete op-ed is available here.

SEC Proposes Regulation A Rules

Yesterday, the Securities and Exchange Commission announced the release of their proposed rules for Regulation A, which is intended to increase access to capital for smaller companies. Comments to the SEC are due in 60 days. CONNECT has been involved in the JOBS Act legislation since day 1 and will be reviewing the proposed regulations and submitting comments. To read the proposed regulations, click here.

Senate May Be Tougher Patent Battleground Than House

CQ NEWS – POLICY
Dec. 17, 2013 – 6:00 p.m.
By John Gramlich, CQ Roll Call

Senators suggested Tuesday that a consensus approach on curbing abusive «patent» litigation may be harder to find in their chamber than it was in the House, which easily passed a comprehensive bill on Dec. 5 after relatively little debate.

Members of both parties agreed during a three-hour Senate Judiciary Committee
hearing that frivolous «patent» litigation poses an increasing threat to
American innovation and productivity. But they floated a wide range of
responses to the problem, indicating that the Senate may face an extended
debate in the weeks and months ahead.

Senate Judiciary Chairman Patrick J. Leahy, D-Vt., advocated for a bipartisan
proposal he developed alongside Sen. Mike Lee, R-Utah, that targets bad actors,
commonly known as “trolls,” that may not make any products or offer any
services, but file «patent» infringement lawsuits against companies and
consumers for the express purpose of obtaining costly legal settlements or
licensing fees.

The Leahy-Lee bill (S 1720) would address such abusive litigation through a
number of steps, including by calling on the Federal Trade Commission to crack
down on misleading “demand letters” that «patent» trolls regularly send to
businesses and consumers to accuse them of «patent» infringement. The proposal
also would provide new legal protection for customers who are targeted for
merely using a «patented» product or service.

“These measures take significant steps to address the problem of «patent»
trolls and misuse of the «patent» system,” Leahy said. “Importantly, the
measures also are balanced and targeted to preserve the rights of legitimate
«patent» holders whose inventions help drive our economy.”

But Sen. Charles E. Schumer, D-N.Y., said the Leahy-Lee bill does not go far
enough because it does not address the quality of «patents» that were issued in
the first place. Schumer urged the Senate to take up his proposal (S 866),
which would allow the «Patent» and Trademark Office to re-evaluate some
«patents» it has already issued. The White House supports Schumer’s bill.

Schumer said trolls have been able to seize on poor-quality «patents» to file
lawsuits and that giving PTO a chance to review its work would amount to a
“cost-effective off-ramp from the «patent» litigation highway.”

“At the end of the day, if we do not address the fundamental problem of
«patent» quality, trolls will continue to abuse poor-quality «patents» and we
will be right back here having this same debate,” Schumer said. “A «patent»
reform bill that does not address «patent» quality is like treating the
symptoms instead of the disease.”

Multiple Ideas

Other members of the Senate Judiciary Committee floated their own proposals.
Dianne Feinstein, D-Calif., and Chris Coons, D-Del., both said they are
concerned that the PTO is underfunded, with Feinstein announcing she will
introduce her own legislation in the coming weeks to ensure that the user fees
on which the agency relies cannot be diverted. The office “should remain wholly
self-supporting,” she said.

“I hope you, Mr. Chairman, will take that into consideration as you move your
bill,” she told Leahy.

All told, at least eight of the 18 members of the Senate Judiciary Committee
are already sponsors or cosponsors of bills aimed at frivolous «patent»
litigation, highlighting the breadth of policy ideas that the panel is
considering.

Besides the Schumer and Leahy-Lee measures, committee Republicans have their
own proposals that closely track with the House-passed bill (HR 3309). Orrin G.
Hatch, R-Utah, is sponsoring legislation (S 1612) that would require the losers
in «patent» infringement cases to pay the costs incurred by the winning party
unless certain conditions are met. Hatch argues that the bill would take away
trolls’ economic incentives to file meritless lawsuits.

John Cornyn, R-Texas, and the panel’s ranking Republican, Charles E. Grassley
of Iowa, are sponsoring their own legislation (S 1013) that has several
provisions similar to the House bill. The measure, for instance, requires
«patent» holders to disclose more information about their inventions in court
pleadings, in an attempt to ensure that plaintiffs have legitimate claims.

Differences With House

Sen. Sheldon Whitehouse, D-R.I., acknowledged that the Senate debate could
easily become derailed by competing proposals. He urged proponents of a
«patent» litigation overhaul to remain focused on reaching conference
negotiations with the House, rather than getting exactly what they want out of
the Senate’s legislation.

“Be as flexible as you can be to get a bill through the Senate that can then
get you into conference with the House,” he said.

Even in the early stages of the Senate debate, however, some senators signaled
that they oppose parts of the House bill. Richard J. Durbin of Illinois, the
Senate’s second-ranking Democrat, said he has serious concerns about the
House’s “loser pays” provision, saying it flips the current litigation system
on its head and may harm small businesses.

“You need pretty deep pockets to live under this new fee-shifting system” that
the House bill would create, Durbin said.

Coons raised concerns that Congress might step too forcefully into the realm of
the courts by mandating how «patent» infringement lawsuits should unfold, a
criticism that has been leveled at the House bill because it would create new
civil litigation rules. The proposal from Coons and Feinstein to shore up
funding for the PTO also would differ from the House bill, which rejected that
approach.

Schumer’s proposal regarding administrative review of some «patents»,
meanwhile, would be a major departure from the House bill. The House sponsor,
Judiciary Chairman Robert W. Goodlatte, R-Va., initially included a similar
plan, but removed it in an effort to win more support.

Patience, Caution Urged

Several senators said Tuesday that they hope to work more deliberatively than
the House, which passed Goodlatte’s bill by a vote of 325-91 some six weeks
after it was introduced.

“The one thing that I find there is agreement on with the California
constituency in this area is, ‘Please have another hearing,’ ” Feinstein said.

Coons noted that Congress had passed the last major «patent» overhaul, in 2011,
after years of negotiation, and said he is hopeful the Senate will devote “a
few more months to making sure we get this topic right.”

Coons and several other committee members said they are concerned that
lawmakers would upset the “fragile ecosystem” of the nation’s «patent laws if
they move too quickly or aggressively.

“I am worried about overkill,” Sen. Richard Blumenthal, D-Conn., said. “I am
worried about unintended consequences.”