November 24, 2013 in Opinion

George Nethercutt: Washington lawmakers must protect intellectual property

George R. Nethercutt
 

On November 12, patent lawyer Brett Nelson and I testified before the Washington Legislature’s Senate Law and Justice Committee, chaired by Sen. Mike Padden, R-Spokane Valley. Sen. Andy Billig and Rep. Marcus Ricelli, both D-Spokane, and Rep. Jeff Holy, R-Spokane, also participated in the hearing at Gonzaga University Law School. Our testimony was designed to equip the committee members with information regarding the importance and impact of intellectual property in Washington state.

I testified that in recent years, IP has become a valuable asset as innovative companies located in Washington have come to appreciate the value of an idea and the importance of its protection in the world of commerce. Protected ideas are what have made the American economy the strongest in the world, led by IP as its own asset class. The Founding Fathers recognized the importance of protecting ideas so much that they included Article I, Section 8 (8) in the U.S. Constitution to promote the progress of science and the arts, constitutionally protecting the rights of authors and inventors.

Between 1998 and 2011, Washington led the nation in patent activity, boasting the most patents in America and the highest number of patents per capita. They’re statistics to be proud of because they signal that Washington is a good place for technology, innovation and business activity to thrive.

Research and development represented about 5 percent of Washington gross domestic product in recent years. We’re just behind Maryland, and Massachusetts is just behind us. Between Boeing Co., Microsoft Corp. and Amazon Corp., 4,087 patents were issued last year, representing $18.3 billion in R&D.

When innovation and business intersect, IP flourishes. Ninety percent of all S&P 500 companies’ assets are now IP assets, not hard assets (plants, inventory and equipment) as they were 40 years ago. IP has attracted the attention of business leaders and policymakers alike. Companies with IP, particularly technology companies, create jobs, move our economy forward and shed a bright light on the future.

As an adviser for this new knowledge economy, Brett Nelson encouraged the committee to renew Washington’s research and development tax credit, which expires in 2015, and take steps to increase the laboratory space available for companies to complete research in a secure atmosphere and a welcoming environment.

Yogi Gupta, director of shock physics at Washington State University and leader of Spokane’s Applied Science Lab, has advocated for ASL to provide space as the world’s leading contract laboratory, serving as an incubator for research and technology for customers developing cutting-edge IP to compete in their respective industries. WSU’s new College of Pharmacy Building on the Riverpoint campus will have lab space, but not nearly enough to meet future demand as health care, pharmacists and research become increasingly important as national healthcare policy evolves. Look for some pharmacies to assume more primary care medical responsibilities in the months ahead.

Materials science and other technological developments, including corrosion prevention and control, represent a bright future for ASL and its partners. The state legislature can learn a lot by paying close attention to resources like ASL, and better understanding IP developments. IP should be understandable to legislators so that they can help Washington companies thrive in an atmosphere that encourages science and technology education and research and development; creating jobs and supporting communities in the process. When Washington legislators advocate strongly for IP development, especially in Eastern Washington, jobs and commerce will follow.

While the topic of “patent trolls” was not raised by the committee, federal legislation has been introduced to reduce lawsuits by companies that purchase patents from inventors and then sue other parties who may be infringing on patents purchased. While the U.S. Senate and House have separate bipartisan bills to control patent trolls, there is fear that such federal legislation may overreach, imposing a “loser pays” attorneys fee provision. There is also division over the wisdom of patent troll control legislation. Some patent lawyers believe it’s a death sentence of legitimate patent infringement cases while others want to stop non-user patent holders from forcing settlements and high attorney fees on innocent companies that are forced to settle cases in order to escape bankrupting legal costs. Even though this legislation seems to be on a fast track through Congress, its fate is uncertain.

IP is the most dynamic area of law today. Ever-changing and ever-evolving, intellectual property developments cannot be ignored – by business or by Washington’s Legislature. Washington depends on it.

George R. Nethercutt Jr. practiced law in Spokane for 18 years. From 1995-2005, he was the 5th District’s congressman, serving on the House Appropriations and Science committees. He now heads Lee & Hayes’ Government Relations Practice Group.

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