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Don't worry about Baltimore's patent drought

As the economy continues to flounder, many cities are looking for ways to replicate Silicon Valley's financial success. When seeking to catch the magic of those biggest successes — Apple, Google and Facebook — the word "innovation" gets thrown around frequently. And as intellectual property is taking on a larger and larger role in how companies do business in the Bay Area, many have equated innovation with patents.

A recent Sun article about innovation in Baltimore and Maryland focused on just that. It lamented that the Baltimore metro area came in 116th out of 360 metro areas for the number of patent applications per capita, and that the number of patents granted to Baltimoreans remained flat over the past decade. The article seemed to suggest that this lack of intellectual property growth was at least partially responsible for Baltimore's lack of job growth.

While these statistics are important, patent applications simply do not equal innovation. Nor do patents necessarily create jobs. Rather, there are nuances to intellectual property — and specifics about Maryland's research corridor — that give these statistics some color.

First, it's important to understand which inventions merit a patent. By and large, there are only three requirements: that the invention is new, useful and nonobvious. These are relatively low bars. The invention doesn't have to be better than what's currently on the market. It doesn't have to appeal to consumers. And it doesn't have to be a significant invention at all. In fact, "worthless patents" (like a patent entitled "Method of Exercising a Cat" using a laser pointer) are well documented. Patents are simply tools to recoup an inventor's cost of developing an invention. They are not necessarily rewards on "innovation."

Second, it's also important to understand what a patent is. A patent is simply a legal right to prevent others from practicing an invention. It is not a right to make a particular product; the inventor had that right whether he applied for a patent or not. Nor is there a requirement that the inventor make her own invention. Indeed, many inventors have sold their patents to companies that do absolutely nothing except file lawsuits against other innovators in the hope of collecting money from settlements or court judgments. These "patent trolls" are the single most serious threat to innovation today, costing the U.S. economy $50 billion to $500 billion a year — all without making a single innovative product.

Third, the number of patents per invention varies widely across industries. In the high-tech space, one big invention, like the iPhone, is covered by at least 200 patents, and likely closer to 400. But in the biotech and pharmaceutical world, one invention, like a new drug, is often only covered by a single patent. This point is critical for Baltimore and Maryland because biotech and the life sciences — not social networking apps — are what the Baltimore-Washington corridor does best. The Johns Hopkins University, the National Institutes of Health, and the University of Maryland, at College Park, Baltimore County, and the Biotechnology Institute (as well as these institutions' various spin-offs) are all focused significantly on life sciences. One should therefore expect Baltimore and Maryland to have substantially fewer patent applications than, say, California.

Patents, alone, don't create an innovation economy. Rather, they're a product of it. An economy of innovators will produce patents because some of those innovators will need to recoup their costs of research by licensing their inventions and preventing others from copying them. But getting to that innovation economy in the first place requires an ecosystem of innovators: young, hungry inventors, senior but not jaded management, liquid private financing, a regulatory scheme friendly to product deployment, and a culture that focuses on getting deals done quickly. This is all famously harder in the life sciences. Inventors are typically PhDs in their 30s or 40s, not straight-out-of-college hotshots looking to be millionaires overnight. Management is often jaded by the FDA regulatory process, which in turn puts a strong damper on product deployment. Private investing in the life sciences has famously dried up. And deals usually come complete with armies of big-law-firm lawyers, rather than over a handshake.

Nevertheless, basic life science research is a huge job creator. One study from the University of Georgia has estimated that every job created in the life sciences spawns two jobs in other industries. These jobs span the gamut, from high-profile executive positions to research scientists to salespeople to office workers to factory employees. And unlike jobs in the high-tech industry, these jobs tend to be sticky. People don't work their way into the pharmaceutical and biotech industries hoping to get rich quick and move on the next "cool" thing.

Baltimore and Maryland should therefore continue to do — and do much more of — what they already do best: basic scientific and biological research. This is the kind of innovation Baltimore needs, with or without patents.

Jacob S. Sherkow is a fellow at Stanford Law School's Center for Law and the Biosciences. His email is jsherkow@law.stanford.edu.

Copyright © 2015, The Baltimore Sun
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