Inventing a better economy
If patents can drive local business, Southwest Colo. in good spot
A framed picture of a sleek, stainless steel faucet prototype graces the wall above Charlie Patterson's expansive desk. The design of the faucet, sleek enough to be mistaken for art, is one of 40 inventions and designs Patterson has patented over his more than three decades as an industrial designer.
Though Patterson said his industry tends to fly under most people's radar, economic development officials are looking at innovators like him as potential driving forces for the region's economy.
"It's the concept of an innovative-based economy," said Roger Zalneraitis, executive director of La Plata Economic Development Alliance. "We've got natural resources, but there are limits and we're never going to be low-cost, so that leaves one thing if we're going to add something to our economy."
Innovation is most prevalent among companies that export goods and services, and also benefits those industries the most because it creates products they can sell outside the community, said Mika Kusar, an assistant professor of management at Fort Lewis College. Because they bring in outside revenue, those companies are the biggest drivers of local wage growth, Kusar said.
In short, innovation has big ripple effects.
The regional statistics for patent growth are encouraging. Annual patenting growth from 1998 to 2010 for the Farmington economic area, which includes Durango, was 2.43 percent versus the United States average of 2.16 percent, according to the Harvard Business School Cluster Mapping Project. Since 1976, a total of 225 patents have been developed by inventors from Durango, Ignacio or Bayfield.
Yet even as patent numbers remain a much-used sign of innovation in an economy, the system has increasingly become so overwhelmed, complicated and expensive that many in the technology industry say it hinders the work it was meant to protect and promote.
Help or hindrance?
Critics of the patent system say patent officers award too many patents that are often duplicative or so broad that they stifle new innovations that address a similar concept. National Public Radio reported that polls of software engineers show that 80 percent said the system hinders innovation.
Locals agree, the system isn't perfect.
"If I were an inventor now, especially in my field, I don't know how many thousands of patents I might run into that I might be violating," said Greg Smith, a Durango resident and former Microsoft employee who patented several inventions for data storage, backup and transmittal.
Meanwhile, companies have spent billions to develop, acquire and exercise patent rights. In the last two years alone, the amount spent on patent purchases and litigation in the smartphone industry has totaled more than $20 billion, according to a widely cited analysis by Stanford University.
The rising frequency and cost of patent-related litigation has become prohibitive especially for small companies, patent lawyers said.
Denver patent attorney Kurt Leyendecker said he has seen numerous instances where a bigger competitor sues a much smaller competitor that may or may not be infringing on its patent. Just the threat of a lawsuit prevents the small company from growing because it has to divert its resources to litigation or settlement agreements, Leyendecker said.
"If you're a startup, it's tough," Leyendecker said.
Obtaining a patent can take years and thousands of dollars, which can be a major challenge for independent inventors or small companies, patent holders and patent lawyers said.
"The biggest thing I would say about the patent process is that it's elaborate, and it's very expensive," said Chip Lile, executive vice president of Airborne Media Group, a company focused on smartphone technology.
The U.S. Patent and Trademark Office has made efforts to reform the system, including reducing the backlog in patent applications and setting up its first-ever satellite offices in Detroit, Denver, Dallas and San Jose, Calif.
Five patent judges have set up shop in a temporary patent office in Denver, but the office's permanent space could be delayed until early 2014, according to a Denver Post report.
On the legislative side, Congress passed the America Invents Act in 2011, which, among other things, changes how the agency awards patents from a "first to invent" basis to a "first to file basis."
Locals had mixed views about whether the changes will cause any major improvements to the system. A satellite patent office could help relieve some of the backlog, but not dramatically, Leyendecker said.
The new standards for awarding patents change a system that "hasn't commonly been a big issue," said Ken Freudenberg, a patent attorney with Freudenberg & Associates in Durango.
From inventions to economic development
While La Plata County's patent growth is encouraging, the area still has a ways to go to become a hub for technology companies.
Zalneraitis admitted La Plata Economic Development Alliance hasn't "gotten its arms completely around" what an innovation-based economy looks like here yet.
The high cost of living here and the small local labor market present challenges for companies looking for specialized labor or that want to move their employees here, Kusar and Zalneraitis said.
An FLC study showed that the Western Slope, including La Plata County, has low concentrations of people working in occupations related to computers, math, management, production and finance.
But people with technology training, for example, are crucial in getting ideas off the ground, Kusar said.
In many cases support organizations are crucial in helping turn an invention into a revenue-generating business, Freudenberg said. Just the act of patenting an idea doesn't guarantee a successful business, he said.
"Having a patent doesn't come with a check."