Time for a detailed plan to save these jobs and IP assets

In the past decade, it has gotten harder to obtain a worthwhile patent in the United States. Thanks to the Supreme Court’s decision in eBay v. MercExchange, a victorious patent owner is no longer entitled to a permanent injunction that orders the infringing defendant to cease infringing in the future. Thanks to the America Invents Act and the creation of the Patent Trial and Appeal Board, commercially valuable patents are challenged in administrative proceedings before administrative law judges who ignore the presumption of validity a patent is statutorily promised and apply rules that move the proceedings along so quickly, due process is seriously compromised. Thanks to a tetralogy of misguided patent eligibility cases from the Supreme Court during the past five years, software and biotechnology industries have seen their innovations largely deemed unpatentable.

But a far larger problem continues to loom. By and large, the United States continues to export our intellectual property so foreign companies and subsidiaries around the world can engage in manufacturing instead of making things in America. Unfortunately, when manufacturing exits a country, research and development funding dwindles in direct response, creating an enormous problem for subsequent generations of innovation.

The manufacturing vacuum will continue to be an acute problem unless a concerted effort is made to change it. During the recent presidential campaign, candidate Donald Trump promised to bring jobs back to America. Those on the left, as well as many on the right, panned Trump for a lack of detail in his plan to bring back jobs—although a lack of detail is hardly unusual in a modern political campaign. For better or for worse, the 140-character sound byte world we live in doesn’t have time for details. Trump did not win the election because people knew exactly what he would do to deliver on his promises; they voted for Trump because they hoped he might deliver on his promises.

Now is the time for details. One of the planks in the Trump plan must be a dedicated and concerted effort to bring manufacturing jobs back to America, which would reward the faith placed in him by the many in the Rust Belt states who voted for him on Nov. 8.

Misplaced Sense of Security

With countless manufacturing jobs gone, the American economy thrives on intellectual property—particularly in the form of innovation. It is mistakenly believed that as long as America is innovating we have no problems and will continue to have a robust and even dominant economy. But since the housing collapse, the U.S. economy has been anything but robust and dominant.

There is nothing wrong with negotiating better, smarter trade deals, but what America really needs is smarter manufacturing policies. After all, what exactly are better, smarter negotiators going to do if the United States remains an inhospitable climate for business, with extraordinarily high tax rates, unreasonable environmental regulations and loopholes that only the richest corporations can leverage? How could we ever reclaim widespread manufacturing in the United States if the deck is stacked against the industry?

Would it surprise you to learn that China has but a 3.5 percent cost advantage for manufacturing compared with the United States? Regulations, taxes and an environment that makes it practically impossible to start a new business creates the overwhelming bulk of the U.S. disadvantage. Thoughtful policies to revitalize American manufacturing would produce dividends, lead to a broader middle class, provide an economic boon to the entire country and lead to greater national security because we wouldn’t be relying on foreign producers for everything, as we are today

We Need the ‘Grunt Work’

In “Great Again: Revitalizing America’s Entrepreneurial Leader – ship,” a central and often repeated theme is that America’s deci – sion to give up on manufacturing has not only caused the obvious problems associated with the loss of high-paying, blue-collar jobs, it has and is causing an enormous loss of intellectual property as – sets. The author, Hank Nothhaft, who was an extremely success – ful start-up CEO in Silicon Valley with many years of experience, quotes what Harvard Business School Professors Willy Shih and Gary Pisano told him: “Decades of outsourcing manufacturing has left U.S. industry without the means to invent the next genera – tion of high-tech products that are key to rebuilding its economy.”

Nothhaft explained it in a January 2011 speech in Washington, D.C., at an Innovation Alliance Conference: “For 30 years now, we have all been fed the carefully cultivated myth that so long as America did the creative work, the inventing, then we can let oth – er nations like China do the so called grunt work, the manufac – turing. Simply, we would think; they would sweat. So we let man – ufacturing go and in so doing we lost the greatest economic force multiplier in history. For manufacturing not only supplies mid – dle-class incomes to the three-quarters of all Americans without a college degree, it also creates up to 15 additional jobs outside of manufacturing for every position on the factory floor.”

Worse, every engineer in the world knows that innovations don’t always (if ever) ramp up from the micro level to the macro level, as one might predict. So when we outsource manufacturing, we are handing over the follow-on innovation that will take place on the factory floor. By outsourcing manufacturing to the lowest bidder abroad, not only have we destroyed the working middle class in America, we are also increasingly turning over our last economic advantage: our intellectual property.

Perhaps right now the U.S. remains in the lead with respect to first-generation innovation, and perhaps second and subsequent generations of innovation made on the factory floor are not a cur – rent threat to the U.S. innovation economy. But how much longer will that be the case? How much longer before the countries doing the manufacturing become more sophisticated in terms of firstgeneration innovation?