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New Patent Laws Will Help Offshore US Jobs to Asia


Legislation being discussed this week in Washington would move US jobs to Asia, according to Dr. Jason Taylor, president of Technology Advancement LLC, a research and development company based in Bethesda, Maryland. The new legislation, termed “The Patent Reform Act of 2005,” does not directly address offshoring. Rather, it concerns patents, legal documents that attempt to financially reward innovation and spur economic growth. Historically, the United States has had one of the strongest patent systems in the world. This week subcommittees in both the House and Senate are addressing new legislation which aims to change that; hearings were held earlier this week in the Senate concerning the proposed legislation, while on Thursday the House is scheduled to markup the bill (known there as “H.R. 2795”).

According to Dr. Taylor, “The new legislation would, among other things, make it much harder for small companies to obtain injunctions against larger companies. Such injunctions currently prevent large companies from cherry picking off the most popular new products.”

States Dr. Taylor, “In the current system, many new domestic jobs are created by entrepreneurs who have a vision for a new or improved product.” Successful entrepreneurs generally obtain funds from investors, who in turn commonly require some sort of patent protection. According to Dr. Taylor, this is because startups normally work on new products that are still being debugged.

“By the time startups successfully move out of the red (and the investors have an opportunity of being repaid), their product is susceptible to becoming ’volume commoditized.’ At that point, it is just an economies-of-scale issue. Large, international companies with dollars-a-day foreign workers will win that game every time.”

“The new legislation would make it harder for startups to ever get their investors’ money back, since without injunctive protection there is little stopping large companies from undercutting the original developers of successful new products. Entrepreneurs and their investors won’t bother taking risk if they won’t also have the possibility of reward. So this legislation effectively helps shift jobs overseas.”

H.R. 2795 was introduced by Congressman Lamar Smith (R-TX). Congressman Smith was recently awarded Legislator of the Year by the Information Technology Industry Council (ITI). The ITI is a Washington-based trade association representing 32 of the world’s largest technology companies. Supporters of the legislation claim it will eliminate legal gamesmanship, while opponents claim it is carefully crafted to make it cheaper for large companies to sell technologies they didn’t develop.

Dr. Taylor said, “If for some reason one wanted to kill the American Dream and help big companies like Microsoft, a much better way would be to toss out our anti-trust laws. At least then we wouldn’t be targeting innovation or domestic jobs.”

Technology Advancement LLC develops new technologies that increase the quality, productivity, and safety of our lives.


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