How To Invent: Tips from Patrick Ennis of Intellectual Ventures (Part 2)

12/12/08Follow @gthuang

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infringing, then you’d have to pay three times as much. When I was a venture capitalist, I’m sure there were times when we built something that was already covered, because we just couldn’t find it, but you were still infringing. You need rules.”

“Who can argue that strong IP is bad for the economy?” Ennis continues. “The way we feel as inventors is the same way that venture capitalists view it, the same way universities and large biotech firms view it. Patents are a bargain. You get this 20-year ability to have a monopoly, but you have to publish it worldwide. That’s a good thing, because then people can read it and get inspiration from it…Versus a trade secret, where you keep the formula for Coca-Cola secret—you can keep that forever unless someone guesses it or steals it, then it’s theirs. But a trade secret can be worse for society because no one gets inspired from it. So patents are a good thing because I have to publish my idea, and after 20 years I have no ownership of it. Versus Disney and Mickey Mouse, those copyrights get renewed forever. Why don’t they expire?”

“If I make a reasonable facsimile of a Van Gogh and sell it, I’m guilty of copyright infringement,” Ennis says. “But if I cure cancer, I only get 20 years [of a market monopoly]. After that, I’m out of it. And the pressure’s on, because you get that patent issued and your product often isn’t ready. By the time the drug comes out, it’s way too late. So I always smile when people say the patent system is too strong. If anything, it’s too weak. It’s a pretty darn good deal from society that you’ve got to publish what you’re doing and in less than 20 years, you’ve got to give it away for free.”

On his perspective from venture capital: “Arch was great preparation for what I’m doing now,” Ennis says. “Arch does venture capital the way it was intended—roll up your sleeves, be a co-founder, add value, understand the technology, do the market research, and be several years ahead of others. Venture capital didn’t arise as an asset class because it was transaction-focused. There’s a role in the economy for that—you need mutual fund investors and later-stage investors.” Ennis says VC is about “building relationships with entrepreneurs and founders in science and technology, sometimes years before an idea comes together, so you can help shape the idea and build a personal relationship.”

“Arch and the early VC firms were interdisciplinary. The exciting stuff happens at the boundaries between fields,” he says. “A lot of VCs today are so narrowly focused. When you change the world, things don’t fit neatly into a bucket.”

On the U.S. and global competitiveness: “Name the most important startups around the world in the last 10, 20 years,” Ennis says. “Google, Amgen, Genentech, FedEx, Starbucks…We can name a couple European and a couple Asian companies for sure, but if you made a list of 100, maybe 85 would be [American]. In fairness, a lot of the great innovations in Asia don’t happen in startups. Samsung is an amazing story. But the point is, the U.S. has a head start due to Bayh-Dole.” (The Bayh-Dole Act is a U.S. law passed in 1980 that gives universities and small businesses the right to patent inventions developed from government-sponsored research.)

“Countries want to move up the value stream…We’re very friendly with these nations and vice versa. We’re natural allies,” he says. “All countries start with agrarian, then city environments with bartering and efficiencies of scale, then low-cost manufacturing, then high-tech manufacturing, and then intellectual property. Every country wants those key Microsoft patents, those key Intel or Qualcomm patents. They want to move upstream because low-cost manufacturing will always migrate to where it’s lower cost. Parts of China are no longer low-cost. There’s competition for inventions, so we have to stay one step ahead of it.”

Gregory T. Huang is Xconomy's Deputy Editor, National IT Editor, and the Editor of Xconomy Boston. You can e-mail him at gthuang@xconomy.com or call him at 617-252-7323. Follow @gthuang

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