How the Neglect of Innovation Nearly Cost Britain the War Against Hitler

One of the many lessons we should remember from Word War II is that England's neglect of innovation nearly cost it the war against Germany. This is a minor but important aspect of a major new book on England's fight to survive in World War II. In Churchill and Orwell: The Fight for Freedom by Pulitzer-prize winning author Thomas E. Ricks (New York: Penguin, 2017), we learn about some of the reasons England struggled to defend itself from Germany. A key weakness discussed by Ricks was England's poor state of preparation with inadequate machinery, feeble industrialization, weak supply chains, etc., that made it hard to fight a serious war and led to embarrassing disasters like the rapid loss of Singapore, their imagined secure fortress in southeast Asia.

Closer to home in Europe, Britain often had a hard time just moving their troops around -- they often had to walk -- and the Brits were amazed at how quickly their American cousins could mobilize when they came to the rescue. Why was England so poorly prepared?

England, of course, was the birthplace of the Industrial Revolution, yet by the time of the War, they were far behind in many of the basic technologies they would need. How could this happen? Ricks provides helpful insight in this passage from pages 203-204:

Managed by family members more interested in reaping dividends than investing in new machinery and other gear, “British firms were unable to adopt modern, best-practice technology,” concluded business historian Alfred D. Chandler Jr. As a consequence, Britain’s brilliant university research generally did not make the transition into factories. Britain had led the first Industrial Revolution of coal and steam power, but generally sat out the “Second Industrial Revolution” of the late nineteenth and early twentieth centuries, built around oil, chemicals, metals, electricity, electronics, and light machinery, such as automobiles. By the end of the 1940s, it would have neither an empire nor an economy capable of competing with those of other major powers. As Correlli Barnett put it, the reality was that by the time World War II ended, the British “had already written the broad scenario for Britain’s postwar descent to the place of fifth in the free world as an industrial power, with manufacturing output only two fifths of West Germany’s.” Interestingly, Barnett was the keeper of the Churchill Archives at Cambridge University from 1977 to 1995.

Something similar happened in China, which once led the world in innovation and GDP, but from the Qing Dynasty until the late 20th Century, in part due to apathetic leaders unwilling to invest in or even open the doors to innovation and technology, China missed out on much of the Industrial Revolution. Only through massive reform and exerted effort in recent decades has China begun its return to a position of global leadership in innovation, IP creation, and economic growth.

In the paper industry, which I've been close to for many years, it's clear that the American paper industry has largely fallen into the same trap that nearly cost Britain its freedom and did cost many lives unnecessarily. The American paper industry has largely failed to invest in new technology and relies heavily on antiquated paper machines and pulp mills that are decades behind what we have in Asia (China and Japan in particular). Their slower, less efficient machines and less efficient plantations put them at a distinct cost disadvantage. Instead of taking steps to compete better, the US industry too often tries to rely on protective legislation to raise tariffs on imported paper and make everyone in the nation pay much more for their paper than they should. The real problem is not Chinese competition, but American businessmen falling into the same pattern that nearly cost Britain the war: focusing on immediate profit and dividends while neglecting the future.

Each industry, whatever it is, needs to build for the future with investment in innovation and a willingness to boldly cope with the threats and opportunities of disruptive innovation. If your industry is dominated with leaders who feel like they can just milk their business as a cache cow with no need to invest in the future, that industry will fail.

WIPO’s New Patent Translation Tool Beats Google Translate (At Least for Chinese/English)

One of the many challenges in IP work is translation of foreign documents, especially patents. Translating between Chinese and English is especially difficult for machine translation, where strange or even nonsense results are common due to the complexity of Chinese and the difficult legal and technical phrasing that is common in patents. Google Translate is quite poor in this context, and the outstanding translation tools at Baidu.com also generally don’t work well for patents.

Fortnately, WIPO (the World Intellectual Property Organization) has recently released a powerful tool specially for patent translation, WIPO Translate. The results have been stunningly good in my testing so far, vastly outperforming prior systems.

WIPO Translate can handle a variety of language pairs both ways, all involving English and either Chinese, French, Korean, Portuguese, Russian, and Spanish. Only about one paragraph at a time can be translated, so you can’t yet dump an entire patent all at once into WIPO translate. I hope that limitation will be lifted in the future.

In using the WIPO Translate tool, you can select a technical field to help focus the translation and improve the chances of the appropriate terminology being used.

Recognizing a Major Chinese Innovator: China's Answer to Gutenberg

For those interested in the contributions of China to innovation throughout history, a significant event will take place in a quiet little Midwest town this month that may interest you. On October 15, 2015, the  Paper Industry International Hall of Fame in Appleton, Wisconsin will induct six people into its Hall of Fame. This unusual industrial hall of fame has around 120 or so honorees at the moment, mostly North American and European business leaders and scientists. This year, though, one of the new inductees is an innovator and leader from ancient China who can be considered as China’s answer to Gutenberg.

Gutenberg is frequently honored as one of the most important inventors ever for giving us the world’s first book printed with movable type. The printing of Gutenberg's Bible was a remarkable achievement from around 1455. As with many inventions long thought to have had European origins, there’s a touch of Eastern flavor in this one, for Gutenberg’s work came 142 years after the world’s first actual mass-produced printed book made with movable type, a Chinese book you probably haven't heard of. It's the large Book of Farming (or the Nong Shu) from China, printed in 1313 by Wang Zhen, as Wikipedia explains.

Wang Zhen was an official in central China in a difficult economic era in which famine was a serious risk. He recognized that vast amounts of agricultural technology scattered across the nation needed to be preserved to help all of China reduce famine and be more agriculturally productive. To achieve his quest of broadly spreading and archiving information, he took a Chinese invention, movable type, and improved it to create a practical way of organizing and selecting individual characters to print an entire book.

He used carved wooden blocks for each character, and developed a sophisticated way of arranging them on two rotating tables to allow typesetters to quickly find needed characters to place them in his press. The Nong Shu was printed and preserved many notable inventions in China, including an early form of a practical blast furnace for making molten iron driven with a reciprocating piston attached to water works, something long that to be a later European invention.

Recognizing Wang Zhen in the Paper Industry International Hall of Fame (PaperHall.org) for his important role in the advance of printing and, indirectly, the growth of the paper industry, is a significant step.  I look forward to many more Asian inventors, scientists, and business leaders being recognized in the Hall of Fame in future years. The historical contributions of China in numerous fields have received far too little attention, and I’m delighted to see folks in Appleton taking the lead in rectifying this problem. Kudos to the Paper Industry International Hall of Fame!

Rep. Dana Rohrabacher Warns Against the Loss of IP Rights with Misguided Patent Reform

Many IP experts are growing concerned about the weakening of the IP system in the United States. Some are so concerned that they are wondering what steps can be taken to save it from the steady erosion of IP rights that has been occurring, often in the name of solving the "fake" problem of so-called "patent trolls."

One man who wants to prevent further harm to our IP system is Rep. Dana Rohrabacher (R) from California’s 48th District, who is a member of the House Science and Technology Committee. He recently wrote an op-ed article for the Washington Times called "Patent ‘reform’ is killing the right to invent: How a congressional misstep could imperil creativity" (March 1, 2015). I agree with much of what he says.

He warns that Congress's zeal to stop "patent trolls" will actually result in them simply doing the bidding of powerful companies who are annoyed by little guys able to defend themselves with patents. In effect, Congress is being manipulated into apparently "reforming" the US patent system but in reality they will be weakening it for small inventors and making it more friendly to the big empires that see patents as unpleasant sources of cost and annoyance. Here is some of what Rohrabacher has to say:

With the best intentions, and naively going along with the corporate world’s hugely financed publicity machine, Congress is about to stomp on America’s most creative citizens, its inventors.

The target is not the much-hyped “patent trolls.” They are a minuscule matter. What’s at stake is average Americans’ constitutional right to own what they’ve created. We’re really up against corporate lawyers acting like ogres, devouring the little guy’s innovative accomplishments.

Many of my colleagues, without understanding the legislation’s impact, will soon vote on “HR 9,” a misnamed “patent reform,” also dubbed “pro-innovation,” that is anything but. In reality, it deforms our patent system beyond recognition.

This legislation — pushed by my Republican colleague, House Judiciary Committee Chairman Bob Goodlatte, and deep-pocketed multinational corporations — appears on its way, again through the House, to the Senate, thence to an eager President Obama for signing.

When that happens, America’s exceptional system of invention will be shoveled into the depths of mediocrity, there to seep into the murk in which less scrupulous global competitors spend their resources.

In the last session, a bipartisan band of my Republican friends (some of whom made their pre-political marks as patent-holding inventors); members of the Black Caucus; and a heroic Ohio congresswoman, Democrat Marcy Kaptur, failed to dissuade our House colleagues that the bill was not the litigation-curbing effort as advertised.

The bill went to the Senate where, fortunately, it stalled. It’s back, this time resurfacing in the House with just one hearing. A whole class of small inventors, among the many who will be injured, is being kissed off as scarcely deserving a voice. All in a day’s work for the corporate influencers who shaped HR 9 from start to finish.

Just because a measure holds itself up as “tort reform” should not mean it escapes the scrutiny of free-market Republicans. It should instead call for a skeptical second look, and then more throughout its progress. Guaranteed: Such close-eyed analyses of this bill will encourage deep suspicion.

Fair-minded members will find themselves aghast at how this leaves defenseless our individual inventors, small and midsized companies, researchers, even universities who depend financially on their patent portfolios. It is a coup in the making by the biggest and best protected operators....

Legislative reform efforts invariably build on a narrative of great injustice. This one moves wildly beyond the need to fix real abuses, wherein at considerable cost companies must defend their legitimately acquired patents against unscrupulous claimants.

But the term “patent troll,” directed against such bad actors, has been transmogrified by corporate marketers to include legitimate small inventors — many of them minorities, which is why my Black Caucus friends sized up the issue astutely — who are outgunned and outspent when they try to protect their intellectual property.

Almost all infringement cases are brought by people who own a patent legitimately. If not, such cases should be decided in court. There is nothing wrong with bringing such matters to court — a cornerstone, not of crony capitalism, but of the free market itself.
Our economy and culture depend on the disruptive nature of innovation. Our Constitution deliberately made all people equal, giving no advantage to those of social status, wealth or position. The founders, even before they added the Bill of Rights, secured the right to hold patents in the Article I of the Constitution itself, the only right mentioned prior to the amendments.

We all know our country’s history of innovation. Large companies reject new ideas. It is the innovator who challenges the status quo, not the corporation.

Under the proposed bill, the pretrial discovery process — just one part of many dubious sections — tilts heavily against the small inventor, who of course must share his or her secrets with an opposing corporation’s well-armed legal team. In another era, I might have considered this an innocent, unintended consequence of ill-considered drafting. Not now.

I implore my colleagues in both the House and Senate to stop this monster aborning.

Open Innovation and Intellectual Property Trends in China

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China is undergoing a revolution in the realm of IP and innovation. In just 3 decades, China has gone from no IP law to leading the world in patents filed and litigation to enforce patents. The level of innovation in China may well be the next big surprise for many in the West.

“Open innovation” is often used to describe collaboration with outside partners to accelerate innovation. Dialog about open innovation frequently assumes that it is recent and Western, but successful open innovation is not unique to the West. Innovation via cooperation between unlikely partners has been a characteristic of China for centuries. Relevant terms are guanxi (often translated as “relationships”) and yuanfen (fate that brings partners together). In China, guanxi and yuanfen have allowed proximity and chance to bring business partners together when there was a basis of trust, resulting in innovative alliances. The fusion of skillsets in China’s manufacturing economy often stems from collaborative innovation, though the results are often decried as merely the machinery of copying.

Accelerated innovation in China, including advanced systems for responding to market feedback, is the subject of a report from the MIT Sloan Management Review, where Peter Williamson and Eden Yin survey China’s innovation in rapid manufacturing and parallel engineering. A key element is obtaining feedback and innovation concepts from outside partners or customers. The cited example of Mindray Medical International, China’s largest medical equipment maker, shows how R&D fueled by rapid response to outside feedback enables advanced new products to launch four times as fast as foreign competitors. This is not old-school copying, but the impressive fruit of aggressive open innovation.

Many more examples could be cited, such as Lenovo’s rapid acquisition of foreign patents to fuel entry into new areas, or Wuxi Pharma Tech (NYSE: WX) and their collaboration with Germany’s Targos Molecular Pathology to support WuXi's bioanalytical work for pharmaceutical customers.

The global IP community was surprised in 2014 to learn that a Chinese paper company had secured 8 billion RMB in funding (over US$1 billion) backed by its intellectual property. The story was reported in a Chinese paper-industry publication in March 2014, and a few days later we had the privilege of reporting this story to the Western world on the Innovation Fatigue blog, which was in turn quickly picked up by Intellectual Asset Management (IAM) magazine. IAM’s blog noted that this deal is one of the biggest IP-backed loans in history.

The company, Tralin Paper (Quanlin in Chinese, or Tranlin in recent US stories), has a modest portfolio with around 100 Chinese patents, several internationally-filed patents and a few trademarks. Their technical strength is in creating paper with natural characteristics from waste paper and straw. Even if guanxi rather than IP was behind the financing, the fact that IP was used as publicized basis for the deal underscores the increasing importance of IP in China and the diverse ways in which Chinese IP can generate value. For Tralin, even if the IP were window dressing, its role even as a prop at a minimum provided PR value and strengthened Tralin’s position as thought leader in its niche. The most reasonable assumption is that IP also provided direct financial benefits, not just window dressing.

In the US, where Chinese innovation and IP is often deprecated, the impact of this deal is being felt strongly as Tralin/Tranlin is investing $2 billion in Virginia and creating 2,000 jobs with the technology they are bringing to US shores. News stories so far have missed the connection between US jobs and Tranlin’s ability to get capital based on Chinese IP, but we hope that Americans might recognize that innovation and IP from China is at least partly responsible for this welcome job growth.

Tralin/Tranlin’s story is part of a landscape in China where entrepreneurs and creative leaders are discovering the many positive uses of IP, including its ability to secure capital and build partnerships. But many Western companies wishing to build partnerships with their technology fear China and the risk of misappropriated IP. This lack of trust is being addressed gradually as China strengthens its IP laws and IP enforcement systems. Lawsuits, no matter how fair, are a last resort. Successful joint innovation requires trust directly between parties, and both sides need more successful examples for inspiration. Fortunately, a powerful role model of the technical, cultural, and political bridge-building that can occur in a healthy relationship rooted in carefully-maintained trust can be seen in a remarkable experiment in technology transfer and international cooperation: the Utah-Qinghai EcoPartnership, a unique collaborative effort that is using IP from the United States to solve major environmental problems in China.

To read more about the Utah-Qinghai EcoPartnership, with some interesting photos showing the fruits of this unique collaboration based on respect for IP rights and mutual trust, see the article I published with two co-authors (Edgar Gomez, and Alan Smurthwaite) in the Diplomatic Courier, "Open Innovation and IP Trends in China: Insights from the Utah-Qinghai EcoPartnership."

The Tralin/Tranlin Paper Story from Shandong, China: An Example of Chinese Intellectual Property Creating Jobs--in the US!

In a previous post, I reported that a huge loan had been given to a Chinese paper company backed by its Chinese IP as collateral. The 8 billion RMB obtained by China's Tralin Paper (Quanlin Paper in Chinese, though they use www.tralin.com for their website), one of the biggest IP-backed loans in history, not only shows that Chinese intellectual property is coming of age, but is now being used to bring Chinese technology to the US where it will help create over 2,000 US jobs. Tralin Paper, renaming themselves as Tranlin Paper, has just signed a deal with the State of Virginia, obtaining state support as Tralin/Tranlin/Quanlin invests $2 billion to create a new environmentally friendly paper mill and create over 2,000 US jobs. Recent news  from the office of Governor Terry McAuliffe of Virginia proudly announces the plans of "Tranlin Paper." Also see reports at TAPPI.org and MFRTech.com.

As the West continues to decry Chinese IP and innovation, always viewing China as a source of IP theft and job loss for the US, this story may come as a pleasant surprise. Here is an innovative Chinese company that has created and protected their own IP in a green technology, used innovative financial tools (and plenty of solid Chinese guanxi) to obtain massive financing based on that IP, and then brought their money and their technology to the US to create many jobs. At least some parts of this story are going to be repeated in many ways in days to come. The old paradigm of China lacking IP or lacking valuable IP is fading.

After the announcement at ChinaPaper.net, the first report on this story to the English-speaking world, as far as I know, was my original March 6, 2014 report here at InnovationFatigue.com followed by an update here on the Shake Well blog that gave a translation of the Chinese story. It was picked up by Intellectual Asset Magazine and by World Trademark Review, but is still a generally unrecognized but important story.

China still has a long ways to go in overcoming its problems and strengthening innovation and IP, but the trends here are remarkable and should not be discounted. Meanwhile, we should welcome stories like Tranlin's, and watch for many more to come. But for some US companies, this will mean even tougher competition that won't be easily avoided with restrictive, protective tariffs or antidumping legislation.

(Similar account cross-posted on the Shake Well Blog.)

Chinese Paper Company Relies on IP to Gain 7.9 Billion RMB Loan

March 6, 2014: I recently learned of important news from the Province of Shandong in northern China. A Chinese paper company, Quanlin Paper (also known as "Tralin Paper") has used its portfolio of patents and trademarks to secure a loan of 7.9 billion RMB (about $1.3 billion). The story was reported on March 3, 2014 on the website for the Chinese magazine, China Paper. This deal may be a record for China in terms of how much value IP brought in seeking financing. To emphasize the significance of this development, the normally dry China Paper publication begins with a somewhat flowery statement based on an interview with the Chairman, who expresses surprise and delight at how much money they were able to obtain with their IP. Here's my loose translation, followed by the actual Chinese:

"I never thought that intellectual property could have such a big effect in obtaining this loan. IP was a big part of it," according to Quanlin Paper Company's Chairman of the Board, President Li Hongfa, speaking today to a reporter about the 7.9 billion yuan from bank lenders that began this week. He said that this money will help them rapidly expand and seize market opportunities. Money has been tight for business, and this new addition is welcomed just as the mist-covered earth rejoices in the spring rains from the night before. 

核心提示：“没想到知识产权能在这次贷款中起这么大作用,占这么大比重!”泉林纸业有限责任公司董事长、总经理李洪法今天对记者说,79亿元的银团贷款本周已开始放款,这笔资金对正在快速扩张、抢抓市场机遇但一直资金紧绷的企业来说,就像雾霾重重的大地喜迎昨夜的春雨。

That may be overly flowery for some tastes, but again, this is big news for China and things get flowery when big news is good. This development shows that IP in China can be valuable (though the portfolio includes some international patents, it is mostly Chinese IP). It also shows that Chinese companies, even in seemingly dull industries like the paper industry, can be innovative and create valuable IP. I haven't reviewed their IP to assess its value, but I understand they have over 100 Chinese patents in areas such as technology for using straw and other renewable or recycled materials for making paper, with alleged benefits of enhanced environmental friendliness and cost effectiveness. Shandong Province's IP Office has also created some publicity about Quanlin's IP estate (see the Chinese article here), though this was before the news of the massive loan secured with the help of IP. Expect more publicity from them shortly.

Further background comes from Baidu's wiki-like entry on Quanlin Paper.

When nations develop strong IP systems, companies can use their IP to protect their innovations. This also motivates them to take the risk and spend the money need to drive further innovation, and gives investors courage to fund growth and innovation. In this case, it helped give a lending partner (a Chinese financial organization) the courage to loan a giant sum of money to help Tralin grow. Tralin has been pursuing IP not just for tax breaks it seems but also for strategic purposes, and information coming out about this story shows that they have been developing expertise in their staff to develop their IP estate. Sure looks like that has paid off for them.

This is one of many signs that China is becoming serious about IP and innovation, and not just low quality IP, but IP that can provide significant value. For IP to apparently be a crucial part of such a large loan in this challenging economic times is a remarkably positive sign for China, in my opinion.
On the other hand, the loan may be due to politics and guanxi with officials, and the IP is just window dressing. That's possible. But to even choose IP as the window dressing for publicity and hype is a remarkable thing in it's own right, and still a sign of China's rapid transformation in valuing and pursuing intellectual property.

Here is my loose translation of the China Paper article:

泉林纸业知识产权质押融资创国内最高
Quanlin Paper Crafts the Nation's Largest IP-Backed Financing 

泉林公司以110件专利、34件注册商标等质押获得的这笔贷款,2月21日在国家知识产权局完成备案。经省知识产权局核实,这是迄今为止国内融资金额最大的一笔知识产权质押贷款。 

On Feb. 21, 2014, Quanlin Paper secured a loan using a pledge of intellectual property. The pledge, recorded with the State Intellectual Property Office (SIPO), includes 110 patents and 34 registered trademarks. The Shandong Province Intellectual Property Office has verified that this is the largest amount ever financed in China using intellectual property. 

“这笔资金到位,我们的大项目就能加快推进,市场机遇不等人啊!”李洪法说的大项目,是一个年处理150万吨秸秆的制浆造纸综合利用项目。泉林公司总部位于聊城市高唐县,是一家以浆纸业为核心的大型企业,利用秸秆制造“本色”纸品,变废为宝、环保健康,改写了人们对造纸业的既有印象,也在改变着人们的消费习惯。企业提出这个大项目后,很快得到环保部、国家发改委认可、立项,是全国资源综合利用和循环经济示范工程,也是2013年省重点建设项目。目前,项目基本建设已经全面展开,计划年底前建成,投产后,预计年可实现销售收入81.65亿元,销售税金4.89亿元,利润12.4亿元。 

"With this funding obtained, we will be able to accelerate our large projects. Market opportunities wait for nobody!” said Chairman Li Hongfa. The primary project Li refers to is a straw-based pulp manufacturing complex for papermaking that will process 1.5 million tons per year of straw. Quanlin company is headquartered in Liaocheng City, Gaotang County (Shandong Province). Quanlin’s core business among their large-scale enterprises is pulp and paper manufacturing using straw to create “natural color” paper. Quanlin turns waste into treasure and promotes a healthy environment, transforming both the impression that people have (of the industry) and their habits of consumption. 

After the enterprise brought this large project forward, it rapidly gained approval from the Environmental Bureau and the National Development and Reform Commission. The project is an important program for the nationwide comprehensive utilization of resources and a model project for China’s recycling economy. It was also considered a provincial key construction project in 2013. Currently, capital construction is fully underway and should be complete by year-end. Once production begins, the expected annual sales revenue will be 8.165 billion RMB, with anticipated sales taxes of 489 million RMB and annual profit of 1.24 billion RMB. 

知识产权获资金市场高度认可,对科技型企业无疑是巨大的利好。尽管泉林公司本身的发展就是受益于在知识产权、核心技术上的不断投入——即使在企业资金最困难的时候,这上面也从来没有“短”过,李洪法这次还是被深深地触动了:在这次贷款中,企业拥有的专利评估价值达到了60亿元,对贷款顺利达成起到了关键作用。这意味着,专利等知识产权不仅能垄断市场、为企业创造长期利润;质押融来真金白银,更是能够解决科技型企业成长中最头疼的资金饥渴,释放发展潜力,及时把握市场机遇,让企业“长大”。 

For intellectual property to receive this high level of approval from the market is without doubt a giant benefit for technological enterprises in general. Although Quanlin company's own development has now benefited from their intellectual property, they continue to invest steadily in their core technology—continuing even during the times when investment is most difficult. This is an area where the company has never gone “short.” The result has made a deep impression on Li Hongfa: in the process of obtaining these loans, the appraised value of Quanlin’s patents reached 6 billion RMB and played a key role in successfully obtaining the financing. This means that patents and other IP rights are not just about obtaining a monopoly in the market, but can be used to creating long-term profit for the enterprise. They can be used as collateral for significant financing to resolve one the biggest headaches for high-tech businesses, the hunger for funds to grow, to capture hidden potential, grasp favorable market opportunities, and to let the company “grow up.” 

这一融资方式也让银行对科技型企业增添了兴趣。不仅国家开发银行牵头银团,为泉林公司发放了这笔79亿元的贷款,交通银行甚至还与省科技厅签署专门的战略合作文件,并推出了专门的知识产权融资产品。交行山东省分行零售信贷部总经理姜鲁荣说,知识产权看似无形,却体现了企业价值创造和持续经营的能力,银行业务风险没有增加,却有可能抢占一批优质客户,改善银行客户结构,“就像泉林公司这样”。 

This financing will stir the interest of banks other technology enterprises. Not only did the China Development Bank and their affiliates issue Quanlin a loan of 7.9 billion RMB, but the Bank of Communications also signed a strategic cooperation document with the Provincial Science and Technology Department, and launched a specialized intellectual property financing product. Jiang Lurong, General Manager of the Retail Credit Department of Shandong Branch Bank, said that while intellectual property seems invisible, it reflects value creation and the ability to continue operations without increasing banking risk, and can help obtain more high-quality customers, improve the system for customers of the bank such as companies like Quanlin.

Kudos, by the way, to Dr. Ian Feng of Goldeast Paper in Zhenjiang, China for alerting me to the story in China Paper.

Note: IAM Magazine issued a blog post on the use of IP in lending in China: "Chinese companies have secured over $10 billion in patent-backed loans since 2008" by Jeff Wild, March 4, 2014. The news I share below (cross-posted at InnovationFatigue.com) definitely supports their article. Great timing! Further, responding to the news that I first broke to English speakers on the Innovation Fatigue Blog, IAM Magazine has written a blog post about this story (kindly citing my announcement), wherein they observe just how big of a deal this is. I agree, though I also think it's fair to wonder how much of the transaction actually depended on IP and how much was due to guanxi and other factors. I have not yet evaluated the IP and if I do look at it in more detail, do not plan on sharing my analysis publicly, but may still offer further updates on this story here. IAM's post includes a translation of the Chinese article behind this story. My independent translation above was prepared before I saw the IAM translation. If there are significant differences in meaning, I'll defer to them since my Chinese is still rough.

Cross-posted on the Shake Well Blog.

Imitation Without Knowledge: A Problem for Innovation and Potato Peelers

Pictured to the right is my potato peeler/fruit peeler which I purchased in Shanghai. It is dutifully based on the design of typical peelers long sold by Western companies. But I suspect this imitation object was copied and manufactured by people unacquainted with the finer points of peeling potatoes. In peeling potatoes, one frequently encounters eyes or other bad spots that need to be gouged out. Good potato peelers have a curved metal end that can be used for gouging potatoes and fruit. My Shanghai peeler has dutifully copied the general shape of other peelers, with a somewhat pointed tip and a concave surface below it, but the tip is made of thick blunt plastic that is useless in gouging. It is a classic example of imitation without understanding the details of how something works. It can look the same, but the results are disappointing.

The innovation efforts of many companies are like my potato peeler: they imitate what they see others doing, but lack the knowledge and experience needed to make the systems actually work. So we get innovation rhetoric, a temporary budget and Big Program, with consultants sailing in and trying to change employees when the real barriers to innovation may be elsewhere. We get brainstorming sessions that lead to nowhere, momentary IP races that waste resources and leave inventors discourage, innovation funnels that become echo chambers, and improvised staged product launch systems that result in decisions made without adequate knowledge and little hope of success. In some cases it all comes down to instinct and gut feel from an omniscient leader imitating Steve Jobs or some other charismatic innovator, while overruling all logic and leaving a wake of confusion.

Innovation requires experience and deep knowledge. It requires systems and cultures designed with innovation expertise, not just a quick fix and temporary effort to imitate others. Innovation leaders need the support and attention of management at the very top, and systems tailored to enhance the innovation culture across the company. Innovation success is far more difficult that it looks when we are imitating someone who makes it look easy. It rarely is. Real knowledge and real patience are required.

Trade Secrets and Open Innovation

A culture that can protect trade secrets is vital for innovative companies. Such a culture becomes especially important in collaborative innovation efforts where failure to protect trade secrets can severely damage partners and the offending company’s reputation. 

Chinese companies are increasingly recognizing the value of what the West calls “open innovation.” In fact, forms of open innovation were the basis of a great deal of innovation in China long before the term was coined in the West. Innovation in China tends to be fueled by guanxi with trust between partners being far more important than the legal details drafter by lawyers for a joint venture or other collaborative effort. Innovation in China, though still largely overlooked by the West, frequently occurs as trusted friends or acquaintances discuss their needs and challenges and find new solutions by crossing disciplinary borders. The many partnerships and allies involved with leading innovators like Ten Cent, Alibaba, Foxconn, and Huawei testify to the fluidity and rapidity of innovation in China achieved via collaboration and shared vision among partners. 

However, when companies in China or anywhere collaborate to find innovation, the inevitable sharing of trade secrets between partners puts the players at risk should there be inappropriate disclosure. Two leaders may fully trust each other, but if one of them leads a company with a weak IP culture where individuals fail to respect trade secrets, the partnership can be destroyed and severe damage can be done. Those engaging in a collaborative venture should be aware of the risks and consider their own culture and processes, as well as the culture, processes, and track record of partners. Zealous efforts are needed to avoid harm, even when there is no intent to harm or defraud. Simple slips can disclose information inappropriately and hurt a partner and one’s own reputation. Those pursuing open innovation need to pay particular attention to trade secret protection and ensure that only a few well trained employees will be exposed to the trade secrets involved in the partnership. 

Unfortunately, university culture in China and throughout the world, generally speaking, is inherently geared toward sharing and publishing information, so partnerships with universities should be carefully pursued with the realistic expectation that information may be leaked. Containing the scope of the partnership and minimizing any sharing of corporate secrets can reduce risks, while still allowing a company to tap the many riches of knowledge and innovation in China’s academic community, where many companies are finding success in advancing innovation.

Tortoise Innovation: The Problem with Corporations (and Their Inventors) Hiding in a Shell

Many large companies take a tortoise approach to innovation and stay as hidden within their shells as possible, even some who advocate open innovation. Tortoise companies may have creative R&D staff, including many scientists doing good work, but they keep these inventors hidden in the shell rather than encouraging them to publish or present their work.

The hares, on the other hand, take greater risks as they frequently step out of their comfortable burrows. They let their inventors not just show up at conferences and other events, but take the podium and present. Or, when appropriate, publish their work in major journals. As a result, their inventors become known and get to know many others with related interests. It is that visibility that allows potential partners to find them, to learn about their work, and to come forward with proposals for partnership or further innovation. These visible minds become more highly connected and able to contribute more directly and effectively to the open innovation needs of the Corporation. They are connected to other industries and better connected to the market, and may be more likely to recognize ways to adapt their inventions for better success.

The extreme of tortoise innovator may well be the large body of government scientists that conducted high-tech R&D for decades in the old Soviet Union. One of my past open innovation activities at Innovationedge included traveling to Moscow to assist Russia (more specifically, ISTC: http://www.istc.ru/) in finding external partners for the huge body of invention that arose from government labs in past work (this public information: e.g., I am listed as a speaker on the published agenda of a biotech meeting in Moscow with a presentation entitled "Innovationedge Partnership to bring innovation from Russia to the U.S."). 

Unfortunately, much of that work in the Soviet Union, in my opinion, was dominated by deep drilling into highly isolated wells of expertise, with advanced technologies that were unconnected to real-world industry and markets. Creating connections and finding market opportunities after the fact (as in “answers in search of problems”) is much less efficient that developing inventions tailored to meet real market needs in the first place. The scientists were some of the best in the world, but they were working in isolation, often in great secrecy, with little ability to discuss their work with outsiders and obtain needed feedback and insights to make their work more useful outside their immediate focus. Looking back in time at the fruits of past Soviet era R&D to me looked like closed innovation to an extreme.

My observation of the isolation of Russian R&D relative to industry and markets is consistent with the detailed observation and analysis by Dina Williams in “Russia’s innovation system: reflection on the past, present and future” in The International Journal of Transitions and Innovation Systems, Vol. 1, No. 4, 2011, p. 394-412, available via Academia.edu at  http://www.academia.edu/1207385/Russias_innovation_system_reflection_on_the_past_present_and_future (free download with registration).

Success in open innovation and even in making conventional internal innovation more successful can be enhanced when innovators “get out more often” and increase their visibility in relevant communities. Innovation is frequently about crossing boundaries and making new connections, and open innovation almost by definition involves reaching past one’s own corporate boundaries to find solutions outside. What better way to do this than by having innovators physically or virtually stepping outside those boundaries and being visible to potential partners?

One of my favorite experiences during my days at Innovationedge involved seeing a technology go from an inventor’s garage to a multinational corporation where it is now being commercialized globally. A key event in that story involved speaking at technical conference where my presentation included some information about our client’s invention. Afterwards, I was approached by an R&D leader from a significant corporation who wanted to know more. There was much more work after this—open innovation success is rarely fast and easy—but that new connection took us on a path toward success. Related stories occur frequently when innovation is shared. But silent companies who rely on their tortoise shell eventually find that solid defense is irrelevant. Sometimes, the prizes go not to those who best hide behind their fortifications but to those who cross the finish line in the race for innovation.

Review: Prisoners of Hope: How engineers and Others Get Lift for Innovating

Prisoners of Hope: How Engineers and Others Get Lift for Innovating by Larry Vincent is an unusual book on innovation that I found to be a refreshing guide to strengthening innovation with great practical value. Part of what makes this book unusual and, for some, perhaps highly challenging, is that it is written from the perspective of a preacher turned innovation champion, filled with references to biblical material, including frequent passages cited from scripture and analogies, sometimes extensive and detailed, drawn from the Bible. Although I treasure the Bible, initially this approach caught me off guard. In fact, at first I felt the attempt to find practical secular lessons for innovators from Bible stories was strained, even to the point that I initially disliked the book after the first chapter or two. But after a few more pages, I began encountering many valuable insights and modern case studies that revealed the author really did understand the practical challenges of bringing innovation to life, especially in a corporate environment. Once I got past my initial challenges with the unique angle of the book, I found it well worth my time, even inspiring. I still struggle with some of the passages using scripture to explain innovation and its challenges, but others may enjoy that. On the other hand, I was impressed by his application of Ezekiel’s “dry bones” vision in the Old Testament, where the prophet Ezekiel saw a valley of dried bones that became living humans again. His treatment made it a very apt and interesting analogy for the challenges inventors face in breathing life and commercial success into their inventions.

Author and innovation expert Lanny Vincent understands the life and challenges of innovators, especially those in corporations. Inventors and innovators are the “prisoners of hope” of the title, people driven and even held captive by their vision of changing the world with their innovation. It is their faith and hope that drives them forward, and this faith and hope allows for many biblical insights to be relevant. Whatever their feelings about scripture, this book can be valuable for them and for those who guide or influence them. Vincent understands how they can be more successful.

Aspects I especially enjoy are the numerous case studies and examples. While many come from the consumer products industry, especially from Kimberly-Clark Corp. where Lanny Vincent had a great deal of industrial experience, the lessons and practical guidance from the author will help engineers, scientists, and other inventors in many disciplines, and may be especially helpful to leaders responsible for innovation and business development.  In these case studies, Vincent draws out key lessons to guide and inspire innovators today.

One of my favorite sections is in the middle of Chapter 6, “Inspiration and Appreciation,” where Vincent recounts how we worked with a team of automotive engineers in Michigan to help them innovate in the area of automotive suspensions. As he observed their responses and discerned that they were there because they had to be, not because they wanted to be, he departed from his normal process. He sought a way to help those jaded survivors of extensive downsizing become more inspired about the innovation task before them. He asked them to tell him the basics of the suspension system, including the history of its development. Admitting his naiveté and asking the engineers to share their knowledge seemed to engage them. They were then asked to draw a timeline of the development of related systems and then to characterize major epochs of the timeline as if they were historians. Then, in light of the past, how would they characterize the next era of development? They energetically and swiftly responded, and then Vincent simply explained that that was the area where they needed to invent. The invention workshop turned out to be highly productive.

One of the interesting insights regarding corporate barriers to innovation is the tendency for companies to promote successful innovators in their ranks to new positions where their rich innovation experience may be unused or essentially lost. The wheels of innovation are constantly being reinvented in companies as those who succeed are moved away from the field where they were able to create success.

Vincent also calls for corporations keep inventors and innovators close to projects as they become commercialized. There is a tendency in large corporations to hand off new products to others and leave those with the original vision and passion out of the picture by the time consumer feedback is being obtained, but Vincent identifies this as a huge missed opportunity. The inventors and innovators may have exactly the insights and knowledge needed to interpret and apply the feedback from the market, and they should play a pivotal role in refining and adapting the product as it moves forward.

Chester Carlson and the Xerox Story: Do Great Inventors Really Have to Die Early and Lonely?

The photocopier, one of the most valuable inventions in the modern world, began with the all-consuming passion of one man, Chester Carlson, who sacrificed almost everything he had for years to realize his dream of "dry printing" using electrostatic means. In the end, he became wealthy and successful, but the years of effort required should be noted by all seeking to launch a major new invention. One of the most important lessons in his story is that he obtained a valid and valuable patent, otherwise companies could have taken his idea and left him behind. You cannot neglect IP if you are an inventor.

Chester's path to invention and innovation began in poverty at age 13, working as a printer's assistant. It was there that he began thinking about better ways to print. He went on to graduate from Cal Tech and then, still at the edge of poverty, dedicated his spare time to tinkering in his kitchen, looking for ways to pint without wet inks, taking advantage of the potential he saw with static electricity as a tool for moving dry particles onto paper.

Chester's story is told well in the Engines of Our Ingenuity radio program series by John Lienhard at the University of Houston. Here is an excerpt:

Carlson patented a copying process in 1937, before he'd really figured out how to make it work. Author Dean Golembeski tells us that he hired a German refugee named Otto Kornei to help him. Working on a budget of 10 dollars a month, they finally managed to reproduce an inked message by electrostatic means. Kornei saw little future in the process, so he went on to a regular job. Carlson spent the next six years looking for corporate backing.

Battelle finally bought into his patent, and Carlson vanished into the work of developing the process. First his marriage fell apart. Then Battelle gave up on the process. Finally, a little company called Haloid bought the patent rights and hired Carlson.

Haloid turned to a Greek scholar for help in naming the process. Since it didn't use any photographic liquids, he suggested that they base the name on the Greek word for dry -- xeros. He suggested that they call it "Xerography." That word was simplified to "Xerox," and Carlson's dream was finally on its way. It took another 13 years to produce the first really successful Xerox machine, but then Carlson was suddenly worth 150 million dollars.

Endless toil, an all-consuming passion, years of sacrifice, then an invention, a patent, and years more of work to obtain corporate investment and eventually commercialize the process--this was what it took for Carlson to achieve success and wealth. And then he dropped dead at age 62, a lonely man. Was it worth it?

Frankly, one thing that passionate inventors often need is a touch of balance in their lives, with more attention to family and personal growth. Chester's zealous focus appears to have cost him his marriage and perhaps his health. Sometimes that kind of balance gives people insights and connections that help them bypass some of the fruitless decades of futile meandering that occurs in many inventor's lives and more directly realize their goal. It also gives them longevity. High stress for decades to realize your passion, only to be promptly terminated with an early heart attack, is too common a pattern in "successful" business leaders and innovators. Again, with balance, more complete and meaningful success may be realized and enjoyed for much longer. Don't overdo it, inventors! Slow down, pay attention to your family and your health, and open channels of creative inspiration to realize you dream more efficiently.

Changes in China: Moving from Copied in China to Invented in China--Seriously

My two years in China have overturned many previous paradigms that I held, including the stereotype of China as merely an IP copier and not an IP generator. While the West clings to that view, largely discounting the patents and innovation capability of China, a rapid transformation is occurring in which China has taken the global lead in national patent filings and is about to tie with Germany as the #3 international patent filer (expensive, generally high-quality PCT filings). China is now #2 internationally in scientific publications, behind the US but ahead of England and everywhere else. In hot areas like graphene, the two-dimensional carbon nanomaterial that is opening whole new vistas of nano-possibilities, China has a clear global lead in the number of patents filed so far.

In my own innovation-related experiences, I have seen that teams of Chinese college graduates, though often seemingly shy and unresponsive at first when challenged to contribute in ideation and innovation sessions, can, with the right guidance and framework, become as energetic and innovative as any Western team I've worked with. One must understand Chinese culture a little and take some steps like removing the boss from the room and setting up rules and guidelines that make it clear they won't lose face by participating and might lose face (or delay lunch and bathroom breaks) if they don't. Once we get past the initial shyness, it can be hard to get them to turn off the innovation juice.

For some, the biggest challenge in China has been the IP system, which many have felt was too weak and lacked adequate means for enforcement. This is being addressed, and the new 4th Amendment to Chinese patent law looks like it will bring some major steps forward, including opportunities for discovery of evidence and stronger penalties. The trend is clear, though, that China is working to strengthen its systems and is treating foreign IP holders as fairly as Chinese companies in general.

Do not ignore the rising tide of IP and innovation in China. Some extremely importance advances in technology and business models are emerging here. The nations and companies that can respect China and its IP are the ones that will benefit most. The opportunities are staggering.

My Presentation at IP Counsel 2013: Shenzhen Station

March 19-20 was the 5th IP Counsel Congress held at Shenzhen, one of 3 2013 IP Counsel events in China managed by JFPS Group. This was their first year in Shenzhen, and I think it was highly successful. I think about 150 delegates from China and other nations were present, including IP leaders and influencers from Hungary, Germany, South Africa, Korea, Japan, and other nations.

I was especially pleased to learn from IP leaders from some of the world's leading IP generators such as ZTE, the top international filer recently.

 I had the pleasure of chairing day one of the two-conference, and being the lead speaker with my presentation on IP, China, and innovation. I briefly retraced some of the monumental achievements in the history of China, including some major inventions that the West originally thought came from the West but actually started in China. I began with the example of the printed book, and quizzed the audience about who invented the world's first mass-produced book printed with movable type? Gutenberg is a pretty good answer and his Bible was a remarkable achievement, one that came just 142 years after the world's first mass-produced book printed with movable type was created in China by Wang Zhen. Had some fun with that bit of history, and caught a lot of the Chinese people by surprise. Many don't realize how rich China's tradition of innovation actually is.

 Today, many people think of China as a great copier, but China is rapidly and deliberately moving from a copier to an inventor and a leading source of IP. There are still barriers and inertia to overcome, but the goal is being realized and by the time the West understands the significance of this transformation, many players will have missed the opportunity of a lifetime and some will be completely disrupted. Those who recognize what is happening here may more wisely prepare for the opportunities and risks that will be created, and adapt.

China as a source of innovation and IP must not be ignored. But tapping its potential requires a deeper understanding of Chinese culture and business, which is much different that what the West is used to. I gave some basic tips and reviewed the importance of Chinese concepts such as guanxi, yuanfen (destiny in chance encounters), and hexie (harmony).

Speaking at China IP Focus 2012, Shanghai, Sept. 20-21, 2012

One of my favorite recent IP conferences was just held in Shanghai. It was the China Intellectual Property Focus 2012 held at the Doubletree Hotel in PuDong. We got to hear extensively from a recently retired Supreme Court Justice, Judge Jiang Zhipei, who shared much about the development of IP law in China and the bold path China is pursuing. We also heard from Ben Wang, R&D leader for Unilever in China, and from many other authorities from Europe, the US, and especially China.

On the second day, I shared my perspectives about the role of IP strategy in dealing with disruptive innovation, and including some of my thoughts about Chinese companies and the lack of respect they get from the West when it comes to innovation and IP. My main point, though, was that large companies need to have aggressive IP-generators who help mitigate future risks by building low-cost but aggressive IP estates in emerging areas and in potentially disruptive areas. Risk aversion is the battle cry, but the "hidden agenda" is actually to help the company prepare for future opportunities in those areas. With proactive IP filed early, when the business units of the company later recognize the importance of market trends and see or feel the need to pursue areas that once looked a little too non-standard/disruptive for comfort, well, when that happens, it won't be too late as is usually the case with disruptive innovation, but the company will find that they are actually prepared with a foundation of IP that can help them survive and move forward more easily.

The application of "disruptive IP strategy" involves some risk and cost, but the costs can be contained and the potential benefits can be huge. A handful of visionary people can help create future-looking IP much more easily than they can convince the company to change directions and make massive investments in new areas. But that IP can later help save the day when the significance of a disruptive threat or opportunity is recognized, often several years down the road.

There were some excellent questions on this topic, including one about the difference in resources and skills between Western companies and Chinese companies. There was a perception, though, that Western companies must be really good at dealing with disruptive innovation and being proactive with their IP. Not so! They are as clumsy and short-sighted as ever, and the opportunity for Chinese companies to seize the future with disruptive innovation and disruptive IP is great. In fact, it's already happening in some quarters. The need for all of us to be more aware and more proactive with out IP is serious.

A Historic Event in IP Collaboration: The US-China IP Adjudication Conference, May 28-30, 2012, Beijing

After 3 years of planning and navigating complex political waters, a historic event finally took place in Beijing last week at China’s top university for IP law, Renmin University. Top justices, judges, lawyers, business leaders and academicians from the US and China gathered for 3 intensive days of sharing regarding intellectual property and the courts. There were over 1,000 people that attended, including numerous judges and IP thought leaders from China and the US. The number of judges from China was said to be 300, though most of the Chinese people I met were not judges but lawyers, business leaders, and students, though I did have lunch with a Chinese judge and met several in other settings during the conference.

The leaders and speakers of the conference included US Court of Appeals for the Federal Circuit (CAFC) Chief Justice Randall Rader, one of the most brilliant and influential minds in US patent law whose decisions have long been shaping US law and practice. He is a strong advocate of international collaboration and appears to have been one of the primary driving forces between this event. I was pleased to see a total of 7 Federal Circuit judges present, most visiting China for their fist time, including these 6 Circuit Judges: Raymond C. Clevenger III, Richard Linn, Timothy B. Dyk, Sharon Prost, Kimberly A. Moore, and Jimmie V. Reyna. Also playing prominent roles were Gary Locke, US Ambassador to China; David Kappos, Director of the US Patent and Trademark Office; Mark Cohen, the USPTO’s former Attaché to the US Embassy in Beijing; Steven C. Lambert, President, Federal Circuit Bar Association; and many others. Mark Cohen wowed the crowd by delivering his speech in fluent Mandarin, though his rather erudite citations of Chinese poetry and classics sometimes challenged the gifted translators who made this bilingual conference accessible to everyone present.

On the Chinese side, we were elated to have active participation by Chief Judge Kong Xiangjun, IPR Tribunal of the Supreme People’s Court. Also from the IPR Tribunal of the Supreme People’s Court were Deputy Chief Judge Jin Kesheng, Supervisory Attaché Zhang Shengzu, Presiding Judge Yu Xiaobai, Presiding Judge Wang Yongchang, Presiding Judge Xia Junli, and Judge Zhu Li. These judges, with the 7 from the US Federal Circuit, were part of an “en banc” panel discussing US and China law and IP adjudication. Fascinating! Also representing China was Chong Quan, Deputy Deputy China International Trade Representative and a leader of MOFCOM (China Ministry of Commerce).

In addition to many keynote speeches and panel discussions, there were also breakout sessions on such topics such as trademark law, patent litigation, pharmaceutical patent adjudication, and copyright law. Definitely one of the most interesting and information-packed IP conferences I've ever attended.

For many, the highlight may have been the afternoon of mock trials in which the same case was presented in an appeal to the US Federal Circuit and to the IPR Tribunal of the People’s Supreme Court of China. Judge Rader lead the 3-judge panel for the US mock trial. The mock trials allowed representatives of both nations to quickly grasp important differences in procedure, though both courts came to essentially the same conclusion in a genuinely interesting real case involving an advance in safety equipment for a circular saw. Following the trials, there was further exchange between the judges of both countries as they discussed their different systems and what they had learned from one another. What a tremendous learning experience and example of meaningful international cooperation.

The rapidity of China’s progress in IP law and adjudication has been breathtaking, in spite of the many complaints made by voices in the West, and the obvious need for further improvements. But from a historical perspective, to go from virtually no IP law in the early 1980s to a world-class system that is leading the world in patent filing now, with the ability of foreign plaintiffs to win against Chinese companies in Chinese courts, represents massive progress worthy of respect. Exchanges like this recent one in Beijing will influence the thought leaders of both nations to further learn from each other and strengthen our approaches to IP law. Many thanks to all those who made this monumental event possible.

In the closing session, I was able to ask a question to the panelists about what future impact they anticipated might come from this exchange. Chief Judge Kong kindly fielded that question and spoke eloquently of the growth of IP law in China and the rich opportunity they had to draw from the US experience and strengthen their system. There is no doubt in my mind that China is rapidly learning and growing and a visionary eye toward the future. I hope the US can keep up and remain a worthy partner and competitor!

Below are some photos of the event that I took.

Related resources: David Kappos’ blog, “China as an IP Stakeholder.”



Liu Yang, Exec. VP of the China Law Society, introduces speakers in the first session.  Also visible are Mark Cohen (USPTO), Chong Quan (MOFCOM), David Kappos (USPTO), and Shen De Yong (VP of the Supreme People's Court).




First session. Left to right: David Kappos (USPTO), Shen Deyong (VP Supreme People's Court), Chief Judge Randall Rader (US CAFC), Chen Jiping (Executive VP, China Law Society), US Ambassador Gary Locke, and Chen Yulu (President, Renmin University).



The US Ambassador to China, Gary Locke, speaks on the importance of innovation and collaboration.

Chief Judge Randall Rader is one of the rock starts of IP--literally. I asked him if he was going to perform for us in the evening but sadly, he informed me that he had left his band behind in the US for this event. I took the opportunity to compliment Judge Rader on setting a great example by being visibly active in areas other than his profession alone. His pursuit of rock music with a real band, even while in the judiciary, is one of many attributes that makes Judge Rader one of the more interesting and likable people in IP law. His passion for China is also part of the Rader equation. Many thanks for making this historic event happen!

David Kappos deserves a lot of credit also for his support of international cooperation with China and other nations.

Another highly likeable luminary of IP is Mark Cohen, a Chinese law scholar and fluent Mandarin speaker who created quite a stir with his presentation in eloquent and rather advanced Mandarin. Kudos!

Richard Rainey, Executive Counsel, IP Litigation, General Electric.

The Innovation Renaissance in China

I've been away from this blog for quite a few months as I've begun an exciting journey of innovation and IP strategy in China. Since 2011 I've been living in Shanghai, where I'm now Head of Intellectual Property for one of the world's largest and most rapidly growing forest products companies, Asia Pulp and Paper. Innovation and IP protection are becoming bywords of industry in China, even as the West continues to ignore China as a source of innovation. But the culture is shifting as the economy develops and as China's IP system matures, and the result is that copying is no longer going to bring lasting success. Innovation, backed with IP to protect one's competitive edge, is increasingly becoming the key for success in China.

China just became the world leader in the filing of patents. Yes, many have questionable quality, but there is a large body of high-quality IP being developed, manifest by the growing emphasis on internationally filed patents as well as Chinese patents. Heavy investment in Chinese R&D is also occurring, and China is now in the #2 position globally for published technical papers. The time of ignoring China's innovation and IP is ending, though some companies and nations are trying their best to keep their eyes closed.

More to follow.....

Northeast Wisconsin Innovation Event: NEW END

Hundreds of Wisconsin entrepreneurs will attend NEW END:

One day event for start-up businesses to focus on creativity and networking

On Wednesday, June 22, 2011, hundreds of entrepreneurs will join together in a one day event to celebrate innovation and job creation in the "New North" of Wisconsin. Northeast Wisconsin Entrepreneur Networking Day—or NEW END—takes place at Fox Valley Technical College, Appleton, WI. The event is dedicated to the specific needs of entrepreneurs and small business owners by packing networking, education, and collaboration into one day.

This is the seventh year for the influential business meeting which has been attended by hundreds of entrepreneurs annually. NEW END features nationally known author, speaker and entrepreneur, Barry Moltz, who will conduct a workshop specifically designed to get business “un-stuck.” Moltz has been a featured speaker at NEW END in the past, but this year’s event will provide more one-on-one learning with Moltz.

“Entrepreneurs are not used to taking the easy path,” Moltz said. “But when they get stuck either in an existing business or a new venture, sometimes they just need to change perspective—that’s what this workshop will do,” Moltz said.

NEW END is sponsored by the FVTC Venture Center, the leading entrepreneur center in Northeast Wisconsin. In the last five years. The Venture Center has helped launch more than 200 businesses through the E-seed and Pro-Seed programs. Executive Director Amy Pietsch says this event is not only popular with entrepreneurs, but is a critical element of their business plan.

“For years, one of the most popular events at NEW END has been the ability to network in person with other entrepreneurs and business resources,” Pietsch said. “Entrepreneurs who attend will connect with the people and information they need to be successful.”

New for NEW END 2011, the “Pop-up-Pitch.” Entrepreneurs may register to be part of this competition in which they could win $2500 by telling a panel of judges in only 60-seconds who they are, what their business is, and how they will use the $2500 to advance their enterprise. Entrepreneurs are encouraged to come prepared for the “Pop-up-Pitch”. A limited number of registrants will be presenting their ideas in front of the entire NEW END conference and are urged to register early.

“Start-ups are constantly pitching their business idea to investors, partners or lending institutions,” Pietsch said. This is a fresh, creative way for them to hone their pitch into a short, specific message.”

In addition to the Pop-up-Pitch, NEW END 2011 will feature:

• Day long workshop with Barry Moltz
• Afternoon Networking session with business owners and other entrepreneurs
• Taste of Entrepreneurship featuring area food entrepreneurs and their finest fare

Cost for the day-long workshop with Barry Moltz is $100/person; attendance is limited. Cost for the evening NEW END networking, Pop-up-Pitch and Taste of Entrepreneurship event is $39/person. To register, please visit www.newend.biz or www.venturecenterwi.biz.

# # # # # # # #

MEDIA ADVISORY:
Barry Moltz is available via phone for personal interviews. Visit his website for more information www.barrymoltz.com

The Venture Center can provide interviews with regional entrepreneurs who have been involved in NEW END.

For more information, contact Mary Schmidt, mkschmidt at centurytel.net, 920-284-7165

More Dangers of the Patent Reform Bill Identified

Sometimes doing nothing isn't such a bad thing. Our patent system could use a few fixes, but not the kind Congress is now pursuing. Folks, if Congress or the Administration really wanted to fix the patent system to BENEFIT innovators and advance the cause of the useful arts, they would NOT imposes a $100 million tax on patent seekers by diverting the money they pay in fees to the USPTO to feed their big spending habits in unrelated sectors. That's right: the inefficiencies and costly delays in our patent system are due, at least in part, to Congress taking away the money that the USPTO receives from inventors. It's a tax on innovation, a ridiculous innovation fatigue factor. Let the USPTO keep and spend the money it receives to advance patent searching and prosecution. Tax tobacco, not innovation and innovators. Our economic recovery needs more innovation, not less.

Now the same group who doesn't mind taxing innovators and adding to the delays at the USPTO have offered "patent reform" to "fix" our patent problems. Sounds great, right? Good intentions, no doubt. But as we warn repeatedly in Conquering Innovation Fatigue, there can be unintended innovation fatigue factors rising even from well-intended actions if policy makers aren't listening to the voice of the innovator. That's the voice of the innovator, not the voice of the largest campaign donors. They might do OK with the reforms being pushed through Congress. It's lone inventors and small companies I'm most worried about. You should be, too.

David Boundy offers a summary of the problems with the patent reform legislation over at Patent Docs. I agree with much of his analysis. From my work in the innovation community, I've seen that the year grace period inventors have in the U.S. from public disclosure to filing a patent really is valuable for lone inventors and small companies, and eliminating it will greatly increase costs and risks. It could be a crushing blow for some.

Read David's article. I look forward to your comments, there or here.

Intellectual Assey Strategy That Leads Innovation

The primary problem with most IP management efforts is that they are reactive only. These systems typically focus on incoming invention disclosures and existing patent applications, leading to recommendations on which disclosures to file, which countries to file in, and which existing applications to abandon for cost control. These are vital components for intellectual asset (IA) management, but they fall short in providing strategy that can inform prospective inventors about what kind of inventions are needed.

Effective IA management begins not with the processing of existing documents, but with the development and articulation of vision to guide the process of IA generation and acquisition. It begins with a roadmap of what the corporation needs to own and protect, and that roadmap can then be infused into a written IA strategy statement that guides the IA-generating community to know what they need to create, and also guides IA committees to know what they should be approving.

Written strategy statements can help innovators be more successful and decision makers more disciplined, though there must also be leeway for out-of-the-strategy-box inventions that could lead to unexpected opportunities. However, most IA generating work in a corporation can and should be targeted and focused on specific objectives.

Once a clear vision is communicated regarding the IA needs of the corporation, IA generating activities can be used to supplement normal new product development and R&D. These exercises can be driven by the IA management team to achieve low-cost IA estates in targeted areas for specific objectives, such as averting a disruptive threat, laying a foundation for future IP in a potentially disruptive area where R&D investment is not yet available, weakening the IP potential of a competitive merger or acquisition, etc. At least a portion of the IA generating efforts of a corporation should be driven from the top with a clear objective in mind, rather than waiting for random invention disclosures to trickle up during the course of normal R&D activities. IA strategy should lead innovation.