Intellectual Property and America’s 50 Laboratories of Innovation

ALEC hosted a congressional conference call with Senator Steve Daines (MT) on Tuesday, March 8. Senator Daines discussed the importance of robust intellectual property rights (IPR) protections to curb IP theft. His pre-congressional career gives him a uniquely relevant perspective on the importance of IP to the innovation economy and the challenges of protecting IP. The senator spent five years during the 1990s working for a multinational corporation in the People’s Republic of China, where he witnessed rampant IP theft and observed first hand that IP was generally the top issue discussed at meetings with the Chinese government. After returning to the U.S., Senator Daines served as a vice president at a start-up cloud computing company (RightNow Technologies), which gave him insights into the vital role that IP plays in the high tech world. To underscore the value of IP to a technology firm, when RightNow Technologies was sold it held more than 20 software patents and was capitalized at $1.8 billion, and, as with many companies in today’s innovation economy, IP was its most valuable asset.

America’s Founders demonstrated remarkable prescience when enshrining IPR in the U.S. Constitution; however, even they would likely be astounded by the exponential increase in IP’s importance to the nation’s economy. Forty million U.S. jobs owe their existence to IP-intensive industries which account for 75 percent of U.S. exports and more than one-third of U.S. GDP. Recognizing that robust IPR protections fuel America’s innovation economy, the senator described strong IPR protections as “incentivized creation and innovation by offering the promise of return on investment for time and resources,” where that return is reinvested to spur greater innovation and create more jobs for American taxpayers. Daines offered that 25 percent of the private sector jobs in his own state of Montana are in IP-intensive sectors. However, even with America’s robust IPR protections businesses lose $650 billion in revenues annually to IP theft, and counterfeits proliferate in the supply chains of numerous industry sectors, including the military, putting the health and safety of U.S. consumers and America’s national security at risk.

Senator Daines has taken his thorough understanding of the importance of IP to Congress, where he identifies the key to preventing IP theft as getting ahead of a challenge that will only grow as innovation accelerates. Reaching out to ALEC members, Daines emphasized the answers will not necessarily come from Washington, D.C. but from the states – including state lawmakers. ALEC agrees with the senator’s observation that the states are indeed, “laboratories of innovation.”