Will Reforming Patent Laws Generate 200,000 New Jobs?

First Reforms to Patent Laws Since the Truman Administration Could Help Lower Unemployment

by Lee Avery on September 13, 2011

President Barack Obama has stated his intentions to sign a patent reform bill which was voted through Congress on September 8^th. The bill will be the first reform to patent laws since just after the Second World War. The bill is part of Obama’s new jobs plan and has been predicted to create as many as 200,000 jobs, but will it?

The reforms in the new bill, the Leahy-Smith America Invents Act, will allow the U.S. Patent and Trade Office to issue higher-quality patents in an expedited fashion, a move which has won rare bipartisan support. This will create more jobs according to the bill’s supporters, though exactly how many has been a rather difficult number to calculate.

What we’ll see is a job-creation engine turned loose,” says David Kappos, director of the Patent and Trade Office. “It will give us the ability to examine work given to us by U.S. innovators much more effectively, so they can produce products and services and economic opportunity much more quickly.”

The 200,000 mark bandied around Washington cannot be easily attributed to any one person, though many new outlets have pointed to Sen. Patrick Leahy, chairman of the Senate Judiciary Committee and one of the bill’s authors, as the source. Leahy’s office has declined to officially put a figure to any jobs claims. Aides for Leahy have pointed out that the calculations for figures have come from two studies: one by the Commerce Department and another by researchers at the University of California, Berkley.

The studies, and most experts, reach two common conclusions: patents help startups get investors to provide funding and patents have an important link to jobs in the pharmaceutical industry.

One statistic from the UC Berkeley study found that each patent a business receives leads to the creation of 3 to 5 new jobs. The study, though, chooses not to make any general assumptions from this data about the industry as a whole. The claims appear to be generated more from the government than the studies.

“There is no principled way to determine from our data whether or not additional patents lead to additional jobs, much less the number of jobs created by each patent,” the authors of the study have said.

The ability of the legislation to directly lead to job creation may not be easy to calculate, but then again, neither are many of the other proposals being investigated in the Capitol.

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