Intellectual Property Institute October 29, 2009

1. “The Future of IP Series” Intellectual Property Institute October 29, 2009

2. Is the Patent System Under Attack? Pressures on the Patent System • Backlogs at the Major Offices • Public Outcry of Poor Quality Patents • Competing Systems for Driving Innovation • Backlash Against the IP System • Developing Economies • Global Challenges, e.g., Health, Climate Change. . .

3. Challenges at the EPO & USPTO • Increasing Backlog. . . Can they get ahead of it? • This is a Global Problem (not just EPO & USPTO) - Can’t necessarily hire their way out of it • Filings may decrease, but not permanently • Decreasing allowance rates compound the problem • Possible Solutions • Increase the fees? - Deferred examination? • Restrict continuations? - Work-Shifting to Users? Full Faith & Credit Must be our Ultimate Goal

4. Challenges at the EPO & USPTO Public Cry of Poor Quality Patents • Perception vs. reality. . . What is the REAL issue? • We can do more to help the patent offices • Higher quality appls (self-regulate or be regulated) • Disclosing the best prior art is a must, but. . . • Inequitable Conduct is still a barrier • More data & digitization can drive greater efficiency • More collaboration with the Offices (e.g., peer-to-patent) • Full faith & credit must be our ultimate goal There Aren’t Any Problems We Can’t Fix Together

5. Competing Systems to IP Open Innovation. . . Connect & Develop • Other systems provide new options • Different solutions for different industries & situations • Why can’t they co-exist with a robust IP system? • Patent quality, patent trolls, damages, etc.? • Systemic IP issues are being addressed via. . . • The Courts, and • Patent Law Reform • The IP system is evolving & adapting as needed The IP System is Still The Best Driver of Innovation

6. Reactions to IP “Quality” Scare • Raising the Bar on Obviousness. . . KSR • Challenging Patents in Court. . . Medimmune, Sandisk • Patentable Subject Matter • In re Nuijten - Electrical signals deemed not patentable • In re Bilski - Managing weather risk in commodity trading • In re Comiskey - Mandatory arbitration of legal documents • Metabolite – Method for identifying a vitamin deficiency • US Patent Reform 1. Damages 5. Post Grant Review 2. Inequitable Conduct 6. Applicant Quality Submission 3. Interlocutory Appeals 7. First-to File 4. Venue 8. Misc. (Best Mode, Fee Diversion, etc.)

7. Is the Patent System Under Attack? What Does the Evidence Say? • Courts & Congress are raising the bar • IP Rights are being questioned as never before • Anti-IP activists are more active than ever • Amount of anti-IP blogs has risen dramatically • Anti-IP community has engaged the media • Anti-IP activists are attacking new areas • Developing countries industrial policy can make excellentuse of the anti-IP agenda and rhetoric We Can Not Afford to Take The Patent System for Granted

8. The Anti-IP Activists Are Going Green The anti-IP activists see green technology as a new opportunity to exploit their Anti-IP Playbook; namely. . 1. 2. 3. Position “the problem” in the context of a global Challenge Point to Intellectual Property as a “Barrier” Demand free access to IP AIDS, famine, climate change, etc. Drugs, seeds, fuel cells Make good on human rights commitments

9. UNFCCC Agreement & Challenge The Agreement Parties “shall take all practical steps to promote, facilitate and finance, as appropriate, the transfer of, or access to, environmentally sound technologiesand know-how to other Parties, particularly developing country Parties…the developed country Parties shall support the development and enhancement of endogenous capacities and technologies of developing country Parties…” • Developing countries seek to compel non-commercial transfer of clean tech. in return for their post-Kyoto commitments (Copenhagen, 2009) • Experts estimate $’s trillions investment needed to achieve low carbon future – this requires significant innovation driven by both private & Gov. investment • A post-Kyoto framework must involve commitments from all countries without shutting down innovation and growth The Challenge

10. G77 Green Tech Transfer Proposal The G77 developing countries are aggressively fighting for compulsory licensing of green technologies in exchange for climate change commitments. Technology Transfer Mechanism Ownership From G-77 and China Proposal

11. What is the Role of Innovation Do We Need More Clean Innovation? One study finds that if we were limited to technologies available in 2005, the present value cost of achieving stabilization at 550 ppm CO2 would be over $20 trillion greater than with expected developments in energy efficiency, hydrogen energy technologies, advanced bio-energy, and wind and solar technologies (Edmonds 2007). Other studies have found that accelerated technology development offers the potential to dramatically reduce the costs of stabilization, with advanced technology scenarios reducing the cumulative costs of stabilization by 50% or more, yielding economic benefits of hundreds of billions to trillions of dollars globally. Innovation is a Critical To Curing Climate Change

12. Estimated 100-Year PotentialCost Reductions Comparative analysis of estimated cumulative costs over the 21st century of GHG mitigation, with and without advanced technology, across a range of hypothesized GHG emissions constraints.

13. What Can We Do About it • Recognize the threat is real & growing • The Anti-IP community has mobilized • Developing countries have joined forces with them • The desire to “get a deal” on climate change could trump the need to preserve strong IP protection RECOGNIZE THE THREAT ACKNOWLEDGE THE IMPACT The potential impact from compulsory licensing of green technology will be sweeping & broad based • Amplify our voice by building a strong, cross-industry coalition (ACTI & IDEA) todeliver OUR message • Proving Strong IPR = R&D Investment = Innovation • Innovation = Cost effective solutions & Tech Diffusion MOBILIZE AGAINST THE ANTI-IP

14. US Legislative Activity IP Amendment in Foreign Affairs Bill • “To protect American jobs, spur economic growth and promote a “Green Economy,” it shall be the policy of the United States that, with respect to the United Nations Framework Convention on Climate Change, the President, the Secretary of State and the Permanent Representative of the United States to the United Nations shall prevent any weakening of, and ensure robust compliance with and enforcement of existing international legal requirements as of the date of enactment of this Act for the protection of intellectual property rights related to environmental technology, including wind, solar, biomass, geothermal, hydro, landfill gas, natural gas, marine, trash combustion, fuel cell, hydrogen, micro-turbine, nuclear, clean coal, electric battery, alternative fuel, alternative refueling infrastructure, advanced vehicle, electric grid, or energy efficiency-related technologies.” Larsen/Kirk Amendment Passed 432-0!!

15. How is GE Reacting? • We agree with a high standard of patentability • GE’s focus was already on Quality!! • High quality IP is in ALL our best interest • Filings may actually go down as a result • Re-examinations are on the rise • GE is seeking to collaborate with Patent Offices • Willingness to fight has gone way up • GE is DEFENDING the IP system globally • If WE don’t support the system, WHO WILL?