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Rising Above the Gathering Storm: Energizing and Employing America for a Brighter Economic Future
INCENTIVES FOR INNOVATION
Recommendation D:Ensure that the United States is the premierplace in the world to innovate; invest in downstream activitiessuch as manufacturing and marketing; and create high-paying jobsbased on innovation by such actions as modernizing the patentsystem, realigning tax policies to encourage innovation, and ensuring affordable broadband access.
Implementation Actions
Action D-1: Enhance intellectual-property protection for the 21st-century global economy to ensure that systems for protecting patents and other forms of intellectual property underlie the emerging knowledge economy but allow research to enhance innovation. The patent system requires reform of four specific kinds:
Provide the US Patent and Trademark Office with sufficient resources to make intellectual-property protection more timely, predictable, and effective.
Reconfigure the US patent system by switching to a “first-inventor-to-file” system and by instituting administrative review after a patent is granted. Those reforms would bring the US system into alignment with patent systems in Europe and Japan.
Shield research uses of patented inventions from infringement liability. One recent court decision could jeopardize the long-assumed ability of academic researchers to use patented inventions for research.
Change intellectual-property laws that act as barriers to innovation in specific industries, such as those related to data exclusivity (in pharmaceuticals) and those that increase the volume and unpredictability of litigation (especially in information-technology industries).
Action D-2: Enact a stronger research and development tax credit toencourage private investment in innovation. The current Research and Experimentation Tax Credit goes to companies that increase their research and development spending above a base amount calculated from their spending in prior years. Congress and the Administration should make the credit permanent,10 and it should be increased from 20 to 40% of the qualifying increase so that the US tax credit is competitive with those of other countries. The credit should be extended to companies that have consistently spent large amounts on research and development so that they will
10
The current R&D tax credit expires in December 2005.
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