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Patents, Startups and US Unemployment

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No, this is NOT another article on the current US unemployment status.
I believe, most of you who regularly follow the Seeking Alpha team are quite aware of the high 9.1% unemployment rate in the United States. In fact, last month, no non-farm payroll employment opportunity was created, and around 14 million people are still unemployed in US. Bad, in fact, disgusting condition of the world's largest economy indeed!
But who creates most of the jobs?! You already know how BofA is pondering over thousands of job cuts. Merrion Pharma is heard to be axing a few pharmaceutical jobs soon. TNT Express to curtail around 20 percent of the head office jobs. There's a long list – HSBC, UBS, Nordeau, etc – all set to cut few thousands in the near future. You see, almost every BIG company is set on to cutting jobs. Or they want something in return. Recently, AT&T promised that it would create thousands of US call center jobs, if its acquisition offer of T-Mobile USA is approved. Wow! And I am damn sure quite a few employees at the T-Mobile USA are going to feel the repercussion if the acquisition is successful.
It's a fact that the most number of jobs are created not at the big established companies, BUT by the start-ups. More start-ups, more number of jobs! And there's almost a new start-up every day even in these times of economic distress. Remember, we have over 10 million self-employed Americans, increasing by the way, who are busy managing their own businesses, and might as well be able to hire a few fellow countrymen in their new business start-ups. And let me remind you, most of these are either in technology sector or in the retail sector.
But it seems the government is not at all helping the start-ups, eh? Well, I am talking about the new America Invents Act (read the full Act here). If you don't have much patience to read, just know that it provides the patent to the person who first applies for it.
Today's patent law allows the inventor a one-year grace period to discuss his invention with the potential investors and decide if it is valuable enough to be patented or not. And this definitely gives everyone the time to properly gauge the invention, resulting in a higher success rate for a start-up. And that's exactly where America Invents Act (NYSEARCA:AIA) pops up. According to David Boundy, Vice President for Intellectual Property at Cantor Fitzgerald, the America Invents Act would: "require a company to file premature, hasty, and expensive patent applications on every baby-step idea to preserve rights against third parties who are dabbling in the field without intent to develop a commercial product."
Now, how does it matter?
US start-ups get almost ten times more venture capital and angel capital per capita than any other country, even in Europe. This is partly because of the better patent law system as well. More time, better preparation and higher success rate! That's how it all works out. In fact, the inventor in United States is given better protection and credibility than in any other country in the world. We are in the side of the inventor, who dropped blood and sweat to create the marvelous idea in the first place. In other countries, the inventor doesn't have almost any rights over his invention, admonished the moment the product or idea is created. This not only derives the enthusiasm of the inventor to create any novel ideas further but also the rush throughout the process ends with an inferior result.
The US government is stripping away the best assets of the country now. Senator Patrick Leahy, sponsoring the bill, says it would create 200,000 jobs in the economy, but where's the logic? Where's the proof?
We can understand very well why this step was taken. There's war everywhere...patent wars! Kodak is going after Apple and Research In Motion. Google buying Motorola Mobility Holding, part of Motorola, for $12.5 billion. Nokia sells around 2000 patents and patent applications to Mosaid. CareFusion sues Hospira Inc. You see, it's a whole chaos out there. To stop these, the current change in the patent law was done, but how good will it be?
In AIA, anyone with the fastest lawyer wins. So, there's no incentive for anyone to invent. And there's no possibility of someone thinking of a start-up, based on a genius idea. And if there are lesser start-ups, how do you expect the 9.1% unemployment rate to go down? Pretty hard! Yes, needless to say, this is not the only factor but it can be a crucial factor in lowering the US unemployment rate.
I am not going after the US government here, but it might have some serious consequences, according to me. Perhaps, we should not tamper with anything that's already at its optimum level. What do you say? Weigh in with your precious comments.


Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
Stocks: T, NOK, MNHPF, BAC, HSBC, UBS, NRBAY, KODK, AAPL, CFN, HSP, MBTHF, GOOG, BBRY