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Senate Science and Technology Caucus

Steven Chu

October 27, 2005

Before beginning on my assigned portion of this briefing, I want to make two additions to the remarks of Chuck Vest.

The first has to do with our need to attract, train and retain the best scientific minds at home and abroad. This country has prospered, in large measure, by the intellectual capital of immigrants. As one example, the majority of the ~ 100 “American” Nobel Laureates in Physics were awarded to immigrants or children of immigrants. These scientific leaders have trained generations of scientists who have gone on to contribute to the scientific and technological leadership we enjoy today. Also, it is a simple fact that Nobel Laureates beget more Nobel Laureates. Other countries are beginning to compete for the brightest scholars in the world. To remain competitive, we must change current immigration and deeded export statutes to attract and retain more highly skilled people.

My second comment has to do with the need to develop clean, safe, secure, and sustainable energy. There are 3 reasons. 1) Our energy security is directly linked to national security. 2) Economic competitiveness is intimately tied to how much energy costs, and how efficiently it is used. 3) There are serious environmental concerns associated with energy usage from local pollution to global climate change. Because of these concerns, I believe that the energy problem is the single most important problem that has to be solved by science and technology in the coming decades.

Now let me turn to my portion of this briefing.

Chuck spoke of the need to revitalize our investments in the training of students at all levels: K-12, undergraduate and graduate education. In short, he spoke of the need to invigorate the supply-side of our intellectual capital.

We must pay equal attention to the demand side of the equation. We need to ensure that this new generation of scientists and engineers will be well utilized.

In the past, the combination of American universities, federal and industrial research laboratories has been extremely successful. We have led the world in many, if not most areas of science, and have been adept at translating those discoveries into innovations.

However, there are growing signs that all is not well. Commercial investments in basic research have markedly declined. We have seen a dramatic contraction of great industrial labs such as GE, Xerox PARC, IBM and Bell Laboratories. Science students are discouraged as they see basic research in industrial or national labs shrinking and witness their professors struggling for funding. Engineering students face the sobering prospect that US companies have begun to off-shore their research and development laboratories.

On the next slide, we list a set of recommendations that will sow the seeds of future innovation.

  • We call for an increase federal investment in long-term, basic research. A special emphasis is placed on the physical and mathematical sciences and engineering. As an example, inflation adjusted funding the physical sciences has remained flat for more than two decades, while DOD investments in basic science - the agency that played a major role in the development of the laser and the internet - has declined dramatically.
  • We call for 200 early-career researcher grants to help jump start our brightest in science and engineering.
  • The infrastructure of our universities and national labs has decayed. We recommend establishing an Institute National Coordination Office for Research Infrastructure, funded at $500 million/year over 5 years to fund rebuilding.
  • We need to sponsor more high-risk, high-payoff research by giving technical program managers some latitude. The pillar and strength of our funding decisions is based on peer review. However, this process can be unwilling to gamble on high risk projects.
  • Institute Presidential Innovation Awards—Current presidential awards identify lifetime achievers or promising young scholars. The proposed new awards would go to support persons who develop the most promising scientific and engineering innovations in the national interest at the time they occur.

(Next slide, please) In addition to sowing the seeds of future innovation, we need to insure that these seeds land on fertile soil. Having the best researchers in the world is necessary, but not sufficient to guarantee that the US will be the best at capturing the fruits of this research. We need to ensure that the United States is the premier place in the world to innovate.

One requirement is that we have to protectour intellectual property. However, we also recognize that the protection of this property can also stifle research and innovation. We make the following recommendations:

  • In the arena of intellectual property protection
    • Give the Patent and Trademark Office enough resources to make patent review more timely, predictable and effective. Studies suggests that the increased workload per person at the US Patent and Trade Office has led to a decline in the quality of patent examinations and a corresponding increase in litigation costs after patents are granted.
    • We need to bring our patent laws more in harmony with most other major economies. An example is to adopt a “first-inventor-to-file" system used by most other countries. This will decrease much of the time-consuming and expensive process of sorting out who was the first to invent.
    • We recommend that a mechanism for “administrative review” after the patent is granted. This would enable the patent to be challenged by stakeholders, a type of “peer review”, and can serve as a second check on recently granted patents. Currently, the only way to challenge patents is through formal and expensive litigation.
    • Shield non-commercial, academic institutions from patent infringement liability. This protect would only pertain to “pure” research, not work done aimed at commercialization. As an example, a university or national lab that uses a free-electron laser light source for non-commercial, fundamental research should not be subject to patent infringement litigation by the inventor.
    • There are existing intellectual property laws that act as barriers to innovation that are particular to certain rapidly evolving technologies such as pharmaceuticals, software and internet activities.
  • We have made other recommendations to increase homeland innovation. More generous tax credits and other incentives are needed to encourage industries to innovate in the US.

    There are lessons to be learned from the successes of Ireland, Finland and other countries. For example, in 1987, the Irish GDP was 69% of the EU average; by 2003, it had reached 136%. Unemployment fell from 17% to 4% over the same period.

    In going from one of the poorest countries in the EU to one of the richest, Ireland did two things. 1) It aggressively courted multinational corporations by establishing a business-friendly corporate tax rate. 2) It invested heavily in secondary and higher education.

    The third part of their strategy is to raise public R&D spending to complement the strong growth in R&D investment by multinational corporations. Currently their investment is 1.4% of their GDP, and they want to raise it to 2.5% by 2010. By comparison, the USfederal R&D in 2005 is ~ 0.8% of our GDP.
  • We need to encourage affordable broadband access for homes, schools and businesses. While large companies have already embraced the technology, our committee feels that wide deployment in homes, schools and small businesses will add to productivity in a myriad of ways that will not be fully appreciated until we get there. The United States was the leader in providing broad access to telecommunications in the 20 th century, and we reaped the benefits of the first country to embrace universal telephone service. New businesses and efficiencies that take advantage of the internet are emerging constantly, and we have fallen behind other countries in high speed connectivity.

In the next slide, we conclude with a simple message. Our future prosperity will depend on our preeminence in science and technology. Let’s not take our current strength for granted, and renew our commitment to education, research and innovation.

Perhaps Andy Grove, co-founder and former Chairman of Intel and a Hungarian immigrant, was right when he wrote his book, “Only the paranoid will survive.”