AMERICA 250 - Intellectual Property: The Freedom & Spirit to Innovate

Each year, SBE Council celebrates World Intellectual Property Day (April 26). Working with our small business allies across industries, we remind policymakers and the public about the importance of intellectual property (IP) as a foundation for innovative entrepreneurship and opportunity. We also urge Congress and the White House to strengthen and protect the IP system that powers American innovation.

In the year of America’s 250th anniversary, World Intellectual Property Day offers a timely opportunity to remind Americans about one of the Founders’ many important contributions: the creation of a constitutional system designed to encourage risk-taking and innovation.

That principle is embedded directly in the Constitution itself. Article I, Section 8 gave Congress the power to secure the exclusive property rights of authors and inventors in order to “promote the Progress of Science and useful Arts.” In other words, the Founders understood that innovation does not happen by accident. Individuals are more willing to invest time and resources into novel creations when they know the law will recognize and protect what they have created or built, and that they could gain from the fruits of that labor.

The new republic acted quickly to formalize this principle. In 1789, the Federal Judiciary Act began building a national court system to resolve disputes under established law, including cases between citizens of different states. Then, in 1790, Congress passed the first U.S. Patent Act, establishing a Patent Board that included Thomas Jefferson, Henry Knox, and Edmund Randolph, while also requiring President George Washington to personally sign each patent. These were not minor procedural actions and decisions. They demonstrated, at the highest levels of government, that the United States viewed invention, creativity, and enterprise as central to freedom and national growth.

The larger story is more than patents alone. The Constitution helped create a broader environment of predictability and confidence: contracts could be enforced, courts could resolve disputes, and property rights defended. Such stability and rule of law matter for every entrepreneur, small business owner, and American citizen. Over time, as technological progress accelerated, America’s IP system evolved to support continued growth.

A powerful more “recent” example was passage of the Bayh-Dole Act in 1980, which permits universities, nonprofits, and small businesses to retain ownership rights of inventions developed through federally funded research. Bayh-Dole has helped to ensure that promising discoveries would not remain stuck on the shelf (as was the case before the Act), and could be developed, licensed, and brought to market. It was, in many ways, an extension of the Founders’ original insight that when people and institutions have clear rights in what they create, they have stronger incentives to develop those creations into something that benefits society. (Learn more on Bayh-Dole here.)

The payoff of strong commercialization incentives via the Bayh-Dole Act has been significant for our economy and society: from 1996 to 2020 alone, academic tech transfer in the United States contributed to 141,000 patents and 18,000 startup companies, generating up to $1.9 trillion in gross U.S. industrial output and supporting 6.5 million jobs over that period.

The productive innovative activity is especially present in technology and biopharmaceutical sectors, where research and development is expensive, time-consuming, and highly uncertain – in fact, entrepreneurs and small businesses dominate these industries and help to keep them competitive and vibrant. Bringing a new drug to market, for example, can take up to 10 years or more, and billions in investment. In sectors like these, legal protections do not simply reward success after the fact. Rather, they help make the risk of innovation possible in the first place. They provide the framework, incentives, and certainty that helps startups and entrepreneurs raise capital. America’s system of patents and related protections has helped support the long-term investment that drives medical breakthroughs and improves lives.

But IP is critical to virtually all sectors – from science to sports, music and entertainment to manufacturing, and technology to agriculture. As noted in our World IP Day communications message:

“Across all 50 states, more than 127 industries rely on IP protections – including patents, trademarks, copyrights and trade secrets – to attract investment, compete globally, and create good-paying jobs in their communities. IP turn ingenuity into real economic opportunity. Today, America’s IP-intensive industries account for $7.8 trillion in GDP, representing 41% of the total, and support more than 47 million jobs.”

As we reflect on America’s founding in this 250th anniversary year, World IP Day is an important occasion to keep in mind that the Constitution and founding did more than establish a government. It established a framework that emboldened the spirit of creativity and innovation – where individuals can create, invest, invent, and build with confidence. That legacy and framework still matter today, and especially for entrepreneurs and small business owners who continue to turn ideas into opportunity and a better life for many Americans.

Karen Kerrigan is President & CEO of the Small Business & Entrepreneurship Council

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