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May 9, 2023 - Truth Podcast - Vivek Ramaswamy
33:41
Can America Win the AI Race? with Andrei Iancu | The TRUTH Podcast #24
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America's founded on, among other things, property rights.
The fact that you own the land on which you live, if you bought it.
That you own the things that you buy, the things that you create, the things that you mix your blood with.
That's John Locke's theory of ownership.
Mix your blood and your labor with a thing.
That thing then becomes yours.
That was the backdrop against which the American Constitution was even written, was the idea that you could own something by making it your own and have it protected against a government's overreach.
That was one of the founding ideals, certainly.
But what about your ideas?
Do you own your ideas?
What kinds of ideas do you own?
This is something that our founding fathers grappled with, struggled with, but ultimately came to form a view on.
It's in our constitution for a reason.
The idea of intellectual property isn't just some modern invention to make new tech.
It's actually something that was woven into the fabric of the founding of our country.
It was as complicated and fraught of a question then As it is in the debates we have today about intellectual property as a form of vesting an individual or a company in their property rights.
It was actually fundamental to the industry where I first began my career, first as a biotech investor and then as a biotech CEO. I was taking on a big pharmaceutical industry and big pharma as an industry, but that entire industry is built On government created monopolies.
If that sounds controversial as an idea, it should be.
The government creates an intellectual property system, especially in certain industries, built on giving monopolies to people who earn the prize of delivering an innovation.
But the return for that prize is a period of exclusivity to actually run a monopoly.
why on earth would we go out of our way to create a government created monopoly?
The answer has to do with fostering innovation itself.
And that's part of the bargain.
We've been arguing about since 1776.
We continue to argue about it today.
And today we're going to advance that conversation in an episode of the podcast with actually the person who led President Trump's US patent trademark and the patent trademark office, the PTO, and has, I think, a lot of insights that I'm looking forward to digging into today.
Andre Iancu, pleasure.
Welcome to the podcast.
Thank you for having me.
It's great to be with you.
So we have some certainly personal mutual friends.
I think someone who worked for you ended up working for me eventually.
That's how we met.
But I think your background, particularly in the last several years in the Trump administration, was our reason for reaching out to you.
One of the things I like doing here in this campaign, in this podcast, is going beyond just the question of the what.
All right?
You could spend a little bit of time on that, laying out the what.
What is a patent?
What is a copyright?
What is a trademark?
What is intellectual property?
In like the two-minute version of that.
But what I'm interested in getting to is the why.
Why is this important?
And I think once we understand the why...
We can then debate the costs and benefits of a system that I think merit some debate in terms of where we are.
So, have at it, Andre.
Welcome to the podcast.
I'm looking forward to hearing from you.
Yeah, thank you.
So, first of all, I loved your introduction because you have clearly identified how we got to have intellectual property rights.
It was so important to our founding fathers that they put it in the Constitution itself.
And what's really interesting to know is that the word right appears in the body of the Constitution only once.
Putting aside the Bill of Rights in the actual body of the Constitution, it only appears in the intellectual property closet, Article 1, Section 8, Closet, which gives inventors and authors the exclusive right to their discoveries and writings.
That is what enabled the United States to begin from nothing.
I didn't know that.
I mean, I guess now that you say it, it sounds about familiar.
Outside the Bill of Rights, which is full of enumeration of rights, I guess you must know this.
Yeah, that's the only place it appears, huh?
Yeah, and because it was that important to them, and they recognized that it is an inherent right.
It's an inherent property right.
You reference Lockean principles of property.
You work the land.
The fruit of that labor becomes your property.
Think about the ideas, the intellectual product of your mind that actually doesn't even exist before you came up with it.
At least the land exists before you get there and you work it.
An idea, you create it from nothing and it's only yours and the only way The government or the public can entice you to give it out to others, to share it with the public so they can benefit from your idea.
The only way they can do that is to protect it, to ensure you that as soon as you provide it to the public, you will have a limited time of protection for what you have come up with, the labor that you put in it.
And what do you think, why do you think they cared so much about it?
Yeah, so, first of all, I don't know that I've answered the what precisely.
So, there are multiple types of intellectual property, right?
Right, of course.
Just very briefly, there's a patent for effectively technological developments, you know, industrial applications.
Medicines, you know.
Medicines, computers, automobiles, spacecraft, whatever.
Then there are copyrights, effectively for fine arts, songs, novels, choreography, etc.
Then there are trademarks that protect brands, names, famous names, you know, of companies, slogans, and the like.
Then there are trade secrets, things you can keep a secret and the laws protect you from disclosing it.
And there's other forms of IP as well.
You probably know in the drug world there is data protection for clinical studies, for example.
Exactly.
And the USPTO stands for the United States Patent and Trademark Office.
Does that also cover copyrights and any trade secret and or data protection as well or not?
So not really.
There's a separate copyright office.
But the head of the USPTO also is in charge of US policy of all these other issues.
Okay, so even though you were chairing the USPTO, we won't call it the USPTO, you were also chair of you in charge of copyrights overseeing the copyright process in this country.
Again, there is a head of the copyright office.
Oh, there's a separate person.
But for policy considerations.
I see, I see.
The USPTO head, which is the undersecretary of commerce for IP, is also the advisor to the president on copyright and other issues as well.
Got it.
Yeah, the administrative state is still something else, but that's a discussion for another day.
So back to the real question here.
Why do you think our founding fathers were so intent on specifying that right?
Okay, look, it is one of the most fundamental tools in our economic engine.
So in order for a free market economy to operate and to allow investment in innovation...
But is this what they were thinking about?
Absolutely.
Because they had to have a way, even back then, to incentivize private investment in risky new developments.
Back then, it was an agrarian society.
Patent number one that was signed by George Washington was for potash, a fertilizer.
But nevertheless, somebody had to invest time and money to create it, And to develop it and bring it to market, they realized that there is no other tool in a free market economy to provide that incentive for people to do this.
So what happens is you provide that incentive Entrepreneurs such as yourself and others invest money in that technology on the promise that it will succeed.
Most times it fails, by the way, because innovation is risky.
But when it succeeds, you have to make sure that that investment is protected.
And then what happens, the brilliance of the system, is that now because it's protected, and if it works, the competitor sees what you have done.
And the competitor says, I want to do the same thing.
Yep.
But I can't.
Gosh darn it, I can't because Vivek has a patent on this or whoever the inventor is.
So what does the competitor do?
If the competitor is honest, then the competitor will learn from what the prior inventor has done and improve upon it.
So now the competitor is also incentivized.
Learns from the prior guy and is incentivized to improve upon it.
And this system allows for dynamic innovation at exponential growth, the likes of which humanity has never seen.
Yeah, I think that it's impressive to me.
So many things about our founding fathers impress me, but it's impressive to me that in the pre-constitutional America, for them to still have had the foresight of all the other things they were working out in that constitutional convention in 1789.
That they were checks and balances, separation of power, free speech, Second Amendment, you know, Fourth Amendment that protects against certain procedures, all against the backdrop of all of these things, that they were still this intent on intellectual property rights.
There's actually – I was giving a speech the other day in New Hampshire and one of the things I happen to just remember is somebody asked me, who's your favorite president?
When I gave my answer, Thomas Jefferson.
I gave the answer that, you know the thing we're sitting in right now?
You know what it's called?
It's a swivel chair.
We can turn comfortably.
Now we have this podcast and these swivel chairs 250 years later.
Thomas Jefferson invented the swivel chair.
Actually, while he was writing the Declaration of Independence.
And so it seems fitting that those guys that dreamed up the Declaration of Independence while also inventing the civil swivel chair, were also those that were writing a separation of powers late in articles one through three of the Constitution, while also thinking about the importance of setting innovation in motion through the intellectual property system.
It's kind of a funny thing, if you think about it.
So it doesn't surprise me That that's true about our founding culture.
It's actually deeper than that.
After the Constitution, the state was established.
President Washington becomes the first president in 1789. And very soon thereafter, they have to pass the first set of laws, okay?
So one of the first acts of Congress, it wasn't the first one, but it's in the first handful, is the Patent Act of 1790. So one of the first acts that they pass is the Patent Act.
In 1793, just a few years later, they amended the Patent Act.
I didn't know that they passed it that early.
Very quickly.
1793 was the first one?
1790 was the first one.
And they amended it.
And they amended it in 1793. The first section of the patent code that we have today, which is called Section 101, the first section that defines what is in and what is out of the patent system.
It was written word for word by Jefferson and Madison in 1793. To this day, Vivek, Congress has not changed the fundamental statute, the first introductory words that define what goes in and out of the system.
Now, they were that brilliant that they were able to figure it out back then, and to this day, no Congress has been able to improve upon it.
The problem with that, though, is that technology obviously has changed a lot since 1793. And as brilliant as the founders were...
Sure.
DNA sequencing and DNA processing.
They did not predict artificial intelligence.
They did not predict quantum computing and autonomous vehicles.
And as a result of that, the courts have been struggling in recent years to fit these new technologies into the words of a statute written in 1793.
And as a result of that, the patent laws and the patent system in the United States at this moment is not nearly as robust as it has to be to enable us to compete in the technologies
So say more about that because I actually want to Also, go in the other direction in a little bit, which is to talk about whether we over-create monopolies in areas where we're actually less well-served even by something that isn't as innovative, which is a big discussion I think that needs to happen in the pharmaceutical industry.
But say more about where you believe our intellectual property regime is not going far enough to incentivize innovation.
Yeah.
I'll give you a couple of examples.
Sure.
One particular area of technology that currently and remarkably in the United States does not receive patents, is not entitled to patent protection, is diagnostic techniques.
So, for example, tests, DNA tests, that a pharmaceutical company might come up with Is not subject to patent.
And you can imagine the disincentive that that creates or the lack of incentive that creates for startups and innovators in that particular space.
A second example in a completely different area of technology that is less clear, but nevertheless, it is still problematic, is in anything to do with software and computer processing.
So areas like artificial intelligence, like cryptography, It's not as clear as what I just said about diagnostics, but still it's highly questionable whether a patent can issue in those areas of technology.
Therefore, again, in this most...
Why is that?
Because of Supreme Court case law, because we're, first of all, relying on a statute written in 1793, okay?
That's still the statute.
It's still the statute on this particular question, and the Supreme Court has struggled with how to interpret it, and it came up with a series of decisions in the past decade or so that dramatically confused this area of law, and therefore, in my opinion, disincentivize investment in those areas of technology.
Now, that can be fixed with legislative language.
And there is a bill that was introduced in the last Congress by Senator Tillis, and Senator Coons said that he would join it as well in a bipartisan way that would address this issue.
But as you know, everything in Congress is a heavy lift nowadays.
Yeah, so what was the thrust of that?
What were they going to do?
I'm not aware of this, actually.
Yeah, so it would clarify this area of law and finally make some changes to the statute that was written by Jefferson and Madison in 1793. It would undo some of the harms and some of the uncertainty created by the Supreme Court.
More specifically, like how?
Well, we probably need a couple of hours.
Give me the two-minute version for the sake of understanding how today's guys, Coons and others, are thinking about this.
Yeah, so effectively what they would say is that there are only certain defined exceptions in areas in technology that do not qualify, and they would specify what those defined exceptions are, such as business methods.
They would not qualify for patent or human interactions.
Right?
So that's a pretty expansive change, actually.
So they're defining by exclusion.
They're saying, let's set up a few categories that we would say are not patentable.
But short of that...
Fair game.
So that's actually a really big deal.
That's why I was asking about the specific.
It's not like they were going in and saying software and computer processing and DNA tests.
They're going in and saying everything except for business methods or communication.
Yes, approximately.
And the reason for that is because… By definition, you can't predict the technologies of the future.
You can't predict what the next inventor is going to invent.
So it's really hard to define by inclusion.
It's doable, but it's really hard to make sure that you don't somehow, by mistake, foreclose some new area of technology in the future.
Yeah, it's fascinating.
Is this pretty close to passing?
No.
Okay, because it's probably going to go nowhere, is the answer.
Well, I don't know, but it's a heavy lift.
Okay.
Okay.
I'll keep an eye on that.
That's interesting to me.
I learned something there.
I agree.
That would be seismic.
I mean, that's a big deal, what you just described.
So, one of the things that always annoyed me, I would say, about being a first investor in biotech and then even running a biotech company was just even wearing my hat as a citizen, how unnecessarily complex that I think I think I think I think Patents
that will give you some form of exclusivity.
You know, what's 18 years, 20 years from the date of filing, something like this.
That's – you'll be filing it when you're developing the drug.
So it could be in phase one, it could be before phase one.
So what's T plus 20 years?
It's 20 years from filing.
20 years from filing.
You'll often file when it's going through some – what they call the preclinical testing phase, before you're testing the drug in human beings.
But then the FDA has this entire separate statutory regime that says that from the time of the drug approval, you get five years of exclusivity that's statutory irrespective of the patent.
And by the way, that's if it's a small molecule, but then if it's a biologic, which is a larger molecule, like a protein generally delivered by injection, then you get 12 years from the date of approval, which has nothing to do with, and it's totally separate from the patent system itself.
And then you'd have these weird things where like you would try to get certain things in the FDA approved label that if you wanted to create a generic, if you got it in the label, but the thing that you got into the label is patented other if you got it in the label, but the thing that you got into So there's the drug which you can patent, but there's all kinds of things which how the drug should be used.
If you got that approved in the label, then even when your drug goes off patent, they can't actually, They can't actually – a generic can't actually say make the drug because a feature of the drug was in the FDA's label and the FDA would say no even if the people who actually envisioned the US patent and trademark system would have said that that's a perfectly new innovation.
The FDA would nonetheless be able to effectively because of how it interacted with the FDA's rules block that and then companies would arbitrage this.
So then the stuff they put in their label actually has nothing to do with the safety or efficacy of the drug.
They pretend like it does but it doesn't.
It was designed to actually just block patent-based exclusivity long after the patent expires.
So those are just two examples right there of complexity that creates room for arbitrage that's not the productive kind of arbitrage, but the sort of regulatory arbitrage that frankly irritates the hell out of me.
What's your reaction to that?
Are you familiar with some of the things I just described?
And what's your reaction to it?
I'm familiar with all of it.
And the data protection, for example, which is your first example, is another form of intellectual property protection that you're absolutely right.
It's completely separate from the patent system.
And it's based on activities at the FDA. Is it really completely separate, though?
Because the FDA lists these orange book patents that they have.
That's correct.
But the 5 years and the 12 years protects the data.
I mean, okay, yeah.
Okay?
So it is incredibly complex.
And it gets much more complex even than that.
And we just simply don't have time to go through all the complexities.
What's happened, Vivek, is that over time...
Various government agencies responding to various pressures from industry from different directions over many, many years and decades have developed various systems for processing whatever they're doing.
The FDA has got its system, the patent office has its system, and there's many other equities available in the government to complicate it even further.
One of the issues...
If you happen to become president and you can look at it, that I think is really important for the United States is to have an overall innovation policy.
And for that, I personally believe we need an overall secretary of innovation that can look at the holistic system for the United States.
Of what it will take to make sure that in all these areas of technology, the United States has the most balanced and optimal system to enable Americans to innovate and to have access to that innovation and to maximize our competitive advantage vis-a-vis China and other countries.
An innovation policy that looks at the system holistically can solve A lot of the inefficiencies in the system and modernize our system in order for us to compete.
So I'll tell you that here's the part I'm deeply sympathetic to about that suggestion.
Part of it really resonates with me is that we have this patchwork, right?
FDA takes it on upon itself for this responsibility.
God knows what non-grammatical amalgam of letters.
Some other agencies do the same thing.
USPTO is doing its thing.
But even though what many people as capital allocators in the farm industry look at often for biologic, rarely is it when the patent expires because it takes 10 years to get it through the drug approval process.
And so 10 plus the remaining 10 years is still less than the 12 years that you automatically get.
So it's the statutory data exclusivity that matters.
It's deadweight waste actually in terms of – even think it's creating incentives that the private sector responds to.
That's only if they can actually readily comprehend and digest those incentives and focus on actually innovating rather than arbitraging across how they interact with each other.
So I'm deeply sympathetic to the idea that we need to have an intentional innovation policy to the extent we're going to have government involvement in this at all.
I'll press you on this.
For me, I have like a native...
Reluctant reaction.
Anytime somebody tells me that we need to have a secretary of anything, I think we need fewer secretaries of things than we do more secretaries of things.
So what in the existing apparatus would you cut to make space for that?
And by the way, when I say Secretary of Innovation, I don't necessarily mean a whole new cabinet level position.
You mean synthesizing.
Synthesize to one more layer.
It's just everybody, the question too is, still, I understand the spirit of that.
It's not something new.
It's synthesizing, which is in principle good, but it's still another managerial layer.
What would you cut or consolidate in order to make that so?
Let me just add that in addition to the FDA, there is the Department of Energy for energy-related innovations.
There is the USDA for food-related innovation.
There are elements of all these innovation policy issues spread throughout the entire federal government.
Those issues can be consolidated.
And what I mean is that you don't necessarily have to have a completely separate new thing.
You could, but if you don't want that, and I understand you don't want to create even more government bureaucracy, it could be consolidated within an existing department.
To me, though, the most important thing is that whoever is president thinks at the highest level about what is the United States going to do To innovate at our maximum capacity.
How are we holistically going to consolidate, simplify, incentivize, and what industries, you know, what is the nation going to do?
Look, in the 1960s, The United States had a Sputnik moment.
We were caught off guard by the Russians putting their first satellite in space, and then the first man in space.
And the president at that time, President Kennedy, called the nation to task and said, we will Put the man on the moon by the end of the decade of the 1960s.
It was a concentrated whole country effort to win the space race.
And there are many elements of that.
Today, it's more complicated.
We have to win the AI race.
We have to win the quantum race.
We have to win the biotech race.
We have to win the new materials race.
We need leadership that can recognize those things and call the nation forward and the best elements of the nation forward to make sure that we actually compete.
Intellectual property is one tool in this kit.
Intellectual property, patents, copyrights, data protection, whatever it is, is a very important tool that needs to be addressed, but it's just one tool.
There are many other elements of this as well.
Well, how about you answer your own question?
Great.
Suppose we say, yes, we need a vision of how we're going to innovate our way out of many of the challenges we face and make sure we're still leading and not China.
Go ahead, pick up where you left off.
What does that look like?
Well, first, I would like to know, what are the technologies of the future?
Okay, now, I'd like to hear from industry, what are the most important technologies of the future?
In the 60s, the country decided that it's the space race, okay?
I just named a few, but who am I to know?
I want to hear from industry and studies should be done.
AI, as I said, quantum, whatever it is.
And then I want to know what are the various elements from the public sector, from the private sector, and from academia to enable us to do that.
And there should be a plan, not a directive, but just a general high-level plan.
Do we need to amend our education system to create more inventors?
Do we need to amend our immigration system, the legal immigration system to bring to the country more inventors?
Do we need to have more public and private investment in research and development?
And look, I mean, these are not easy issues to answer, but the nation has to start talking about it.
Because in some areas of technology, Vivek, we've already lost the race.
Yeah.
What's unclear to me is whether the proposed method, and I'm truly keeping an open mind here.
I'm thinking through what you're saying.
I'm appreciative of it.
I think what's unclear is, what's clear is, yes, we are Losing on a battle of innovation vis-a-vis China, vis-a-vis even other countries in the world relative to the standing that we had.
What's less clear is whether the idea of having a centralized national plan in an area that matters is likely to be successful.
I think that that might – I was using this expression in an earlier discussion with someone else – Does reflect a bit of what Friedrich von Hayek would have called the fatal conceit.
The idea that you can solve a complex problem centrally or through some form of central dictate is an open question versus saying, all right, pass a bill like these other guys are talking about.
Make sure we reform, simplify, and expand the scope of the patent system and then leave it decentralized as we always have.
I mean, the space race was one example, but I think that's the anomaly.
Other than the space race, most of the rest of what we enjoy was done the other way.
And so, what would you say in response to that challenge?
Look, I very much agree with you.
I think the nation has benefited dramatically over time from our decentralized free market economy.
But if we don't know as a nation even what our problems are, if we don't even know where we are going to compete, we are going to have a very difficult time competing there.
These bills, take for example, the fact that you cannot have patents on diagnostics.
Why is that important?
Who says that that's important?
Now, we know that it is because we think diagnostics and technologies in that area is important.
Artificial intelligence, the fact that it's hard to get patents on that, why is that important?
I'm not saying that we should have a centralized directive like the Chinese, God forbid.
That's the exact opposite of what we should do.
But at the minimum, we need to have leadership that recognizes that we need to compete in these areas Identify some paths and direction, directly, not, you know, directionally, I mean, for us to be able to go in and be based on those, then certain bills and projects can be undertaken.
This actually gets to the heart of a debate in the conservative movement.
It's interesting to me, and I'm going to confess.
My own convictions on this are...
To be determined, okay?
It's still up in the air for me.
The extent to which we need to rethink the classical model of total decentralization, that's where my heart is.
Versus, you know, the example I was having in another discussion episode of the podcast with another guest was even Reagan, who was the ultimate embodiment of that Friedmanite philosophy, the one that I'm deeply sympathetic to as well, still Made a decision that we needed more auto manufacturing in the US and put a quota on the number of Japanese cars that could be imported to help spur domestic manufacturing industry,
which in turn resulted in temporarily higher consumer prices, but which were ultimately made up for whenever a Japanese company came to the American South and started manufacturing cars here in America.
He decided that was the problem he needed to solve.
There may be other problems today.
And I want to be careful not to fall into – What I often criticize the left or others who disagree with me of which is reciting your own dogmas without necessarily Addressing the actual clear and present issues that rest in front of you that stand in the face of your dogmas.
But I have to say that I believe that history should teach us to be very skeptical of a centrally planned model.
But I think that you did a good job of presenting it in a persuasive way by saying at least ask the questions of what are the biggest problems we're facing for at least as a prompt for what a decentralized marketplace could then deliver.
Let me leave you this rhetorical question.
I believe we have lost the race on 5G and 6G. More than 50% of installations in the world are done by Huawei and ZTE, for example, despite Western sanctions.
That's a fact.
We are neck and neck on AI. We are neck and neck on quantum computing.
And by the way, the Chinese have already demonstrated a quantum uplink to a satellite.
We haven't.
And there's many examples like this.
Accepting that these are facts, and true, we can verify all that.
The rhetorical question I have is, what are we going to do?
What is the United States going to do?
And I'm just posing the question.
It's a powerful question.
It's a powerful question.
I think you've taken the first step, honestly, man, by asking it.
I don't have the answer for you right now.
It's part of the reason that I'm getting folks like you here and preparing me to occupy that seat if we're successful in this process.
So thank you.
I really appreciated this.
Learned a lot in a short time together.
I have a feeling we're going to be continuing the conversation offline for some time to come.
Pleasure to be with you.
Thank you so much.
Thank you.
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