we're going to get now. >> that's hip. the hipsters will like that dude. >> yeah. only one person even knows what the word hipster means and . that's me. i'm the youngest one there by 35 years. >> we're out of time. thank you so much for joining me today. >> thanks, matt. thank you all. >> okay. i just got yelled at backstage because i've been forgetting this whole time to mention we have a whole give away thing that we're doing that i just kn learned about. so if you like gopro -- everybody knows what a gopro iss. right? i got one hand. guys are active and engaged. you all know what a gopro is., it i we've got the new black one, like with a head mount -- it's our wi like literally everything you a couldny with a gopro we've got back stage. our winner will be selected in some way that i don't understand at all. but put a selfie of yourself on instagram at techcrunch disrupt and we'll choose on the third day.pane god chosel on the third day, te of seventh day, something like that. i'm excited about this next will b panel because this is a taste of the future. we're going to talk about modern commerce and that's exciting and i am that's obviously going to change as we move into the future. what i'm really excited about is success we're about to bring three incredibly successful strong women on our stage and one token male. get ready for that. that's what it's going to look lite like from here on out. please welcome to the stage julie, jennifer, david and our moderator, colleen taylor. have fun guys.s >> all right. we only have 20 minutes and each of you are fantastic and i just want to dive into our conversation. so for the benefit of time, i'm going to do a quick rundown of of yo each ofur your companies and what ofound theyer do. david tissue is the co-founder of spring which is a mobile marketplace for brands to sell in the directly to consumers on their phones. m david is also an investor well known here in new york, probably of rent to a lot of you. in the middle we're happy to have jennifer hyman who is the desti co-founder of rentna the runway, which i'm sure a lot of you know about. it's the online definition for designer apparel and accessory rentals. and they also have a subscription business and an ala carte business, which we're going to talk about. and to my right is julie frederickson, who is the founder of stowaway, a direct consumer e commerce start-up that makes er of makeup that you love in small sizes that you can carry and actually finish, which is a novel concept. so, jen, i want to start with you because you've been doing this a long time very successfully. and what's interesting to me in the past couplerent of years is that rent the run away was so established as an e-commerce company and you guys want some brick and mortar locations, some showrooms. what made you decide to do that?l of >> i think snap building a brandu is always multi facets and you need to think about all the channels through which you're nd phy going to acquiresi customers. we've found that our physical retail stores accomplish two things. number one is they're the most effective way for us to spend effectively marketing dollars because they have the strongest brand impact on the customer. it's much stronger to have a physical retail store than to buy paid ads on google, as an to example, especially when you're trying to serve up to the customer a new customer behavior like renting clothes. the second thing is by nature of having a physical retail store in a market like chicago or d.c., which are two of our markets where we have retail stores, i'm able to use that -- store like a mini distribution center and provide a better level of customer service and experience to all the women who live in that market. because i'm in the business of renting clothes, there's a percentage of the time where youerceiv will receive something as a customer and you will not like it, it will not fit. tha that is kind of a cardinal rule of e-commerce.if now that i hav ye a store in the gold coast of chicago, if you live anywhere in that area and e can let's say you receive an order ions. and it doesn't fit we can currier you more options from the store. so what would have been a return, now comes back and is counted at cash. so using the store as an operational hub is incredibly important to solve problems that also allows us to have a last 3 minute business in those cities. so around 30% of fast fashion, is so h&m, etcetera are of their into revenue comes from people having a last minute need and going with into the store and booking it. and now we can really compete ys with fast fashion, as well. >> is that something that you always knew you wanted to do from the very beginning? did you guys have this dream of ys kne having a brick and mortar store or was that something that came ater. up later? >> having stores with something that did come up later. we've seen success of some of our friends' companies having physical outposts and seeing how it ignites the brand and we pe still are in the e-commerce business.ventor people love to see and feel the inventory, try things on, it addresses a new customer etailer segment. now the difference between us and a traditional retailer is wey see a strategy of potentially long-term having 15 to 20 stores of 100 in major metros. we don't ever see a strategy of having hundreds of stores.what a which is what a traditional retailer or brand would do. >> do either of the two of you think a retail store or brick and mortar shop is in your future?er david, i'll start with you. ser >> to me, i think what jen said that's super important is, a, ers extending the brand and, b, service. you need to provide your customers with fantastic service and if that meanss the ability to exchange something because it , that doesn't fit the day of your event, if you're renting a dress, that's a vital piece of their pie. if for spring we're working with other brands.st. our brand partners, they have their own stores. we're not looking to compete in the channels that they exist. if you're a passionate brand sual evangelist for a brand, you may download their app. but if you're a shopper and you love a brand, but not obsessed enough to put it on your home screen and an app, how are they going to reach you on your co mobile? that's where we'resale trying to fit in. for brands to figureerie out a communication and a sales channel where they're able to i control the entire experience that's what spring is to their marketi brands. is that going to extend off-line? i don't think in thetake near term ers ca there'sn marketing opportunities to take your brand and put it into places where consumers can find it more successfully.change >> sinces 2009 when we launched the company one of the major things that's changed in shopping is that aprod huge portion of discovery of new products is now happening on instagram and pintrest for women. so those -- pintrest and instagram basically serve as virtual malls or virtual kind of cataloging for every woman across the globe right now.and soho the business of spring is very smart in how they're using instagram as a channel. >> thanks jen. >> so i think what's really important to remember is that direct to consumer means you're interacting directly with the consumer, right? like it seems really stupid and obvious, but specialty retail is direct to consumer. when you go to a small and you go to an ann taylor, that's direct to consumer. anyone who is building a direct to consumer brand means that anyt conver channel through which i can directly have a conversation xp with youlo we will explore. so it's very new. would he have been alive for i think ten or 11 weeks. whether or not we do a store is far in the future. but all a i care about is reaching consumers in the medium that's make accepts for them and physical mediums do make accepts. >> for these brands and you definitely understand this is there's a margin involved, right? when you're a wholesale brand and you're giving up half your margin to that retail partner versus a brand like h&m zarah, stowaway, they're selling direct to consumer and that brings down prices. that's happened off-line brands build their own stores. on mobile that channel is really hard to develop again, an because consumers -- raise your hand in the audience if you have an individual brand app sitting on your home page.and. look, we have a lot of people here. nobody raised their hand. one. and he's faking it. >> it's like please download ourhere app and you can get this.d apt >> seriously there's nobody who is waking up and downloading that brand app to go shopping. they might download the brand comm app because they love the content, they love the at community. they're not going to download each brand's app to shop from that brand and i think that's the struggle with mobile that has been solved r off-line and on the web. >> the future of retail is the end of wholesale. and i think that's why spring and run away retail is exciting for me. i'm thrilled to be able to go knowi and rent the run away and be like this is what i want. i'm wearing something now. and just knowing that those experiences are going to be future because it just makes more money for everyone.both that's kind of why we're all here. >> everybody benefits, both the brand and the consumer benefits. technology is supposed to remove middlemen. >> i would imagine, though, it hard t still would be hard to turn downr a if someone were to come to you tomorrow and say we would like to have stowaway in all of our stores worldwide, would you say no? >> i have. i turned down a $10 million p.o. not from them but from another retailer. how many women are in the b audience? i have a struggle seeing. there's not a ton. but of you how many have hed an finished a lipstick ever? yeah, that's what i thought. so the makeup industry is highly entrenched in a position in which everyone is a wholesaler. when you're a wholesaler, you care about your margins which that me means they're latching enormous products that none of you are finishing. f one of the reasons no one manufacturers the smaller sizes is there's a cost of goods issues and it costs the same to make a smaller size as well as a larger size which is why they're selling you [ expletive ] costco sizes you can't finish.? it's not the customer experience. there are plenty of ways to scale and we've seen it with all of our brother companies in a direct way that don't involve cutting out all of those margins because we don't make any money off that. >> there are two things to this. when you're looking at a retail experience, the retailer tale takes southernship of that experience. when you're workinge. with a marketplace like spring, we allow them to use their own packaging experience. the customer can take a videotape and bring it online like they do in all of these brands. so i think that's the piece, too, that's important is to give the brand the ability to sell to. their product in a way that they want to sell them, which tells their story. >> i think that when amazon started and has become a huge and successful as it has, there has been kind of a point of viewr. in the tech world in particular that e-commerce is just better. why would you ever use a t of physical store? now that you have e-commerce andasier mobile commerce? from the customer's point of view, yes it's much easier to order your commodities and your essentials on amazon.uld go t but there are still reasons why you would go into a physical location whether that's b discovery of somethinge new, whether it's experiential, whether it's just fun. now, it happens to be that start-up webs because we're a technology first company, you know we started most of the neerin peopleg that work at rent the run away are in engineering or logistics. i can recreate what a retail store is to service the customer need a lot quicker than a traditional department store ever would be able to. so i can understand that customers want to come into my store for personalized styling and a unique experience. b so a huge part of our business is subscription where people have essentially a netflix for retail fashion. you can receive three things at a time off of your queue, etcetera. imagine a world where you can he nec come into our retail store and take the necklace that julie is wearing and her bag and say, i'mof a tired of this. here it is. i want to kind of steal two things from theor store and walk out of the store without paying an we're going to beacon you and grab whatever you want. the store is essentially a portion of this dream closet upt that we're creating. indus i can do that because i can build out that functionality and disrupt the industry way before an anticipate mayor with do that. >> you've seen this first hand rent the run away has been a pioneer pioneer. i feel like what we've seen is these incumbents trying to appear more savvy because of this because of this threat of disruption. >>t so what has that experience it se been like from being first mover here and now we're seeing -- it seems like more pressure from these big companies whether they want to offer a better experience online or have these parts of your business. >> i think it's better for customers if everyone ups their game. i don't see anyone entering the anyon rental sector in any way, which is great because it's xhimt complicated to do so. but i welcome anyone who wants to -- >> your question i think as we started spring and as we went into this business it's been fascinating that in theti tech world, everybody who sells something is grouped as the competitive. so anybody in e-commerce is overlapping because we're re selling stuff. if you go out on the street, we walk up eighth avenu ae or across there 34th street there's hundreds of stores. they're not all directly with competitive with each other opinion and there is nuance in ssumptio each of the offerings. so i think in the tech world inst a there's been ama broad assumption that it's everybody against mpetit amazon andiv if you're selling anything, you're competitive with anybody else would is >> i selling anything. >> i totally agree. we have 5 million members right ur now and on average, they're 25 years old, which is 25 years younger than the average age of the traditional designer/customer. >> but people views as competitive with these things that have no relevance to you, right? >> completely.where but i think there has been a bent f change whereiv the incumbents fivei am years ago might have thought i was competitive, now they actually think that i am adding ld on to the market andyo increasing the total addressable market and to just build on your point, not only are many of these e-commerce businesses not competitive, but one thing that is the e really benefits rent the run away is the existence of spotify, netflix, bench box where which is all about discovery commerce class pass anything where you would change the model in which you consume things. that helps my business grow because it creates a mentality around access and rental and new ways of getting what you want. anybody else who is selling something on mobile and teachingice on consumers that buying something d sh nice andow on your phone that will show up the next day is benefiting our business, it's not hurting our business.that i and so i think that there's a broad education that's happening in the market around new ways of buying things and new ways of getting those things delivered to you and what those experiences can be that's benefiting all of our businesses. >> do i think investors -- have you seen a shift how investors are talking to you and your respective businesses? is some of that concept of if amaz you're inon e-commerce you're under this one umbrella and you y. might be competing with amazon. i imagine some of that comes from the investment community. has that shifted, has it become more nuanced at all in the past you h few years? ba >> of course. when you have real numbers to back up what your investment thesis is. right now, when we raised our last round they were investing er than on the success of what we had done not the dream any more. and so rental is a much higher gross margin business than if i were just to sell that product because it's utilizing your ing mo inventory more effectively. i also think that having more femalesu founders and having many a of those female founders being extremely successful has also hope had a real benefit in our fund-raising over time and hopefully we're a part of that. you know i want to see as many female founders actually succeed in creating multibillion dollar oats. businesses because it liftses all boats. i thought it was amazing last one in week when the news came out about parker and their recent round. it helps everyone in new york to see other businesses that are c successful here. we have to start thinking of ourselves as a community a lot more.lie: >> julie, what's been your experience in pitching a cosmetics company?last y >> i thinkea cosmetics will be this year as food was to last -- year from a ventral perspective. the market is so large and so few people are playing in it that there's so many opportunity. i quote the statistic endlessly, 1 but0. 70% of the industry is consolidated into ten conglomerates. when technology comes into a space that hasn't changed in 50 years, that's real money. from that perspective, our fund raise was a breeze because the white space is very much there. i anticipate that it will get entirely competitive. but makeup, just makeup is four times the size of shaving and shaving is killing it as a category online. so i think it's where there are has bet two trends, where you commodify l and you brand. branding has better margins and th we're seeing the success of that branding because that's what consumers resinate with. we're all going to do very well when we establish something thatblem, an means something, solves a problem, makes women's lives easier and that's where money is. >> i also want to say that there has been -- the word fashion in the tech world is often viewed d. historically as being a dirty word. the reason why i started the disruptive fashion business is that it's the second largest industry on planet earth. it's a $1.7 trillion global industry that we are disrupting. the only thing that's larger is the transportation and automotive industry. it's one of the few things that people have to do every single day. you have to put on clothes. so -- at least i hope so. so let's understand where the whe stereotypes are coming from that five years ago when i went out le tho to raise funding around a fashion company, people were like, oh this is some kind of niche thing etcetera, for women. i'm like no it's actually one wom of the biggest industries on earth. >> our fund-raising is -- and i think what differentiate spring as our business model we don't with b touch inventory, we're tot doing warehouses, we're not figuring out how to get the product. we're working with brand partners. anybody from mark jacob toes ever lane tos take s taestee lauder. what we're able to do is build a business model. in the business model is being built first in country that's t haven't had a big e-commerce giant emerge. if you look in china, if you look in india the marketplace model is what succeeded there. what happened in america is desktop and amazon came first. so if you start with mobile and obile if you start with brands having ic lea the ability to do the logistics themselves, the marketplace model, which is what we're focused on is totally differentiated and to consumers, it should deliver a better experience in the end. >> we're just about outs of r time. i want to thank you all for c coming. >> thank you. >> thank you. >> thank you.[app >> the new york tech scene is the best one and the other ones aren't as great, including san york. francisco. so we've actually -- yeah, thank you. i appreciate that. from we can actually all clap for that. go new york. yeah. i'm proud of new york. proud to be from here.feel proud of all the companies out here and i know our next guest feels the same way. the success or failure of this ecosystem with regards to tech start-ups is largely dependent on the decisions he makes while in office. we are truly honored to have him welco on our stage. it's a really exciting moment for tech crunch and i'm sure for him, too. please welcome to the stage mayor bill de blasio. >> thank you so much everyone.she is o i want to thank jordan to the f introduction and jordan is one of my favorite kinds of human beings. she is a brooklynite. so i thank you jordan, for all you do. are there brooklynites here? brooklynites? thank you. i want to say it's a great honor to be at techcrunch disrupt this conference. everyone knows it's an we extraordinary opportunity to talk about where we are going forward and what it means for new york city. grow and we are so energized by the tech community. we think it is quintessential to the future of this city. i believe there's tremendous opportunity for further growth here and great opportunity for the tech community not only to make is a stronger city economically but to make us a hrille fairs and better d city. wo so i'm thrilled to talk to you about some of the things we're doing and some of the ways i owledg look forward te o working a lot together. i want to take a moment to acknowledge some folks who have done a lot of great work and are part of this growing community and deepening of the tech munity' community's involvement with the city as a whole. first of all i think a great example are some of the schools represented today from our public school system. i'd like to shout out the academy for software engineering and the ralph mckee cet school on stattonex island. give them a round of applause. . an extraordinary effort being s grea made to pilot our schools around h software engineering. it is great to have young people in these schools here to connect with this industry and deepen their opportunities ahead because they will be the leaders of the tech industry in this city in the future. i know you had the chairman of the fcc here earlier, tom o protec wheeler, who i think has done extraordinary things to protect the freedom of the internet. and i gave them a lot of credit for standing up for open access. i also want to thank the members of my team and we are very very proud of the team that we have put together at city hall focus on the tech community and what it means for this city. i want to thank my council who has spearheaded our broadband co access that we are very proud o of. i want to thank our new ceo. i want to thank jessie singleton, our digital director and the director of our tech commun talent pipeline. they are doing an extraordinary job linking this community to theui broader work of the city. now, i will be quick, but it must start with a little bit of positive bragging. i like to brag about the glories of my city. sometimes it's tempting to feel competitive with other places that are well known for a technology presence. maybe california would be an example. well, this year, new york city is surpassed california in start-up funding requests. and we are very proud of that fact. the tech ecosystem here providesonomy. near 300,000 jobs making it one of the biggest employers in our economy, generates over 30 billion in wages annually. and if having a transformative effect on other quintessential fashio new york city industries, including food, fashion and happ entertainment. so the impact is great and the speed with which this has happened is breath taking and is a incredibly energizing. and a positive example of good change happening in the city. and i know again, there's a lot more where that came from. i see the strengths of this community being the ability to open up opportunity for more and w more new yorkers, including manyqualit new yorkers who have not had opportunity for the kind of qualities of jobs that you i provide and have not had opportunity for the kind of hink career paths that you provide. i think that's why this nk, bu community is transcended not only the way we think and the reatin way we do things and helping to p do things better, but ineo create we kn ago different economicew paradigm that could open doors for so istratio many of our people. the t from the beginning we knew in our administration that we have to work with the tech community to make it truly a five bourough community. and i like what i'm seeing with the growth of this community allwe kne over the five buroughs. we had to expand the tech larger education and we knew that if we were going to achieve our larger tech co goals of combatting income inequality that the tech community would be a crucial and ally. from all i have seen, a willing and energized ally in the fight against income inequality. let me talk briefly three key areas we're working on. talent first. our goal is to help this community by building an extraordinary pipeline of talent our for the ever growing needs of the community. wor our hope and our belief is that we do our work well and if we t deca partner with you properly, over fi the next decade a majority of tes of tech jobs in the city will be filled by graduates of our public schools and universities. -- and that will be transcendence for this city. we know, again, these are quality jobs that you create. jobs that actually define a middle class lifestyle and that's what we want for our people and we want to make sure every kind of new yorker knows that this community is for them in all five burrowoughs. wooerve investing to create the tech talent pipe lynn, working directly with industry so we can shape training programs that getwe a young people the right skills and get them to the jobs. we are about to announce in our city budget on thursday an additional investment in quni in s.t.e.m. programs for quni especially for our two-year the community colleges. upcom 29 million will bein invested in this upcoming year and that will increase to 51 million the year after for s.t.e.m. programs for quni. we are very excited about what that means and i have to tell o you so much of the impetus from w those investments came from gs tha leaders oft this community who said we love some of the tremendous things that are happening, like cornell technio fl. we need them but we need a ills t broader approach that gets more and more people, especially young people the skills that will give them opportunities of all kinds in this industry. and quni is the perfect tool for realizing that vision quickly. second, we're focused on giving all new yorkers i want to digita emphasize the word all new yorkers broadband access. we want to defeat the digital for divide. so we're investing $70 million over the nn next ten years in broadband infrastructure.es. much greater investment than you've seen in other places. we believe this is necessary.annot one of the key realities is that we know this city can't be a place of inclusion can't be successful if so many of our fellow new yorkers don't have access to the internet. so we're building the world's largest, fastest, b free municipal wi-fi network. in terms of the number of people who have have access, in terms of the numbers of devices that will be out there to connect people, in terms of the speed that it will allow them to connect, it will be the largest and fastest in the world. over 10,000 hot spots, obviously, connecting potentially all 8.5 million of is is so us and growing. we know this is something that has to happen to realize our plan in the last ten days called one new york. it is a plan for the future of the city and it's a plan that and looks at everything from economic growth to resilienty to sustainability and adds to that notion that we must address income inequality and it's one that is environmentally sustainability and economically ote th sustainable for its people. we need to hit both notes at once and that is what our plan addresses and that's why broadband is such a crucial piece of the equation. third, innovation. this community understands in a particularly powerful way that innovation has to be a constant. governm it can never be feared.best it must be embraced.it com i can safely say in government we have not always had the best track record when it comes to frustra innovation. in fact, a lot of us have been frustrated over the years at some of the bureaucratic road brocks to necessary change. not just on the macro policy level, but literally on how we what do the work day-to-day.co what we've found is working with the tech community we are figuring out ways quickly to do things a lot better and we're wh listening to the community when nt people say c here is how government can work better but here is how the community can help the government work better and can be more of a partner. we're trying to respond to that energetically which is why we for n appointed the first ever cto for new york city. which is why my council mya wylie is spearheading our broadband expansion efforts because we understand that we hi can do something different and s better and we want to be pushed i by this community to be different and better and to innovate. the fact is there are so many examples already.found members of the tech community have helped us to find a better way of doing things. we've pulled together a broadband task force which we are really excited about and we thank all the members of task force who may be here or may be watching right now. out c this is a group of experts that are going to help us close that we be digital divide. we pull out calls for ically innovation places where we believe the community can help us to specifically solve nagging problems that government has notrts resolved. we believe all these effortsshap will help us reshape the city. so i'll end where i began. the goal is a stronger city economically the goal is a better city and a city where this community grows, but we have to do it in a way that is more inclusive and more fair om than the new york city of today or yesterday. that is our vision and we see this community as one of the great allies in that effort to create a better city for all. thank you very much. >> hello there. can >> why don't you have a seat. >> all right. >> another round of applause for mayor bill de blasio. we're going to bring out kim-mai cutler. thank you for coming. >> you're welcome. >> the former mayor of bloomberg was a big proponent and after terms the ocrisis you know, that strategy helped pay off in terms is of the job market and the kind o rebound. leave what is your o -- what kind of mark do you want to leave on tech in new york and how is that different from the bloomberg tion. administration?obvi >> i think maybe bloomberg builtdone i a good foundation. obviously, it was very native to him with the work he had done previously in the private sector. he re-oriented government redit policies towards the growth of the community. i think that was fantastic and he certainly gets tremendous credit for cornell tech which t we're very excited about. but i think at the same time we take a more populist approach.five we are trying to build on that foundation, but build out.erse t build to all phi burrows. we want to see a much more diverse tech texter in every ortuni sense. we want to see the opportunitiesai that are in the tech sector available to every kind of new yorker. sog, i we have a muscular effort in terms of training, in terms of d the efforts we want to undertake in our public schools and ting a universities. it all adds up tot po creating a much bigger talent pool and we're proud of the fact that we . believe the only way we get there is with a strong e goal i government role working with industry, but the goal is to make this industry -- this community, this industry a transcendent part of the effortsjordan to fight income inequality and that's a supreme focus for us. >> one of the things that you -- one of the differences between the finance industry and the tech industry is the financials industry favors a lot of office space but tech tends to like -- you know there's tech offices popping up.hese how much do you think about rezoning these other burrows for commercial office development? >> i think to begin with it's crucial to be a five burough industry. one of the things i'm thrilled with is that's not an idea. it's a pleasant reality. and we want to support that. i think in the first instance there's a lot we can do with our xurnt rezoning. i think there may be some specific areas where there will there would be smart rezoning around live work space where rying there's been a great command for. and we're trying to build a super structure around that in terms of affordable housing and creating better transit options. but i would say right now we canwe don' accommodate a great expansion ofning this industry in a lot of our communities without needing to get to rezoning. >> speaking about this populist approach attack, i mean, since google released its diversity numbers, basically this month a year ago we've seen the data for lots and lots of companies. it's very obvious. it's predominantly white it's predominantly male. and when i talk to tech industry leaders, you know, the sort of truism is that, well, it's a pipeline problem. to what extent do you think thatl makeup the racial makeup of the tech industry and gender makeup of the tech industry has to do with cultural shortcoming of the industry itself and the way it hires people versus what's was a coming w out of our k through 12 system? >> i think that moment a year ago was a wake-up call for all of us. a lot of soul searching occurred which is good and healthy.re i think part of the approach we've taken in government youme where you could argue some of the same historic issues have been raised in terms of pipeline.ou bui you know i'm very much in the if you build it they will come school, meaning if you send a g if y message from theou beginning of inclusion, if you insist in the hiring process that there be imum o maximum opportunity for ss inclusion, you find a lot more success at inclusion. our entire tech team happens to m happ be women, including some women of color. our administration -- thank you. our administration as a whole in terms of senior jobs and our administration across all agencies is 53% women in senior management roles for the entire set new york city government. so i think it is quite available if the mind-set of what is valued changes. i would argue this is not just about social responsibility or art in building a more t inclusive society. i think it's smart inig terms of recognition of markets. who are going to be the biggest mark markets going etforward? the majority of our people are women, obviously. we are in a society that is increasingly people of color and an increasing percentage of our for community. so i thinkev the further integration of the sector is good for everyone and every sense. we're going to trye and do all we can through our public schools, our public universities, our training programs to really improve that pipeline. but i think one of the things that people in the tech community can do is meet us in that process help us figure out how we can do that well. but then really lean into hiring people that come out of ur the public schools, our public universities and our training programs. >> you've done this program. when i look at a lot of the -- over the past several months, and the year i've gotten to know a lot of different community so groups and organizations and different parts of the san francisco bay area. also, organizations here like coalition for queens and they're often run by dedicated, invested, wonderful community leaders. but those graduating seems so ce of small relative to the kind of needs and the skills gaps that these employers have. $10 million seems small in what >> i tech companies are going to t hire if you're going to ask them to hire locally.of p >> we continue investing more deeply to ensure that the city tant g university systemen is a constant ou thi generator of talent for this community.bo if you think about the impact that mentorship programs would have, internship programs, summer jobs and we're going to emphasize we want people in the community to participate in all those, one of the things we wants on to do is we want to constantly see if it's working. this is really one of the greatest opportunities to get our people good quality jobs.e is m if we think there's more we investment necessary to a achieve that goal, you know, that's kim: going to be something we're very open to. >> how are you looking to get that feedback? what's the best way that tech companies can do that? >> certainly the tech talent pipeline is an example and the working groups we put together with the community to give us that constant feedback about of tr what kind of training is needed that will actually maximize the likelihood that people going through the training will get to a job. dia so we're thrilled that oush tech team is in constant dialogue with the folks doing the hiring and we want to constantly adjuste the training approach to the literal and specific needs of the community. i'm a firm believer look at the jobs of today and look at the jobs of tomorrow and re-orient. we do a half billion in training. this will give us perspective. we want to do that now. >> i grew up in the -- i grew up in the tech industry and i've been reporting inn i tech for many many years. i think about when -- i remember when i started coming in and working in tech journalism, it was about like realtime search and social and every year it's literally changed so much.demand one year it's bit coin and the next it's the on command economy. i have a hard time understanding how public educational the institutions can be as flexible as, say, some of the vocational schools that have come up like general assembly or flat iron. how do you think about your hese b allocation of time sxre sources between some of these boot camp-like resources? >> i think it's a great point. and i don't pretend that we will always be, you know, at the exact cutting edge. but i think the question is how we are increasingly improving our approach. i think if you look at it in terms of the core skills people need and the connection to the tech community they need, that is not necessarily implied -- oops. that does not necessarily imply that we're doing everything perfectly or we've got people calibrated to the exact most recent trend. it does suggest if you turn out generation upon generation of ong an young people with the basic d skills and the orientation of this community and the sense that they belong and the l achiev exposure, which is why i emphasize internships and think mentorships and summer jobs i think that will achieve a lot of the. outcome. i think within the community itself, what i would call the fine tuning can occur. >> one of the other things that has been a central piece of your administration is focused on affordable housing this incredibly ambitious plan both citie are cities for san francisco. it is incredibly crazy, crazy housing prices. can you tell me a little bit about that? >> sure. you know, san francisco obviously had to deal with some of these challenges ahead of us and we have learned from some ofave the struggles, we have the most the hi ambitious affordable housing program in the history of any city. 200,000 units build and n the preserved over the next ten years. that's enough for about half a million people. very >> yeah. >> so far, we're actually very much on schedule to achieve reat r that. it's wildly ambitious, but we're finding is we're getting a great response from the private sector meeting us and also our investments as we're going to show in a few days are going to ou continue to increase to support that plan. you think if you find enough housing for half a million people in the five bouroughs, gr it's one for keeping the city for every kind of economic group. but the work, in effect, never end because we need a lot more market rate housing, as well which we're working on. and one of the challenges is we o have to make sure the highest percen percentage possible is for folksto at the lowest income level because of a substantial quantity of people in this city ty lev are living below theel poverty levelop and we needti to ensure they have affordable housing options. but, again i'd like to get them out of poverty which is why our one nyc plan just published literally puts a goal to that. we say we want 800,000 people e mini out of poverty in the next ten years. it will require a substantial increase in the minimum wanl which i think is long overdue ms, and i think theplus state needs to progra work aggressively on that front. plus the affordable housing programs, you a whole host of afford things. but as a singcity, we are committed reduct not only toio building affordable housing, but to matching it with a specific poverty reduction goal. >> inclusionary housing is that kim: i a key opponent of your platform it's lass practice that we have in san francisco and we're always debating about what is le the appropriate share that we say is devoted, you know, to booel being permanently affordable. but, you know, it seems to me -- i get wher e we're doing it. there's just not as rch federal or state funding for affordable housing as there used to be. but it seems to ex atser as bait the trend of the middle class. when you do inclusionary, the cost gets passed on to the market rate buyers. it just feels like there's a rancis tension thercoe and we're grappling it.ges, w should we do 12%, 25%, 35%, and what does that do to our housing stock? >> these are real issues, but i'd say given the economic and equality cry sess, one of the statistics i site is effectively since the kwot unquote end of the great recession it's being bega deeply felt by so many americans. since the recovery began that's the majority of the game. we have to approach om inclusionary.e the highest income buyers i don't think that is an issue with federal funding. i agree with you.w a soci in washington, right now you peo know, a society that stops working for middle clat class people and for hard working lower income people, that nowh society stops working people literally have nowhere to go it's just not a healthy society.can be we think that the affordable housing efforts done aggressively can be a profound part of the solution. it's the number one expense in people's lives. we think we have to address it aggressively. >> last thing. so earlier today we were talking about ways that the techved in industry can get involved and how they can work with local government and do you have specific recommendations for the tech industry here? >> i sure do. thanks for having. well, i really appreciate what fred wilson has done particularly in terms of education. i'm a pn bigy fan of ron conway and i appreciate that they are think putting forward realit models for this community and real communitywide levels of commit that they think makes sense. i think that's healthy. that shows an engagement. if you think in terms of economic sectors, that shows us a level, if you will of enlightenment and engagement from the tech community. we don't see from every sector of our community, so i think nter f it's very very healthy. but i would say this. two things.ife we have our center for youth employment as part of the is mayor's fund to advance new york city, which my wife chairs. the idea is to, over the next 100 few years, by 2020 reach a level of 100,000 high school inter students each year who are either in a summer job or an internship or a mentorship program. you a d 100,000 each year. we want to start that aggressively this summer and we'll give you a quick deadline no time of may 15th. we're asking -- no time like the present -- we want to start that this summer reaching towards that bigger goal. but this summer we're asking everyone in this room to do and everyone who is watching to do if is y if you can, create a summer job for a young person. m if you can create an internship or a mentorship effort, we want you to start doing that now so we can plug in a lot of our young people this summer and build out over the next few years. that's one. the second, in terms of our tech pipeline and all the efforts to train young people and not prop necessarily young people for thering the opportunity, we beseech you to work into working with the maximum number of people in those efforts.on so we're adding training nd we resources. we really want to push people, engage us on how they do it muc best, but be focused on hiring those who come through this hank training and those educational efforts. >> thank you so much. >> thank you. thanks, everyone. >> thank you. >> come here. homeland security secretary jay johnson talks about efforts to protect online government networks wednesday at the center for strategic and international studies. you can see his comments at 1:00 p.m. eastern on c-span2. thursday the senate armed services committee holds a confirmation hearing for the president's choice to be the next chair of the joint chiefs. marine corps general joseph dumburg will replace martin dempsey who is retiring from the military after 40 plus years. that is live at 9:30 a.m. herein here on c-span3. >> this week on first ladies influence and image, we learn about lecretia garfield and mary el roy. lecretia was an educated woman and a believer in women's rights. when her husband president garfield, was assassinated, she returned to ohio and ensured his legacy by making their home into an early version of the presidential library. chefrt arthur, a widower becomes president and his sister mary arthur mcelroy fills the role of first lady and establishes white house social etiquette used by future first ladies. that's this sunday night at 8:00 p.m. eastern. examining the women who filled the position of first lady and their influence on the presidency. from martha washington to commercial obama. sundays at 8:00 p.m. eastern on american history today on c-span c-span3 c-span3. >> next the discussion of the u.s. patent system and the impact on innovation and the economy. patent and trademark office director michelle lee joins representatives of the business software alliance and others at this event for strategic and internal studies. it's 90 minutes. a >> well, good afternoon. my name is jim lewis.ewis welcome to csis. we are very lucky today to have with us michelle lee, the undersecretary who is responsible for the u.s. patent and trademark office. u.s. bto. and with her, also, a very ma distinguished panel of experts. the format for today is michellewill giv will give opening remarks and p then the other panelists will join us up here.intera we'll have an interactive the session and then we'll turn to you, the audience, for questions. so i am looking forwarwed to this event. i think we can have a pretty good discussion on a timely topic. we have bios available on the website. but i'll do a brief o a introduction. bri as i said, michelle lee is the undersecretary for commerce. for intellectual property and director of the u.s. p.t.o. which i didn't realize it was 12,000 employees. that's quite a lot. >> more than 12,000. >> it's grown. and she directs its day do day operations, right. her background is really interesting in some ways.on and it's kind of unique. unique in washington. maybe it's not unique in silicone valley because she was at m.i.t., worked at what we would know as the artificial intelligence lab and then was p.t.o.'s -- the first director dir of p.t.o.'s silicon valley office and worked add google on patent issues and then came back i after getting a law degree, wil which i probably got the order wrong, but you'll just have to live with it -- came back and is now -- came to washington on therodu east coast and is now the director of the patent office. let me turn it over to michelle now. thank you.e. >> thank you, jim. good afternoon, everyone. and it's a real pleasure to be here. to talk about as subject that is all extremely important to me and i a think to all of you, as well, pic o that's the topic of innovation. i would like for us to consider the critical role that the u.s. patent system plays in making the american economy competitive in today's increasingly global innovation economy. to give you a little historical go p perspective, it wasn't so long ago that patent law was considered a niche topic. the most valuable assets of a company were oftentimes tangible. so plants, warehouses and inventory. but today the most valuable co assets of our leading companies are the intangible assets. the inventions the algorithms, the processes, the designs and t the brands of a company. what we like to call cause intellectual property or i.p. and because these tangible assets are more easily copied, y the -- protecting them is t important for investment and american competitiveness.re an i patents proi protect market exclusivity for a limited period of time are important forms of that protection.at o it's a fact that our economic competitors recognize, my appreciate and mention often in my meetings with them. last may, i traveled to beijing,minister china, for meetings with the ministers and vice ministers of china's trade, patents, copyrights and trademark offices.ith i began my trip with a meeting with one of the most senior officials in the chinese government. that is vice premier wong yong. during that meeting he emphasized china's desire to strengthen its ip protections and enforcement systems. not just because its trading partners were asking for these changes, but because china views it as necessary in thsh sdooind desired transformation to an innovation based economy with technologies developed in china to provide products and services higher up the value change.na chain. put another way, china wants an ur economy more like ours in which intangible assets play a greater role. and to get there, they recognize the need for a patent system more like ours. from that meeting in china and many other encounters i've had with leaders around thend world, i repeatedly hear that the united states is a global leader when mes it comes to protecting and enforcing intellectual property desp rights.cu despite all of our discussions e and debates here at home, our i.t. system is frequently what many countries look to when designing their own ip systems and enforcement mechanisms. and while we can and should take n pride in this we also need to take heed that as china and inn other countries seek to move from a manufacturing based economy to an innovation based economy, we will face more and more competition. we cannot afford to stand still as other nations seek to catch up.ot rem we cannot remain immobile as american innovators seek to compete in the 21st global economy. a q so we are faced with a question. we str do we leave our patent system as is or do we strive to make it even better and incentivizing and promoting innovation and investment? it's worth noting that our patent system itself is quite innovation. at its core is the bargain between inventors and the rest the of society.exclus embedded in this -- of the constitution. the investor gets an exclusive righ right for a limited period of inven time to a patented invention.iety in exchange for teaching society how that invention works.xclusi that exclusivity makes it easier to secure investment and commercialize the invention. and the public disclosure of how the invention works allows ng others to begin working on g ot improvements while also letting others know which technologies require licenses or work arounds. pr but the constitution only el provided a very broad level framework for our patent system. it looks to congress to update legislation. .over the years, that legal framework has further developed. through courts' interpretations of the laws in light of changing circumstances. and administratively such as through the work of the united states patent and trademark office. that work continues to this day. in an information economy, where patents are increasingly viewed e re andrei sitovettes like any other corporate asset. my i saw this first half during my time in the private sector. in the past, operating companies p would build their patent portfolios, sometimes cost license them with other companies and they wouldn't mpani offer transfer or sell their patent assets. today in contrast, there's a much greater mmt market for patent at assets.r ch and with that comes a greater han chance that the assets end up in the hand of somebody else. o somebody else. with the patent system such as ours-imposes meaningful penalties for infringement, we are seeing a rise in behavior of truly monetizing the value of a patent from another, without contributing anything inventive and without making or providing any product or service. this can and has led to increased threats and to the extent that panting from joy and claims i made merely to coerce settlements from the merits of a claim this is inefficient and costly for everyone involved particularly small companies and start ups who often times have limited financial resources. i can tell you from my time in the private sector litigating hand cases is very expensive. defending against patenting fringe and suit can cost on average depending on a variety of factors anywhere from $3 million to $5 million for a case that is not very complicated. for us start up with an initial round of funding of $10 million that is a devastating cost on innovation. taking a patent case to trial can burnt through one or even two rounds of funding at a time when the young company should be spending ltd. a precious amount of money, hiring employees investing in research and development for growing its business and let's be clear this is not bad for small businesses and start ups. is bad for all of us. inventors, consumers, jobs and the american economy. worst of all it reduces the public's face in our paten a i patent protection to incentivize innovation high to examining and issuing patents. our patent examiners have the duty of examining patent applications and issuing patents is the requirements that are met and rejecting applications when they are not. every one of our examiners understands ands accurately and a clear stroke is more important now than ever before so that inventors can better understand the scope of their invention. so that others including competitors can have the information they need to make better informed business decisions on how to invest their limited research and development dollars and taking a patent license. this is why we launched our enhanced pet quality initiative at the end of last year soliciting an unprecedented amount of input and feedback from the public on how but agency can enhance the quality of the paths that it issues. trial appeal boards also play an effective war role as a quality check on patents. patents that are already issued. the board provides a faster and lower-cost alternative to district court litigation where the validity of the pact claim is in question. it will also have an important impact on the front end of patent system. by making patent applicants think more carefully about pursuing broad claims that may not ultimately be upheld, this is good. it ultimately drives down needless expensive and time-consuming district court litigation while also encouraging africans to seek patent rights of appropriate scope. but the accord still have an important role to play in bringing about needed improvements for the patent system. recent decisions have tightened the standards of clarity for patent claims and made it easier for judges to award attorney's fees in pant infringement cases. these are welcome changes but we want to remember it, they are also incremental. judges can only decide the cases before them and can do so only one case at a time and because their rulings can be appealed all the way to the supreme court judicial willingness to take time to propagate throughout our entire patent system and if we want changes that are uniform, systemic come and timely that save our small businesses and start ups, targeted and balanced legislation needed. they can be achieved via legislation. which was wild pleas by patent reform legislation in congress. and these exchanges reduced the incentives by abusive patent litigation tactics. can target and balanced reforms constrained and and level the playing field for all innovators. and patent suits, about patents allegedly infringed by providing financial incentives for parties both plaintiffs and defendants to take reasonable positions in litigation. by providing opportunities for manufacturers who are best suited and incentivized to step in and defense against infringement suits on behalf of their customers and end users and providing increased transparency of pant ownership to reduce barriers to patent licensing and patent sales. these reforms combined with other changes that are occurring in the judiciary and administratively, attributing the pant system to continue to remain an engine of innovation with strong, clear and balanced property rights of appropriate scope that are enforceable. these reforms will contribute to our competitiveness in today's increasingly global economy. reallocating resources from wasteful litigation to productive research development and commercialization. these reforms will ensure of american innovators will continue to define the top of the global value chain. even as the rest of the world rushes to catch up. reform is not a crisis of faith about our patent system but a way of keeping faith with its goal of promoting innovation and technological progress. if i have learned anything in my experience in the private sector it is that no good company effort rest on its laurels. is always looking for new ways to improve, streamline and adapt to the new realities of an ever-changing environment. from my vantage point as head of the united states patent and trademark office i believe we should treat our patent system is the same way. we need to maintain what is best in our system but we must also strive to improve what can be improved guided by the constitutional mandate to incentivize innovation and the convictions that the best days of american innovation are still ahead of us. thank you for your attention and i look forward to continuing the discussion with my fellow panelists. [applause] >> thank you, michele. please have a seat. but invite our other panelists to come on up. >> i have known both of these people for quite a long time. take your cares, seats please. first, victoria, and many of you know, victoria espinel, president of p s a, but before that as the first intellectual property enforcement coordinator at the white house which was kind of a patent breaking job and before that you probably knew her from u.s. t r where she handled many negotiations and broke a lot of new ground in all three jobs so thank you for being here and also a known michael for a long time, michael waring is director of the washington office and executive director of federal relations with university of michigan, someone i have worked with many years of innovation topics and a real expert both in how washington works and how washington policies might help us about innovation. what i told them for the format and thinking of changing it while michele was speaking but i won't. victoria and michael to briefly say something, respond to michelle ng and we will go into questions. at that point if you have something i will ask you to raise your hand please identify yourself, keep it as a question, not a speech and we will move ahead but victoria, why don't we turn to you? >> thank you for inviting me to be here today, a pleasure to be here i thank you and michele for pulling together this event, and congratulations to you and your confirmation. enduing great work that you have for many years and it is fantastic. it is an honor to be up here with michael so our university, an incredibly important part of the innovation system and the prior job for the university, a pleasure to be with you. i of victoria espinel and my organization represents the software industry worldwide and one of the reasons my job is fun is because our companies are among the most innovative companies in the world and because of that they offer the largest hand holders in the world so we really believe in and clearly understand a well functioning patent system. we also believe what you said about keeping faith with the patent system that is important that our litigation system be set up in a way that doesn't allow bad actors to get our halfwit system id our patent system and so it is very important that there be changes to the litigation system to avoid the kind of abuses that has been happening today. it is hard for bad actors. and joy various pieces of legislation moving into the system, four things to focus on so i will mention this briefly and turn things over, we want to make sure that if anyone gets for the patent infringement they get genuine notice that a suit filed against them clearly lays out what the actual allegations are against them. that notice is important to having official litigation system and feared litigation system. second with respect to where this is, cases of robbing the right chords and avoid form shopping, and bake litigation and discovery specifically as efficient as possible so therefore we think it would be best discover was delayed to be addressed to get them out of the way. we want to beat her frivolous cases being brought. is important to be awarded in cases that are objectively unreasonable and an efficient mechanism to be awarded. financial incentives have shifted some is not so easy and cost 40, they are better for the system as a whole and it will be stronger and better than it is today. and could talk at earthlink, to turn the mike over. >> thank you very much for the invitation, always a pleasure to be here with michele and victoriana and talk about a topic we seem to be talking about for a long time, we went through three congresses where we wrestled with the notion of a patent system, what should depend system be, how to update it to make it fit with the international, our understanding of the patent system and did three congresses to pass the act and here we are less than four years later trying to make major changes to that legislation so that is an interesting dynamic interesting place to be and i shall also say before i get too far down the road, i worked for the university of michigan but i am not speaking on their behalf just representing the higher community at large including six associations that have banded together to work on behalf of the university system around the country and i am also not an attorney. as far as my colleagues here on the lot, haven't been involved in negotiations specifically with congress on this issue but i am aware what is going on with this issue so i will respond the best i can to the questions and concerns and hopefully talk about things beyond legislation and there are other issues we are wrestling with. let me start by saying, why universities care about patents and there was an allusion to the act in 1980 which was the watershed piece of legislation that almost didn't pass. it has in the waning hours of that congress thanks to the work of bob dole at the end of congress, trying to finish above the year-end able to get some approval by a couple senators to take hold of of this legislation and move the bill through congress. until then the government when it funded research the government held the patent on a research. the government is not always good at business and a lot of the things that were created in university labs and other places around the country that were funded didn't have a mechanism to get that invention, that idea out to the private sector to develop into a real product or new technology. they said let's do this differently, at universities have the patent and see if we can use that as leverage with licensees to try to create a marketplace for these ideas out of that was born the tech transfer of the system the we had at universities and the last 35 years and i submit it has been a very effective system for america. the most recent statistics from the university of technology managers association is it is created in the last 35 years $1 trillion in economic development, thousands and thousands of start up companies, 3 million jobs hundreds of new drugs we all are able to take advantage of to improve health care in the united states that is a wonderful legacy and other countries are trying to mimic that with their own versions around the country. that speaks well to the system, the patent is really the bridge from the lab to the marketplace from most discoveries so discoveries created in the lab bring ideas to the tech transfer office and the business people say that is an interesting idea interesting knowledge, interesting discovery, what could we do with that? if we had a patent should we get a patent first of all? a complicated thing expensive proposition, new knowledge, the we find a licensee who would want to develop that hand? who would want to fund, provide further research dollars to finish up the work started a university campus which is fairly basic and get that out to a new startup company or existing company and reap the benefits of that, all of us do as taxpayers and american citizens. it is the linchpin. i was at a forum a couple months ago and an invented scribe depend as collateral. a collateral that would then be used to attract the venture capital that will be needed to take that idea out of the lab and get it to the marketplace where people can take advantage of it and that is why can'ts are really important and patents the things that universities need in order to do their job to get this tech transfer process working by and large so when we see legislation we think will make asserting patents more complicated, more expensive potentially more risky for inventors and their hand holders and licensees we get concerned. that is part of what the debate has been in congress, where to go from here. during those three congresses we worked on, it took that long to come to a consensus point of view and in the end when the bill passed everybody didn't get everything they wanted, they were able to live with the outcomes. i submit if you look at the situation today that is not the situation we have now with this legislation. we continue to have large segments of the country, universities included, with major concerns about the legislation being considered particularly in the house. i would throw that out for people to think about. the difference, the political situation in 2011 was fairly a consensus view.and now where we have such a divergence of viewpoints on other legislation. we care about these issues and are involved in these issues and work closely with groups and been at the table to negotiate with house and senate folks to work on these issues and why the university is feeling so strongly about patents. i feel strongly about that. >> i start with a general question by posed wall street by will begin with michele. one problem we are looking at is the transition in how we think about economic policy as we move into an economy that is driven more by intangible assets, like this is a big challenge for how we measure how we construct policy. many of our policies are out of date but it is also as michele noted something that is the quotable problem. there are a lot of positive statistics you can say about the u.s. patent system. will be in any number of things you s p t o is a non appreciated through. one thing we begin in patent litigation, let me start by asking michele when you think about positive patent systems when you think about japan or the e.u. or china, how do you think we stack up? where is it we would want to improve our performance to be competitive? let me ask victoria and michael to comment on that as well. >> let's see. i think there is a lot we do right in this country and now the have the privilege of having a role i have speaking to many of the leaders in the world i do hear a lot about what we're doing right and a sense of what they would rather not have a part of. .. >> >> and dave matter of time to strike the talent. >> clearly something i thought the lot about but how it we account for trade balances is completely out of date. the go back to the topic at hand our ptl does tremendous work that you have taken on with vigor to improve to change the process to make sure they have the funding that they need. was so i think it is lowe's the patented system and more the with the litigation vince system is structured to take unfair advantages the problem. the issues that we have are not issues that we see in countries around the world because our litigation system is set up differently. i am keenly aware of that and what that will do is make it even stronger. i think when there are frustrations about the system because of the litigation process that can cast a pall to read people doubt that is bad collectively if you doubt whether a patent is a good thing but it is part of the system to make sure to clear up that litigation than the shadow of doubt cannot be cast out. >> michele touched on balance of interest. that is the tricky part. what we're doing is read litigating to do the positions but they're not any easier to resolve. we would agree that day get the mom-and-pop retailers threatening them with a $501,000 penalty because they use of pated technology and though wife by is wrong what is interesting but hr9 does not even deal with that issue. if you make people argue their entire case before it even comes to trial that will be tricky. the tavis some of this you cannot get them going to court is always a last resort and most of the time they think there may be some infringement. either a licensed taken or the technology does not infringe. so these are all questions of balance and where does that need to be? i would submit a jardine anyone who goes to court and loses much show they have a value to their case goes too far to rebalance the system. that is what we do come back to. for the big parties and the small parties. it has now come out to raise those that had serious concerns about this legislation they think there'll be some question of validity or the value to get it to stand up under scrutiny because people will not make those investments. >> we did invite michael. [laughter] >> the one that says if you lose it is not something we will support our companies are very innovative. we have a real interest to make sure it is not too difficult and we will all not support but we do think to be objectively unreasonable then you should be awarded and we think that will be helpful with the bad actors says of reasonable place but it sounds like then to hold up under scrutiny they are real innovators and then it will be held up under scrutiny. if i am not that concerned about having a system we have a strong path. i don't like that provision as a losing case system but the abuser case system if he would use the system plaintiff or defendant if you run recently asserted then you should pay. to defend a case for logger there you should have. so to make it more expensive to a gay didn't abuse and tactics. and we're all in this sabo together universities, businesses co mpanies. universities are incredible in chin's of innovation reword not be where we are today without the contributions of universities but on the other hand, when they license technology out to the startup company they will be there facing patent infringement lawsuits that are not abusive to allow that to processed to make sure they strike that balance and that is why very smart people are with these issues i am optimistic but it will require every betty's and put. so we have to preserve the ability when we need to. >> and michael mentioned many people don't know how important that was to sustain the technological lead. maybe a good question to ask. >> what are the of biggest challenges? to best treat than up at an system. >> as i said with us keynote won a the issues we're focused them on a at the uspto you may say the you are not the first of the last to say quality is a private -- parody so why now? because number one all the discussion about litigation is even more important not to issue not because there is a cost both ways. number two for the first time we have been given the ability and i cannot tell you what a difference that makes it to do the job. we have the price of the patent application and if we're not getting access and then make do with less. so to go up and up so now weirded a position is said long-term initiative but getting that chiles right to issue opinions but i will stop there because i could go on of course, . [laughter] for the purposes of this audience those are the top priorities. >> that review process has added real value. i am curious to ask a question it is the innovative step the ptl has taken for what they add to the community. >> as many as you know, as the first director i was irresponsible for those satellite offices. we have for outside of the d.c. area denver, dallas, detroit and a silicon valley. even if all they did was help process applications that would not take the vantage of the full potential. we have so much innovation in said that occurs outside of the washington d.c. area and so many small ups -- start of set don't have the resources to fly the council out to interview or to participate in the review board. so really nothing but the upside to bring a wider range of ptl services and materials and we developed lots of policies and procedures that the uspto we now have a more broader range of been put with guidance now it is no longer of big company who are fighting in what so that is critically important so it is though win for everybody. >> the key for opening that detroit office. to recognize the number of engineers that now more and more that has been very helpful so it is great. and if the kudus good. we are fully behind every time it comes around to be taken off the top. >> i will see if there are any questions of the group. please introduce yourself. >> as a small start up and from the standpoint of the startup mode he is out of the pto services to look at the web technology low-key yet things that have not been put together before. day you have to hire a big firm? so when i can hear is you submit and then three years later you find out maybe there is a different outcome with a different firm. or some equity in exchange with those that are set up that way. soul-searching what is patentable. >> thank you very much for the question i come from a startup community and thinking about what i want out of the satellite office based on past experiences i will say that pto has a wonderful panoply of resources targeting the start -- the target environment with the fifth come from the smaller companies so we have the inventor hotline if you have questions you can call. we have a trade mark video available on-line for viewing and a pro bono program if it is the other resource inventor if you don't satisfy that we also have another program that means you can write to the application yourself we have said dedicated team at the uspto to handhold you through the process who can spend a little bit more time with you. we like to say we have all whole range of services. if you qualify for small entity status you could have the 50% discount on these or even an 75% so we are trying to be user-friendly to make all resources available. we hope one day you grow into a full company to pay full fees but contact us we are glad to put you in touch with all resources and the satellite offices are playing a critical role on the ground in the innovation communities. >> we have unleashed pandora's box. >> tom dickinson. ivan like to ask about the issue of patent eligibility. it has been one year since the decision came down at the supreme court where they attempted to narrow what was eligible and a steady came down that said only one at a the last 20 decisions were held patentable 100 percent of the cases were not now of the rejections have been doubled under what no one. is anything patentable anymore or not? [laughter] this is a presumption of validity to apply to section in 101. >> that was rarely a good question of. [laughter] >> although i cannot tell which side you were on. [laughter] >> so to see how it is interpreted by the courts and it uspto we feel it should be overturned with how that develops but we have taken the view that nothing is patentable. >> but in the area of software it is eligible but there has been in significant changes is the case law from the supreme court in the area of software you have seen the court's respond and the pto was on the front line here issuing guidance with input from the public. but we all hope for greater clarity on the issue that is extremely complicated. i think we will see a lot of development in the foreseeable future. >> we appreciate on this issue it is a very important topic >> but the international group thank you for your position but those in africa have invented things and then they get into the hands of different countries so highroad to protect themselves? into the big guys' hands. >> and then because of the systems we will see the innovations taken out by the large european companies. to help address this problem? >> with countries across the globe my chief of staff and the african continent talking about intellectual property that international affairs team was trying to get other governments with the robust system because of not only benefits the indigenous inventor is the also american companies to off export products and services you want to make sure they're also respected so to where we can have a level playing field, or all countries all of us will be better off as the global marketplace we should be encouraging innovation and supporting it whether foreign or domestic if the best ideas come to the top. >> have the votes by big guy a argument is how you balance the rights it is designed to protect the little guy the little guys need some help and if we go too far in the effort to change the dynamics changes can be made it will be hard for them to go to court at some point. >> let me come back to another impression of china. to move up the of value chain to make things for those that patent themselves. of book didn't 1900 had a book that he was complaining within the couple of months of the new product showing up in china there were already copies of the market. i know pretoria doesn't spend any time on china. [laughter] how low do you see as working with china or the chinese reacting? >> i just returned from beijing from the vice premier and i am encouraged about the desire to strengthen the it enforcement and protection but there is a long way to go. there are undergoing changes with legislation on the patent law and copyright law trademark law to provide input to that. and considering trade secrets law changes also antitrust and anti-monopoly issues and rework closely with the counterpart offices i am the co-chair of the china joint commission of commerce and in trade that we are the head of that end we are working with that to get to a place where domestic and foreign innovators are treated. >> guest: those idea is to be protected there is a lot of work to be done that we emphasize that market forces can determine where they are sold that that will benefit everybody. >> i would say a couple things but china has struggled the part that was driven with the u.s. patent office that they read not good quality. we also have far registration no examination system so that they are unexamined. >> and how that track is working. but they want to see that. but what i was going to mention is how to be anti-competitive to undermine the patents in china. so we are still working with the chinese and u.s. government. there is the tremendous amount of innovations so there are lots and lots of issues with the it related but if there is intellectual property space there is the view of this we are holding over the long term we will see the approval of china. the to be with those chinese university leaders. tour exchange students and faculty said to be involved in those discussions. >> visit is important to have judicial changes to have the specialized case and is a national court. to local favoritism a national court has the experiment for judicial reforms. man's maybe even end greater damages for infringement. >> but the profits have been working in the court over the last six months with the intellectual property issues to the of of positive reaction to that. >> when we talk to people from chinese companies it appears that they are eager to incorporate themselves to sell the global market. it is positive for a bumpy ride. >> we do have access to medicine as an ngo. ice though think that would be preferential treatment with pharmaceutical patent rights. but india said treats pet and stiffly than pharmaceutical law for patents on drugs that don't short approve with the safety or efficacy. so if that car about provision and passes so what is that aspect to have differential treatment. >> if we have someone from far mightier? >> thanks for that question those are valid concerns as you know, it is the topic discussed and no legislation has passed but it is what people are focused on. >> it is done to compare china they are little further along in the intellectual property protection so it is one of the places reseed disparities with how the two countries said minister things it is an issue of concern. >> i am with the american bar association i want to do is take you all to get here in one space the first time in a battle they china but russia and iran as a threat in this space. so russia also plays of big role in diameter and private practice now but the enforcement issue is what we are concerned about for our clients and a variety of activities that has both the patent trademarks and cyber and i am carey is also most recently at the indictments of the university professor and the fact they are involved in the cutting edge work with military and dod to see more penetration and information leaking out. what is the role we can play in the private sector for enforcement for the trade mart work? >> we have enforcing intellectual property that is deteriorating to doesn't target that intellectual property but a lot of are unhappy with the position in the government has taken. and we are very concerned about in the country to stay within their borders so that is a real concern. summit would be a real blow corporation but that has taken but some of the steps that russia has taken with the russian in government so it is difficult to give advice on how to try to improve the situation in russia. and there is an interest with a system like russia but i don't think that that is the main focus. with of corollary of fact - - defect is what we are concerned about. but it looks like it will be difficult rescissory can work together. at this moment in russia it is hard to say that. it is difficult to give you advice but we have operations in russia and we are concerned about the stage of operation. but it is difficult at the moment but what we are concerned about them looking to russia as the president but certainly it is of of grave concern and as they put in place as a positive example. >> with the patent and copyright equation we share those concerns in fact, we recently have established the attache in moscow we do have a program that is a representative from the ground to help americans navigate the id - - the landscape we have about one dozen world wide we have three or four in in staging and because the landscape is as challenging as dimension to with every source american companies know what they are stepping into as a complete solution it is the sharing of information how to navigate that environment and import

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