There’s a sense of the relevancy of [the David Bowie song “Life on Mars”] for today, given the unmoored nature of the global sort of world that we live in, political events, cultural events…

FOGLE: The title of the exhibition came much later than the actual show started developing. In 112 years, the show has never had a title other than The Carnegie International. And I really wanted to start the exhibition before you walked in the door, so I wanted something that was evocative without closing down, meaning that it opened up questions before you walked in the door. I have always been a big David Bowie fan, and the song “Life on Mars,” which is on the “Hunky Dorey” album that he did I think in ‘71 or ‘72, it’s a song that really talks about kind of a world spinning out of control and about — he longingly asked the question, “is there life on Mars?” For me, thinking about other worlds, thinking about what contemporary art does, it takes you to other worlds. There’s a sense of the relevancy of [the David Bowie song “Life on Mars”] for today, given the unmoored nature of the global sort of world that we live in, political events, cultural events, and whatnot. So it seemed like and apt title to give, and an evocative title to give to an exhibition that was about 40 contemporary artists from all over the world.

The lyrics express a desire for humans to connect with each other, with another world?
FOGLE: Yes. I wouldn’t put too much stock in it — I don’t want the title to lock down and clamp down on the artists in a way. It is a metaphor. It’s just kind of what I just said, which I think, for me, it’s a metaphor of thinking about other worlds, thinking about utopian places, thinking about a human longing for connection or for escape, either way. So for me it really is a way, just a very loose framework on which to hang — to get someone in the door thinking about the exhibition before they see the show.

In the exhibit are works that are made by hand that last only a short period of time– the duration of the exhibit. There’s an ephemeral aspect to it. Is that related to the nature of personal communication? Is it one shot reaching out?
FOGLE: I don’t think it’s the nature of communication. I think that, and it’s only a few artists, the hand is very present. But the ephemeral kinds of work that we’re talking about — Richard Wright would be a really great example — there is something about that and the transitory nature of his work. He paints directly onto the wall with wash. In nine months, when the show is over, it gets painted over white.

Ariel, Friedrich KunathAnd it becomes a ghost in the gallery. It’s not a stencil; it’s not a silk screen. It is done by hand. I think that the most basic form of expression that one can conjure as a human being is picking up something in your hand and making a mark, making a mark in the sand, making a mark on a piece of paper, making a mark on a painting, a piece of clay. Forming something, that is human, really human, all too human kind of a quality. There are not a ton of works in the show that have that exact kind of transitory, ephemeral feel to it. But then there is a lot of work in the exhibition which is using low-fi materials, more democratic materials than we think of as for fine arts, as opposed to marble. We have Thomas Hirschhorn using cardboard, packaging tape, and tinfoil as opposed to oil paint. You have someone like Barry McGee, painting on wood, cutting it up, and making this incredible installation that you walk through like a street. Looking back historically, you have someone like Paul Thek, who purposefully chose to paint on newsprint, which is — as our conservators will tell you — not a very sound medium for the ages. And he made that choice for two reasons. One, it was very much about a democracy of the, “I’m gonna paint on whatever is available. I’m not going to worry about the preservation of the work in a way.”

But it’s also — he was painting on newsprint. It was also painting on the events of the world, on the things that wash over us every day that constitute our relationship to the greater world. So the support structure itself that he’s painting on — he’s painting a new world on top of our world, in a way. Then with the untitled earth painting, which became one of the icons of the show, he’s literally painting the earth — or the world on top of the world.

What surprised you the most about your experiences curating the show? Something that stood out?
FOGLE: It’s hard to say. Phil Collins’ new film, I knew what it was going to be about, but I had no idea how beautiful and sophisticated it was going to be. I really think he outdid himself. It’s a piece that I think is his most mature work to date.

It’s very powerful, very emotional.
FOGLE: It’s an incredibly emotional, but yet analytical film. With all of Phil’s work, there’s an emotional aspect, and there’s a very removed aspect, where he’s analyzing as well. And the camera movement in that film is very much on the outside. You identify with the people in front of the camera, but the camera has another sort of agenda. It’s a very interesting kind of photographic — his director of photography and film chose some very interesting sort of ways of doing a so-called documentary. It’s not a documentary at all, actually.

And how old were you when you started your first business enterprise?
DAVISON: I was 11 years old. It was a candy business.

Selling candy.
DAVISON: Yes. Every day I’d leave my house, walk into our town and meet with the guy who owned a candy store. I’d buy candy from him in bulk and then get on the bus and take it to my school locker. The kids in that area didn’t have access to candy because they lived further out in the country. And so every day I’d arrive with my goods and I would stock my locker. My best product was Charms lollipops. I’d buy them for a nickel and sell them for a quarter.

That’s quite a mark up.
DAVISON: Yes, and it was a lot of fun. And that went on for a couple years until candy started showing up in areas of the school where they didn’t like it so they said “no, we can’t have you selling candy in the school.” But it was a great time for me in my life because I learned how to manage money. I learned how to manage an inventory. I wanted to turn my inventory and I learned what customers wanted and made sure that I gave it to them. I also learned to serve others the best to profit the most.

…when you are surrounded by creative and business influences at a young age, as I was, you are naturally formed into a person who feels very comfortable in those areas.

Tell me what influenced you as a child– something that resonated with you when you were growing up.
DAVISON: As far as creativity, the biggest influence would have been my Uncle Bob — that’s what I used to call him — who was a family friend. My mother and uncles all grew up with him. He was a scientific guy who experimented a lot and could build anything with his hands. He could tear engines down. He could build a deck, put a roof on a house, do plumbing — he was also my Boy Scout Den Master — and I learned so much from him. I learned, basically, if you think it, you can create it. He was constantly searching for knowledge, which taught me to try and try and if you fall, just get back up and try again. Over time, you can gain great knowledge because most people tire of getting back up all the time. Eventually, others stop getting back up and that’s called opportunity, as I would hear from the business mentors’ side when I was a child. So, I learned to make getting back up my strength.

As you found yourself in this business, did you see those influences as helpful? And do you continue to find it helpful?
DAVISON: Yes, because when you are surrounded by creative and business influences at a young age, as I was, you are naturally formed into a person who feels very comfortable in those areas. I mention this because I have found that those influences are not commonly found. Creative people prefer to spend their time doing creative activities because that’s where they feel good. And business people like the game of business. I was fortunate enough to be exposed to both at a very early age, so I am comfortable working with people who are creative and those people who are involved in the business area.

On a side note, I must mention the influence of my mother. I was about four years old when my dad left and my mom was wise enough to know how to turn that into a great opportunity for her son. She realized that I was going to grow up with no real male influence in the home, so through a family friend, she put me in touch with other businessmen in the area at a very young age. She found out that some of the businessmen used to have breakfast at a restaurant called the Red Raven back then; it’s now the Holiday Inn. And one of the guys there who had bought my grandfather’s business told her to “bring your kid over.” So every Sunday my mother would drop me off and I’d go in and have breakfast with them.

How old were you?
DAVISON: I was twelve or thirteen years old when it started. At the table were people who were vice presidents or presidents of major corporations in Pittsburgh. There were half a dozen and most of them self-made. So, basically, the rule was, “shut up and listen, kid.” So I did — I sat there on Sundays. And years later when I was in college, I would come back and I’d still go and see them and have breakfast with them, because it was better than any college education. Sometimes after breakfast, we’d get in the car and we’d go to their offices. Or, if they were building something — for example, one of the guys was building the largest dredge in the world — I actually went down and saw it after breakfast one day and learned what it meant to dream big. They were always building something. Those were the big influences in my life when I was younger.

Despite the mega-profits recorded by big oil, independent gas station owners may actually lose money when prices go up. That may sound counterintuitive, but in order to attract customers, gas station owners have to keep their prices low and cannot always pass on their costs to consumers.

Before we examine what affects the prices at the pump, let’s take a look at what makes up the retail cost of a gallon of gasoline. In March, the retail price of gas was $3.24. Breaking down that number, 72% of the cost was crude oil; 8% spent on refining; 8%, distribution and marketing; and 13%, taxes, according to the Energy Information Administration, statistical agency of the U.S. Department of Energy.

Currently, the U.S. average retail price for regular gasoline is $3.57 per gallon. The price varies from region to region, based on a number of factors, including transportation costs to get the gas to a retail station, real estate prices– a gas station owner who’s paying a high rent is going to have to recoup some of that money from consumers – and most significantly, taxes. In California, where the state adds another 38 cents to the already high cost of gasoline, consumers are paying nearly $4.00 a gallon. In contrast, consumers who live in close proximity to refineries on the Gulf Coast pay $3.50 per gallon.

There are a number to reasons why the price of gasoline goes up and down, including changes in the price of a barrel of crude oil; geopolitical tensions; and economic conditions in the countries purchasing the oil, not the countries receiving the cash, according to Mark Waggoner, president of Excel Futures in California.

“For example, if the U.S. is having economic turmoil and oil companies can’t afford to buy the oil, they’ll buy less so the demand goes down and the prices go down,” he said.

But supply and demand is probably the main reason for the fluctuation in the price of a barrel of crude oil, the price of a wholesale gallon of gasoline and the price of a retail gallon of gas.

“The dollar is having a major impact on the price of energy,” [Flynn] said. “The leap that the price of oil has made is unusual and it’s really not because of a supply disruption or war in the Middle East but because the Federal Reserve is trying to save the housing market by creating a situation where they are devaluing the dollar.”

“Although some people think gas prices come from outer space, and some people think that they’re made up in the back rooms of ExxonMobil, the reality is that the prices of oil and gas are set on a global market with the convergence of buyers and sellers that create a process that determines the price of a barrel of crude oil on a particular day, and at a particular time,” said Phil Flynn Vice President, Energy and General Market Analyst with Alaron Futures and Options in Chicago. “Obviously those prices are also determined by supply and demand. And the futures market is supply and demand in its purest form – if there are more buyers than sellers the prices go up, if there are more sellers than buyers the prices go down.”

The question right now, though, is why are prices continuing to go up, even though there is evidence that demand is going down? The answer is because the price of a barrel of oil is priced in the world market and it’s priced in dollars, Flynn said.

“The dollar is having a major impact on the price of energy,” he said. “The leap that the price of oil has made is unusual and it’s really not because of a supply disruption or war in the Middle East but because the Federal Reserve is trying to save the housing market by creating a situation where they are devaluing the dollar. And because the rest of the world buys oil in devalued dollars, they want more dollars for a barrel of oil.”

When the price of a barrel of crude oil changes – the current price is $115.63 per barrel – the wholesale price of a gallon of gas that the gas station owner pays also changes – the current wholesale price is right around $2.95. That means if a gas station owner is paying more for a gallon of gasoline, he’s going to pass some of that increase on to consumers.

It appears that an increase in the price of crude oil sparks an immediate increase in the price of gas at the pump. But is that really the case? Well, it depends on who you ask.

Gas station owners immediately react to the cash market because they have to fill their tanks just like the rest of us do, Flynn said. So when the price of crude spikes up very quickly, they increase their prices just as quickly because they know they’re going to have to pay more to buy gas tomorrow to replace the gas they sold today, he said.

“In this business there’s an old saying, ‘prices rise like a rocket and fall like feather.’ And there’s a little bit of truth to that because gas station owners don’t really make much money when the prices go up and sometimes they actually make less money,” he said. “So when the prices start to come down, because the gas station owners lost money on the way up, they’re probably not in a real hurry to bring prices back down. They want to try and make up for some of the money they lost on the way up.”

So hard as it may be to believe, it really is a very difficult time for the gas station owners who are also upset because they don’t like these high gas process any more than we do, he said.

Essentially, the end user is enabled a view of one’s self as viewed and determined by other devices. This view is established within seconds and remains accurate until the end user repositions; then the view is reestablished. Of course, each system satellite in each country will provide a consistent and precise coordinate of one’s position on Earth, a worldview if you will, of your position, by several sources.

There are thousands, perhaps millions, of GPS locator devices utilized on Earth. While augmentation devices in some instances do provide a better signal, in general the GPS satellites do not place a higher importance on one ground-based locator device than the other– they just receive its signals and calculate the end results accordingly. All serve as useful information and merit, with an equal validity and place on Earth. One GPS receiver does not interfere with another.

Back here on Earth, much has been written and discussed about the positioning of the U.S. in the world; where and how military, economic, political, and democratic power could or should be used. There are ongoing dialogues about the rise and new positioning in the 21st century of other countries and regions, including China, India, the Middle East, and a re-emerging Russia, and how this affects the position of the U.S. in terms of leadership, respect, and engagement in each others’ lives. It has been said that the U.S. does not enjoy the leadership position and respect that it once held as recently as 10 years ago; that the 21st century leadership of the world is currently up for grabs.

So what does the GPS have to do with foreign policy?

A country’s foreign policy is defined by many factors. A novel idea may be to consider the design and function of a GPS when thinking about that definition. The location and view of the definition of one’s presence is arrived at in a multilateral manner, from both afar and internally. A bigger GPS receiver does not equate with a more important presence. Your position in the world as viewed by all indicates who and where you are, not your own definition thereof. In order for the entire system to provide precise information, all three components of the GPS need to be in working order, and they all need to communicate flawlessly; thus, accurate and frequent communication is key, and an understandable message is critical.

As the United States works to define its presence and position in the world in the 21st century, and government leaders define 21st century foreign policy, the working components and relationships of the GPS may be useful in viewing and analyzing one’s position as determined by various sources, both internal and external, and reflected throughout the world’s other valid and credible presences.

Current Status

As of April 18, 2008, the Patent Reform Act is stalled in the Senate over disagreements about key issues. Speculation has already begun that the bill is not just sidelined, but is in jeopardy of dying. Bill co-sponsor Senator Arlen Specter commented that “the patent bill is … extraordinarily complicated. And its consequences are very, very far-reaching.” Democratic Senator Patrick Leahy said that the negotiations stalled over “just a handful of words.” Mark Isakowitz, legislative strategist for the high tech industry says the bill was “literally one sentence away from being done” and settling on a rate for damages was the last remaining issue on the table.

There are many issues and problems addressed in the Patent Reform Act. Nearly all parties agree that some reform would benefit the system. It is widely accepted that the issue of patent reform in the U.S. congress if not the current bill, will be an ongoing issue that will surface again in the near future.

Black and White speaks with George Davison, President & CEO of Davison, Inc.; Keith Grezelak, Chair of the IEEE-USA Intellectual Property Policy Committee; Chiara Orsini, Associated Director of Intellectual Property at University of Pittsburgh; Marc Malandro, Ph.D. Associate Vice Chancellor for Technology Management and Commercialization at the University of Pittsburgh; and Jack Lasersohn from the Board of Directors of the National Venture Capital Association. Contributing statements were provided by co-sponsors of the bill Senator Arlen Specter (R-PA) and Senator Patrick Leahy (D-VT); and vice presidents for Dupont, Dean Oestreich and Uma Chowdhry.

Interview with George Davison

George Davison is President and CEO of Davison, Inc. Davison is a new product development company that helps individual creators, corporations and entrepreneurs. Its services include research, industrial design, virtual rendering, video, animation, product samples, packaging, presentation and royalty management.

Tell me about the current U.S. patent system. What is positive about it and what needs fixed? Coupled with that, what are the negative components from your perspective?
DAVISON: What is positive about it is that it has functioned well for about 200 years. It’s a proven system that was written by people a long time ago who understood commerce that didn’t have a major amount of politics integrated within it. In other words, you had people in the old days who wanted to build a country and understood industry from a very basic level and that thinking from the founding fathers built a very strong patent system that, in turn, helped our country build itself into what it is today.

Why is that now good for an inventor? Why does the patent system work well for an individual inventor the way it is right now?
DAVISON: I would say it works well for the individual inventor today because it’s fairly consistent with the way it protected inventors years ago. So the system is proven historically.

One of the proposed changes is a change from first-to-invent to first-to-file. And you see first-to-invent as working well for an individual inventor.
DAVISON: Correct. You reward the person who invented it first, not the person who had enough money to pay the attorneys and patent office first.

What do you think the compelling reason would be, then, for someone to want to change it to first-to-file?
DAVISON: The reason is simple economics. Our forefathers under the current system created a logical and low cost method of knowing if you should ever file at all. They created the “one year rule” which allows inventors the opportunity to test market the invention for one year and see if you, the inventor, have created something that people would pay for. In other words, if you cannot sell any in the first year, don’t waste your time and money on patent filings. Under the first-to-file system, fear would cause everyone to file regardless of market conditions and certain special interests benefit greatly.

It’s built well. You need to protect it. So first-to-file would throw a major change into the system and one that puts risk into one of the basic building blocks of how our country was built.

But you’re still protected during that time?
DAVISON: Correct. You’re still protected during that one year period of time, which is of high value because you get to find out what you should be putting your time and money into based upon the reception of what you’re getting from who your consumer would be with your technology. So if you don’t get any reception on the technology then don’t waste your time and money and file with the patent office. Our founding fathers set it up that way because in the old days, before we had big government, big politics, etc., we had a system that was built to perform efficiently. Back in the early days, country people had to build the basic necessities of life to survive. So they didn’t want us wasting our time on things that weren’t going to bear fruit. So they gave us a full year. So first-to-invent works well within the architects who designed our system and it still makes logical sense today when people use common sense and they apply it in that common sense manner. Where it gets confused is when you start to massage all this information and you’re better off not massaging it. It’s built well. You need to protect it. So first-to-file would throw a major change into the system and one that puts risk into one of the basic building blocks of how our country was built.

If you look at rural African schools, they haven’t got swing sets and the kind of playground equipment that European and American kids have got.

You saw a version of the roundabout at an agriculture fair in Johannesburg. Why were you drawn to it? What made you want to do this?
FIELD: Well, what I saw at the agricultural fair was actually a model of a roundabout. And it was a working model built very small, perhaps at a tenth scale. I just thought it was a really cute idea. I had seen 100 people battling to obtain water in various parts of the country. And I just thought it was a really good idea in a very simple way, and an environmental friendly way of providing water to people. If you look at rural African schools, they haven’t got swing sets and the kind of playground equipment that European and American kids have got. So it was like killing two birds – or, since then, about six birds – with one stone. That’s what turned me on to it pursue it.

Were you looking for a project? Or did it come to you to work like this once you saw the model?
FIELD: No. I’m a keen fisherman. Often would get out to the coast to a place they call Transky, which is on the east coast of South Africa. It’s called the “Wild Coast” because it’s called the – it’s wild, you know. It’s hard to get to. You need a four-wheel drive car and that’s why the fishing’s good. It’s difficult to get to. I think I went down there for a boy’s fishing weekend, and I observed some ladies standing next to a windmill waiting for the wind to blow, because the concrete reservoir at the bottom of the windmill was cracked and broken. And it wouldn’t hold water. And we were there for a couple days. And when we came back and these ladies were still there waiting for the wind to blow. And I thought, “that’s quite pathetic.”

So I had this notion in my mind of trying to come up with the idea of a sort of starter handle, like you get on an old motorcar, so you can turn the windmill when there was no wind. But that didn’t work because you’re going the wrong way for a gearbox. So, yes, I was looking for a solution. And I just stumbled across one.

Once you had the idea and were looking at reengineering and redesigning, did you build an initial prototype?
FIELD: Yes. The guy who came up with the idea and I set about designing it and redesigning it. I’m not an engineer at all, but he came up with a couple of designs. And the first one that he came up with worked on an Archimedes’ screw principle. That only goes in one direction. And so the kids showed a resistance and wanted to go both ways. They all went the other way, the kids pumping water. So he had to come up with a method to get this thing to work in both directions, which is what he did, eventually. And we – my company, Roundabout Outdoor, bought pipe from him, and we reinstate it a half a dozen times since then. It’s going to be an export-quality product that we can leave in a very rural community. And it won’t tear or break down. And it won’t get damaged, ’cause it’s very, very strong and robust. We have trademarks in every country where we believe it will be used in the world.

Okay. As good of a cause as this is… what your organization is accomplishing, do you have competition at this point? Has competition emerged?
FIELD: Yeah. We’ve had an outfit copied our system completely in South Africa. And we informed them they were infringing on our intellectual property via our patent attorney. We do know that the system has been duplicated in India. We don’t know how effective it is. But I’ve looked at their designs, and without being slanderous to them, I can tell you that from what I’ve seen on the drawing board, they should not put in the field. It’s not going to last far with this. It’s just the wrong thing.

Do you know the companies who you feel infringed upon your patent and copied your product? Are they for-profit or are they a nonprofit like your organization?
FIELD: No. They’re a for-profit.

Your product works by extracting water from the ground with pumps powered by children playing on the roundabout, or the merry-go-round, and you subsequently sanitize the water and store it in towers. Have you looked at, or has the thought come up for using this type of solution to solve other types of problems in similar environments, as in the sub-Saharan area?
FIELD: Yes. Well, we won the World Bank Development Marketplace competition in February 2000, in Washington, D.C. We were the highest-scoring division in the event competition was the replicability of the system. You know, we can take this system we’ve got here in our factory in Johannesburg, put in a 747 and fly it into your backyard, so to speak. Actually, if we find a borehole that has a sufficient quantity of water and quality of water, even I could bop this thing together and it would work exactly the same in your backyard as it works in South Africa, or it would do the same in India or China or anywhere else. Obviously, it won’t work in the Artic Circle or in the desert it would be so hot, you know, you wouldn’t be able to touch it. But in fairly temperate climates it’ll work anywhere.

Before you founded PlayPumps your career was in advertising. How do you compare the two in terms of personal satisfaction? Is what you’re doing now as rewarding, more rewarding? Can you speak to that for a bit?
FIELD: Sure. I mean on a personal satisfaction level, I believe what I am doing now is a lot more satisfying. I can sleep at night. It really rocks me to know we’re making a difference to a lot of people who are nowhere near as privileged as I am or my family is. But when I was in advertising, I worked for Penthouse Magazine. That was a lot of fun, too, and quite satisfying.

Kept you up at night, huh?
FIELD: Oh yeah.

How many people are involved in the Johannesburg operation?
FIELD: In our offices here, we’ve got about 14 people who organize database and computer systems. And at the factory we’ve got about 35 people involved in the factory manufacturing the product. And then we’ve got all of the installation crews, who are contractors in the various provinces and countries where we install. So, all in all, this probably – we’re close to a hundred, I would guess, in total.

Are the majority of those people from the area?
FIELD: Yes. Everybody at the factory works and lives in the area. Everybody here lives in Johannesburg. And all of the contractors who install and repair my timing equipment live in those provinces. You know, it’s ridiculous for us to drive to very far to go fix a leaking crack. We’ve got a Durban crew that lives there and they do all these fixes and do maintenance in that particular territory.

That’s great. I read that in September of last year, 2007, Dale Jones joined the company as the Chief Executive Officer. Tell me, how did you come to know him? What impact will he have? Why was he chosen to be the CEO?
FIELD: Well, Dale is – I don’t know a great deal about his background, but I do know that he was one of the most influential people for one the biggest recruitment agencies in the States. And Steve and Jean Case were looking for someone to head up the operation in the US, that type of international Washington. And they called him up, and he thought that they wanting him to find somebody, when in fact, they were wanting him, personally. That’s how I got to know him. I think he’s going to have a fantastic impact because he’s very well connected. He’s particularly articulate. And because he’s a gentleman and now a good friend of mine now. So I think that why he was chosen to run the company because he’s just such a nice people’s person.

With that in mind, Linda Rosencrance asked currency experts Marc Chandler, global head of foreign exchange at Brown Brothers Harriman, and David Resler, Managing Director and Chief Economist, Nomura Securities International Inc. to talk about the national and global effects of the battered dollar.

Why has the dollar fallen? Are there political reasons? Is there a weakness in the financial system?
RESLER: There are a myriad of reasons for the dollar’s weakness: the turmoil and problems in the U.S. credit markets are a big part of it. And problems in the U.S. credit market are part of it, as is the perception that the U.S. economy is slipping toward recession — all of which tend to undermine assessments about the U.S. as an attractive market to invest in so that tends to pull dollar lower.

Other people would argue that what the sub-prime problems point to is sort of like global overreach — our government is in debt, the military is overstretched, consumers are tapped out, people who ought not have bought homes, bought homes.

CHANDLER: There are two types of reasons: one is cyclical and one is structural. The cyclical reasons have to do with the Federal Reserve first getting done tightening before other central banks and now cutting interests rates much more aggressively than other central banks including the Bank of Canada and the Bank of England, which that have also begun to cut interest rates and the ECB, which is nowhere near close to cutting interest rates according to their officials.

For the structural reasons — people would cite that the central banks are diversifying reserves — I mean that the central banks have accumulated reserves through either intervention or through trade surpluses and are now moving some of those dollars into other currencies like the euro or the British pound. Other people would argue that what the sub-prime problems point to is sort of like global overreach — our government is in debt, the military is overstretched, consumers are tapped out, people who ought not have bought homes, bought homes. So they would say that the long-term decline of the dollar is feeding on itself.

Some countries like Iran and Venezuela have now demanded that countries pay them for their oil in forms other than U.S. dollars. People are worried that the Pax Americana is in decline and the dollar is emblematic of that.

I tend to side much more with the cyclical argument than the structural argument. I think that Wall Street oftentimes minimizes cyclical arguments and exaggerates structural problems. I think the dollar’s weakness in largely cyclical and I would say that a dollar is already in the process of bottoming out.

How have the currencies in other countries been doing?
RESLER: By definition, if the dollar is weaker the currencies of other countries are stronger. The euro in particular is at an all time high or close to it and the strength of the euro is an indication that investors are reasonably confident that the European Central Bank isn’t going to ease monetary policy anytime soon. So the prevailing interest rate differential between U.S. rates and European rates is going to continue. So that makes currency investors in other parts of the world where neither the euro or the dollar is the medium of exchange look to the euro as a relatively more attractive alternative, at least for now.

That may well change because a lot of this international sentiment against the dollar in favor of the euro is predicated on the belief that while the U.S. is slipping into recession or is operating at close to recession-like levels of activity right now that somehow the rest of the world will avert that fate and I think that’s a hope that’s not warranted.

There’s this notion circulating that because of the strength of Asia, China and India, that somehow the rest of the world has become decoupled from the U.S. We’re still the largest economy in the world.

There’s this notion circulating that because of the strength of Asia, China and India, that somehow the rest of the world has become decoupled from the U.S. We’re still the largest economy in the world; we still buy a substantial portion of the world’s output and if we’re buying less of it then those who sell to us are going to feel the pain. I would argue that one of the reasons that this economic business cycle hasn’t been worse than it might have been is because the pain is already being shared around the world. Because we’re importing less that’s actually helping the U.S. economy stay stronger.

Current Status

H.R. 1908 and S. 1145 are patterned after The Patent Reform Act of 2003/05 and originate from a FTC Federal Trade Commission report (2003) and a National Academy of Sciences report (2004). In a broader sense, the bills would position the U.S. law consistent with many other countries by switching the priority of a patent application filing from first-to-invent to first-to-file. H.R. 1908 introduced by democrat Howard Berman passed in the U.S. House of Representatives on September 7, 2007. Senate Bill 1145 was introduced by democrat Patrick Leahy. Over 15 amendments have been circulating the floor of the Senate for consideration to alter various aspects of the bill. The Senate leadership has reaffirmed its commitment to passing the patent reform bill, but however has acknowledged four areas that are in need of refinement, namely: legislation damages, post-grant review, inequitable conduct, and venue. In February of 2008, the Bush administration sent a six page letter to chairman of the Senate Judiciary Committee Patrick Leahy opposing the bill in its current form unless the damages provisions are significantly revised, arguing that more problems would be caused then solved otherwise. The bill, with considerations and amendments added, is slated for Senate consideration as early as April 2008.

Explanation of Key Parts of the Bill

The proposed bill would change the current priority of the patent granting system from first-to-invent to first-to-file.

First-to-invent is based on the premise that priority should be given to an inventor that claims the earliest invention date. The U.S. Patent and Trade Office must, through due diligence efforts, determine if an inventor’s proclaimed date is true and resolve conflicts of competing filings. This method is thought to benefit independent inventors and small companies.

First-to-file focuses on the actual date of the filing and awards priority accordingly to the inventor with the earliest date filed. This method is thought to benefit corporate interests who have more funds and resources to navigate the bureaucratic patent filing landscape.

Should the bill become law in its current proposed form, the following changes would be applicable:

The revision of procedure in patent interference disputes

The current system uses interference proceedings to determine the priority of competing filers. Interference proceedings which are thought to be costly and time-intensive, would be replaced with a derivation proceeding. Derivation proceedings determine the true holder of the claim. The claimant must meet the burden of proof for basis of a dispute by showing that the prior applicant filed improperly.

Third party assignment rights

Allowing a third party assignee, other than the inventor, or a person with a proprietary interest to file for the patent in its own name.

Broaden definitions of an inventor to joint and co-inventor

Defining “inventor” to include a joint inventor and co-inventor.

Venue requirement changes for civil patent actions

The location requirements for civil patent actions against individuals and corporations will be revised to allow actions to be brought in the judicial district where either party resides, or where the corporation has its principal place of business or was incorporated. Currently, the venue is where the defendant resides.

Third-Party document submission

Allowing third parties to submit documents that could challenge the patent application.

Post-Grant Review

Post-grant review would allow a person who is not the patent owner to file a petition with the board to cancel a patent as invalid. This would also set forth procedures for the consideration of such petitions, including provisions to prevent harassment of patent owners and abuse of process.
A petition for cancellation may be filed if: it is within 12 months after the patent issues; reasons are apparent that the continued existence of the challenged claim will cause the objecting inventor significant monetary harm; notice has been recieved from the patentee alleging infringement; and the patent owner has consented to the proceeding in writing. In the petition, the challenger must meet proof standards of claim, and establish a valid basis.

Provision for damages of willful patent infringement

The patent infringement litigation calculations of damages would be altered. Damages would be limited to the value of the improvements of the invention over the prior art. A current rule that a reasonable royalty is the minimum damages permitted will continue to prevail, but the new bill establishes that a reasonable royalty cannot be based on any contribution from prior art. An award of damages using the “entire market value rule” is only applicable when an inventor claimant shows that the patent’s specific contribution over the prior art is the predominant basis for market demand for an infringing product or process.”

Bill Advocates

Proponents argue that the first-to-invent system encourages patent abuse and that a first-to-file system would simplify overlapping patents and battles over patent rights. They additionally argue that the switch would allow the U.S. to become standardized with the rest of the world. Organizations in favor of the bill include: the American Institute of Certified Public Accountants, the Business Software Alliance, the Intellectual Property Owners Association, and the Coalition for Patent Fairness.

Bill Opponents

Organizations opposing the bill argue that the bill weakens the rights of independent inventors and patent holders and would contribute to an outflow of jobs through outsourcing to other nations. Opposing groups include: the AFLCIO, the IEEE, the National Association of Patent Practitioners, the BioTechnology Industry Organization, and the National Small Business Association.

Tell me about intangible assets and Steel City Re.
KOSSOVSKY: We’re in the business of helping companies increase, protect, and recover the value of their intangible assets.

In fact the “hard assets” that are known as the tangible assets represent, on average, only 30% of the value of the company.

Describe for me the definition of an intangible asset in the context of what we typically think of an asset of a corporation.
KOSSOVSKY: Intangible assets, as a group, are the most valuable assets in companies today. When we typically think of an asset of a corporation, we think of the property, plant, and equipment, the cash and the cash obligations, the accounts receivable, and the various securities. These are the assets that sit on a company’s balance sheet and define what a shareholder owns through equity in a company. This is the book value. The problem is that today the market capitalization of these companies tends to be substantially greater than book value, which is property, plant, equipment, and cash on hand. In fact the “hard assets” that are known as the tangible assets represent, on average, only 30% of the value of the company. You look at a large company like GE, a conglomerate; and you see that the book assets only represents about 10% of GE’s market value. So where is the other 90% And the answer is, well, the other assets are what accountants call intangible. These assets represent the human capital, intellectual property, reputation for safety, security, quality, integrity, and all those other forms of knowledge and sources of value that, in fact, generate the cash flows for General Electric.

When did intangible assets come into their own in terms of market capitalization of a company? When did companies begin to value and count the intangible side of things?
KOSSOVSKY: So intangible is an accounting term. It is defined as something that an accountant cannot define. So it was not much of an issue long ago when a company was a big box and raw materials came in one end and out the other. Raw steel came in and a car came out the other end. Even today, General Motors is 60% intangible. What has happened is that companies have stopped owning the assets that create the goods. A lot of outsourcing has taken those assets off the books.

Due to globalization?
KOSSOVSKY: Yes, in part globalization. But more importantly, it is the vertical disintegration of the manufacturing value chain and the growth a widely distributed supply chain that has led to the removal of all these physical assets from a company’s books. U.S. companies no longer have the physical assets because they no longer do a lot of hard manufacturing. The value added today by U.S. companies is the magic of putting pieces together, the business processes that allow an assembly of components from all over the world, the tacit knowledge that drives the production and control of the economic engine.

And is the U.S. a leader in recognizing the value of intangible assets or did this come from global sources and not to say “who invented it” ?
KOSSOVSKY: The U.S. is the leader for several reasons. Some of them were accounting reasons; some were operational reasons. You may be familiar with what’s known as the DuPont Identity, or the DuPont Formula, which was a tool used in the bricks and mortar world of manufacturing to help management get a sense of how effectively it was running the company. It was a senior level managerial tool. And it relied on a return on assets, degree of leverage, and a return on sales — profitability. Those metrics reflected areas where a manager could make changes and observe an effect. He could squeeze more out of the bricks and mortar — the equipment to make it produce more. He could squeeze a little bit more out of every sale — reduce costs or increase the price — to get a little more profit. Or he could increase the leverage of the company to get a little more power out of the equity. Well, so that identity was what enabled managers to run a company.

So let’s first look at the accounting reasons. If you think about the math of that identity, if you begin to reduce your asset base, you improve your return on assets. So instead of having to improve the return side, you can reduce the assets side. So there was an accounting driver for companies to reduce their asset base and begin to outsource. Now let’s look at the operational reasons. It also turned out to be a less expensive mechanism. You could get cheaper labor and you could transfer the risk of ownership of the assets to somebody else.

So between the instant accounting benefits of taking assets off the balance sheet, the cost benefits, the P&L [profit and loss] benefits of outsourcing to separate source, as well as the risk benefits of letting somebody else worry about maintaining the equipment and the production line, companies move in that direction. U.S. companies have generally been in the forefront of any accounting driven or finance driven strategy. So U.S. companies have led that effort. The globalization movement only made it easier to find sources for the transfer of risk and an operational capacity.

So move ahead to the current day. Do global firms recognize their intangible assets and make use of them? Are they better at it than the U.S.?
KOSSOVSKY: There is plenty of room for improvement, but it is a difficult question to answer quantitatively because there are no universally applied accounting standards by which one can compare various corporate financial metrics. Further, there is no agreed upon universal standard for measuring intangible asset financial management prowess or effectiveness. That being said, Steel City Re in cooperation with the Intangible Asset Finance Society is spearheading a project on intangible asset finance metrics to develop quantitative metrics. But your general question is, do other companies in other parts of the world recognize that they have intangibles to monetize, or to use?

Well, who adheres more to best practices?
KOSSOVSKY: I don’t think anyone’s really asked that question. The notion of intangible asset finance and tangible asset, managing best practices, or return on intangible assets is a very new concept. Well, there was a first wave, which evolved around the intangible brand. And certainly companies have, for many years, appreciated the power of brand. But no one could beat Madison Avenue, which is a U.S. invention in terms of getting the most out of a brand. The Japanese have the keiretsu model, and so there’s a Mitsubishi. There’s a Matsushita… And they’ve sort of leveraged that brand name pretty broadly. So it’s a huge family, huge conglomerates that work off a similar brand. And that works to your benefit when the brand is good, and works against you when the brand is challenged.

We turn to Europe, and there really isn’t a great branding strategy, very few that really play that game well in Europe. So you come back to the U.S. and you realize that the U.S. has led in top brands, like Coca-Cola, an 81 billion-dollar brand. Now that being said, the Interbrand survey [an assessment of valuable brands] might be different to look at. BMW is a very powerful European brand, Rolls Royce, very powerful European brand.