Diversity in the Innovative Space
By Triniti Groves of the St. Louis Internship Program (SLIP); edited by Greensfelder associate Dee Harleston
The Global Innovation Index has opined that the United States of America is one of the most innovative countries in the world. In recent years, technology has become a frontrunner of innovation. Places like Silicon Valley have provided space for innovators to invent technology-based products in hopes of launching successful businesses. However, the ethnic and gender diversity among inventors and innovators has not kept pace with the exponential growth experienced by technology-based start-up companies.
The underrepresentation among diverse ethnic and gender groups is prevalent in three main areas: (1) technology entrepreneurship and the funding process, (2) patent grants and patent applications, and (3) patent and intellectual property law practice. This article explores the underrepresentation among women and diverse ethnic groups in technology innovation spaces and identifies solutions to reduce these gaps.
Diversity in Technology Entrepreneurship and Funding
Technology entrepreneurship has been on the rise nationally and globally, but that rise has resulted in higher failure rates among companies because of the ultra-competitive environment. New technology businesses — sometimes referred to as “tech startups” — have a failure rate of 63 percent as of 2018. There are 1.35 million tech startups each year, so that means about only 499,500 of those succeed.
The primary reason behind the failure of tech startups is a lack of funding. There are four main ways entrepreneurs receive funding for their businesses: angel investors, venture capital (VC), crowdfunding, and self-funding. Acquiring funding requires a great deal of strategy by the entrepreneurs. It requires proving that your product will not only do well once launched, but also that the startup has a management team that can deliver on the promised results.
When asked about the determinative factor for the success or failure of the companies they invested in, VC investors said the management team was the most important factor. VC investors invest in businesses that are well-managed and have industry experience. This forces businesses that lack experience or talented management teams to hire outside talent for these positions in hopes of receiving VC funding. This determinative factor reduces the chances for diverse tech startups because they often lack the necessary industry experience or management teams needed to secure outside funding opportunities.
Of all the VC-backed startups, about 77 percent are white, almost 18 percent are Asian, 2.4 percent are Middle Eastern, almost 1.8 percent are Latino, and 1 percent are Black. In the past seven years, Black and Latino founders only received about 2 percent of VC investments. This VC funding gap is glaring considering that Black people make up more than 13 percent and Hispanic and/or Latino people make up almost 19 percent of the U.S. population, respectively.
There are several contributing factors to the lack of diverse tech startups. Research has shown that the main causes are poverty, lack of resources, and networking disadvantages. Poverty and lack of financial resources prevent diverse ethnic groups from self-funding their projects without going into debt — unlike their white and Asian counterparts. Additionally, a lack in a robust network can tarnish the diverse ethnic groups’ chances of receiving funding from investors and prevent them from hiring quality management and executive employees.
Industry experts have proposed solutions to reduce the funding gap among diverse tech startups, which include: (1) improving access to the VC funding pool for diverse ethnic groups, (2) providing mentors for diverse gender and ethnic tech startups, and (3) having diverse leaders of VC organizations and other investment spaces. Organizations like WEPOWER St. Louis, for example, provide interest-free loans and other helpful services to entrepreneurs from diverse ethnic groups. In the organization’s annual report, it states that it has given access to $400,000 in seed capital and the entrepreneurs who use this program have more than tripled their monthly revenue by using the organization’s resources.
Diversity in Patenting
The United States Patent and Trademark Office (USPTO) received 646,244 patent applications and granted 388,900 patents in 2020. However, the data concerning the number of diverse applicants in the patent process has been slim and has led to data collection discussions and reform efforts on the federal level.
Demographic data regarding ethnic diversity among patent applicants does not currently exist, because the USPTO does not collect demographic data of its applicants. There have been bipartisan legislative attempts to address this issue, such as the Inventor Diversity for Economic Advancement Act of 2021 (the IDEA Act), an attempt to get the USPTO to collect demographic information from patent applicants on a voluntary basis. The collected data would have been used to propose solutions to address the lack of diverse inventors in the patent space.
Despite the lack of data, studies suggest there is an underrepresentation of women, Black, Latino, and Native American inventors in patent applications. The lack of applications from diverse ethnic groups in the patent process is due to: (1) the cost of the patenting process, (2) a lack of financial capital to support the patenting process, (3) fewer networking and mentoring opportunities, and (4) less formal education. Former USPTO Director Michelle K. Lee opined that fewer women are participating in the patenting process because women pursue STEM careers less often than men and have a lack of knowledge about the patenting process.
There have been numerous proposals to solving the diversity gap in the patent process. The proposals include: (1) creating programs that target underrepresented groups, (2) collecting data on the USPTO demographics on patents, (3) neutralizing the toys girls and boys play with, (4) popularizing underrepresented people in STEM, (5) having diverse mentorship, and (6) recruiting talent from underrepresented groups. Experts on these issues have stated that these solutions would generate more value to the U.S. gross domestic product (GDP), create normality amongst diverse groups in innovation and STEM, eliminate the underrepresentation in the patenting process, and encourage them to take part in the patenting process. People are also addressing these issues through pro bono work and the America Invents Act. These tools have helped lower the cost and eliminate the ambiguity in the patenting process, but more can be done to resolve these issues and increase participation among women and diverse ethnic groups.
Diversity in the Patent and Intellectual Property Law Practice
In the U.S., there are more than 1.3 million practicing attorneys. Of those attorneys, the USPTO reports that there are 12,776 active patent agents and 36,057 practicing patent attorneys. Patent attorneys are finding their place in the patent law practice because the intellectual property world has drastically changed over the past few decades.
The IP practice has been a less popular legal practice, but the emergence of technology has elevated its status in the legal world. In the past, IP boutiques were the main space for IP lawyers to practice. However, in recent years, large general private practice firms have gained more patent lawyers to maintain the one-stop-shop abilities of their law firms. Because of that, they tend to either merge the entire IP boutique into their firm as a practice group, or they hire individual IP lawyers. The National Association for Law Placement (NALP) reported that the number of IP boutiques from 2006 to 2016 decreased from 9 percent to 3 percent and the number of firms that report IP as a practice group increased from 205 firms in 2006 to 761 in 2016. The USPTO concluded in 2016 that 24 percent of practicing patent attorneys worked in-house. This shows that although general practice firms have focused on expanding the IP practice, there is room for those who desire to practice in-house or at an IP boutique.
There is an even greater underrepresentation of diverse ethnic groups among IP and patent attorneys than in the practice of law in general. In 2017, for example, the American Intellectual Property Law Association (AIPLA) concluded that in law firms, 70 percent of IP attorneys are male, 1.8 percent are African American, about 2.5 percent are Hispanic or Latino, and 0.5 percent are Native American.
The three main reasons behind the lack of diverse patent and IP attorneys is: (1) the lack of diverse students attending law school, (2) the low number of diverse students entering STEM careers, and (3) a lack of diverse upper-level attorneys. Other reasons include the restrictive academic prerequisites required for taking the patent bar exam, the necessary experience for certain jobs, a lack of representation in the field, and a lack of diverse mentors. These factors have been shown to influence the diversity of attorneys in the patent law practice and have resulted in underrepresentation in both STEM and law.
Elaine Spector, an experienced patent attorney, has suggested that organizations can fix the underrepresentation of women and diverse ethnic groups by creating mentorship and training opportunities for diverse STEM students, so that they can gain insights into the requirements of a patent attorney. Scholars have also said that the USPTO can start tracking and providing accessible data about diversity in the patent bar and patent practitioners because it is easier to propose practical solutions if there is tangible data to back up the poor diversity claims in the patent law practice. The USPTO could also reconsider its patent bar prerequisite requirements to bolster more access to marginalized groups. These approaches will expand the eligibility pool for people to become patent attorneys, which will promote greater diversity in the field.
The world has work to do in diversifying the technology and innovation space. There is a lack of diversity among women and diverse ethnic groups in all areas of technology innovation, but especially in the patent and IP law practice, the patenting process, and in technology entrepreneurship.
Generally, diverse ethnic and gender groups do not have the financial or educational support to succeed in the technology and innovation space, and they have often been excluded because they lack the necessary industry experience and management teams to secure VC funding. Although practical solutions have been proposed on a federal level, solving these issues starts with major stakeholders such as the USPTO collecting demographic data on diversity, representation, financial support, and education. These statistics will show the apparent diversity and gender gap in the patent and IP space and provide advocates with the necessary information they need to bolster their claims of underrepresentation of women and diverse ethnic groups in the field.
There are organizations on the local level like WEPOWER St. Louis that are attempting to close the gap between these groups and their white counterparts, but more organizations are needed to reduce the underrepresentation in the IP and patent law space. Addressing the underrepresentation of diverse gender and ethnic groups is essential to moving the world of innovation and intellectual property forward.
 Global Innovation Index, https://www.globalinnovationindex.org/analysis-indicator
 Harvard Business Review, https://hbr.org/2021/03/how-venture-capitalists-make-decisions
 Rate My Investor, https://ratemyinvestor.com/DiversityVCReport_Final.pdf
 United States Census Bureau, https://www.census.gov/quickfacts/fact/table/US/IPE120219
 Id. at 8.
 World Economic Forum, https://www.weforum.org/agenda/2019/01/here-s-how-to-improve-diversity-in-startups/
 Id.; see also US Congress, https://www.congress.gov/bill/117th-congress/senate-bill/632/text
 Leahy-Smith America Invents Act, https://www.uspto.gov/sites/default/files/aia_implementation/20110916-pub-l112-29.pdf
 World Intellectual Property Organization, https://www.wipo.int/wipo_magazine/en/2011/06/article_0002.html
 Stern Kessler Goldstein & Fox, https://www.sternekessler.com/news-insights/publications/state-ip-boutique-part-1
 Maurer School of Law: Indiana University; IP Theory, https://www.repository.law.indiana.edu/ipt/vol10/iss1/1/
 Stanford University: Comment of Patent Law Scholars, https://www-cdn.law.stanford.edu/wp-content/uploads/2015/05/PTO-P-2021-0005-Patent-Law-Scholars-AS-FILED.pdf