Patent protections put small business at a disadvantage

[Small Business Technology Council (SBTC), January 2015, SBTC, “Patent Reform Threatens Small Business Innovation,” , accessed: 7-11-24, ES]

Patent protections are particularly important for innovative small businesses, which operate on much smaller margins, and often rely much more heavily on their intellectual property for revenue than large firms. According to the SBA: “Of high patenting firms (15 or more in a four‐year period), small businesses produced 16 times more patents per employee than large patenting firms. Research also shows that increasing the number of employees correlates with increased innovation while increasing sales does not.”1

The Small Business Technology Council (SBTC) believes that HR 3309 and other “patent reform” bills in the Senate will cloud patent titles, making them weaker. For small business, patents will become mostly unenforceable due to the proposed much higher upfront cost of litigation, thus making small business patents significantly less valuable. Loss of patent value constricts new company formation, chilling new investments, and choking job formation. Purporting to attack predatory trolls, the bills instead attack all small companies with legitimate patent suits to protect the interests of large infringers at the expense of new business job creation. All these changes to the patent system have the collective effect of raising the cost of business for small firms, particularly those in innovative, high‐tech areas. Furthermore, these bills do not specifically define or address “trolls” or “non‐practicing entities,” but instead lump all patent holders together.

The America Invents Act requires a study be conducted by the SBA on the impacts of the new law on small business. So far, a year and half after implementation of AIA, that study has not been produced. It is important that a new round of patent reform legislation is not rushed through before careful consideration of the effects the changes AIA has already made to the patent system. To do otherwise could compound any burden felt by small businesses due to the proposed changes.