House Small Business Committee Holds IP Hearing

July 18, 2018

On July 11, the House Small Business Committee held a full committee hearing on intellectual property (IP) entitled “Innovation Nation: How Small Businesses in the Digital Technology Industry Use Intellectual Property.” The hearing examined how small-business owners in the digital technology industry and beyond, utilize IP and the issues they face when navigating the IP processes.

The committee heard from Frank Cullen, Vice President of U.S. Policy at the Global Innovation Policy Center within the U.S. Chamber of Commerce, Morgan Reed, President of ACT, The App Association, Christopher Mohr, Vice President for IP and General Counsel, Software & Information Industry Association, and Chris Israel, Executive Director at the Alliance for U.S. Startups and Inventors for Jobs.

Committee Chairman Rep. Steve Chabot (R-Ohio) and Acting Ranking Member Rep. Dwight Evans (D-Pa.) opened the hearing discussing how our nation’s small-business owners are essential to producing new, creative and ground-breaking products and how IP plays a vital role in protecting these ideas and inventions in the U.S. and abroad. All of the panelists stressed the critical importance of IP protections to ensure fairness, job creation, individual business development, and overall economic growth—a stance NSBA strongly agrees with.

There are four main types of intellectual property: patents, trademarks, copyrights, and trade secrets. Each type of intellectual property has different attributes and criteria that must be met in order to be protected. Unfortunately, many small-business owners are not aware that they should protect their innovative products and ideas through intellectual property protections, as many of the panelists noted in their testimony. Additionally, those small-business owners that are aware of intellectual property rights do not always know how to navigate the intellectual property process, and it can be very expensive—the House Small Business Committee explored some of these issues and solutions throughout the hearing.

NSBA views the current patent system as drastically flawed. The passage of the America Invents Act (AIA) in 2011 resulted in negative side-effects for small-business innovators and limited their ability to protect their patents from infringement, further complicating and countering innovation. Witness Chris Israel, for example, offered specific statutory solutions the U.S. Patent and Trademark Office can follow to improve the current situation but also said bills such as the STRONGER Patents Act (H.R. 5340), among others, will directly help fix the U.S. patent system.

The STRONGER Patents Act will restore patents as property rights, make standards of protections in courts uniform, and protect start-ups from being out-resourced by technology incumbents. It also protects small patent owners and start-ups by eliminating harassing, duplicitous patent demand letters, many of which are often sent in bad faith by so-called “trolls.”

NSBA supports H.R. 5340 as well as the newly introduced Restoring America’s Leadership In Innovation Act (H.R. 6264), which will go even further to strengthen patents across the business community, enhance the U.S. patent system, and reestablish the attractiveness of creativity and encourage innovation. Both bills will take necessary steps towards reversing the unintended consequences of the AIA, and NSBA enthusiastically supports these reforms.

NSBA supports reasonable efforts and reforms to protect small businesses from unnecessary and unwarranted patent infringement actions, but warns an over-reactive solution could weaken existing patents and discourage innovation. NSBA applauds the House Small Business Committee for calling a hearing on this important issue and looks forward to working with the committee and its members to continuously improve IP protections.