NSBA Cautions Lawmakers Against Patent Reform

September 7, 2011

With the U.S. Senate scheduled this week to consider patent reform legislation, NSBA is urging lawmakers to vote only once they have a full understanding of how the America Invents Act will negatively impact small businesses.NSBA strongly opposes to the America Invents Act due to its severe tilting of the system against small innovators and in the favor of large, multinational corporations.

“This legislation will irreversibly damage the ability of small-business owners and entrepreneurs to create, develop and commercialize their innovations,” stated NSBA President Todd McCracken. “To think this bill will have anything but negative implications on job creation is absurd.”

The “reforms” in this bill, namely the switch from a first-to-invent to a first-to-file system and changes to post-grant patent challenges, will put small firms at far greater risk than the current system. The gutting of the existing grace period—which currently grants firms up to a year to raise capital, assemble partnerships, and perform field tests before filing a patent application—will force small firms to file applications early and often, even before good information was available. This will result in far greater costs and time for a small-business community that already is extremely time-stretched and financially-stressed.

The current U.S. patent system has played a fundamental role in helping the U.S. achieve its status as the global leader in technological innovation—something the America Invents Act would end. Congress also must tackle the U.S. Patent and Trade Office (USPTO) backlog and the issue of “fee diversion.” NSBA firmly believes that all of the fees collected by the USPTO should remain under the agency’s control until they are expended. The current backlog at the USPTO is inexcusable and a severe detriment to American innovation and the House’s proposal to address this problem is unacceptable.

“Small firms produce five times as many patents per revenue dollar as large firms and cover more original and broader technologies than large patenting firms,” Larry Nannis, CPA, NSBA chair and shareholder at Katz, Nannis + Solomon, P.C. “Tilting the scales against these small firms—which are responsible for a great deal of job growth—is the wrong idea at the wrong time.”

Since 1937, NSBA has advocated on behalf of America’s entrepreneurs. A staunchly nonpartisan organization, NSBA reaches more than 150,000 small businesses nationwide and is proud to be the nation’s first small-business advocacy organization. For more information, please visit www.nsba.biz .