Senate Committee Discusses Patent Reform

February 23, 2016

pic-patent-drawingOn Feb. 25, the Senate Small Business and Entrepreneurship Committee will hold a hearing entitled “An Examination of Changes to the U.S. Patent System & Impacts on America’s Small Businesses.” The hearing will examine the state of the U.S. patent system since the America Invents Act (AIA) was passed in 2011. Set to testify at the hearing are Brian Shaughnessy from the Licensing Executives Society, Inc. and Robert Stoll of Drinker, Biddle & Reath.

Patent reform has been a focus for NSBA for several years and NSBA opposed the AIA as it worked its way through Congress in 2011. The changes introduced by that legislation minimized protections for small patent-holders and increased the costs of obtaining, maintaining, and enforcing patents. On average, small businesses produce more patents per employee than their larger counterparts. Those patents are often the most valuable asset that small businesses hold and making it more difficult for those businesses to protect their assets undermines the incentives for small businesses to innovate and create, let alone pursue patents.

A chief complaint of the patent system following enactment of the AIA is that it has enabled “patent-trolls” to prey on businesses and threaten costly litigation in order to extract spurious licensing fees or settlements. In this Congress, there has been a significant push in both the House and Senate to curb some of the problems which have arisen since the AIA was enacted. The NSBA-opposed Innovation Act (H.R. 9) and PATENT Act (S. 1137) unfortunately go too far in their attempts to curb patent trolling, and would create a patent system detrimental to small business interests. Both of these measures would place an unnecessary burden on individual inventors and legitimate small-business patentees, making it more difficult for them to grow their companies and raise much-needed capital. Legal fee-shifting language among other provisions in those bills makes defending patents far too costly for small businesses.

NSBA supports patent reform which will curb the ability of “patent-trolls” to prey on small businesses, while at the same time not making it more difficult for small businesses to compete. Patent reform legislation such as the STRONG Patents Act (S. 632) and the TROL Act (H.R. 2045) represent more measured responses to the current problems in the patent system. Contrary to the NSBA-opposed measures, these have found a thoughtful way to stem the practice of patent demand letters without going so far overboard in creating a patent system that is unworkable for countless small-business inventors. Ensuring that the patent system works for all participants is essential so that the U.S. continues to be a world-leader in research and innovation.