News From the
Committee on Small Business
Nydia M. Velázquez, Chairwoman

For Immediate Release
March 29, 2007

CONTACT: Kate Gilman/ Austin Bonner,  (202) 225-4038

Committee Reviews Impact of Patent Reform on Nation’s Small Businesses
Patent Commissioner stated legislation is necessary to reform patent litigation rules

WASHINGTON – Small firms are increasingly responsible for the innovations driving the U.S. economy.  But those creations rely heavily on the ability of small businesses to protect their investments and ideas. As Congress considers reforming the U.S. patent system, the House Small Business Committee today stressed the impact that patent reform has on this nation’s small businesses.

“Small, innovative companies are creating the technologies America needs to compete in the global marketplace and the jobs that expand communities,” said Chairwoman Nydia M. Velázquez. “It is critical to the ongoing success of small businesses that their unique needs be considered in any reform of our nation’s existing patent system.”

Small companies have been major contributors to the technological advances of recent decades.  According to the Small Business Administration (SBA), small tech companies produce nearly 13 times more patents per employee than large firms and represent one-third of all companies in possession of 15 or more patents.

During the questioning of Commissioner for Patents, John Doll, he stated that legislation is necessary to address concerns about rules governing patent infringement. The Commissioner’s response was significant given the testimony of a number of the witnesses, who raised concerns about excessive patent litigation costs.  According to more than one panelist, the threat of costly patent litigation is deterring small hi-tech companies from engaging in research and development. Many entrepreneurs simply do not have the resources to deal with even minor suits.  This leaves small hi-tech companies to face an environment that is more risk-averse and less competitive.

“Small companies are taking risks and producing results in the most competitive sectors of our economy,” said Chairwoman Velázquez. “Today’s discussion of a broad range of patent issues made it clear that small firms face unique challenges in both protecting their intellectual property rights and navigating the current patent system.”

Appearing before the committee today small firms outlined a broad patent reform agenda.  The plan included proposals to strengthen patent quality and give patent owners more assurance in their claims, which is important for small businesses to be able to attract investments in their ventures. Also emphasized was the need to limit costly abuses of the system.  Two proposed solutions were to incorporate post-grant opposition proceedings and litigation reform. The committee will continue to review the impact of these proposals on small businesses throughout the year.

“Reform that takes small business needs into account is critical to maintaining an economy that promotes innovation,” said Chairwoman Velázquez. “Decreasing compliance costs and increasingly the predictability of the patent system will encourage more small businesses to participate in developing new inventions.”

Today’s hearing on patent reform is part of a series of discussions that the House Small Business Committee will hold on issues that are important to this nation’s 26 million small businesses.  The committee’s oversight stretches beyond the Small Business Administration, and it is contracting, access to capital and entrepreneurial development programs, to also include issues and legislation that directly impact entrepreneurs.

###