March 19, 2015

Cardin: Patent Reform Intrinsically Linked to the Success of Small Businesses

“The ability of entrepreneurs to obtain patents often acts as a precursor to investor willingness to provide funding at critical stages”

WASHINGTON - U.S. Senator Ben Cardin (D-Md.), Ranking Member of the Senate Small Business and Entrepreneurship Committee (SBC), today voiced concerns that the federal government is not doing enough to update and streamline the patent system to allow small businesses to grow. At a SBC hearing entitled, “Patent Reform: Protecting Innovation and Entrepreneurship,” Senator Cardin heard from Maryland small business owners, industry experts and analysts about the need to reform our patent system.

“An efficient and fair patent system is intrinsically linked to the success of small businesses in America. Small businesses produce 16 times more patents than larger businesses and the ability of entrepreneurs to obtain patents often acts as a precursor to investor willingness to provide funding at critical stages. Across Maryland, and in today’s hearing, small companies and organizations called for the federal government to stand up and protect small businesses from patent trolls and an antiquated system. Small businesses are particularly vulnerable when claims against them are invalid and require significant investments of time and money to litigate. Unfortunately, it is simply more cost effective to settle and pay off a frivolous, nuisance claim rather than spending significant sums on attorneys’ fees in court to fight the claim.

“Intellectual property has been a fundamental source of American innovation and economic prosperity since our nation’s founding. Recently, there have been many efforts to improve the patent system:  the Administration issued a series of executive actions and Congress passed the America Invents Act in 2011 which put in place a first-to-file system, procedural changes, fee revisions and post-grant review additions. Congress’ challenge is trying to balance different thoughts on how the patent system is working and where it can be improved. Big companies, small companies, universities, biotechnology companies, and hi-tech companies have different views on how to improve the system.

“I also understand that research institutions play a significant role in the patent arena. In Maryland, I have seen how technology transfer programs at the University of Maryland, the National Institutes of Health and Johns Hopkins University all have stimulated this growth. Nationwide, similar programs have generated hundreds of billions of dollars in economic activity and over three million jobs in the past three decades alone. We should all agree that exploitation of intellectual properties hurts all parties.

“It was particularly important to hear from a small tech company and small pharmaceutical company, both from Maryland, about how the system really works. What impressed me is how we can do a better job, especially in areas where there shouldn’t be much controversy, such as standing to bring a patent claim, so that those bringing claims have to fully disclose their interests.  We should take action to stop the filing of frivolous claims in order to manipulate stock values and make short-term gains at the expense of a small business, their products, and their workers.  We should all be against such abusive practices.  I think it is important that we take action against those types of abuses and find common ground across parties. We also have to make sure the resources are there in the Patent Office to give timely consideration to all these issues because delays do exacerbate the problems, slow innovation, and create a significant drag on our economic growth and job creation.”

 

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