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Statement of the Honorable Nydia M. Velázquez

Ranking Member, House Committee on Small Business

“Patent Reform Implementation

and New Challenges for Small Businesses”

May 15, 2013
 

Thank you, Mr. Chairman for holding this important hearing.  

America’s small businesses have always been our nation’s drivers of innovation, developing new products and processes that improve our lives and create new economic opportunity.   This remains true today with the smallest companies producing more patents per employee than their larger competitors.  The fact is that those game changing devices that shake up markets tend to originate with small entities that are willing to take big risks on new ideas.  

In that regard, the patent system can be an important safeguard for entrepreneurs.  When a small company or individual stakes their future on a technology they have developed, it is vital that protections exist to ensure they can profit from the fruits of their labor -- without their ideas being stolen. 

Having a workable regimen for protecting intellectual property can help smaller companies to secure capital.  Venture capitalists and other financiers will be unlikely to invest in entrepreneurs if there is a high probability that their groundbreaking ideas will be snatched away from them by a competitor before being brought to market.

While the patent system provides valuable protections for small business owners, there are weaknesses that could stand to be improved.  Many inventors have struggled with long waits at the U.S. Patent and Trademark Office.  With an applications backlog of more than 660,000, it can take three to four years to receive an initial response on a patent request.  The America Invents Act created a new fast track system, helping small firms obtain legal protections for their products more quickly.  At the same, this new system requires an application fee, which may be difficult for some of the smallest firms.

It is also critical that our patent system engage in meaningful outreach to the entrepreneurial community.   Recent creation of additional patent offices in hotbeds of innovation like Silicon Valley, Detroit and Denver will provide additional resources to businesses that are on the forefront of developing new technologies. 

Other initiatives to counsel small firms seeking patents, as well as the establishment of a “Small Business Ombudsman” will help small companies navigate the patent process and ensure they are treated fairly.  

Just as the patent system provides valuable protection for innovative entrepreneurs, I think many recognize that the patent system can be misused, stifling innovation and competition and creating new hurdles for honest firms seeking to enter a market.  In particular, there are concerns about so-called “patent-trolls”, entities that are not interested in creating products, so much as abusing the system by suing honest operators for patent infringement.   In many instances, these cases never go to trial, but serve simply as a mechanism for forcing a settlement.  Unfortunately, an entire industry centered around this form of legal blackmail has sprung up.  It is important for small firms in particular – who often cannot afford costly legal fights – that we find ways to mitigate the impact of these actors on our economic system. 

Mr. Chairman, as our nation continues on the path to economic recovery, we cannot overstate the importance of new products and services being developed.  When new products are discovered, they often create new jobs.  Those are opportunities we cannot afford to pass up, especially now. 

For this creative cycle to continue, we need a strong patent system that protects legitimate intellectual property claims, while preventing abuse that can thwart creativity and innovation.  It is my hope to hear today how the AIA has helped further that goal and I thank our witnesses in advance for testifying.  

I yield back.  

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