Leahy: Small Businesses Will Benefit From America Invents Act

WASHINGTON (Wednesday, March 16, 2011) – The U.S. Senate this week is debating legislation to reauthorize the Small Business Innovation Research Program and Small Business Technology Transfer Program.  The bill will improve small businesses’ ability to take part in federally-funded research.  Last week, the Senate overwhelmingly voted to approve the America Invents Act, legislation authored by Senator Patrick Leahy (D-Vt.) that will also benefit small businesses by making important updates to the nation’s patent system, improving patent quality, and reducing harassment of patent owners.


Statement Of Senator Patrick Leahy (D-Vt.),
Chairman, Senate Judiciary Committee,

On The SBIR/STTR Reauthorization Act Of 2011

March 16, 2011

I am pleased that the Senate is proceeding to consider legislation to reauthorize the Small Business Innovation Research Program and Small Business Technology Transfer Program (SBIR/STTR).  Our Nation’s small businesses and start-ups are crucial to maintaining America’s position as the world leader in technology and innovation.  The SBIR/STTR programs improve the ability of small businesses to take part in federally-funded research. 

Last week, the Senate voted 95-5 to pass another bill to help small businesses and our economic recovery, the America Invents Act.  This legislation will provide our small businesses and start-ups the legal landscape that they need to protect and commercialize their inventions to create jobs and boost our economy.

The Small Business & Entrepreneurship Council, in strongly endorsing the America Invents Act, wrote that “[p]atent reform is needed to clarify and simplify the system; to properly protect legitimate patents; and to reduce costs in the system, including when it comes to litigation and the international marketplace.” 

Similarly, Louis Foreman, an inventor and advocate for other independent inventors wrote that the legislation “will make independent inventors, such as myself, more competitive in today’s global marketplace.”

Both the Council and Mr. Foreman specifically noted the importance of transitioning to “first-inventor-to-file” and ending fee diversion at the United States Patent and Trademark Office. 

The America Invents Act will benefit small businesses and start-ups in several specific ways.  First, the legislation will make it more difficult for large infringers to harass a patent owner through successive administrative challenges of the patent or challenges that have no likelihood of success.  Large corporations often use these challenges to avoid license fees or discourage an infringement suit.  For small businesses, patent owners and independent inventors, the expense of countering these tactics can make enforcement of their patents difficult to impossible.  The improvements that this legislation makes to the inter partes system will limit harassment. 

Second, the America Invents Act requires discounts for small businesses at the Patent and Trademark Office (PTO).   Specifically, the bill mandates that the PTO provide a 50 percent reduction in fees for small business, and a 75 percent reduction in fees for businesses that receive a new “micro-entity” designation as truly small and independent inventors.  Together, these provisions ensure that the PTO’s need to collect fees for services is not done on the backs of small businesses.  Small businesses will, therefore, be able to afford patent protection better than today.  

Third, as part of the transition to first-inventor-to-file, the America Invents Act eliminates costly interference proceedings as the method for determining the right to a patent between competing inventors in favor of a derivation proceeding.  Under current law, before enactment of the American Invents Act, when more than one application claiming the same invention is filed, the patent is given to the applicant who has the resources to prove their claim to the invention. This costly proceeding is almost always won by larger corporations.  A derivation proceeding is far simpler and does not require meticulous notes by the inventor, which gives large corporations an advantage, because the key date is the date of application. 

Finally, the legislation will improve patent quality overall.  Roughly half of all patents in litigation have claims invalidated.  When there are too many patents out there that are not able to withstand court scrutiny, it leads to a more difficult climate for small businesses to license their inventions and raise capital from investors.  By improving our patent system, we can provide confidence that when a patent is granted, it is of high quality, and investors can rely on that. 

The New York Times editorialized last week that today, “The patent system is too cumbersome, and it doesn’t protect the small inventor.  The America Invents Act is a smart reform.”  Indeed, the legislation is crucial to fulfilling the promise that we make to small businesses and independent inventors that if they put in the hard work, the United States is the place where a great invention will be rewarded.  I thank the 95 Senators who voted in favor of Senate passage of the American Invents Act and look forward to continuing our work with Chairman Smith the House of Representatives to get the legislation to the President’s desk without unnecessary delay.  We tried to make sure that patent reform in the America Invents Act helps small businesses and increases their ability to serve as an engine for economic growth and good jobs here in America.

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