Patent News

Apr. 16, 2015

The Hill Blog: Correcting the record of venture capital’s views on patent reform, by Scott Sandell

This post originally appeared in The Hill on April 16, 2015.

As chair of the National Venture Capital Association (NVCA), I’m responding to a recent blog post on this forum by venture capitalists Brad Burnham and Jason Mendelson on the issue of patent reform. I admire both men and believe that their contributions to venture capital and the entrepreneurial ecosystem have been significant. However, I believe their personal views of what should be achieved through patent reform are out of whack with the realities on the ground in Washington, DC.

Let me begin by saying there is no daylight between the authors and the rest of the venture community on many of the broad goals of patent reform. Through my role as chair of the NVCA Board of Directors, I have had many conversations with my venture peers on this topic and virtually everyone agrees that action should be taken to curb abusive behavior by non-practicing entities (NPEs), or “patent trolls.”

To date, much of the focus and attention has centered on H.R. 9, The Innovation Act of 2015. While well intended, we have serious concerns with H.R. 9 and believe certain provisions in the bill will have a devastating impact on startups trying to enforce their patents against large incumbents and on small companies facing legal challenges by larger, well-financed competitors.

Contrary to the beliefs of Burnham and Mendelson, H.R. 9 will have a far greater impact on the ability of small companies to protect their ideas than on our shared goal of curbing abusive behavior. The authors believe that legislation should “empower courts to require the patent trolls to pay the legal fees incurred by a winning defendant.” Far from simply allowing the courts discretion to assign legal expenses in frivolous litigation to a plaintiff troll, H.R. 9 effectively mandates the payment of legal expenses by the non-prevailing party in almost all cases.