Patent News

Jun. 25, 2015

PE HUB: The unintended consequences of patent reform, by Bobby Franklin

This post originally appeared in PE HUB on June 25, 2015.

If you were able to join us for VentureScape 2015 in May, you likely heard a lot of discussion about patent reform. The issue is receiving a tremendous amount of attention in Washington and has been identified as one of the few areas where President Obama and congressional Republicans can find common ground.

Because many of our members invest in patent-dependent startups, NVCA has been on the frontlines of the debate in Congress and actively engaging with lawmakers to strike the right balance of curbing abusive behavior by patent trolls and other bad actors while also protecting the rights of patent-reliant startups that depend on strong patent protections to ensure their survival.

At the time of this writing, the Senate Judiciary Committee has already passed out of committee S. 1137, the PATENT Act of 2015, and the House Judiciary Committee is on the cusp of reporting out of committee H.R. 9, the Innovation Act of 2015. While well-intended, we have serious concerns with several provisions in the bills and believe the unintended consequences resulting from these bills would cause a tremendous amount of collateral damage to the entrepreneurial ecosystem.

Any congressional effort to address abusive patent litigation practices that has the effect of making patent enforcement more risky, difficult and expensive will have a dramatic impact on small businesses and startups. Universities, medical device manufacturers, technology companies, and businesses of all shapes and sizes, from startups to Fortune 500 companies, are critically dependent on patents to protect investments of time, money and other resources from both competition and imitation here and abroad. Especially for the thousands of venture-backed startup companies across a broad spectrum of industries, preservation of their ability to obtain and enforce patents is fundamental to survival.