February 13, 2008
Business News For Immediate Release Contact: Monica Stewart February 13, 2008 (703)-242-5840 Study Highlights Positive Impact of Patent Reform on Small Businesses, Offers Policy Options Increasing Number of American Small Businesses and Innovators Need Patent Reform WASHINGTON, DC - The Small Business & Entrepreneurship Council (SBE Council) today released a study detailing the negative effects the U.S. patent system has on small businesses and innovators. The study recommends reform to the system that is proposed in the Patent Reform Act in order to make substantive changes that would benefit entrepreneurs, small businesses and economy at large. The study titled, "Patent Reform: Protecting IP, Enabling Innovation & Bolstering Entrepreneurship," was authored by SBE Council chief economist Raymond J. Keating. The study reviews the historical and economic rational for protecting intellectual property; the economic significance of innovation and IP industries; the central and growing role small firms play in the innovation economy; the problems facing the current patent system; and the needed reforms that will produce a more effective patent system. "In the 21st century global economy, the major advantages of the U.S. are our entrepreneurial skills and abilities to innovate," said Keating. "In order to fully capitalize on this competitive edge, we must protect intellectual property in a rigorous and cost effective way. The Patent Reform Act is an important step in achieving this serious goal." Key shortcomings in the U.S. patent system highlighted in "Patent Reform: Protecting IP, Enabling Innovation & Bolstering Entrepreneurship" include: Lack of Patent Quality: Many point to examples whereby the quality of patents has declined, in particular, failing to meet an adequate or rigorous enough test for being non-obvious. This raises questions and potential costs for the small business community. The U.S. First-to-Invent System is Ambiguous and Costly: On an issue of both international and domestic importance, the U.S. grants patents on a first-to-invent basis, rather than the first-inventor-to-file system the rest of the world follows. First-to-invent is inherently ambiguous and costly, and that's bad news for small businesses and individual inventors. Litigation is Out-of-Control: The system is plagued by excessive and costly litigation. Of course, large firms have the resources to better weather litigation, while just one lawsuit can terminate a small, entrepreneurial firm. Keating offers a solution to the existing problems under the current patent system: the bi-partisan, bi-cameral Patent Reform Act - passed in the House (H.R. 1908) in 2007 and expected to be voted on by the Senate (S. 1145) in early 2008. The legislation, if enacted, will offer positive reforms for small businesses. "Consider that 99.9% of the 26.8 million American businesses are ‘small businesses' and that they contribute a more significant source of innovative products and services than larger enterprises do, it is undeniable that small businesses demand and deserve a fair, pro-innovation patent system," said Keating. SBE Council is a nonprofit, nonpartisan advocacy organization dedicated to protecting small business and promoting entrepreneurship. For nearly fifteen years, its work has led to substantive reforms and policy solutions that have helped entrepreneurs in their key roles as innovators, job creators and economic drivers. To view the complete report, or for more information about SBE Council, please visit: http://www.sbecouncil.org/. # # #
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