Patent Reform Splitting Republicans, Business Community

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Republicans are increasingly split on whether the nation’s standing patent laws impede or encourage innovation in the small business tech sector.

“Thus far the Republican Party has not really seemed to embrace an innovation agenda that would supercharge the economy,” says Derek Khanna, a fellow with Yale Law School’s Information Society Project and the author of the cover story in the May/June issue of The American Conservative magazine.

He argued in the piece that if Republicans are serious about economic growth and job creation then one of the primary levers to accomplishing that is by mending patent laws.

Patent reform is important, noted Khanna, because not only is the majority of job growth stimulated by newly-formed small businesses, but by startups in the tech sector, which are often barred from entering the marketplace because of excessive software patent issuing.

Threatening small competitors with lawsuits have earned so-called patent the reputation of being the main culprits of abusing the US Patent and Trademark Office’s (PTO) low bar for awarding patent rights. In 2011 alone patent trolls were estimated to have cost the economy $29 billion in legal fees.

While some believe that if the PTO maintained higher standards for patent rights – only awarding licenses for inventions that are truly novel – job creation would rise to new levels, others argue that strong intellectual property laws are what has allowed for unprecedented levels of innovation over the past several decades.

Geoffrey Manne, a senior fellow at the nonprofit tech-advocacy organization TechFreedom, explained that “the market is built on the back of property rights,” and “if there is anything the government should be doing, it is defining and enforcing those rights.”

He told The Daily Caller News Foundation that in order for entrepreneurs or companies to invest the significant amount of resources and time it takes to build something patentable, there needs to be a guarantee that they will have rights – and a return on investment – on their creation.

A small tech firm’s patent portfolio is also prime bait when trying to attract funds from venture capitalists, according to a survey conducted by the University of California Berkeley Law School.

Researchers found that 67 percent of firms surveyed indicated that the existence of patents were an important factor in their investment decisions.

Aside from a House bill targeting patent trolls, which the Senate is now considering, not much is being done on the Hill to create higher standards for patent quality.

When lawmakers do decide to weigh in on standing intellectual property laws, they will be faced with the challenge of balancing the incentives that encourage inventors to create valuable products and new jobs while simultaneously preventing a monopolistic system that bars less established parties from entering the market.

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