Congress's Latest Patent Legislation a Big Win for Entrepreneurs, Small Business
By Karen Kerrigan
"Mr. Watson. Come here," Alexander Graham Bell said to his aide, "I want you." Those were the first words transmitted through Bell's breakthrough technology, the telephone. The history books document that moment, but a pivotal event took place three days earlier. On March 7, 1876, the U.S. Patent Office granted Bell patent number 174,465, cementing his legacy as the inventor of the telephone.
At the time, Bell did not operate a large business. The prototype telephone was built in a small workshop with help from just a single assistant. Yet, as a result of the patent, Bell was able to secure funding and expand the Bell Telephone Company. Without legal protection, Bell's competitors could have copied his creation without consequence.
Today, Bell's feat is harder to replicate. Over the last decade, patent protection for small businesses has eroded considerably.
Fortunately, Congress is working to strengthen our patent system. Two recently introduced bills — the Patent Eligibility Restoration Act (PERA) and the PREVAIL Act — would reinforce patent protection and nourish America's ecosystem of small-business innovation.
Bell's patent story isn't a dated historical artifact. Consider the case of a revolutionary innovation born in a Stanford dorm room a century later. The patented algorithms behind Google's search technology gave rise to one of the world's foremost digital businesses. By protecting its intellectual property, Google could raise capital, invest in research, and forever change how the world finds information.
Patent rights are oil to the innovation engine. Absent legal protection for new products and services, entrepreneurial risk-taking and small businesses are put at risk. Better-funded rivals and corporate behemoths can exploit the innovations of entrepreneurs without consequence, which discourages investment. Without strong patent protection, inventors and small businesses fearing vulnerability to copycats also hesitate to disclose their innovations, reducing the free exchange of ideas. And weak patent rights hinder licensing, turning a revenue driver and efficiency producer into a risk.
Regrettably, various U.S. court cases and legal interpretations over the last decade have significantly eroded patent protections. One example is the Supreme Court's decision in Alice Corp. v. CLS Bank in 2014, which imposed strict eligibility requirements for software patents. This ruling introduced excessive ambiguity, rendering many software innovations vulnerable to legal challenges and chilling research and development.
Separately, the America Invents Act of 2011 created the Patent Trial and Appeal Board. Designed to reduce costly patent litigation, the board instead has been used by large, well-funded companies as a weapon against competitors. Because anyone can bring multiple challenges to the board, even for the same patent, the board has become a repeatable-use weapon wielded against smaller innovators, who have been forced to spend precious time and money defending their patents from challenges in this forum in addition to the federal courts. The Patent Trial and Appeal Board also has a lower standard of proof than traditional courts, leading to more patent invalidation.
The PREVAIL Act and the Patent Eligibility Restoration Act would help to deter these threats to innovation and small companies. The PREVAIL Act would reform the Patent Trial and Appeal Board, making it less likely to drain resources and time from inventors. PERA would clear up a decade of legal cases that have muddied patent waters. Together, these two bills give peace of mind, strengthened incentives, and more opportunities for small businesses and start-ups to scale and compete.
Karen Kerrigan is president and CEO of the Small Business and Entrepreneurship Council (sbecouncil.org) in Washington, D.C. This piece originally ran in the Duluth News Tribune.