We applaud the introduction of the PATENT Act, an important piece of legislation that would create much-needed balance, fairness, and transparency in the patent system. The bill’s package of incentives directly target a patent troll problem that has, over the past decade, grown out of control, harming countless startups and our economy at large.
The patent troll epidemic has been well-documented by reporters, advocates, and even comedian John Oliver. It costs our economy at least $29 billion annually. But, worst of all, it disproportionately targets startups and small companies. Research shows that 55 percent of companies targeted by trolls have less than $10 million in annual revenue. And a survey of 200 VCs and their portfolio companies found “venture capitalists overwhelmingly believe that patent demands have a negative impact on the venture-backed community.” In fact, it’s been estimated that were it not for troll threats, VC investment in startups would have been $8 billion higher over the last five years alone.
The PATENT Act would give those threatened by patent trolls the tools they need to fight back, redistributing power and creating a more level playing field. These common-sense reforms would require patent owners to provide basic information, and would incentivize them to bring only those lawsuits that are based on high-quality patents and represent legitimate claims of infringement. As such, it creates no unnecessary burden on patent holders. And the bill effectively addresses the serious problem of out-of-control demand letters.
Patent reform enjoys broad bipartisan support in both houses and growing demand from the American people. In the weeks ahead, we'll be redoubling our efforts to ensure the passage of the PATENT Act, a bill that will strengthen the patent ecosystem for all innovators.
We commend the bill’s co-sponsors Sens. Grassley, Leahy, Cornyn, Schumer, Lee, Hatch and Klobuchar and look forward to the PATENT Act becoming law.