Scientific Opinion Poll: Small Businesses Support Legislation Reforming Nation's Patent System

Washington, DC—A scientific opinion poll released today shows small business owners across the country agree our nation̢??‰?s patent system needs to be reformed and support current legislation that would strengthen it, while protecting small business interests.

The poll, conducted April 7-23 by Lake Research Partners and Chesapeake Beach Consulting on behalf of Small Business Majority, found that by a 3:1 margin, small employers support the Innovation Act—legislation that would change the rules and regulations surrounding patent infringement claims to reduce frivolous lawsuits brought by "patent trolls," also known as patent assertion entities. Patent trolls are companies that don't make or sell anything; they just own patents, often vague or generalized ones covering commonly used technology such as WiFi, then demand annual fees for use of that technology—or immediately file lawsuits against companies they claim have infringed on their intellectual property. When small employers learned more about the provisions within the Innovation Act that would protect them from patent trolls, support grew even stronger.

"Two years ago, I received a letter claiming my business was infringing on a set of patents covering the scan-to-email function on our business copier and threatening to sue me unless I paid a licensing fee of at least $1,000 for each of my 70 employees," said Roberta Hurley, owner of Southeastern Employment Services in Old Lyme, Conn. "Fortunately, I had a great attorney on my side and after he requested documentation pertaining to my infringement of their patents, we never heard from the company again. I'm lucky to have been able to access an attorney that specializes in patent law and speak out about my situation. However, I'm very concerned for other small businesses that may not be able to fight this predatory business practice. That's why lawmakers need to take a look at the weaknesses in our current patent system and close loopholes that allow unscrupulous businesses to exploit everyday technologies."

Seventy-seven percent of entrepreneurs support a provision that would require patent trolls to sue the party that is actually responsible for infringement, not the end users who had no input into the product (like the small coffee shop owner using WiFi). What's more, nearly three-fourths (73 percent) of small business owners believe patent trolls should be deterred from attacking small businesses in the first place by penalizing them for filing fraudulent patent assertions or sending abusive demand letters. Seventy-six percent believe courts should impose financial sanctions against patent trolls that file baseless lawsuits.

In the case that a small business must go to court to fight a patent troll, more than 6 in 10 (61 percent) support a provision that would allow courts to require the loser in a frivolous patent case to pay the winning side's fees and costs, and 77 percent support a provision that would require more transparency in patent lawsuits by requiring plaintiffs to disclose who the owner of a patent is before litigation so it is clear who stands to benefit financially from the lawsuit. What's more, 82 percent of entrepreneurs support the creation of new judicial rules to reduce the costs of discovery in patent litigation, so that high legal fees do not force small businesses and entrepreneurs to settle out of court when they don't need to.

Small employers also agree that improvements should be made to the U.S. Patent Office in order to help prevent abuse of the system. Sixty-eight percent believe the U.S. Patent Office should be fully funded so there is closer scrutiny of patent applications. Nearly three-fourths support expanding patent review opportunities to prevent patent trolls from threatening small businesses with patents that were questionable in the first place, and seven in 10 support creating a system to trigger automatic reviews of patents that are commonly exploited by patent trolls.

"It's crucial our patent system promote innovation and entrepreneurialism, while protecting small business owners from frivolous litigation," John Arensmeyer, Founder & CEO of Small Business Majority. "Unfortunately, a few bad apples are jeopardizing the integrity of the entire system and it's time for smart reforms. We hope lawmakers give this issue the careful consideration it warrants and enact strong, comprehensive legislation that protects small businesses from unscrupulous actors."

It's important to note that this issue affects small business owners across a range of industries and political persuasions, showing small businesses do not view the issue through an ideological lens. The respondents were predominately Republican—with 47 percent of small business owners identifying as Republican, 29 percent as Democrat and 19 percent as independent.

The full poll report is available at: http://www.smallbusinessmajority.org/small-business-research/technology