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428A Russell Senate Office Building

Chairman David Vitter

I want to thank our panel of witnesses for taking time away from your jobs and making the trip to Washington for this important hearing. We look forward to your testimony.

As many in this room are aware, there is a growing call for the Senate to act swiftly and make patent reform legislation a priority for floor consideration once the relevant Senate Committees have completed their work on patent legislation.

Today, we are here to answer a sole question: How can we address patent reform while protecting innovation and not impose negative consequences on small businesses and entrepreneurs?

It is important to ensure any bill that moves to the U.S. Senate floor achieves the goal of combating frivolous lawsuit claims from so-called “patent-trolls;” but that also maintains a level playing field between small business inventors and large companies alike.

Patent jurisprudence has changed considerably over the past three years, and there are ample ongoing changes to the patent system, which are still being implemented.

Protecting small business and safeguarding those innovations is the responsibility of this Committee, not to mention the bedrock of the American entrepreneurial spirit.

Similarly, it is essential to remember that many legitimate owners of intellectual property (IP) do not manufacture anything, but nonetheless, have legitimate claims of patent infringement against other parties. These include independent inventors, research and development companies and universities who all qualify as non-practicing entities.

Therefore, Congress should act decisively, but it should also act with prudence.

We have heard pleas from businesses across the board that the patent system is increasingly becoming a forum for financial speculation and litigation rather than innovation.

American innovators and small businesses across the country are being forced to divert critical resources to defend themselves against vague claims of patent infringement, resulting in a substantial drain on our economy.

Main street businesses using off-the-shelf technology need to be protected against frivolous “demand letters” and suits.

This must stop, but it would be similarly disturbing if we uprooted a major portion of the U.S. economy to address harmful behavior from some bad actors.

The discussion surrounding patent reform must include a detailed analysis of how legislation would further impact small businesses, investors, and universities.

As Chairman of the Small Business Committee, I feel it is an obligation to highlight that our patent system fuels our economy.

• Small businesses are responsible for 20 percent of gross job creation in the United States each year, and hold 16.5 times more patents per employee than large firms.

• According to testimony before the Senate Judiciary Committee yesterday, in the past twenty years, from 1996-2013, U.S. university licensing activity contributed $181 billion to the U.S. GDP.

Unfortunately, American businesses have seen some bad actors, and patent abuse by bad actors certainly wastes vital funds that could otherwise go toward growing businesses.

It is for that reason that I fully support bringing the patent discussion forward to address specific legislative fixes as long as that discussion carries the necessary protections for the smaller businesses and startups.

Unfortunately when dealing with bad actors, there is very rarely a one-shot solution.

Sadly, I have seen disturbing efforts that in an attempt to demonstrate a greater level of “growing abuse” lump innocent well intentioned business suits in with that of trolls.

Legislation should not have the effect of allowing one group to strong-arm another smaller group simply because of immediate access to resources. Efforts to unbalance the system using misguided information will ultimately lead to a less prosperous American system.

Licensing one’s patents is not a bad thing.

It is for that reason I believe the discussion deserves the necessary room to include what the legislations further impacts will be on small businesses, investors, and universities.

Today it is my hope that together with the witnesses, as experts from across the spectrum, we can discuss how to best balance the legislative path moving forward.

I certainly look forward to investigating this issue as Chairman of this Committee and as a member of the Senate Judiciary Committee.