Advocacy Research Examines How Patenting Changes May Affect Small Innovators

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Created on June 30, 2015
 

The Office of Advocacy, an independent office within the U.S. Small Business Administration, released an Issue Brief entitled “Patenting and Innovative Startups: Putting the America Invents Act (AIA) in a Broader Economic Context.” The issue brief summarizes some of the potential small business outcomes of the AIA and contextualizes those outcomes for innovative startups. This issue brief finds that policy changes that affect patenting could affect innovative startups as they may heavily utilize patents to raise funds to continue to innovate.

The importance of patents to the economy

Patents are at the crux of innovation in the economy. Patents provide a framework by which innovative research can take place and new technologies can be disseminated. In particular, patents provide a clear economic incentive to undertake innovative research that has the potential to substantially grow startups.1 Patents protect researchers and investors with clear determinations of intellectual property rights while also providing a vehicle with which to share newly developed technologies without a fear of losing ownership of intellectual property.2

Given the significance of patents, any changes to the patenting system could potentially have widespread impacts—both positive and negative—to startups, small businesses, and by extension, to the economy as a whole. In recent years, the Leahy-Smith American Invents Act of 2011 (AIA) made significant changes to the U.S. patenting system. While it is too early to tell precisely what those impacts are, the AIA could affect the viability of innovative startups.3

Download full Issue Brief: Patenting and Innovative Startups: Putting the America Invents Act (AIA) in a Broader Economic Context

 

1. “Market Value and Patent Citations: A First Look” Bronwyn H. Hall, Adam B. Jaffe, and Manuel Trajtenberg (2000). NBER Working Paper No. 7741.

2. “Recent Research on the Economics of Patents” Bronwyn H. Hall and Dietmar Harhoff (2012). NBER Working Paper No. 17773.

3. “The Leahy-Smith America Invents Act: A Preliminary Examination of Its Impact on Small Businesses” Josh Lerner, Andrew Speen, and Ann Leamon (2015). U.S. Small Business Administration, Office of Advocacy. Available at www.sba.gov/advocacy/leahy-smith-america-invents-act-preliminary-examination-its-impact-small-businesses.