Some of the nation’s powerful venture capitalists are also some of the biggest opponents of the proposed Innovation Act, seeing a real threat to a free market economy in the changes envisioned by the law.
The National Venture Capital Association put its concerns on record back in February, dispatching a respected intellectual property lawyer to Congress to make its case against the bill, H.R. 9.
Robert P. Taylor, of RPT Legal Strategies, told the House Judiciary Subcommittee on Courts, Intellectual Property and the Internet that venture capitalists rely on inventors big and small to drive the innovation that grows the economy. That cycle, he said, would be put at risk by the proposed legislation.
“Let me say frankly at the outset, we are concerned that H.R. 9, if enacted as written, will have a chilling effect on investment in patent-intensive companies, which in turn will have a depressing effect on innovation in general,” Mr. Taylor testified. “At the very least, the legislation will make it far more difficult, risky and expensive for emerging companies to enforce their patents, which is an essential part of the patent right.
Mr. Taylor also warned that the law “will raise the cost and risk confronting smaller companies trying to defend against patent litigation brought by their larger, incumbent competitors.”
Mr. Taylor told the committee that the initial concerns that prompted discussion a few years ago about legislation like the Innovation Act abuses by so-called patent trolls who file frivolous lawsuits have since been dealt with effectively through fixes implemented by the federal courts and the U.S. Patent & Trademark Office.
If lawmakers still feel it necessary to address possible abuses, he pleaded with them to narrowly focus on specific behaviors rather than a massive rewriting of patent protections.
“Innovation does not take place in a vacuum,” Mr. Taylor agrued. “It requires entrepreneurs willing to devote time and resources to pursue visions and new ideas. It requires investors willing to invest time and money in developing those innovative new ideas.
“Venture capitalists work closely with entrepreneurs and innovators to transform break-through ideas into emerging growth companies that drive U.S. job creation and economic growth,” he added. “.Patents are critical to innovation in many industries and a company’s ability to enforce its patents at reasonable expense and risk is an essential element of such rights.”
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