Solving your payroll and HR issues with insights, answers, and action.

  • Startup
  • Payroll/Taxes
  • Human Resources
  • Employee Benefits
  • Business Insurance
  • Compliance
  • Marketing
  • Funding
  • Accounting
  • Management
  • Finance
  • Payment Processing
  • Taxes
  • Overtime
  • Outsourcing
  • Time & Attendance
  • Analytics
  • PEO
  • Outsourcing
  • HCM
  • Hiring
  • Onboarding
  • Recruiting
  • Retirement
  • Group Health
  • Individual Insurance
  • Health Care
  • Employment Law
  • Tax Reform

The Innovation Act Raises Concerns in the Small Business Community


Small businesses depend on patented products for long-term profitability. Successfully navigating the patent process helps businesses attract outside investors and sets companies apart from competitors. For these reasons, any potential changes to the patent system in the United States tend to raise concern in the small business community. The recently proposed Patent Reform Innovation Act is the latest regulation with pros and cons for entrepreneurs hoping to profit from their inventions.

Proposed Changes Affect Patent Infringement Lawsuits

This most recent attempt at patent reform is intended to limit frivolous patent infringement lawsuits, which may cost businesses large amounts to defend. As currently written, the Innovation Act increases the amount of specific information required by the plaintiff to initially file a patent infringement case. The filing must also include more transparent ownership information than was previously required.

In another effort to hold down litigation costs, the Innovation Act limits the amount of discovery permitted when preparing a patent infringement case. After a judgment has been rendered under this proposed ruling, court fees may be awarded to the prevailing party.

How the Innovation Act May Affect Small Businesses

Patents will still provide small businesses with the potential to gain notice for an exceptional new product. Yet under the Innovation Act, companies wishing to pursue litigation for patent-related issues will likely face increased costs to collect and report the information needed to file a case in the courts. For small businesses with limited funding, these added costs may make infringement lawsuits unaffordable.

How to Protect a Patent

Litigation expenses incurred to pursue a court case may become too heavy for some small companies to bear, but action can still be taken to fight patent infringement. If other companies are copying patented products, an intellectual property lawyer can send a letter on behalf of the patent holder requesting the infringement activity to stop. Often, the simple threat of litigation may serve as an effective deterrent. Also, if criminal action is suspected in conjunction with patent infringement, a complaint may be file with one or more U.S. Federal Agencies such as the FBI or Homeland Security. If a patent is a key company asset, small business owners may also consider purchasing intellectual property insurance for additional protection.

Even with the proposed reform, small business should still validate inventions by applying for a patent. Once this process is complete, they may protect their intellectual property as they see fit. Although the Innovation Act may increase the expense of initiating a patent infringement lawsuit, small businesses may also benefit from the decrease in frivolous cases which also require the need to retain legal counsel.


This website contains articles posted for informational and educational value. Paychex is not responsible for information contained within any of these materials. Any opinions expressed within materials are not necessarily the opinion of, or supported by, Paychex. The information in these materials should not be considered legal or accounting advice, and it should not substitute for legal, accounting, and other professional advice where the facts and circumstances warrant.
View More in FinanceView All Categories