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Why are small business patents declining? #patents #smallbusiness

Since 2001, the percentage share of patents awarded to small businesses has fallen from 25.9% to 19% in 2015.  Observers have suggested a few reasons for this including.

  1. The cost of patenting has risen in recent years making it more difficult for small businesses to pursue patent protection for their technological innovations.
  2. Research has shown that the USPTO has become less likely to grant patent applications in recent years, coming down particularly harshly on small businesses.
  3. A slowdown in the processing of patent applications makes it more difficult for small businesses to use the patent system to protect their products and services against imitation by competitors since patents are being awarded too slowly to be of much value to them.
  4. Patent infringement lawsuits have become more common and costly to prosecute, making it more difficult for small businesses to enforce their patent rights in court.

Although these reasons are plausible, Scott Shane of Smallbiztrends thinks there is a much simpler reason for the drop in patents for small business.  Shane believes the patent decrease coincides with the decrease in small businesses.  According to Shane, between “1998 and 2011, small business’s share of U.S. private sector payrolls declined from 48.6 percent to 42.0 percent. The share of the labor force employed in small companies fell from 54.5 percent in 1988 to 48.4 percent in 2013. In 1998, small businesses accounted for 50.5 percent of private sector GDP, but in 2011 they contributed less than 45 percent.”

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