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Small Firm Inventions Often Unprotected Globally

Study shows small firms patent abroad less often than larger firms.
2 min read
Opinions expressed by Entrepreneur contributors are their own.

(SBA) - A new study shows that small U.S. firms are not protecting their inventions through foreign patents as often as large firms. This lower rate of foreign patenting results in fewer commercial opportunities and lost revenue, according to the report issued today by the Office of Advocacy of the SBA.

The report, "Foreign Patenting Behavior of Small and Large Firms: An Update," written by Dr. Mary Ellen Mogee, points out that smaller firms are increasingly protecting their inventions in the global marketplace through patents. However, they still patent abroad less than larger firms do, and they allow their patents to lapse more often as well.

"Small firms are incredibly inventive," says Thomas M. Sullivan, chief counsel for Advocacy. "But many times, they are unable to protect their inventions in the global marketplace due to their inability to secure foreign patents. If small firms are unable to protect the results of their hard work, our country could lose its most valuable source of new ideas and innovations."

Mogee reviewed recent literature to determine reasons behind small firms' patenting behavior. The reason cited most often for small businesses' failure to patent abroad is lack of financial resources. Moreover, a 2002 GAO report found that the most important impediment is foreign patent costs. That report highlighted other barriers, including small firms' limited resources, limited foreign patent knowledge, differences in foreign patent systems, and weak enforcement in some countries.

The report released last week also confirmed the innovative nature of smaller firms. It found that patent value measures based on the number of other citations showed small-business patents to be more valuable than large business patents in all years studied. This result reinforces the conclusions of another recent Advocacy-funded study, "Small Serial Innovators: The Small Firm Contribution to Technical Change." Taken together, these reports clearly indicate that America's technological innovators are found in small firms.

For more information, visit the Office of Advocacy Web site at www.sba.gov/advo.

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