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Why isn't the Senate taking up innovation bill?

When folks hear the term "start-up," all sorts of images are easily conjured in one's mind. You think of energetic young people in Silicon Valley or maybe Boston or Austin creating new innovative businesses; like Facebook or Twitter — hip tech companies with new ideas that seemingly came out of nowhere and now are integral parts of our lives. The good news is this is only part of the story. As Chairman of the House Small Business Committee, I've learned that start-ups can be found across America, from Boulder, Colo. to my backyard in Kansas City, and the types of companies and problems these companies seek to solve extend far beyond just the high-tech industry.

Rep. Sam Graves (R-MO).
James Lawler Duggan | Reuters
Rep. Sam Graves (R-MO).

We recently celebrated "Start-up Day Across America," a day to celebrate the importance of entrepreneurship and raise awareness about the job-creating potential of start-ups. We know that small businesses create the bulk of net new jobs in this country, but interestingly enough, research has shown that it is a particular subset of small firms — start-ups — that are actually leading the way in job creation. According to the Kauffman Foundation, a small 1 percent of start-up firms account for 10 percent of new jobs each year. Further, a report by the Pacific Research Institute estimates that in a given year, each net job created by start-up firms increases a state's gross product by almost $1.2 million; shedding light on the significant benefits growing start-ups can have on the local economy. With numbers like these, it is easy to see why Americans are beginning to focus on the importance of start-ups.

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Start-ups are rapidly moving and as we all know, the government is not. So when the Small Business Committee holds hearings and listens to the real-life challenges of start-ups, we learn what we can do, or usually not do, to allow them to stimulate the economy, create jobs, and spur innovation. Frequently, the story goes that government intrusion into this space only slows down start-ups and makes things harder; even when the government's actions are best intentioned.

Take, for example, crowdfunding — it's been one step forward, with many steps back. Access to capital is an important issue, especially for companies just starting out, where a month or two of funding can change everything. While Congress passed the Jumpstart Our Business Startups Act of 2012 (JOBS Act) over two years ago, many of the relevant crowdfunding regulations are yet to be released, and the regulations that have been proposed seem to set up more roadblocks to obtaining capital than providing access to financing. The bill's supporters saw it as an opportunity to allow start-ups to thrive, not create even more onerous regulations. Unfortunately, some in Washington have mastered snatching defeat from the jaws of victory.

That said, start-ups have mentioned a few things Congress can do to help — one is finding ways to combat patent trolls. Patent trolls are entities or people that attempt to bring frivolous patent claims against all types of businesses to challenge or try to take intellectual property. For start-ups, their intellectual property may be the most valuable asset they have. The cost of patent litigation is particularly harmful to entrepreneurs because they take limited resources away from building that next great product or service.

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How can we expect to get the economy back on track and create meaningful employment when start-ups are afraid to innovate and create new products due to the potential threat of an all-too-often meritless demand letter from a patent troll that could shut the company down and turn away investors?

In December, the House overwhelmingly passed H.R. 3309, The Innovation Act, with strong bipartisan support to begin addressing patent trolls. While this legislation lacked a provision specifically addressing demand letters, it was a step in the right direction to prevent costly litigation and add much needed transparency. Yet, Senate Majority Leader Harry Reid has not brought the bill up for a vote in the Senate; refusing to truly create better conditions for these important companies. To me this is inexcusable.

As we think about the economy, it is time to start thinking about start-ups as an integral piece of the puzzle. Start-ups are not just a hip new term or a group of companies isolated to one part of the country. They are in each and every one of our backyards actively working to revive America's economy and make a living for themselves.

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Commentary by Sam Graves (R-Mo.), chairman of the U.S. House of Representatives' Small Business Committee and U.S. representative of the 6th congressional district of Missouri. Graves, who is a sixth generation family farmer, has served in Congress since 2001. Follow the committee on Twitter @SmallBizGOP.

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