In an open letter (2-page / 486KB PDF) to Government ministers the group said that small and medium-sized enterprises (SMEs) are not able to take advantage of the protection offered by patents.
"Some of your ... announcements demonstrate Whitehall's continued ignorance of the real issues facing Britain's largest group of innovators, SMEs," said the letter from the SME Innovation Alliance (SMEIA) to Chancellor George Osborne and Business Secretary Vince Cable.
"A false assumption is made that an SME holding a patent will have 'protection' for their related investment in R&D and any resultant innovation," said the letter.
"For high-tech SMEs ... a patent is almost impossible to enforce," it said. "It does not require another review of IP [intellectual property] to establish this particular unfair fact yet again, it requires immediate change."
SMEIA chair John Mitchell told the Daily Telegraph that smaller companies could not afford to defend themselves in court and that a 'patent defence fund' should be made available to them so that they could afford to take part in major patent suits with large corporations.
"Although no-one likes to hear the truth about how the big business of today can simply hijack British inventions taking billions from our economy and many jobs, action is required to rectify matters," said the SMEIA's letter.
The Government said last month that it would carry out a six month review of IP laws to try to encourage internet-related business.
It said that the review would focus on issues of IP enforcement and licences and would attempt to find ways to help companies exploit their creations.
"The future of the economy lies in the highly skilled, technology sectors. For many of those companies their intellectual property is their most valuable asset," said Baroness Wilcox, a minister at the Department for Business, Innovation and Skills (BIS), when the review was launched. "We must ensure the intellectual property system helps not hinders those companies."
The SMEIA also called into question whether university research leads to as much business innovation as it should and proposed direct Government funding for technology-focused SMEs instead of Government lending to banks, which then might or might not lend to SMEs.
