Patent Trolls Are Targeting Small Businesses — And You Could Be Next
Opinions expressed by Entrepreneur contributors are their own.
As I walk the CES show floor each year, I’m awed by the world-changing innovations put on display by our country’s top entrepreneurs, inventors and businesses. While innovation can happen anywhere and exhibitors join us from around the globe, it’s not just our Las Vegas location that brings thousands of American businesses to our halls. But this year, beyond the spectacle and lights, I’m concerned about a quiet but potentially disastrous threat to American innovation and entrepreneurial spirit.
The International Trade Commission (ITC) is a little-known but powerful executive agency tasked with protecting U.S. industries — including small businesses and entrepreneurs — from unfair trading practices deployed by foreign companies. That’s a laudable goal. However, in recent years, patent trolls — in other words, companies that don’t make anything, but manipulate patent laws to extort legitimate businesses — have transformed the ITC into a legal weapon targeting successful companies of every size. These cases have serious consequences, as the ITC often relies on exclusion orders and sweeping bans blocking American businesses from distributing products and using technology as a primary tool to resolve disputes. These extreme bans pose a real danger to American innovation. Just one errant exclusion order could shut down a small business, shutter a growing company or hamstring a successful entrepreneur.
Related: 4 Potential Lawsuits to Watch Out for in Small Business
American entrepreneurs and small business owners spend years creating and investing in innovative products and services to build successful companies. Patent trolls simply prey on others’ success. Unfortunately, these bad actors often see small and medium-sized businesses as easy targets, and the ITC’s legal forums do nothing to discourage baseless lawsuits. Even the ITC’s own data shows that the problem has gotten out of control, with lawsuits filed by patent trolls skyrocketing in the past decade. Now, it’s commonplace for business owners to receive threatening letters, which cite absurdly broad or vague patents and offer business owners the choice between huge payments or costly, drawn-out legal action.
Even small business owners who avoid direct confrontations with patent trolls can be caught in the crossfire of disputes between bad actors and larger companies. Take, for example, a recent ITC case filed by one patent troll against leading U.S. tech companies over their use of semiconductors. If that case is successful, it would exclude a large swath of tech products. Overnight, smaller businesses could lose access to key components used in their products.
While Congress has been slow to address the patent troll problems plaguing the ITC, the issue is starting to gain momentum. Groups like the National Federation of Independent Businesses (NFIB) and the Small Business and Entrepreneurship Council (SBEC) have led the charge on ITC reform, pushing leaders in Congress to introduce meaningful legislation. The bipartisan Advancing America’s Interests Act, for example, would fix some of the most glaring legal loopholes patent trolls exploit for profit – but Congress still needs to pass it.
Related: How to Stop a Frivolous Lawsuit From Sinking Your Business
Small business owners and entrepreneurs have a critical role to play in pushing ITC reforms over the finish line. Lawmakers in Washington pay special attention to concerns raised by members of their home state’s small business community, which means that calling and writing members of Congress in support of the Advancing America’s Interests Act and similar legislation can have a real impact.
American entrepreneurs and small business owners are spending too much precious time and money fending off bogus lawsuits from patent trolls. ITC reform is needed urgently to stop patent trolls from hijacking American innovation.