Small business owners know that seemingly minor changes to laws and regulations can have large effects on our bottom line. We have tight margins to begin with, and when there are big challenges we can’t control — like inflation driving up costs — it makes it even more difficult for us to grow. Some obstacles we will never be able to plan for, which comes with running a small business. This unpredictability, however, means it’s even more important that our lawmakers fix obvious problems, and give us a little more breathing room to adapt to new ones.
One obvious problem facing American small businesses is patent trolls using sham lawsuits to profit at our expense. Luckily, the solutions are clear.
Most people have a general understanding of why patents are important and how they help grow our economy. It makes sense that if you develop a new technology or product, you should benefit without other businesses immediately taking your idea. Most people don’t give it much more thought than that, but for a small business owner like me, the devil is in the details of the system.
My son and I run Queen Tackle, a small fishing business in North Carolina. We had a patent pending with the U.S. Patent and Trademark Office (USPTO), when a larger competitor filed a patent infringement lawsuit against us without even specifying which patent we were supposedly violating. We were confident that the accusation was baseless, but we still had to dip into our savings defending ourselves in court.
Many businesses that find themselves in a similar position are targeted by patent trolls. Trolls are shell companies that do not create or sell products. Their only potential income source is buying poor-quality patents and using them to sue legitimate businesses for patent infringement. When patent trolls come after small businesses, they count on owners choosing to settle instead to make the case go away and avoid a long and costly legal battle.
This type of scheme has drawn attention from some lawmakers. Notably, the Washington State Attorney General has fought back against a patent troll that sent over a thousand threatening demand letters. But much more must be done to protect small businesses.
Congress took steps to help solve this problem over a decade ago, yet that action has been thrown into uncertainty. When Congress passed the America Invents Act in 2011, it overhauled the American patent system. Importantly, it created an expert body of judges at the USPTO, known collectively as the Patent Trial and Appeal Board (PTAB), to weed out low-quality patents much more quickly and at a far lower cost than litigating in court. PTAB is a lifeline for companies like mine. Instead of being stuck with the options of settling or going through a lawsuit, the PTAB reviews a case’s merits and determines whether the troll’s patents are valid.
The system worked until the previous USPTO director changed the rules, making it more difficult for patent troll victims to get the patents being used against them reviewed. Fortunately, the current director, Kathi Vidal, may be taking steps to reverse those changes through interim guidance, but as of now it is not clear where the agency’s final policy will land.
Businesses like mine need the certainty of a formal rulemaking process that restores PTAB to working as intended and providing targets of patent trolling with the protection of reliable, expert review. With so many unpredictable problems, let’s make sure we are helping small businesses by solving the obvious ones.