There’s a threat facing the small business community that could cost small employers billions of dollars in lost revenue. What’s even more disturbing is it’s not something entrepreneurs are usually prepared for, like a drop in consumer demand or the rising cost of doing business. This little-known threat is coming from what are commonly referred to as patent trolls, and it’s frequently affecting end users of common technologies, such as a coffee shop offering WiFi to its customers.
For those who aren’t familiar with the term, patent trolls are companies that purchase relatively ambiguous patents and then demand royalty payments for use of their technology or immediately file lawsuits. They’re not just targeting technology startup firms: they’re going after small businesses across industries for using everyday technologies.
Small Business Majority recently asked small business owners what they think about patent trolls and our country’s patent system. The poll found that by a 3:1 margin, small employers support the Innovation Act—legislation that would change the rules and regulations surrounding patent infringement claims to reduce frivolous lawsuits brought by patent trolls.
These cases have cost the U.S. economy an estimated half a trillion dollars in the last 20 years. When one considers that
55 percent of companies targeted by patent trolls have less than $10 million in revenues, it’s imperative to enact reforms that will help protect small businesses from fraudulent patent troll claims.
Seventy-seven percent of entrepreneurs support a provision that would require patent trolls to sue the party that is actually responsible for infringement, not the end users who had no input into the product. What’s more, nearly three-fourths of small business owners believe patent trolls should be deterred from attacking small businesses in the first place by penalizing them for filing fraudulent patent assertions or sending abusive demand letters.
It’s crucial our patent system promote innovation and entrepreneurialism, while protecting small business owners from frivolous litigation. Unfortunately, a few bad apples are jeopardizing the integrity of the entire system, and it’s time for smart reforms. We hope lawmakers give this issue the careful consideration it warrants and enact strong, comprehensive legislation that protects small businesses from these unscrupulous actors.
