In an era of hyper-partisanship in the nation’s capital, it’s refreshing to see members of Congress working across the aisle on legislative solutions that fix loopholes or systems being exploited by bad actors. Such is the case with the “Advancing America’s Interests Act” (AAIA) introduced byReps. Suzanne DelBene (D-WA) and David Schweikert (R-AZ). The AAIA aims to modernize practices at the International Trade Commission (ITC) and stop the Commission from being abused by patent trolls.
The ITC was established to protect U.S. industry from unfair foreign competition, but non-practicing patent licensing entities (NPEs), aka patent trolls, that do not produce any goods or services, have found they can exploit the ITC’s investigatory and remedial powers to “shake down American companies in search of large multi-million-dollar payouts.”
Patent trolls have found a way to manipulate ITC procedures to threaten wholesale destruction of companies over claims of IP violations and thereby force massive settlements at the expense of productive U.S. businesses. This exploitation in the name of IP actively undermines our innovation potential, as significant capital is wasted to ward off patent trolls, rather than being re-invested in the economy. Patent trolls file patent infringement complaints at the ITC to spur broad import bans called exclusion orders. Even a minor patent issue can block billions of dollars of trade
Exclusions orders, as well as the coerced settlements harm consumers and small businesses as they limit the supply of products, which drives up prices. With rampant supply chain challenges currently affecting every industry, Congress needs to be doing all it can to root out distortions and bad practices that exacerbate these challenges and fuel inflationary pressures. The bipartisan AAIA legislation is one measure that will help accomplish that goal. It would ensure the ITC can act whenever it is in the public interest and protect U.S. industries against unfair import competition, but also ensures the Commission’s process cannot be weaponized against productive U.S. companies.
This effort is particularly urgent since patent trolls are increasingly targeting the technology in devices that American consumers have grown to depend on throughout the COVID-19 pandemic. Remote work, learning, telehealth, and other activities have increasingly become the norm. Meanwhile, business survival now hinges on being able to operate digitally. Without access to devices that are a big target of patent trolls - from laptops to tablets to smart phones and more - small businesses and entrepreneurs would not have survived. The pandemic has only underscored how much small businesses need technology and digital tools going forward to operate nimbly and efficiently as our economy works to fully recover.
Disrupting the market for these devices by vastly curbing their inflow into the U.S. and limiting supply creates uncertainty, bottlenecks, and higher costs for our economy and small businesses.
Proposed reforms in the DelBene-Schweikert bill seek to stop the abuse of the ITC in several ways. The bill protects U.S. industry by ensuring that “patent-assertion entities” which have no U.S. presence or genuine domestic industry support cannot sue at the ITC. As a reminder, the ITC is supposed to protect US-based entities from unfair foreign competition, but increasingly “ITC complaints are attacking US based companies.”
The legislation would also restore the public interest to ITC proceedings. Under proposed reforms, the ITC is required to affirmatively determine that an exclusion order would actually serve the public interest.
The bipartisan AAIA is a step in the right direction toward curbing abuse of the ITC by patent trolls seeking to shake down productive companies in the United States. By adopting common-sense reforms, the ITC will better serve the American people and more effectively maintain a competitive and vibrant marketplace for the goods and services consumers and small businesses need.
Modernizing the ITC is one of many steps Congress can take on a bipartisan basis to help American businesses, workers, and local small businesses better navigate this uncertain period and help our economy recover.
