Government Must Reform the ITC to Keep Pace with Innovation and Curb Trolls

By Bruce Gjovig
August 9, 2021

“Congressional action is needed to reform the ITC so it can uphold intellectual property rights with more precision than blanket import bans, which are currently its only remedy.”

https://depositphotos.com/69798509/stock-photo-woman-holding-microphone.htmlIn 2001, six years before the iPhone appeared, a futurist named Ray Kurzweil wrote that humankind would cram 20,000 years of technological progress into the century that had just begun. There were skeptics, but today any of the world’s six billion smartphone subscribers can read his essay on their devices practically any time, any place they choose.

As we move into an era of Artificial Intelligence (AI), quantum computing, and 5G telecommunications that supports Kurzweil’s vision, we must make sure that our laws and federal agencies match the pace of invention and protect innovators from trolls who would game the legal system and government functions for their ill-gained profit.

Trolls at the ITC

Case in point: the International Trade Commission (ITC) is an independent government agency that monitors aspects of trade and serves as a quasi-judicial body to ensure American industries have recourse when foreign companies skirt global trade rules. In a technology-driven world, many of these cases involve patents. The touch screens on our mobile devices alone can contain hundreds of patents, for example.

Protecting intellectual property is enshrined in the U.S. Constitution and is essential to the innovation ecosystem. It is the ITC’s duty to respond when high-tech products coming into the United States violate the rights of patent holders, but the agency’s options for how to use its authority are susceptible to misuse by bad actors.

Though legislation like the America Invents Act, and precedent established by pivotal opinions like eBay v. MercExchange in 2006, help to impede these abuses, any relief gained has been incremental and limited in scope. In more formal legal parlance, they are also referred to “non-practicing entities” or “patent asserting entities.” Terminology aside, these are companies that acquire patents NOT with the intention of developing new, innovative products; but rather to file suit when a product appears to be using a patent they purchased.

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Held Hostage

Patent trolls have become adept at using the ITC as part of a legal strategy, filing suit in federal court while simultaneously asking the ITC to investigate a claim of IP infringement. If the ITC determines the claim is true, it can issue an exclusion order on the product, which is essentially an import ban, stopping sales. For patent trolls, such a blunt instrument can force a faster, potentially billion-dollar settlement in court, holding the other side hostage.

It can also monkey wrench a system where entrepreneurs use existing platforms to come up with new ideas and products. Think of how costly and disruptive a ban on millions of mobile devices, such as smartphones and tablets, would be in a world where so much of daily life – operating small businesses, instructing students, providing health care, and more – has migrated to our mobile devices as result of the coronavirus pandemic.

No one should assume this legal chicanery affects only large corporations and scrappy patent asserters. A distorted and corrupted technology marketplace makes it harder for startups and small companies to attract capital and form partnerships. Innovation begets innovation. Lawsuits and ham-handed import bans by the ITC work in direct opposition to this.

Federal courts are better suited for parsing the complex legal issues in today’s IP disputes, many of which are legitimate. Trials can take a long time, but are often worth the fight if one has a principled, justified claim. On the other hand, expensive litigation used as a tactic for sidelining competition is an affront to principle. Using the ITC in this way is making a handful of lawyers rich but it hampers the ability of consumers and small businesses to take advantage of new technologies and choices and it sticks them with higher prices.

Congress Should Take Action to Support Innovation

Congressional action is needed to reform the ITC so it can uphold intellectual property rights with more precision than blanket import bans, which are currently its only remedy. Bipartisan legislation was previously introduced to prohibit non-practicing entities from meeting the ITC’s domestic industry requirement by subpoena and to require the ITC to place greater emphasis on the impact to public interest when making determinations. Another area of ITC policy that Congress should also address is allowing non-infringing, redesigned products to enter the U.S. market without delay by requiring the ITC to adjudicate all design-around requests.

Congressional action will both prevent patent trolls from using the ITC to intimidate foes and extract huge sums from them and support continued innovation in the U.S. tech sector.

In April, President Biden met with corporate executives to discuss a shortage of semiconductors. Supply chain disruptions of the technology behind dashboard displays and other features had brought car manufacturing to a halt in some places. Biden held up a silicon wafer and asserted, “This is infrastructure.”

It was an apt metaphor for a marketplace where the availability of sophisticated components and devices is essential to manufacturing, fueling new ideas, and making daily life possible. The exponential pace of technological change can expose weak links in supply chains as well as overwhelm legal structures for settling IP disputes. Just as supply chains must be resilient, courts of law and government agencies must be able to protect patent rights while also preserving America’s economic dynamism.

The Author

Bruce Gjovig

Bruce Gjovig is CEO Emeritus of the UND Center for Innovation Foundation of Grand Forks, North Dakota, a nonprofit entrepreneur outreach center that received numerous national and international awards for excellence.

Warning & Disclaimer: The pages, articles and comments on IPWatchdog.com do not constitute legal advice, nor do they create any attorney-client relationship. The articles published express the personal opinion and views of the author as of the time of publication and should not be attributed to the author’s employer, clients or the sponsors of IPWatchdog.com. Read more.

Discuss this

There are currently 13 Comments comments. Join the discussion.

  1. Bob Weber August 9, 2021 4:36 pm

    the troll narrative along with “bad patents” was created by the efficient infringer lobby to avoid having to pay royalties. Let’s stop using the phase “patent troll”, “bad patents,” and “illegitimate competitors” (i.e., small companies with patents competing in the same marketplace)

  2. Paul Morinville August 9, 2021 4:50 pm

    Bruce, You used the term “patent troll”. I have yet to find a consistent definition and most conflict with other definitions, so please define your meaning of the term so I can understand your article.

    This is a real request that requires a real answer.

  3. Anon August 9, 2021 5:04 pm

    The article commits the fallacy in assuming that a property right is only “valid” for continued development efforts or ‘real products,’ and displays a gross — and really unforgivable — mistake of not understanding what a patent is, and how the foundation of US patent law aimed to make the property nature of a granted patent fully alienable, with NO affirmative ‘must make’ characteristic.

    The author either does not know of that which he speaks (bad), or does know, and yet seeks to spread propaganda (unforgivable).

  4. Pro Say August 9, 2021 6:48 pm

    Ugh. Really Bruce? Yet still more “troll” tripe? Really?

    “entrepreneur outreach center” *

    * except that entrepreneurs should be denied their constitutional, legal, and moral right to sell or license their patents to others

    This is your idea of supporting entrepreneurs, Bruce?

    Sheesh.

  5. John meli August 10, 2021 7:39 am

    You are killing the motivation to invent by rendering the patents useless to small inventors and companies. In a free market, patents have the value assigned by the market. In a twisted market, there are those that seek to invalidate inventions so they can be used for free. The legal system is there to allow an inventor and his npe partners to receive fair value for their property. You have the audacity to imply that the shortage of semiconductors is the fault of patent trolls ? You are clearly clueless in grand fork. Will you be happy when Apple has all the money. Do you have an address I can send my money to to help the poor little tech giants. Are you friggin kidding me? What a joke.

  6. Bob Weber’s Friend August 10, 2021 9:30 am

    In fairness to Mr. Gjovig, maybe the big-tech-funded propaganda of “patent trolls” just hit North Dakota. But that still wouldn’t excuse him from adopting the illogical position that weakening patent rights would somehow benefit inventors. But if he’s correct, that would be incredible! Imagine the possibilities! The government could ban “bad” speech, and that would be a huge improvement to the first amendment and everyone’s right to free speech!!!

  7. jacek August 10, 2021 12:16 pm

    ” legislation like America Invents Act, and precedent established by pivotal opinions like eBay v. MercExchange in 2006, help to impede these abuses”..
    ———————————————————————————–
    Seems that the Author has no ability to distinguish between left and right. Shocking impediment when comes to somebody who claims to be part of the innovation landscape. Totaly confused. How much damage did you do Mr. CEO Emeritus?

  8. Shawn Ambwani August 10, 2021 1:58 pm

    You guys are hilarious ? Unlike all of you, Bruce actually works with companies creating real jobs and helps them become successful in the real world. Not in the tenious world where somehow an NPE buying a patent which is more than 10 years old from failed startup is helping innovation (which no one can actually define or measure). Your white, male biases are sadly coming out….

  9. PTO-indentured August 10, 2021 4:13 pm

    Nice Try Bruce — and perfectly wrong group chosen to blindly drink Troll Kool Aid.

    What next — no good ever comes from an NPE?

  10. Anon August 10, 2021 4:30 pm

    jacek – nice catch. I had noticed that as well, but neglected to include it in my comment.

    With ‘friends’ like this, why would innovation need enemies?

  11. Anon August 10, 2021 5:55 pm

    Your white, male biases are sadly coming out…

    Check your activist privilege (while checking the basics of patent law).

  12. jacek August 10, 2021 9:04 pm

    Shawn Ambwani.
    I do not doubt that Bruce supports Big Tech and every nonsense coming out of Supreme court judges endorsing eBay theft. After reading his piece, there is no doubt; he is on the side of Big Tech and Chinese companies invalidating US competition patents using PTAB. Yes, he is creating:
    JOBS IN CHINA.

    What about Skin color? Why is it to you so important when it comes to IP?

  13. Paul Morinville August 11, 2021 11:45 am

    Bruce, Since you won’t define a “patent troll”, I forgive you. It’s hard to define a cartoon. But I have a definition for you. It is an investor in a startup that collateralized its patents for that investment and was ran out of business by infringers, the investor, who now owns the patent and is attempting to return that investment, is what you call a “patent troll”.

    But since you are up there in my old home turf, I have a story from Northern MN. Back in the 1990’s in Brooks, MN, my cousin invented a sprayer hinge that kept the sprayer arms level even if the spraying vehicle hit a dip. This way, the sprayers arms did not dip with the sprayer vehicle damaging the crop while also keeping an even application of the sprayed material. He patented it and collateralized the patent to attract funding. That funding built his first products and his company, which manufactured and distributed his sprayers worldwide. Eventually he sold the company, which I believe is now in Detroit Lakes MN.

    Your proposal reduces the value of any patent as collateral for funding by allowing infringers to steal it, massively commercialize it, and import it into the US. Had this been the case in the 1990’s, my cousin would not have been able to attract funding for his company because he would not be able to stop multinationals like John Deere (who mfg overseas and import into the US) from sweeping the market by leveraging their existing supply line, manufacturing and distribution systems along with their deep pockets long before he could get his product on the market.

    How does your position of eliminating injunctive relief at the ITC square with the startups who trust the UND Center for Innovation Foundation to help them? Doesn’t your position harm them?

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