This piece originally appeared in Bloomberg Law.
Americans benefit from innovation and the policies and protections that promote it. However, the very system intended to protect US trade interests and innovators from foreign counterfeiters and infringers, notably the International Trade Commission, is being abused by non-practicing entities that specialize in acquiring patents for extortion—not for development or commercialization into products.
Also known as patent trolls, more and more NPEs are filing lawsuits at the ITC where they hope they can win powerful exclusion orders under a law called Section 337. Exclusion orders block allegedly infringing imports from the US, and NPEs use the threat of such an order to shake down legitimate companies and extract a large financial settlement.
Over time, this problem has grown worse. An ITC exclusion order can be based on infringement of a single patent. But today, modern products are increasingly complex and may potentially touch on thousands of individual patents—making it easier and easier for patent trolls to find a single patent hook that justifies their bringing an exploitative infringement claim.