TEDDY REESE: Small businesses need protection from patent trolls

Small businesses are the heart and soul of both the Georgia and American economies. There are more than 33 million small businesses nationwide, and 99.9% of businesses across the country fall into the category.

In my roles as an attorney and state Representative for the 140th House District, I have been privileged to see the innovation and drive that small business owners bring to our state. From the restaurant owner who provides a meal to your family after a long day at work, to the contractors who repair your home, or the start-up providing a new product or service that might change the world, Georgia is a better place to live, work, and play because of the small businesses located here.

Georgia is a better place when we create an economic environment that allows small businesses to thrive, and as a member of the House Committee On Economic Development & Tourism, I am committed to that mission.

Tourism is booming across the state of Georgia, and I am proud of the role small businesses play in contributing to this success. We have tourists visiting us from all over the world to enjoy the sights and sounds of Atlanta, the beaches of coastal Georgia, and among other things, the longest urban whitewater course in the world right here in Columbus. Our small businesses provide transportation and lodging for tourists, activities for people to enjoy, retail opportunities for people to make purchases, and so much more.

Through tourism, small businesses help local communities promote local culture, boost the local economy, generate tax revenue, employ more people, and start more businesses.

Along with their clear economic impact, small businesses are also huge drivers of innovation in our state and across the country. According to the Small Business Administration, small businesses produce 16 times more new patents per employee than other larger patenting firms. Small businesses enjoy bipartisan support at the state and federal level, which is why leaders at both levels have taken steps to support them.

One such example at the state level in Georgia is the recent passage of HB 128, which streamlines the state certification process and expands opportunity for minority-owned, women-owned, and veteran-owned businesses within the state procurement process.

We have more work to do on the federal and state levels, though, and one concerning change worth mentioning is the recently proposed rules from the United States Patent and Trade Office that risk creating a new set of challenges that could hinder the ability of small business to create jobs and innovate. A unique type of company, sometimes referred to as patent trolls, who don’t make or produce anything on their own, but instead go out and buy up old unused patents for vague ideas, is at the heart of this issue.

They’ll then use these patents to target small businesses with the threat of a lawsuit, claiming to own the “idea” of a very simple process. In 2011 Congress took action to protect American businesses by passing the historic Leahy-Smith America Invents Act. This bipartisan legislation created the Patent Trial and Appeal Board and the Inter Partes Review process, both of which were meant to get at the root of the patent troll problem: weak patents that never should have been issued in the first place.

The proposed rule changes include restricting who can file an IPR, raising an already high standard for an IPR, and giving organizations less time to file an IPR. If these changes go through, local businesses here in Georgia would almost certainly be faced with an even greater barrage of lawsuits from patent trolls. There is strong evidence that the IPR process as passed by Congress is working since 99.8% of active patents have never faced an IPR, suggesting that the program is being used as intended — to go after the tiny portion of old patents that should not have been issued.

Estimates suggest that the process has saved litigants $2 billion in legal fees — money that could be invested back into our economy.

Unfortunately, Small businesses in Georgia and around the country have faced a challenging few years. I can only imagine how difficult it would be for a restaurant owner, for example, to make it through the hurdles of a global pandemic, a shut-down on indoor dining, staffing shortages, inflation and supply chain issues and come out the other side — only to receive a letter demanding tens of thousands of dollar by an entity that claims to own the idea of scanning a document.

Under the IPR process as envisioned, the small business owner, the company they purchased the scanner from, or any other party could challenge that bad patent. If the challenge had merit, the bad patent would be invalidated, and the company could continue on without the threat of future litigation.

It’s critical that we maintain this important provision as intended so that small businesses can protect themselves and continue to drive the economy and innovation in Georgia. We’re better when we work together and our economy is stronger when we do everything we can to protect and support our small businesses.