In the wild west of today’s e-commerce landscape, there is just one option to describe the present patent enforcement system: a catastrophe that’s slowly but surely destroying the American dream. Major online retailers like Chinese titans TEMU and Shein have established business models that profit significantly from stolen mental property from entrepreneurs and small businesses. Even popular retailers like Shopify, Etsy, and eBay have benefited from the glaring lack of patent enforcement. With no reasonable legal recourse for the little guy, small businesses that strive for true innovation are exploited, manipulated and omitted within the cold. Although all of those corporations say they’re doing their best to counteract counterfeits, our experience proves otherwise.
My sister and I created NightCap when she was only 16 years old. She had the thought in a dream and built the primary prototype of our product using a hair tie and our mother’s tights. We applied for (and were awarded) a patent for his or her revolutionary solution to the issue of fortifying drinks – and headed to Shark Tank, where we teamed up with Shark and business icon Lori Grenier for one in all the fastest deals in history the show concluded. In just two years for the reason that company’s founding, NightCap had reached nearly half 1,000,000 followers on social media and generated over $2 million in sales in 40 countries. But after three years we discover ourselves once more in shark-infested waters, but this time they’re out for blood.
In May 2023, I saw an imitation of our product at Shein for the primary time. Horrified by the blatant disregard for our patent and admittedly concerned about how the $1.99 price would affect sales of our $11.99 NightCap package, I immediately started working, but I quickly found myself at a dead end.
Undermining the American Dream
These e-commerce sites have deliberately created so-called “passive” platforms that only resolve patent infringements if you will have a court order. If you’ve got never tried to use for a court order before (I have not), it costs tens or possibly tons of of 1000’s of dollars to acquire one – an expense that is usually prohibitive or just suicidal for many small businesses.
Worse, sellers of infringing products even go to date as to create these listings on multiple platforms, knowing full well that every requires a separate court order to be removed. While this can be a plausible one-time fee for a small business, there is no such thing as a practical option to keep spending $50,000 to repeatedly seek court orders. Even then, these sellers are free to repeatedly place recent offers – an incredibly expensive game of Whack-A-Mole.
Many of those e-commerce web sites can price your product so low because there are not any costs involved. They enable entrepreneurs like us to take a position all of our money and time into marketing and constructing our products and types. All you will have to do is bid on the keywords our product uses they usually’ll send half of the traffic you drive straight to their cheaper alternative. The third-party platforms don’t care in any respect because a sale on their platform means a profit of their pocket. Either way, you generate profits – and it doesn’t matter where it comes from.
These sites stole my little sister’s idea and our labor, not to say the last five years of our lives, and there was nothing I could do about it. I knew that if I could not change our circumstances, I had to vary the system.
The Internet is sort of limitless and corporations like mine face major problems with counterfeits and dropshippers offering our products on every platform conceivable. By stealing patented products and ideas and offering them at a fraction of the worth, these platforms are pocketing revenue that ought to go to the developers and entrepreneurs who did the work. These deals based on stolen mental property create price wars and reduce the profit margins of the brands we all know and love.
Ask any business owner about this topic and you will quickly end up in a passionate but hopelessly fatalistic conversation. “Because TEMU promotes similar products at a tiny fraction of the price, our potential customers are discouraged from even considering our products,” said Beth Benike, the founding father of Busy Baby, a silicone placemat that also appeared on Shark Tank was see. Benike says: “It’s heartbreaking and scary” and raises concerns concerning the safety standards of the imitations.
As if the protection of youngsters weren’t a major enough concern for the U.S. government to act, current patent enforcement completely disincentivizes innovation and entrepreneurship—the very foundation of the American dream.
“You can’t get those years of sacrifice back,” said Lerin Lockwood, the founding father of Lion Latch, one other clever product featured on Shark Tank. “What’s the point of being an inventor if TEMU hits as soon as you’re on national television or go viral on social media or have your big breakthrough?”
Who wins on this current system? The factory, the drop shipper who does nothing but bid on the entrepreneur’s keywords, and the ecommerce platform manager who just doesn’t care because they profit either way. Who loses? The entrepreneur who has put his life’s work into his brand – and ultimately into consumers.
How can we fix this?
There is already a model that may solve this problem and it really works thoroughly. Amazon, a platform where we sell NightCap, has launched a neutral patent review platform. This is an incredible option to make sure patent enforcement. This process needs to be repeated at government level to make sure a future for small businesses on this country.
This is how it could work:
- Establish an e-commerce patent enforcement division inside the USPTO.
- Introduce laws requiring all e-commerce platforms operating within the United States that generate annual revenue above a specific amount to hitch this department.
- Any patent disputes escalated on the Platforms can be referred to this department.
- The department hires outside lawyers or judges to observe and review the disputes and determine the end result.
- The decision is distributed to the platform and have to be enforced by the platform.
- The IP owner receives a code that permits them to remove future problematic listings without retaliation unless the accused seller appeals.
Such a system would remove the responsibility and liability for enforcing patents from e-commerce platforms that want nothing to do with it. All they need to do is either remove or maintain the listing based on the third party’s decision.
This makes it less expensive for small corporations to implement their mental property. In the Amazon program, each party donates $4,000 and the winner gets their a reimbursement. It is way more sustainable for small businesses to participate than to file lawsuits and acquire court orders. The violator also has the choice to not participate in any respect and to have their entry removed for free of charge to them.
While I can not speak for Amazon, they might probably like to depart this to the federal government since they do not make any money from this program and it could be higher in the event that they let the USPTO handle it.
A single decision should allow IP owners to remove infringing listings on any major platform, and unless their removal is appealed, they might only need to cover the price of a patent assessment once.
It’s time to take a stand. Let’s apply these ethical practices to each platform and re-incentivize innovation, moderately than maintaining the present system that permits entrepreneurs and small businesses to be robbed repeatedly and unapologetically. Let us not stand idly by and watch the American dream falter.
Michael Benarde is co-founder and president of Nightcap. The opinions in this text reflect his personal viewpoint only.
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