By Tom Swatzel
Companies big and small have come to our state because it is a good place to do business. Iconic brands like Mercedes, Michelin, and Samsung set up shop in South Carolina because they know it is a place where they can compete and thrive free from much of the regulatory bureaucracy that consumes other states.
However, the federal government has always been the biggest barrier to South Carolina businesses reaching their full potential, and a little-known agency is proving the point.
The U.S. International Trade Commission (ITC) was created to protect American businesses and workers from foreign countries and businesses that try to manipulate our trade laws to undercut American industry.
Unfortunately, the agency is now doing the opposite, ruling in favor of foreign bad actors that are intent on undermining South Carolina businesses. It’s an agency in desperate need of reform, and Sens. Lindsey Graham and Tim Scott can help make that happen.
Among its various responsibilities and authorities, the ITC adjudicates certain patent disputes.
The U.S. patent system fosters innovation by allowing inventors and entrepreneurs to benefit from their work.
Unfortunately, the ITC has threatened our patent system by misusing its authority under something called Section 337, which allows the ITC to ban the import of products it deems to be in violation of existing patents.
That should help American businesses, but the ITC is instead allowing foreign entities to take advantage of the agency for their own gain.
Non-practicing entities (NPEs), also known as patent trolls, typically don’t produce any products. Their business model is built on buying old patents, filing meritless legal claims related to those patents, and then leveraging them to extract large financial settlements.
Many NPEs have taken advantage of Section 337 investigations to profit off of settlements from productive American companies, including those here in South Carolina.
One of the ITC’s enforcement authorities — an exclusion order that bans the importation of a product into the U.S. under section 337 — is usually enough leverage to force American companies to spend millions, sometimes billions, of dollars to settle.
Not only does this reward bad behavior but it exposes a real vulnerability in American trade policy that other countries and NPEs can use to harm South Carolina businesses and our economy.
These bad actors target our country’s biggest economic drivers and, unfortunately, South Carolina and the auto manufacturing industry have not been immune.
A patent troll accused Mercedes, which has a large presence in South Carolina, and other companies of patent infringement.
The patent troll, which owned an old patent unrelated to Mercedes vehicles, knew it was possible that the ITC could rule in their favor and exclude certain Mercedes vehicles from the market.
But the troll didn’t need a favorable ruling. It just needed the threat of devastating consequences for Mercedes to extract a sizable settlement from the company.
Fortunately, the ITC ruled against the patent troll in this case, but the ITC often makes the wrong decision and rules in favor of bad actors targeting American businesses.
Clearly, the ITC requires reform to protect hundreds of thousands of South Carolinians who work for companies that could face senseless regulatory action from the ITC.
That’s what the “Advancing America’s Interest Act” (AAIA) would do.
The AAIA will require complainants to meet certain standards when asserting patent infringement, strengthening the ITC’s requirement to consider the “public interest,” which it often doesn’t do currently.
This bipartisan and commonsense legislation will ensure the ITC returns to its original mission — mitigating U.S. intellectual property theft and other illegal trade misconduct.
The AAIA has already been introduced in the U.S. House of Representatives, most recently by Reps. David Schweikert, an Arizona Republican, and Don Beyer, a Virginia Democrat.
Sens. Graham and Scott could similarly choose to protect South Carolinians’ jobs and our state’s economy in the U.S. Senate.
Tom Swatzel is a former Georgetown County councilmember and advocate of promoting economic development in the Pee Dee and across South Carolina.
