Shopify vs. Patent Trolls: Defending Entrepreneurs and Innovation

At Shopify, we prioritize choosing the right path over the easy one. Our merchants face this decision every day as they work to run successful businesses. But this concept applies in the judicial system too, and against an unscrupulous opponent: patent trolls. 

Patent trolls stealthily orchestrate hundreds of patent litigation cases yearly, with no accountability. They often target small businesses and start-ups and stifle innovation and entrepreneurship – especially in emergent technologies. What’s worse, these patent trolls can actually deter small businesses and entrepreneurs, who can’t afford to fight or lose a legal battle. According to Harvard Business Review, companies settling or losing patent troll cases reduce investment in R&D by an average of more than $160 million over the next two years. 

We often know who is behind patent trolls – US Innovation Fund, IP Edge, and Acacia Research. But these groups’ funders, interests, and decision-makers hide cowardly in the shadows. In a majority of cases, they achieve their ultimate goal: a quick payout. In fact, 90% of patent litigation cases filed each year are abandoned or settled, making “winners” out of the patent trolls, and victims of the forward-thinking businesses who put in the work to create and innovate.  

Shopify and our entrepreneurs are builders and innovators. They spend years, sometimes their entire lives creating products designed to improve the world. Patent trolls? They lazily sit back, burying hard working entrepreneurs in piles of legal paperwork. As John Oliver says, “at least real trolls actually do something. They control bridge access for goats, and ask people fun riddles.” Patent trolls just tear things down to make a profit. Our builder DNA outright refuses to accept dealing with patent trolls as the normal course of doing business. We want to build up, and build forward. They want to destroy and stifle. 

And Shopify? Well, we’re done with this game. 

That’s why we will aggressively pursue identification of funders in patent litigation cases against us. Litigants deserve to know who they’re litigating against and judges need to know who’s before them to ensure there is no conflict of interest. Today, Shopify filed a motion in the United States District Court for the Western District of Texas with The Honorable David Ezra, requesting the Court to third-party interest disclosure in Lower48 IP LLC v. Shopify, Inc.

We’re already seeing more judicial precedent and force behind this issue. Late last year, U.S. District Judge Colm Connolly of Wilmington filed an order regarding a case with Nimitz Technologies LLC, calling out the “lack of transparency” in patent litigation cases. His leadership is already having an impact. By removing the cloak of secrecy in Delaware courts, he is encouraging other jurisdictions to take a hard look at the lack of transparency in patent litigation cases across the judicial system. 

This is just the beginning. 

We’ll continue to support legislation to expose patent trolls as well as the numerous organizations shedding light on this issue: LOT Network, Unified Patents, Open Invention Network, Computer and Communications Industry Association and BSA | The Software Alliance. And, we'll keep amplifying the voices of our millions of merchants so more elected officials take action to protect the businesses driving our economy forward. 

We need entrepreneurs to build without fear of ‘get-a-quick-payout’ patent litigation. That’s how we’ll level the playing field for entrepreneurs everywhere, and cultivate more incredible, world-changing businesses.