Blog: The Vulnerability of Small Businesses 

Normal operating pressure on running a small business existed before the Coronavirus hit the country. But nothing was anywhere near the past, forcing a small company gym to shut down for months.

In my experience, here are what small companies were faced with the decades I have worked with small businesses:

Nearly half of businesses report that they were the subject of a cyber-ransom campaign in 2016, according to Radware’s Global Application and Network Security Report 2016-2017.

The report clearly states 49% of businesses fell victim to cyber-ransom attacks in 2016. Many small companies did not have the resources to fight back. One again small businesses are behind the curve. I assume statistics are still closed to that report.

To top it off there was another interesting article in the Wall Street Journal recently stating 69% of small businesses with the website are not compatible with mobile. This is not surprising to me as I indicated earlier small businesses in general are still slow to grasp the technology that would be a real asset to running their business.

Many of the mall companies I worked with knew there is something called the cloud or big data or online sales but they didn’t have the resources to take advantage of what’s happening in the technology and marketing world.

There are still some industries and markets behind even basic things like websites. In working with several student entrepreneurs they are coming across these companies. One entrepreneur had great software related to property management. He found many with hundreds of units, were reluctant to even seek aid to improve their websites.

And then we had the trolls. In situations where the small businesses could not afford to file for a patent to protect their technology, an outsider could file the patent and then force the small company had to pay for the use of their own technology.

Patent trolls are companies which hoard many patents in order to sue other companies for infringement, solely generating profits from the lawsuits, rather than production and development of the invention. For a small business owner, they may big bad patent trolls won’t notice you.

While ongoing legislation is minimizing the power of these corporations, they still pose a major risk to startups who are unaware of how to handle them. Knowing how to deal with patent trolls might just determine whether your company sinks or swims. Here’s an overview that can get you started.

What Makes Small Businesses So Vulnerable to Patent Trolls?

There was a time according to the LOT Network, 55% of companies sued by a patent troll make $10 million per year or less. The foremost reason that startups are vulnerable is that they simply don’t have the resources and knowledge to counter them. It’s easy for these predatory companies to make a small business cave into their demands, rather than embarking on the expensive and lengthy process of IP litigation and defense.

There was a peak time more than 40 percent of patent lawsuits were filed in a federal court in East Texas with a reputation for friendliness to plaintiffs.

In recent years, a single judge based in Marshall, Texas, oversaw about a quarter of all patent cases nationwide, more than the number handled by all federal judges in California, Florida and New York combined.

The Texas court was a favorite venue of patent trolls, or companies that buy patents not to use them but to demand royalties and sue for damages.

Normal operating pressure on running a small business existed before the Coronavirus hit the country. But nothing was anywhere near forcing a gym to shut down for months.

I am still trying to help small businesses as part of SCORE a dedicated national organization with retired business executives.