Why Temu poses a threat to US companies and patent owners

Nowadays, you can’t search for a product online without having to scroll through multiple ads from Temu and other e-commerce sites – with too-good-to-be-true prices – popping up at the top of competing retailers. If you watched the Super Bowl this year, you couldn’t miss these three Advertisements Ago. You may have even wondered what kind of company this is. While Temu started as an offshoot of the large Chinese e-commerce site Pinduoduo, selling goods directly from Chinese manufacturers at deeply discounted prices, the company has evolved into an artificial intelligence e-commerce site copying the designs of countless U.S. retailers both large and small . small. Two class action lawsuits recently filed against Temu, accusing the company of failing to protect customers’ personal data and misleading users. Ago responded to the allegations, among others: statement denials and intent to fight lawsuits, but these legal challenges only scratch the surface of broader concerns for business owners.

As an inventor, entrepreneur, and small business owner with multiple patents, I have experienced first-hand the effects of the economic battle we are in with Temu and similar foreign companies undercutting domestic companies due to lenient U.S. government policies. As a TikTok creator, I have a front row seat to the behind-the-scenes e-commerce corruption that typically involves unethical practices and fraud. For example, some companies publish false positive reviews to increase the rating of their products, or negative reviews to harm the competition. Counterfeit or unauthorized replicas of famous brand products are also common on these platforms. These tactics deceive consumers and infringe intellectual property rights through the use of trademarks, logos, images, and deceptive pricing strategies.

The U.S. government fueled economic growth in other countries by allowing foreign companies to steal our intellectual property to produce counterfeit and imitation products of fraudsters without recourse. These companies take advantage of differences in legal systems and law enforcement from country to country, which is a very costly problem for small businesses. While domestic companies can file lawsuits and send cease-and-desist letters to companies that infringe their patents, doing so is often a waste of time and money. Typically, companies close their operations after receiving such a letter. Others change their name to a new entity and continue to infringe our patents. As this cycle repeats, copy companies become richer and patent holders continue to lose time, business, sales and profits as our intellectual property is stolen. Small businesses cannot submit cease and desist letters to hundreds or thousands of e-commerce stores. While laws exist to enable businesses to track such criminals, e-commerce sites or online stores can be a moving target, often backed by large marketing machines. Stricter international intellectual property laws, better enforcement mechanisms, and increased cybersecurity measures to track and shut down all infringing e-commerce operations as soon as they open online are key to mitigating this growing problem.

Moreover, shipping prices for foreign companies may be more than half lower than for domestic companies. Current conditions of the Universal Postal Union (UPU) Treaty has inadvertently created a legal loophole for foreign companies, especially multinational e-commerce companies, to ship goods from abroad at much lower prices than their U.S. counterparts pay for domestic shipping.

For example, international shippers, including those in China, pay $2.87 per package and $3.95 per kilogram (about 2.2 pounds) to ship to the US. As a US based company, I ship mine Liddle Speaker domestically, it costs between $5.00 and $7.00 for a package weighing only half a pound. These significantly lower shipping costs give foreign companies an unfair advantage in pricing and ultimately business revenue. The US government implemented fair trade policy to protect domestic industries from unfair competition and ensure a level playing field for high-value goods such as steel and cars. However, online e-commerce shopping is a situation where foreign companies can fly off the radar at lower costs and gain significant market share in the U.S., leading to the decline of domestic companies that are unable to compete on price. Increased competition from foreign companies may put pressure on wage stagnation or job cuts to remain competitive.

The widespread impact on U.S. business owners has been so great that I met with the U.S. Patent Office to discuss how harmful this problem is to inventors and work on a solution. Although we were offered a lawyer and reminded that we could file a cease and desist petition, our case was swept under the rug. These overseas operations are largely unstoppable as billions of packages spin out of control, shipping directly to consumers, bypassing U.S. customs offices that monitor container shipments rather than individual USPS packages. Foreign companies benefit from this by not paying tariffs on the goods they ship, and if caught, they simply rebrand and reopen under a new name. The UPU treaty allows these practices to continue, and AI tools enable the continued rapid creation of new e-commerce websites and stores. Unfortunately, the UPU Treaty also allows foreign companies to ship copycat products through e-commerce sites like Temu unnoticed, without any regulation on what is delivered at discounted prices. As technology, especially artificial intelligence, outpaces the regulatory framework, urgent reforms must address these weaknesses.

Inventors and business owners cannot win the sales battle unless we press the U.S. Postal Service, the U.S. Patent Office and Congress to act more responsibly when it comes to AI and technology. Government leaders need to be educated on how foreign companies are exploiting loopholes to ship undetected counterfeit products through Temu and similar e-commerce sites.

The U.S. government should strengthen the legal framework and enforce online corruption by harmonizing intellectual property laws to address the challenges facing digital and global online e-commerce markets. Working with international partners to establish robust cross-border intellectual property rights enforcement mechanisms is crucial. E-commerce platforms should be required to verify the authenticity of products and sellers before offering (counterfeit) goods for sale. The U.S. Patent Office should implement cybersecurity measures to protect intellectual property and supply chains from digital threats, using artificial intelligence to immediately monitor and delist a product. It is necessary to increase consumer protection and awareness of the risks associated with counterfeit products. By implementing these recommendations, policymakers can mitigate the threats posed by e-commerce sites infringing intellectual property and disrupting supply chains, thereby protecting economic interests and supporting a fair and competitive market environment.