FTC Targets Patent Assertion Entities

The Federal Trade Commission will be gathering studying on 25 Patent Assertion Entities (“PAEs”). The FTC intends wants to better understand how PAEs operate. The FTC’s primary concerns how PAEs impact innovation and competition. One of the FTC’s missions is to see how competition and consumer protection effect the U.S. economy.

PAEs are firms who maintain large portfolios of patents, obtaining them in a variety of ways, with no intention of producing the end product. Instead they spend their time looking for companies that infringe on those patents, like software and smartphone makers, and then make their money suing.

FTC Chairwomen Edith Ramirez remarked “Patents are key to innovation and competition, so it’s important for us to get a better understanding of how PAEs operate.”

Previous studies on PAEs using public data available in court filings indicate PAE activity is on the rise. Now the FTC will utilize its Congressional authority to per into licensing agreements, patent acquisition information, and cost and revenue data which are not in the public domain.

Specifically the FTC will be seeking answers to the following questions:

How do PAEs organize their corporate legal structure, including parent and subsidiary entities?

What types of patents do PAEs hold, and how do they organize their holdings?

How do PAEs acquire patents, and how do they compensate prior patent owners?

How do PAEs engage in assertion activity (i.e. demand, litigation, and licensing behavior)?

What does assertion activity cost PAEs?; and

What do PAEs earn through assertion activity?

Public comments on the proposal can be submitted electronically and will be accepted until 60 days after the Notice is published. Written comments should be sent to:  FTC Office of the Secretary, 600 Pennsylvania Ave., N.W., Washington, DC 20580.

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