Another day and another volley fired against patent assertion entities (PAEs). Today, it’s the FTCU.S. Federal Trade Commission. An independent regulatory agency charged with consumer protection and competition policy, which conducted several influential studies on how patents work in practice. Authored several key studies: 2003’s To Promote Innovation: The Proper Balance of Competition and Patent Law and Policy [PDF] and 2011’s The Evolving IP Marketplace: Aligning Patent Notice and Remedies with Competition [PDF]. joining the fray.
At an event co-sponsored by CCIA, FTCU.S. Federal Trade Commission. An independent regulatory agency charged with consumer protection and competition policy, which conducted several influential studies on how patents work in practice. Authored several key studies: 2003’s To Promote Innovation: The Proper Balance of Competition and Patent Law and Policy [PDF] and 2011’s The Evolving IP Marketplace: Aligning Patent Notice and Remedies with Competition [PDF]. Chairwoman Edith Ramirez announced that she would be asking the Commission to institute a Section 6(b) investigation of the patent trollAn entity in the business of being infringed — by analogy to the mythological troll that exacted payments from the unwary. Cf. NPE, PAE, PME. See Reitzig and Henkel, Patent Trolls, the Sustainability of ‘Locking-in-to-Extort’ Strategies, and Implications for Innovating Firms. business model. Senator Leahy also sent Chairwoman Ramirez a letter today, encouraging the FTCU.S. Federal Trade Commission. An independent regulatory agency charged with consumer protection and competition policy, which conducted several influential studies on how patents work in practice. Authored several key studies: 2003’s To Promote Innovation: The Proper Balance of Competition and Patent Law and Policy [PDF] and 2011’s The Evolving IP Marketplace: Aligning Patent Notice and Remedies with Competition [PDF]. use its powers “to prevent unfair and deceptive trade practices in patent infringement allegations.”
This announcement is recognition by the FTCU.S. Federal Trade Commission. An independent regulatory agency charged with consumer protection and competition policy, which conducted several influential studies on how patents work in practice. Authored several key studies: 2003’s To Promote Innovation: The Proper Balance of Competition and Patent Law and Policy [PDF] and 2011’s The Evolving IP Marketplace: Aligning Patent Notice and Remedies with Competition [PDF]. that patent trolls have become a serious problem for the U.S. economy. Typically, the FTCU.S. Federal Trade Commission. An independent regulatory agency charged with consumer protection and competition policy, which conducted several influential studies on how patents work in practice. Authored several key studies: 2003’s To Promote Innovation: The Proper Balance of Competition and Patent Law and Policy [PDF] and 2011’s The Evolving IP Marketplace: Aligning Patent Notice and Remedies with Competition [PDF]. uses Section 6(b) studies to gather information about an industry or about particular industry practices, such as the accuracy of credit reports, whether voluntary guideline to reducing advertising alcoholic beverages to minors work, and the market for generic drugs.
A Section 6(b) study on the patent trollAn entity in the business of being infringed — by analogy to the mythological troll that exacted payments from the unwary. Cf. NPE, PAE, PME. See Reitzig and Henkel, Patent Trolls, the Sustainability of ‘Locking-in-to-Extort’ Strategies, and Implications for Innovating Firms. economic model, which CCIA proposed, has the potential to pull back the curtain (if you’ll pardon the cliché) on the entire patent trollAn entity in the business of being infringed — by analogy to the mythological troll that exacted payments from the unwary. Cf. NPE, PAE, PME. See Reitzig and Henkel, Patent Trolls, the Sustainability of ‘Locking-in-to-Extort’ Strategies, and Implications for Innovating Firms. industry. For years, patent trolls have hidden behind layers upon layers of shell companies and confidential agreements. Except for a few instances where details came out during litigation (such as Intellectual Ventures’ deal with patent troll Oasis Research), we still know very little about how trolls really operate.
While Chairwoman Ramirez did not give any details of the proposed study, her statements show that she gets the nature of the problem. Here are a few quotes from Chairwoman Ramirez’s keynote:
“[T]o the extent that privateering and other hybrid PAE strategies rely on lack of transparency to reduce competition, this of course adds to the cost of PAEPatent Assertion Entity. A narrower term for trolls that focuses on the core business model rather than whether the entity is actually making use of the patented technology ("working the patent"). activities.”
“We know that most PAEPatent Assertion Entity. A narrower term for trolls that focuses on the core business model rather than whether the entity is actually making use of the patented technology ("working the patent"). lawsuits allege infringement of software patents, which often include broad functional claims.”
“[T]he limited evidence we have today tends to support the Commission’s concern that PAEs may do more to distort than improve incentives to invent.”
“In particular, I would like the Commission to help develop a better understanding of the PAEPatent Assertion Entity. A narrower term for trolls that focuses on the core business model rather than whether the entity is actually making use of the patented technology ("working the patent"). business model, which would inform many of the cost-benefit questions associated with PAEPatent Assertion Entity. A narrower term for trolls that focuses on the core business model rather than whether the entity is actually making use of the patented technology ("working the patent"). conduct.”
“Flaws in the patent system are likely fueling much of the real cost associated with PAEPatent Assertion Entity. A narrower term for trolls that focuses on the core business model rather than whether the entity is actually making use of the patented technology ("working the patent"). activities. PAEs are good at monetizing patents. But effective monetization of low-quality patents imposes a de facto tax on productive economic activity, with little or no offsetting benefits for consumers.”
I’m definitely encouraged. As we’ve written before, a Section 6(b) study is critical to understanding and exposing the way that patent trolls operate. And it’s great that the Chair of the FTCU.S. Federal Trade Commission. An independent regulatory agency charged with consumer protection and competition policy, which conducted several influential studies on how patents work in practice. Authored several key studies: 2003’s To Promote Innovation: The Proper Balance of Competition and Patent Law and Policy [PDF] and 2011’s The Evolving IP Marketplace: Aligning Patent Notice and Remedies with Competition [PDF]. sees the problem.
I don’t expect that Intellectual VenturesThe largest patent aggregator, currently holding around 40,000 patents. Closely associated with co-founder Nathan Myhrvold. IV is often viewed as a patent assertion entity, although much of its activities are conducted through spinoffs, and the company is at least nominally in the business of producing inventions in-house. See our posts on Intellectual Ventures. and its trollish brethren are all that happy today. (I heard IV had people in the audience.)
Which is just icing on the cake…
