When the Government gets back to work, the Federal Trade Commission will begin a probe into the practices of patent assertion entities – a.k.a., patent trolls. In short, PAEs are in the business of capitalizing on registered intellectual property. Often criticized for not “actually produc[ing] anything themselves,” PAEs don’t have the best reputations. Regardless of how you feel though, many PAEs, like Intellectual Ventures, make a whole lot of money.
How Does The FTC Plan To Go About Investigating Patent Trolls & Legitimate PAEs?
Commission staff will use a formal inquiry process, known as a 6(b) study, which will involve requesting information from 25 as yet unnamed companies. The initial public comment period will take 60 days, followed by a review from the Office of Management and Budget, which may extend for a year before the requests are sent out. When the information is received, months of data analysis may be necessary before any results are announced.
In other words, this could take years.
What Issues Are The FTC Going To Focus On?
According to reports, the FTC is looking for specific answers to PAE practices. What types of patents do these companies hold? When did they acquire them? By what manner do these cases land in court and produce huge settlements?
When the study was announced, FTC chairwoman Edith Ramirez commented that the commission intended to use its full authority to get an accurate picture of PAE activity.
Patent Trolling Has Been On Politicians’ Radars For Awhile
The FTC announced their plans at a time when federal and state law makers are abuzz about patent trolling. Why? A cynic may say it’s a safe issue when it comes to public support. Moreover, it’s easy to make “troll companies” — that usually don’t get hit with a countersuits because as shell companies, they don’t have assets – look bad (and by the rule of foils, the politician look good).
As it stands, the FTC probe is a formal inquiry, not an enforcement action. However, the inquiry allows the commission access to documents and business records not readily available to the public. The FTC has also opened a similar study on companies that buy, sell, and tap consumer information in bulk — commonly known as data brokers.
Patent Related Lawsuits Are Costing SMBs Big Bucks
A report released in June 2013, claimed that PAEs were responsible for more than 60 percent of all patent lawsuits in 2012, a significantly higher figure than in previous years. Peter Detkin, co-founder of Intellectual Ventures, however, rejects that figure. Although the 25 PAE companies that will be asked to participate in the investigation is still unknown, it is assumed that Intellectual Ventures will be on the list. And they’re ready. Detkin recently stated that he and co-founder Nathan Myhrvold have no objection to the forthcoming FTC study.