FTC Plans to Investigate Patent Assertion Entities

On September 27, 2013, the Federal Trade Commission (FTC) voted to examine Patent Assertion Entities (PAEs) and their impact on innovation and competition.  The FTC proposes to gather information from approximately 25 PAEs that engage in the buying and asserting of patents.  If approved, the FTC's will be able to obtain non-public information about patent acquisition, licensing and litigation from these as-yet unnamed PAEs.  The FTC will also gather information from 15 other entities asserting patents in the wireless communications sector including manufacturing firms.  The FTC is inviting public comment on the study, which could be used to inform the FTC's competition policy advocacy efforts as well as potential future enforcement actions.The questions will include:

• 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?

The proposed questionnaire is very lengthy--it runs for 13 pages--and it will almost certainly result in recipients resisting the FTC's document requests on privilege and other grounds.

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