The US Federal Trade Commission has announced that it is opening an investigation
into patent assertion entities (PAEs), commonly referred to using the derisive term "patent trolls." The commission cautions that its initial move is limited to information gathering, focusing on approximately 25 companies whose primary business model involves purchasing patents and filing infringement lawsuits.
"Patents are key to innovation and competition, so it's important for us to get a better understanding of how PAEs operate," said FTC Chairwoman Edit Ramirez.
The FTC and US Department of Justice late last year sponsored a workshop to explore the potential impact of PAEs on innovation and competition. The agency notes that it received many comments surrounding potential harms from such practices, many participants are said to have acknowledged a lack of empirical data to solidify their claims.
The Commission points out that it has a unique Congressional authority to access nonpublic information, such as terms of settlement deals, that has yet to be collected for a large-scale examination. The broader study will try to determine how much PAEs earn through assertion, how much the assertion activities cost PAEs, and other details surrounding litigation strategies an corporate structures.
Many companies have voiced concern over patent trolling, arguing that PAEs file frivolous lawsuits and pose a threat to innovation. Some small companies appear to be prime targets, essentially forced to sign licensing deals rather than risk a costly legal battle, however PAEs also target large corporations.
"We want to use our 6(b) authority to expand the empirical picture on the costs and benefits of PAE activity," Ramirez added. "What we learn will support informed policy decisions."