Patent News

Oct. 20, 2016

IP Watchdog: The FTC’s PAE Study–Doing More Harm Than Good, by Kristen Osenga

This post originally appeared in IP Watchdog on October 20, 2016.

Recently, the Federal Trade Commission (FTC) released a report of its study of patent assertion entities (PAEs). The report was long anticipated and could have gone a long way to shining some light on patent licensing firms – who they are, how they operate, and so on. After all, patent licensing firms are misunderstood, partially because so much of their activity is not visible to the public. In theory, because the FTC has the power to obtain this invisible information, the study could have provided the data and insight needed to better understand these firms and improve the policy dialogue surround their behaviors. This PAE study had the potential to do a world of good…but unfortunately, the resulting report is likely to do more harm than good.

To be fully transparent, I was unconvinced from the outset that the FTC’s PAE study would promote any real insight into patent licensing firms because the study was poorly designed. Specifically, I argued that 1) the subjects of the FTC PAE study did not represent a realistic picture of the patent licensing landscape and 2) the questions asked by the FTC were not designed to develop an understanding of these firms and how they operate. I concluded that the FTC’s study had the potential to cause more harm than good, because “inaccurate and incomplete data will go far to bolster the inapt theories that are currently holding the day for those who wish to hinder, if not destroy, patent licensing firms.” Now that the report has been released, my fears have been realized.