Patent News

Apr. 20, 2016

IP Watchdog: Why the FTC study on PAEs is destined to produce incomplete and inaccurate results, by Kristen Osenga

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

In the near future, the Federal Trade Commission is going to release the results of its study on patent assertion entities (PAEs)[1]. While it is very clear that we need additional information to understand the many complex business models that exist in the patent licensing world, the FTC’s study is unlikely to produce that information because of a few very critical flaws. What follows is an executive summary of my article, Sticks and Stones: How the FTC’s Name-Calling Misses the Complexity of Licensing-Based Business Models, published in the George Mason Law Review.

The premise of the FTC’s study is good. Most data on PAE activity is limited to publicly available information (i.e., litigation data), ignoring that the bulk of patent licensing behavior takes place before, and therefore outside, litigation. Using its 6(b) power, the FTC can obtain non-public data, including information about licensing requests, negotiations, patent acquisitions, and other activities that PAEs engage in. As the FTC noted, the study “will add significantly to the existing literature and evidence about PAE form, structure, organization, and behavior.” This information would be invaluable to those who study PAEs as well as to policy makers who remain concerned about PAE activity.