Source: http://www.jdsupra.com/legalnews/ftc-announces-study-of-patent-assertion-40484/
Timestamp: 2013-12-07 03:09:23
Document Index: 302705171

Matched Legal Cases: ['§ 6', '§ 46', '§ 6', '§ 6', '§ 6', '§ 6', '§ 4']

FTC Announces Study of "Patent Assertion Entities" | Patton Boggs LLP - JDSupra
Kevin Bell, Scott Chambers, Richard Oparil | Patton Boggs LLP Contact
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The Federal Trade Commission (FTC) announced on September 27, 2013 that it would begin an investigation of so-called “patent assertion entities” (PAE). Its first step was to seek public comment on a lengthy series of questions that the commission plans to submit to 25 PAEs and 15 other entities asserting patents in the wireless communications sector, including manufacturers and licensing organizations. The Notice and Request for Comments (Notice) was published in the Federal Register on October 3 (here).
The FTC describes PAEs as “firms with a business model based primarily on purchasing patents and then attempting to generate revenue by asserting the intellectual property against persons who are already practicing the patented technology.” It expressly excludes from the definition universities, research entities and design firms.
The FTC study is not a surprise. On December 10, 2012, the FTC and the Antitrust Division of the Department of Justice (DOJ) jointly sponsored a workshop and requested comments on the impact of PAE activity on innovation and competition. Workshop panelists and commenters noted a lack of empirical data in this area, and recommended that the FTC use its authority under § 6(b) of the Federal Trade Commission Act, 15 U.S.C. § 46(b), to collect information on PAE acquisition, litigation, and licensing practices. Members of Congress also called for a § 6(b) study of PAE activity. In June 2013, FTC Chair Edith Ramirez gave a speech (here) in which she said: “Given the developments in PAE activity and the need for more evidence to inform appropriate policy responses, I believe that the Commission should use its 6(b) authority to study the costs and benefits of PAE activity.”
Under § 6(b), the FTC may order persons and entities to provide sworn, written answers to specific questions as well as “such information as it may require as to the organization, business, conduct, practices, management, and relation to other corporations, partnerships, and individuals….” The FTC has long used § 6(b) special reports for adjudicatory proceedings pending before the commission. See, e.g., In the Matter of Exxon Corp, et al., 98 F.T.C. 107 (1981).
Here, the study will seek detailed information regarding licensing agreements, patent acquisition information, and cost and revenue data, which will provide a more complete picture of PAE activity. The information sought by the Notice includes the following:
How do PAEs engage in assertion activity (i.e., demand, litigation, and licensing behavior)?
The Notice includes 11 pages of detailed information and requests that all 25 PAEs selected for the study will have to answer. The 15 other entities will have to answer a subset of those requests.
Answering the questions will undoubtedly require the production of confidential commercial and trade secret information. Responding companies may have some protection under § 6(f) of the FTC Act, which prohibits the FTC from publicly releasing “any trade secret or any commercial or financial information which is obtained from any person and which is privileged or confidential….” See also 16 C.F.R. § 4.10(a)(2) (“Trade secrets and commercial or financial information obtained from a person and privileged or confidential” are not subject to disclosure under the Freedom of Information Act). The FTC may, however, disclose the information to other governmental agencies for law enforcement purposes, provided that confidentiality is maintained. Moreover, any data gathered for the FTC study could be the subject of a document request or subpoena by an adverse party in litigation.
Under the Paperwork Reduction Act, the FTC must obtain approval from the Office of Management and Budget (OMB) before it can collect the information. The Notice states that it will provide an opportunity for public comment before requesting that OMB approve the PAE study. Specifically, the FTC will seek comments on: “(1) whether the proposed collection of information is necessary for the proper performance of the functions of the FTC, including whether the information will have practical utility; (2) the accuracy of the FTC’s estimate of the burden of the proposed collection of information; (3) ways to enhance the quality, utility, and clarity of the information to be collected; and (4) ways to minimize the burden of collecting information.” The deadline for comments is December 2.
Topics: Abuse of Process, FTC, Patent Assertion Entities, Patent Litigation, Patent Trolls
Published In: Antitrust & Trade Regulation Updates, Business Organization Updates, Commercial Law & Contracts Updates, Intellectual Property Updates
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