FTC Announces Study of Patent Assertion Entities

On Sept. 27, 2013, the Federal Trade Commission announced that it will conduct a study concerning Patent Assertion Entities (PAEs) and other entities asserting patents in the wireless communication sector, including manufacturers and other non-practicing entities (NPEs) engaged in licensing. For purposes of the study, the FTC defines PAEs “are 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.” The notice distinguishes these entities from “NPEs that primarily seek to develop and transfer technology, such as universities, research entities and design firms.”

The study will consist primarily of an information request to be sent to approximately 25 PAEs, as well as approximately 15 other entities asserting patents in the wireless communications sector.  The topics include how PAEs organize their corporate legal structure; the types of patents PAEs hold and how they organize their holdings; how PAEs acquire patents and how they compensate prior owners; how PAEs engage in assertion activity; what assertion activity costs PAEs; and what PAEs earn through assertion activity.

The FTC will solicit public comments on the proposal concerning the following issues: 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; the accuracy of the FTC’s estimate of the burden of the proposed collection of information; ways to enhance the quality, utility, and clarity of the information to be collected; and ways to minimize the burden of collecting information.

The FTC’s press release with links to the proposal is available here.