FTC announces investigation into patent trolls in the US
Managing IP is part of the Delinian Group, Delinian Limited, 4 Bouverie Street, London, EC4Y 8AX, Registered in England & Wales, Company number 00954730
Copyright © Delinian Limited and its affiliated companies 2024

Accessibility | Terms of Use | Privacy Policy | Modern Slavery Statement

FTC announces investigation into patent trolls in the US

edith-ramirez.jpg

Federal Trade Commission chairwoman Edith Ramirez announced that the FTC is launching an investigation into the potentially anti-competitive practices of patent trolls in the US

Ramirez made the announcement during a seminar on patent trolls and anti-competition law hosted in Washington DC by the Computer & Communications Industry Association and American Antitrust Institute.

The investigation is part of a coordinated crackdown on patent trolls by the Obama administration. It follows the announcement earlier this month of a White House plan to curb patent trolls, which will mainly be implemented through the USPTO. The plan was accompanied by a 17-page study by the National Economic Council and the Council of Economic Advisors and has been generally well-received by academics, industry and consumer advocate organisations.

Ramirez said the investigation will be held under Section 6b of the Federal Trade Commission Act, to “help develop a better understanding” of what she referred to as patent assertion entities (PAEs), which are popularly known as patent trolls.

She said that while the Commission still has “only snapshots of the cost of PAE activity”, early indications suggest that their benefits to innovation and the general public are greatly outweighed by their costs, which include shifting money away from research and development.

Between 2007 and 2012, the number of patent infringement lawsuits filed by trolls tripled, said Ramirez. Trolls now file the majority of patent infringement lawsuits in the US.

She said that PAE activity is also “changing shape”. Although IT is still the industry most targeted by trolls, data and anecdotal evidence collected by the FTC suggests that they now file half of all their lawsuits outside of the high tech sector.

Retailers are now the most common low tech sector targeted by trolls, and the FTC has had complaints from online retailers who have had to defend lawsuits against common features on their websites such as drop-down menus and shopping carts.

Small businesses have also increasingly become targets, with offline businesses such as coffee shops being sued for patent infringement for offering features like WiFi. Ramirez said the FTC plans to use Section 5 authority to protect small businesses against deceptive patent claims by trolls, such as attempting to secure settlements relating to expired patents or patents the troll has no rights to.

She said the Commission is also concerned about an increase in what she described as “hybrid PAE activity”, in which large corporations hide behind shell companies to engage in troll activities strategically targeting competitors.

more from across site and ros bottom lb

More from across our site

With a team of more than 80 patent lawyers and attorneys across 21 European offices, the firm is acting in some of the most high-profile UPC cases
Lippes Mathias has hired three partners and a counsel from Offit Kurman
External counsel for automotive companies explain how trends such as AI and vehicle connectivity are affecting their practices and reveal what their clients are prioritising
We provide a rundown of Managing IP’s news and analysis coverage from the week, and review what’s been happening elsewhere in IP
The winners of the awards will be revealed at a gala dinner in New York City on April 25
Counsel debate the potential outcome of SCOTUS’s latest copyright case after justices questioned whether they should dismiss it
Each week Managing IP speaks to a different IP lawyer about their life and career
The small Düsseldorf firm is making a big impact in the UPC. Founding partner Christof Augenstein explains why
The court criticised Oppo’s attempts to delay proceedings and imposed a penalty, adding that the Chinese company may need to pay more if the trial isn’t concluded this year
Miguel Hernandez explains how he secured victory for baby care company Naterra in his first oral argument before the Federal Circuit
Gift this article