Washington — FTC Chairwoman Edith Ramirez released the results of a 2 year investigation into patent troll operations at an event co-hosted by the American Antitrust Institute and the Computer & Communications Industry Association. The study looked at ways patent trolls or Patent Assertion Entities (PAEs) made their money. One key finding is that those PAEs who sue generally settle for less than $300,000. This matters because patent litigation typically costs more than $300,000. This proves that these are indeed nuisance lawsuits.
The FTC study also found that sending demand letters alone is not how most PAEs successfully obtain licenses from their targets. They get settlements through filing lawsuits. This means that reforms aimed at clarifying demand letters will not be enough.
The FTC is recommending comprehensive patent litigation reform to prevent patent trolls from abusing the system. CCIA, which represents companies that accounted for 4.5 percent of all patents issued in 2014, has been advocating for comprehensive patent reform for more than a decade.
The following can be attributed to CCIA President & CEO Ed Black:
“The FTC followed the money and found that patent trolls do indeed have business models that extract large sums of money from productive sectors of the economy. These practices are a significant drag on both innovation and the performance of the U.S. economy. The FTC study revealed patent trolls frequently target the computer and communications industry. In fact, 88 percent of the patents in the study were from that sector of the economy.
“A key revelation is that trolls are costing businesses more in discovery and other legal fees than they are making. This FTC finding proves that we don’t just think these are frivolous lawsuits — they are indeed nuisance lawsuits.
“We now have more information than ever on how trolls operate, and what practices fuel their business models. Armed with this new information, Congress must tailor legislation aimed at halting the abuse of the patent system and this multi-billion dollar a year drain on innovation and our economy.”