FTC Votes To Begin Studying Cost Of Patent Trolls

BY CCIA Staff
September 27, 2013

Washington – The FTC has voted to seek public comments on a study that would examine companies whose main business is extorting money from patents, known as patent assertion entities (PAEs) or patent trolls. This is the first step in a broad federal investigation into the toll of patent trolls.

Until now, this empirical data had been challenging to gather as patent trolls did not volunteer this sort of business information, and the FTC had not yet decided whether to use its legal power to demand this information. The Computer & Communications Industry Association had filed comments with the FTC in April saying the FTC should use its subpoena power under Section 6(b) of the Federal Trade Commission Act to get better information to examine the practices of PAEs. For more on the filing, please see our Patent Progress blog post.

CCIA had been anticipating today’s vote since FTC Chair Edith Ramirez announced at a CCIA/AAI hosted event in June that she planned to ask her FTC colleagues for such a study. The following can be attributed to CCIA President & CEO Ed Black:

“This vote by the FTC is an encouraging sign that the Administration is committed to investigating the practices of patent trolls, and we commend them on this step. While previous studies have estimated that PAEs cost the economy $29 billion, the ability to dig deeper into the numbers will be useful.

“Trolls thus far have taken steps to hide their tracks through a maze of hundreds of shell companies, and the FTC’s investigatory powers can finally shine a light on these secretive practices and the cost to consumers, innovators and our economy.

“The FTC has a long history of producing comprehensive reports on bad actors and the impact on our economy. This new report will provide guidance for the FTC and others to craft competition policy that discourages this anticompetitive abuse of our patent system.”

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