Innovation Asset Blog

FTC intent on investigating patent assertion entities

The U.S. Federal Trade Commission is seeking public comment on a proposal that would allow for broad investigation into the business practices of so-called patent assertion entities (PAEs). The government agency would use its power of subpoena to examine the activities of approximately 40 organizations, 15 of which would be centered in the wireless communications sector.

The PAE label has been used to define many different companies, but their common characteristic is revenue generation based exclusively on patent licensing and/or infringement litigation and settlement fees. Yet while public opinion may be stacked against such firms, FTC chairwoman Edith Ramirez has previously lamented a lack of tangible evidence regarding the market impact of escalating infringement litigation.

"Patents are key to innovation and competition, so it's important for us to get a better understanding of how PAEs operate," Ramirez remarked. "We want to use our [investigative] authority to expand the empirical picture on the costs and benefits of PAE activity. What we learn will support informed policy decisions."

More specifically, the commission will look to confirm how PAEs organize their corporate legal structures, acquire assets from prior patent owners and apply financial resources toward litigious activities.

Peter Ackerman

Peter Ackerman

Founder & CEO, Innovation Asset Group, Inc.