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FTC proposed patent troll study gets go-ahead from OMB

The commission has congressional authority to collect nonpublic information from patent assertion entities, which will provide a better picture of their activities.

August 18, 2014

The Federal Trade Commission received approvallast Friday from the Office of Management and Budget for its proposed study on patent assertion entities, informally known as "patent trolls."

The study was first proposed in September 2013. According to a press release issued at that time, the FTC said that the purpose of the proposed survey is " ... to examine cutting-edge competition and consumer protection topics that may have a significant effect on the U.S. economy."

OMB approval of the study will allow the FTC to issue compulsory process orders seeking information from PAEs. The bureau also will seek answers to these questions:

• How do PAEs organize their corporate legal structure, including parent and subsidiary entities?
• What types of patents do PAEs hold, and how do they organize their holdings?
• How do PAEs acquire patents, and how do they compensate prior patent owners?
• How do PAEs engage in assertion activity (i.e., demand, litigation, and licensing behavior)?
• What does assertion activity cost PAEs?; and
• What do PAEs earn through assertion activity?

Earlier studies of PAE behavior have focused primarily on publicly available litigation data. However, the commission has unique Congressional authority to collect nonpublic information, such as licensing agreements, patent acquisition information, and cost and revenue data, which will provide a more complete picture of PAE activity. 

“Patents are key to innovation and competition, so it’s important for us to get a better understanding of how PAEs operate,” said FTC Chairwoman Edith Ramirez in the September release. “ ... What we learn will support informed policy decisions.” 

The study is approved through August 2017, but various media sources report that it most likely will be completed earlier than that.