FTC Chair Proposes Inquiry into Impact of Patent Trolls

Edith Ramirez, chair of the Federal Trade Commission, presented her recommendation for an investigation into the practices of “patent trolls” yesterday during a patent and antitrust seminar in Washington. Ramirez is calling for the FTC to use its subpoena power to launch a sweeping inquiry into patent-assertion entities (PAE’s, or patent trolls), which are known for purchasing bundles of patents in order to threaten infringement lawsuits.

“Despite the rapid growth in the number of lawsuits filed by those patent-focused companies, regulators have little more than anecdotal evidence of how patent trolls affect business innovation, Ms. Ramirez said, and whether the patent-enforcement companies help to produce benefits that small companies could not enjoy on their own,” reports The New York Times.

“We have a role to play in advancing a greater understanding of the impact of PAE activity and using our enforcement authority where appropriate to curb anticompetitive and deceptive conduct,” said Ramirez, adding that the activity of patent-assertion entities “raises tough competition policy and enforcement issues that defy a one-dimensional answer.”

Ramirez explained that the FTC is especially interested in the methods used by hybrid PAE’s, which may involve privateering, “where an operating company takes patents that it owns that might be applicable to a rival’s products and transfers them to a patent-assertion entity,” notes NYT.

“For the FTC to roll up its sleeves and study what the real problems are in a rational way is going to be helpful,” suggested William C. Rooklidge, a California patent litigator.