May 14, 2014

FTC Seeks OMB Permission for Patent Assertion Entity Study

From: IP Watchdog

Written by Gene Quinn

Earlier today the Federal Trade Commission issued a second Federal Register Notice containing the revised information requests for its study on patent assertion entities (PAEs). The Commission vote approving the second Federal Register Notice was 5-0. The Notice is styled as a submission to the Office of Management and Budget (OMB) because under federal law federal agencies must obtain approval from OMB for each collection of information they conduct or sponsor. 

The second Notice also calls for additional public comments. As explained more fully in the Notice, the FTC proposes to collect information about Patent Assertion Entity (“PAE”) organization, structure, economic relationships, and activity, including acquisition, assertion, litigation, and licensing practices.

The study is designed to develop a better understanding of how PAEs may impact innovation and competition. PAEs are firms with a business model based primarily on buying patents and then attempting to generate revenue by asserting them against businesses that are already practicing the patented technologies. The FTC says it is conducting the study in order to further one of the agency’s key missions, which is to examine cutting-edge competition and consumer protection topics that may have a significant effect on the U.S. economy.

Hopefully the FTC will keep in mind that by the very nature of the right granted by the Federal Government, a patent offers the patent owner the right to exclude others from making, using, selling, offering for sale and importing infringing products or services. In fact, it is this strict, strong exclusivity that is at the heart of the reason why patents foster innovation, a point that critics seem to simply refuse to acknowledge and seem wholly incapable of understanding.

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