Today the Federal Trade Commission made its long-awaited announcement that it has voted to seek public comment on a proposal to conduct a Section 6(b) study of patent assertion entities and their impact on innovation and competition. The FTC proposes this study based on requests from the public and Senators as well as the FTC’s “own role in competition policy and advocacy.” The FTC will entertain public comments on its proposal to gather information from about 25 Patent Assertion Entities (PAEs) and about 15 other entities.
Importantly, issues regarding PAEs are distinct and separate from issues relating to standard essential patents and they should not be conflated. So why does the Essential Patent Blog care? Two reasons.
First, the FTC’s study will include specific requests for information about whether a PAE owns patents that are subject to a standard setting organization (SSO) obligation (see Information Request C(1)(o) at page 5 of the proposal):
o. whether the Patent (or any claims therein) is subject to a licensing commitment made to a Standard-Setting Organization and specify:
(1) all Standard-Setting Organizations to which a licensing commitment has been made;
(2) all standards to which such a licensing commitment applies;
(3) the Person(s) who made the licensing commitment;
(4) the date(s) on which the licensing commitment was made;
(5) all encumbrances, including, but not limited to, all commitments to license the Patent or any of its claims on reasonable and non-discriminatory (RAND), fair, reasonable, and non-discriminatory (FRAND), or royalty-free (RF) terms;
Second, the FTC is targeting non-innovating, non-practicing patent monetization entities. Specifically, the FTC defines the PAEs that are the subject of its study to be “firms with a business model based primarily on purchasing patents and then attempting to generate revenue by asserting the intellectual property against persons who are already practicing the patented technology.” The FTC distinguished such PAEs “from other non-practicing entities or NPEs that primarily seek to develop and transfer technology, such as universities, research entities and design firms.” This focus on non-innovating, non-practicing entities may address concerns that some have raised about patent assertion entities that own SEPs and do not have the reputational concerns of actively innovating SSO members whose licensing approach will seek to foster adoption of their continued innovations in future versions of the standard.
The FTC will accept public comments about its proposed study up to 60-days after it is published in the Federal Register.