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U.S. agency moves toward major study of 'patent trolls'
September 27, 2013 / 1:40 PM / 4 years ago

U.S. agency moves toward major study of 'patent trolls'

WASHINGTON (Reuters) - The U.S. Federal Trade Commission on Friday took another step toward a comprehensive study of “patent trolls” - companies in the business of buying and asserting patents - to see if they are hurting competition with abusive litigation.

FTC commissioners voted 4-0 to seek public comments on a proposal to collect information from about 25 “patent assertion entities.”

“The FTC intends to use this information to examine how PAEs do business and develop a better understanding of how they impact innovation and competition,” the commission said.

PAEs typically do not invent or manufacture products. Their business model consists primarily of buying the intellectual property of others and seeking money from firms that may infringe those patents.

The entities account for more than 60 percent of all U.S. patent litigation.

A rising tide of patent litigation has become an increasing concern for companies. In July, dozens of major U.S. companies urged lawmakers to pass bills to protect against “extortive demands.”

Information the FTC hopes to track down would shed light on how PAEs organize their corporate legal structure, how they engage in assertion, what that activity costs, and how much the entities earn though their actions.

The commission also proposes to send information requests to about 15 other entities asserting patents in the wireless communications sector, including manufacturing firms and companies engaged in licensing.

The investigation being proposed would use what is known as 6(b) authority, which enables the FTC to conduct wide-ranging economic studies that do not have a specific law enforcement purpose.

“What we learn will support informed policy decisions,” said FTC chief Edith Ramirez.

The White House in June also took steps intended to curb lawsuits by patent trolls.

Reporting by Ros Krasny; Editing by Gerald E. McCormick and John Wallace

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