Patent Assertion Entities: Trolls or Angels?
Intellectual property patents inspire lively debate, to put it mildly.
A patent assertion entity (PAE) is a firm that acquires and licenses patents with no intention of manufacturing or marketing the invention itself. Is the bashing of PAEs justified because they’re “patent trolls” or misguided since they’re “angels” for inventors and investors alike?
Patent assertion entity activity and its effect on innovation and competition were the focus of a recent public workshop jointly held by the Federal Trade Commission (FTC) and Department of Justice (DOJ).
PAEs make money by licensing the intellectual property to—or litigating against—manufacturers who are already using or want to use the patented technology. The day-long forum looked at PAE activity, not the more general non-practicing entity activity.
FTC Chairman Jon Leibowitz said in his opening remarks:
Patent issues raise a minefield of problems. A truthful fact: it is clear that PAE activity is a growing issue for the United States. There were more than 4,000 patent lawsuits filed last year. James Bessen and Michael Meurer report that PAE-generated revenue cost defendants and licensees $29 billion in 2011, a 400% increase from 2005. They calculate that no more than 25% of this flowed back to innovation. Almost like lobbying in Washington, D.C., 75% was deadweight loss!
And as reported by Reuters,“For the first time, individuals and companies that do not themselves make anything—commonly known as ‘patent trolls’—are bringing the majority of U.S. patent lawsuits, according to a study by a California law professor.”
What is intellectual property? “It is imagination made real,” according to the United States Patent and Trademark Office. “Just like other kinds of property, intellectual property needs to be protected from unauthorized use.”
The FTC and DOJ are interested in receiving comments on PAE activities and will accept written submissions from the public until March 10, 2013. Interested parties may submit public comments to [email protected].
What do you think? Are PAEs trolls or angels?
