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comparable age measures for litigated patents were a mean of 11.3 years (median 12) for Portfolio PAEs and a mean of 14 years (median 14) for Litigation PAEs. Litigated PAE Patents Received More Citations than Average Patents When a firm applies for a patent with the USPTO, it must disclose literature that it knows of that would be material to the patentability of its claimed invention. 336 Often, this includes any previously-issued patents that relate to or that might limit the claims of the new invention. Moreover, as part of the patent application process, USPTO examiners perform their own search for relevant prior art. The issued patent cites all of the prior art that the examiner or applicant cited. The USPTO maintains a data set of the specific citations that each issued patent has received from other granted patents and applications. A large body of empirical literature has found that highly-cited patents are, on average, more valuable than less frequently cited patents. 337 For this reason, patent citations are often seen as a proxy for patent quality. The median patent held by a Study PAE or Holding Entity received six citations by the end of 2013. There was a significant difference between the number of citations received by the “typical” patent held by a Litigation PAE and that held by a Portfolio PAE. The median number of citations received by a Litigation PAE patent was 14 (mean 40.7) compared to six (mean 19.7) for a Portfolio PAE patent. As a comparison, the median number of citations received by the entire set of patents granted by the USPTO since 1990 was three (mean 9.8). Thus, compared to the overall population of patents, patents held by Study PAEs had more citations than the average patent granted over the same time period. Factors unrelated to patent quality may have caused the mean or median number of citations received by patents in the study sample to differ from the overall population of patents granted since 1990. For example, older patents can receive more citations than more recently granted patents simply because they have had a longer period of time in which to be cited. Likewise, some technology categories tend to 336 See 37 C.F.R. § 1.56 (2016). 337 See, e.g., Moser et al., supra note 327; Hall et al., supra note 327; Harhoff et al., supra note 327; Cohen et al., supra note 94. 140
eceive more citations than other categories. 338 As a result, the FTC compared the citation of the study sample patents to the overall population of all USPTO granted patents, controlling for a patent’s age and technology category. The FTC implemented the control by creating technology category-grant year cohorts. Specifically, for each study sample patent, the FTC calculated the ratio of the number of citations received by the patent (as of December 31, 2013) to the mean number of citations received by all patents in the same technology category (the six NBER categories) and grant year cohort. 339 In this case, a patent would be “less cited” as compared to the average cohort patent if its relative citation number was less than one and “more cited” compared to the average cohort patent if the measure was greater than one. 338 The economic literature teaches that it is critical to control for both age and technology effects before comparing the citation counts of different patents. ADAM B. JAFFE & MANUEL TRAJTENBERG, PATENTS, CITATIONS, AND INNOVATIONS: A WINDOW ON THE KNOWLEDGE ECONOMY (2002). 339 For example, Computers & Communications patents granted in 2010 would be a unique cohort for this analysis. The mean number of citations received by all USPTO granted patents in the 2010 Computers & Communications cohort (as of December 31, 2013) was 2.2. The relative citations measure for each Computers & Communications patent held by a Study PAE or a Holding Entity granted in 2010 was calculated by dividing the raw number of citations received by 2.2. If a Study PAE or Holding Entity patent in this cohort received 4 citations, then its relative citation measure would be 4/2.2 = 1.8. 141
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Patent Assertion Entity Activity AN
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Table of Contents EXECUTIVE SUMMARY
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Litigation Outcomes................
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Executive Summary and Recommendatio
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Table A.1: Categories of PAEs in FT
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generated royalties of less than $3
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most frequently by Study PAEs, or (
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litigations tended to settle early;
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in a timely manner would help allev
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In December 2015, however, an amend
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Chapter 1: Introduction and Backgro
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corresponded to various types of NP
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PAE’s enforcement of that patent
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In one of the earliest studies, Jam
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defendants that will arise in the l
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entrepreneurship and related invest
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and efficient marketplace for paten
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The FTC and the DOJ supported USPTO
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the brief observed that the share o
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Greater transparency of patent owne
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only egregious misconduct, as Justi
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In September 2013, the Commission b
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were intended to generate a sample
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The FTC’s study has two parts. Th
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Litigation PAEs: Litigation PAEs ty
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licenses. There was little overlap
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guaranteed revenue and zero risk. T
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agreements exclusively. These agree
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Larger Litigation PAEs also used th
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determine whether it has already li
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epresented as unique docket numbers
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Prior to initiating the study, the
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FTC examined the frequency with whi
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Study PAEs sent demands to relative
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from related PAEs may help them neg
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Electronic Product Manufacturing”
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arely generated license agreements
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In addition, four Responding PAEs a
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Litigation PAEs and Portfolio PAEs
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Table 3.1 provides the distribution
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Figure 3.5a: Technology Category of
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PAE cases and 44% of Litigation PAE
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Figure 3.6: Frequency Distribution
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Figure 3.7: Proportion of Study PAE
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portfolios of patents, which typica
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manner and extent to which Respondi
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as quickly as possible. For Portfol
Page 95 and 96: Study PAEs Generated Approximately
Page 97 and 98: likely seeks to avoid the possibili
Page 99 and 100: factor of 10. This analysis include
Page 101 and 102: Figure 3.10a could be the result of
Page 103 and 104: Figure 3.11: Number of Licenses Inv
Page 105 and 106: granted licenses to firms operating
Page 107 and 108: Turning to specific assertion behav
Page 109 and 110: The preceding considerations have l
Page 111 and 112: Chapter 4 first describes how Wirel
Page 113 and 114: A Small Number of Targets Received
Page 115 and 116: These percentages suggest that both
Page 117 and 118: worldwide wireless chipset sales du
Page 119 and 120: with 75% of their settlements occur
Page 121 and 122: Wireless Respondents’ Licensing A
Page 123 and 124: Table 4.2: Percentage of Wireless P
Page 125 and 126: license with that entity, whereas P
Page 127 and 128: Most Wireless Licensees Operated in
Page 129 and 130: Conclusion The FTC’s goal in stud
Page 131 and 132: Patent assignments were frequently
Page 133 and 134: Figure 5.1: Size of Patent Holdings
Page 135 and 136: Classification. 309 As of the time
Page 137 and 138: while USPTO economists estimate tha
Page 139 and 140: categories were Other Electrical &
Page 141 and 142: More Than 75% of Study Patents Incl
Page 143 and 144: Affiliates and Holding Entities, he
Page 145: Figure 5.5: Age Distribution of Stu
Page 149 and 150: 1.5 and the median was 0.6, meaning
Page 151 and 152: Table 5.1: Percentage of Acquired P
Page 153 and 154: Appendix A: Glossary of Frequently
Page 155 and 156: “PAE Special Order” means the i
Page 157 and 158: Appendix B: Methodology Introductio
Page 159 and 160: contained more than 9,100 variants
Page 161 and 162: of the dispute as of the end of the
Page 163 and 164: Affiliates to a single industry. 37
Page 165 and 166: industry called “Management of Co
Page 167 and 168: the selected firms meet the FTC’s
Page 169 and 170: owning 10% or more of its stock.”
Page 171 and 172: Delaware avoided disclosing any inf
Page 173 and 174: SPECIFICATIONS A. Identification of
Page 175 and 176: (2) identify, from the following li
Page 177 and 178: (2) identify, from the following li
Page 179 and 180: (a) state the total amount paid in
Page 181 and 182: (3) did the Firm grant an exclusive
Page 183 and 184: H. Patent Assertion Information 1.
Page 185 and 186: Do not report revenue reported for
Page 187 and 188: f. Does the License relate to a Wir
Page 189 and 190: (e) provide a narrative response st
Page 191 and 192: 1. Separately, for each year since
Page 193 and 194: APPENDIX A A. General Instructions
Page 195 and 196: “Patent” means a United States
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For district court and bankruptcy c
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Number Ending Reference Number Cust
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(i) (ii) (iii) (iv) For productions
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APPENDIX B Certification This Speci
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SPECIFICATIONS A. Identification of
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(1) state the jurisdiction; and (2)
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e. Identify, from the following lis
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(1) state the total revenue the Fir
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(1) identify the geographic restric
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F. Aggregate Cost Information 1. Se
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3. Produce, and provide a narrative
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Microsoft Word and PDF versions. Fo
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U.S. Patent numbers shall be provid
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(ii) Submit emails in image format
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Filename with extension Production
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(v) (vi) For each document withheld
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APPENDIX E: SUPPORTING STATEMENT FO
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“strongly urge[s] the FTC to foll
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The proposed case studies will prov
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What strategies do PAEs employ to a
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competition, innovation, and intell
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proposed requests “are a rational
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study questions and removed questio
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Some of the proposed requests for d
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Response: The Commission has narrow
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increase are not well understood.
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equests include interactions betwee
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In contrast, several commenters bel
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average burden for each of the appr
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enefits), and 320 research assistan
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PART B - COLLECTION OF INFORMATION
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stratum. The FTC will sum the two s
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Freedom and RPX use public sources
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The FTC will send one set of inform
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will have one entry for each acquis
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are two reasons why it is important
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Federal Trade Commission ftc.gov
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