Patent Assertion Entity Activity

In September 2013, the Commission began the formal process of obtaining authorization to conduct a
Section 6(b) study. As required by the Paperwork Reduction Act and implementing regulations of the
Office of Management and Budget (OMB), 150 the Commission published a Federal Register Notice that
included, among other things, the Special Orders under Section 6(b) of the FTC Act 151 that the
Commission planned to serve on PAEs, manufacturers, and NPEs. Commenters on the Commission’s
first Federal Register Notice announcing the study likewise stressed the need for Commission research
in this area. 152
Based on public comments received in response to the September 2013 Federal Register Notice, the
FTC amended the information requests that would be attached to the Special Orders. In May 2014, it
published a second Federal Register Notice requesting public comments, and announced its official
intention to seek OMB approval. 153 On August 8, 2014, the FTC obtained the required approval, and on
September 15, 2014, it began serving the Special Orders on PAE, NPE, and manufacturer respondents
selected for inclusion in the study.
(“This Article does not address settled cases directly, or demand letters and licensing arrangements that do not involve
litigation, and it is possible that PAEs significantly differ from practicing entities when it comes to out-of-court assertion
practices.”).
149
Letter from Senator Amy Klobuchar, U.S. Senate, to Edith Ramirez, Chairwoman; Julie Brill, Commissioner; Maureen K.
Ohlhausen, Commissioner; and Joshua D. Wright, Commissioner, Fed. Trade Comm’n (June 24, 2013),
http://www.klobuchar.senate.gov/public/2013/6/klobuchar-calls-on-administration-to-address-concerns-over-patent-trollsthat-stifle-innovation-and-hurt-the-economy;
Letter from Representative Daniel Lipinski, U.S. House of Representatives, to
Edith Ramirez, Chairwoman, Fed. Trade Comm’n (June 25, 2013), http://lipinski.house.gov/uploads/PAE_letter.pdf.
150
The Commission was required to obtain OMB approval before it could begin the study because the proposed number of
special orders triggered the requirements of the Paperwork Reduction Act of 1995, 44 U.S.C. ch. 35, as amended.
151
15 U.S.C. § 46(b) (2012); Fed. Trade Comm’n, Agency Information Collection Activities; Proposed Collection; Comment
Request, 78 Fed. Reg. 61,352 (Oct. 3, 2013).
152
See List of Public Comments regarding PAE Study, FED. TRADE COMM’N, https://www.ftc.gov/policy/publiccomments/initiative-501.
The Government Accountability Office (GAO) has also recognized deficiencies in the existing
record of non-public PAE activity. First, although GAO reported that patent assertions frequently do not result in litigation, it
could not obtain reliable data on such assertions. Second, GAO could not collect information on litigation costs from court
records or the sample data, nor obtain information on the settlements that resolve most cases. 2013 GAO REPORT, supra
note 2, at 23–25. (The GAO used the term “patent monetization entity” (PME) to describe an entity that “buy[s] patents from
others for the purpose of asserting them for profit.” Id. at 2. This definition is nearly equivalent to the FTC’s definition of a
PAE).
153
Fed. Trade Comm’n, Agency Information Collection Activities; Submission for OMB Review; Comment Request,
79 Fed. Reg. 28,715 (May 19, 2014).
37