FTC recommends investigation of patent trolls

150px-US-FederalTradeCommission-Seal.svgThe Federal Trade Commission recommended last week an investigation of a number of patent-assertion entities—often referred to as “patent trolls” because of their assertive legal tactics—following calls by the Obama administration to protect small businesses from the entities.

Patent trolls purchase patents from technological inventors and threaten to sue other firms using the technology, claiming they are infringing on the patents, though PAEs often do not use patents in any products themselves, Terra reports.

Though PAEs have typically targeted IT firms, FTC Chairman Edith Ramirez said retailers are also at risk.

“Even hotels and coffee shops are not immune,” Ramirez said in a speech before the Computer & Communications Industry Association and American Antitrust Institute. “The costs to consumers from PAE activity appear increasingly tangible and direct.”

Several trade groups, including the National Retail Federation, Food Marketing Institute and National Restaurant Association urged the FTC in a letter last week to thoroughly examine the problem of PAEs.

“Valuable resources are being extracted from end users that could be used to invest in business, create jobs and contribute to the growth of the economy, and instead are going to fight or settle frivolous infringement claims,” the letter said.

Ramirez said federal courts will play a key role in the fight against patent trolls, which are responsible for 62 percent of all patent-infringement lawsuits—an increase from 29 percent in 2011, according to Terra.

“There has been significant progress in addressing this core problem,” Ramirez said, pointing to the America Invents Act, which included reforms to improve patent quality and expand mechanisms to challenge patent validity. “At the same time, courts have strengthened the non-obviousness requirement for patentability, moved towards a more economically rational basis to award patent damages and eliminated the presumption in favor of injunctive relief. But as the Obama administration and Congress have recently recognized, more can and should be done.”

Earlier this month, President Obama announced several executive orders aimed at protecting innovators from patent trolls. The Patent and Trademark Office will be required to require patent owners to be more specific in providing information about their patent and will be required to boost scrutiny of overly broad patent claims.

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