FTC Study on Patent Assertion Entity Activity

The FTC has released its long awaited study on Patent Assertion Entity Activity. [FTC Report]   Using its subpoena power, the agency obtained data on more than 2000 patent holding companies, a minority of which have asserted their patent rights in court.

The report offers important insight into PAE business models – primarily identifying two categories: Litigation PAEs and Portfolio PAEs.  The FTC found that Litigation PAE licensies are “typically … less than the lower bounds of early stage litigation costs” and thus seen by the FTC as consistent with “nuisance litigation.”  The report suggests a variety of litigation reforms to help alleviate potential abusive litigation tactics by patent owners.

The 269 page report will be a catalyst for patent reform measures and thus should be considered carefully.