FTC Patent Entity Study Report's Importance Seen Diminishing Ahead of Release
Confidence is growing that the FTC may release a report in coming weeks on its years-long study of the business practices of patent assertion entities, patent stakeholders said in interviews. Release of the report, begun in 2013 (see report in the Sept. 20, 2013, issue), has been repeatedly delayed. Commission Chairwoman Edith Ramirez said in February the agency would issue it last spring (see 1602010021). The study likely will hold some diminished value in influencing the patent law revamp debate, lobbyists said.
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There’s no definitive proof the FTC is on the verge of releasing the PAE study, but several lobbyists pointed to the scheduling of three separate events through Oct. 20 on either FTC’s IP-related activities or the PAE study as a possible indicator that the study’s release is imminent. Ramirez is to speak Thursday at a joint American Antitrust Institute-Computer & Communications Industry Association event on the agency’s IP antitrust enforcement work, “including patents” (see 1610030049). Northwestern University Pritzker School of Law’s Searle Center on Law, Regulation and Economic Growth plans an event Oct. 13 on the PAE study, which it said will “examine the legal, regulatory, and economic implications of the recently released” study report. Commissioner Maureen Ohlhausen is to speak at an Oct. 20 Technology Policy Institute event on the PAE study; TPI said the event will be postponed if the study report isn’t released by Oct. 20. FTC Chief IP Counsel Suzanne Munck is also to speak at all three events. The agency didn’t comment.
“Scheduling this many events on essentially the same subject doesn’t usually happen unless there’s a strong sense that a rollout is happening,” a tech sector lobbyist said. Munck's presence at all three events "tells me something," another tech lobbyist said. R Street Institute Senior Fellow Mike Godwin said he’s relatively certain the study report will be released “sometime soon.” TPI scheduled its event on the study based on chatter about an impending release but “we still don’t know for sure,” said Senior Fellow Tom Lenard.
Commissioners and staff have been “pretty tight-lipped” about details, but it’s likely the agency will be “very conservative” in the scoping of its report, said Orrick Herrington antitrust lawyer Jay Jurata. “My sense is that you probably won’t see anything that’s really earth-shattering” in the study report, he said: “There will likely be a fair amount of data” based on the responses from the 25 PAEs the FTC studied, but “there will be very few policy recommendations.” Suggestions will likely involve “nothing controversial,” and more thorny issues will likely “be punted,” Jurata said.
The study will more than likely discuss the data collected from the 25 PAEs “but given the variety of sources and what we know about their methodology, it may be hard for them to reach any actionable conclusions” on agency enforcement activities, a PAE lobbyist said. “I wouldn’t be surprised if the report includes some legislative recommendations, but at this point, I’m not sure there’s much they can conclude based on their data” about what legislation is needed.” The FTC has certainly “been proceeding cautiously and thoroughly” with the study, but hopefully the report will “shed some light on PAE practices,” said CCIA Patent Counsel Matt Levy: “I’m hoping they’ll make recommendations for legislation or Patent and Trademark Office action” against PAEs.
The FTC has likely been hampered from creating a wider-ranging report because of two vacancies, Jurata and others said. Commissioner Joshua Wright left in August 2015 and is now executive director of George Mason University Scalia Law School’s Global Antitrust Institute (see 1508170051 and 1508270055). Julie Brill left in March to become a privacy and cybersecurity lawyer at Hogan Lovells (see 1603220021). There still would have likely been a divided vote on a more controversial report if the FTC had all five commissioners, “but I think it’s much different to do something controversial with a 3-2 vote than with a 2-1 vote,” Jurata said. “If I was an advisor to any of the commissioners right now, I’d be advising them not to do anything [in the report] that could be perceived as a political hot potato.”
The document isn’t likely to have quite the same cachet within the patent revamp debate it would have had if the FTC had released it a year or two ago simply because the contours of the debate have shifted, Jurata said. “Changes in patent law have addressed many of the issues with PAEs but certainly not all of them,” he said. “It’s my understanding that a lot of companies spent a lot of money pulling together the information the FTC requested, and it will be a bit of a shame if not much is done with this information.” If the report “had come out during the heat of the debate on Capitol Hill” during the 114th Congress, before debate on bills like the Innovation Act stalled, “it might have had more of an impact,” a PAE lobbyist said. “Proponents of legislation have achieved many of their desired goals” since then, the lobbyist said, “so I don’t know that this report will add much at this point.”
Other patent revamp backers said they continue to believe the report will be valuable. “I’m eager to see what the FTC has come up with,” Godwin said. "We still see it as being essential” in influencing the revamp conversation, Levy said: “The study will have its limitations and we don't want to overinterpret the results, but it certainly will be worth reading carefully."