Agency Information Collection Activities; Proposed Collection; Comment Request; Project No. P131203 #00005

Submission Number:
Philip Conrad
Outside the United States
Initiative Name:
Agency Information Collection Activities; Proposed Collection; Comment Request; Project No. P131203
Matter Number:


I am a U.S. citizen currently residing in Montreal, Quebec. I am also a lawyer licensed in Massachusetts, and I am registered to practice before the U.S. Patent and Trademark Office. I have spent over twenty year working in the field of intellectual property and, more specifically, in the area of patent law. I strongly support and encourage a thorough investigation of this issue by the FTC as I believe PAEs to be a significant drag on innovation and a drain on the operating resources of U.S. technology firms. I am, in general, pro-patent, and I believe that a fair balance has been achieved over time between the need to encourage innovation, and the need to prevent a stifling of competition. PAEs do not destroy this balance, but they raise the cost of doing business for everyone while offering little in return. PAE proponents will speak of "monetizing" patents on behalf of inventors who would otherwise be ignored in the marketplace but, in the majority of cases, they are simply asserting patents that they have already acquired. Patent litigation is complex and expensive and the outcome can often turn on semantical arguments presented to a judge or jury that has no real understanding of the scientific underpinnings of the technology involved. This, unfortunately, raises the level of doubt for all litigants and, regardless of how strong the patent, or how meritorious the claim, a PAE can always rely on there being defendants who, rather than spending millions on patent defense, will make the practical business decision to settle a case for a nominal sum. One important question that I think you must present in your information requests is what percentage of a PAEs licenses are exclusive licenses. Typically it is very low or even zero. NPEs such as universities are engaged in true "technology transfer." While they do not operate in the commercial marketplace, they can use licensing to transfer a patented technology to one who does. However, such licenses are typically "exclusive" licenses that prevent the licensee's competitors from having access to the same technology. There are some exceptions, such as technologies for Internet or wireless communication protocols, but for a typical technology space, the true value is in the exclusive control of the patent. These licenses are more expensive than "non-exclusive" licenses for obvious reasons, and would not be entered into unless the patent had real value. PAEs typically do not sign exclusive licenses because they would then have only one potential buyer, and that party would scrutinize the patent carefully. Rather, they use non-exclusive licenses to extract a small amount from as many parties as possible, with everyone understanding that the license brings no actual value to the licensee. PAEs are also very secretive about the patents they assert, and the companies that they are approaching, as they do not want their targets to share information. They will usually try to extract nondisclosure agreements in exchange for information that they provide regarding the patent. It would be interesting to ask in your information requests whether this is a standard practice of the PAE. They may argue that it is just good litigation strategy but, as a matter of public policy, I wonder whether it would not be better to have a public vetting of the patents involved rather than lots of secret deals that are, at best, of questionable integrity.