Agency Information Collection Activities; Proposed Collection; Comment Request; Project No. P131203 #00031

Submission Number:
James Glassman
American Enterprise Institute
Initiative Name:
Agency Information Collection Activities; Proposed Collection; Comment Request; Project No. P131203

Ambassador James K. Glassman [redacted] Federal Trade Commission 600 Pennsylvania Avenue, NW Washington, DC 20580 December 3, 2013 Dear Commissioners: I write to you today to express grave concern about the current U.S. patent system and the threat it poses to innovation and economic prosperity. Democrats and Republicans agree that our patent system needs reform -- seven bills have been introduced in Congress recently in this regard. As you move forward with your investigation on the negative impacts of bad-acting patent assertion entities (PAEs), I ask that you consider the implications this growing trend of aggressive PAEs will have on the U.S. economy, both domestically and on the foreign marketplace. For instance, while patent pools can be highly beneficial, they can also foster abuses. One is example is MPEG LA which formed the MPEG-2 patent pool for digital formatting used in devices around the world. The danger here is that the pool includes non-essential and expired patents, yet the overall fee is not adjusting correspondingly. The price for these unnecessarily high royalty fees are absorbed by consumers. Patent trolls are another offender and becoming increasingly more aggressive by filing costly lawsuits that place a damper on innovation. A Boston University study estimates that the cost to consumers of these suits amounts to a ‘‘patent tax’’ that adds 20 percent to research and development costs. A newer and perhaps more alarming trend is the government-sponsored patent pool, which is popping up in countries such as France, Korea, and Japan. These entities openly favor patents of their own country and pursue legal action against foreigners. Examples include Intellectual Discovery (Korea), France Brevets (France), and Innovation Network Corporation of Japan, whose latest government-backed IP fund -- IP Bridge -- was established just this year. These new entities—in effect, state trolls—can lead to government abuse of regulatory power and can harm trade agreements and government relations. Patent abuses come in more than one form, as I outline in this letter and the corresponding editorial I wrote for Bloomberg BNA titled “Time to Fix the Patent System.” I strongly encourage the FTC to review all forms of patent abuse in your investigation, and it is my hope that DOJ takes similar action to address this growing concern. I applaud the FTC for conducting this investigation and allowing public comment on the topic. Sincerely, [signed] Ambassador James K. Glassman Visiting Senior Fellow, Center for Internet, Communications, and Technology Policy American Enterprise Institute Washington, DC Note that the affiliation above is for identification purposes only. The views expressed in this letter are exclusively my own.