Well, look who finally showed up to the patent party! The US Federal Trade Commission announced on Friday that it has opened an inquiry into “patent assertion entities”, a.k.a. patent trolls. Start popping some popcorn, folks. This could get good.
To be specific, the FTC voted unanimously to seek public comments on an investigation into “approximately 25 companies that are in the business of buying and asserting patents.” This is terrific news because these kinds of companies are a scourge upon the Earth, engaged in the filthy business of hoarding patents and then threatening innovative companies to pay up or get sued for infringing on said patents. These 25 companies were responsible for 60 per cent of the 4000 patent litigation lawsuits last year. The number of patent litigation lawsuits alone rose 70 per cent from 2004 to 2009. If the FTC’s investigation finds evidence of malfeasance, it could launch a series of antitrust lawsuits against the patent trolls.
The FTC is indeed a little late to the justified assault on patent trolls. A little over two years ago, NPR famously reported on the practice which is more or less confined to the tech industry. By the following summer, a couple members of the House of Representatives had heard about the practice and introduced the Saving High-Tech Innovators from Egregious Legal Disputes (SHIELD) Act. “Patent trolls don’t create new technology and they don’t create American jobs,” Representative Peter Lazio, one of the bill’s sponsors, said at the time. “They pad their pockets by buying patents on products they didn’t create and then suing the innovators who did the hard work and created the product.” The bill’s still under consideration.
The FTC route could prove very effective. As the statistics tell us, if the commission manages to stamp out the activity of these 25 companies, it will do away with the sources of over half of the patent litigation lawsuits out there. Without legislation, though, there’s a good chance we’ll see the hydra-like tendencies of patent trolls. For every one that’s taken down, two more grow in its place. And these beasts just can’t stop devouring American innovation. Ever. [FTC via NYT]