AGs support federal information-gathering project on patent trolls

WASHINGTON — A group of state attorneys general say they support a proposed project by the Federal Trade Commission aimed at collecting data and information about patent trolls.

On Dec. 16, the National Association of Attorneys General sent a three-page letter to FTC Secretary Donald Clark. In their letter, the 43 attorneys general also made two recommendations. The group includes state Attorney General Patrick Morrisey.

Patent trolls — referred to as Patent Assertion Entities in NAAG’s letter — are companies that purchase groups of patents without an intent to market or develop a product. The companies then target other businesses with lawsuits alleging infringement of the patents they bought.

Several state attorneys general initiated efforts this year to use existing unfair and deceptive trade practice laws to attack patent trolls’ demand letter campaigns.

In their letter to the FTC, the attorneys general say the commission’s proposed project will “greatly assist” enforcement efforts for both federal and state authorities.

The FTC request “should yield a trove of information relevant to PAEs’ practices, methods, and beliefs regarding the veracity (or lack thereof) of infringement claims, and the number and types of their target entities,” the letter states.

The attorneys general suggest that the FTC share, to the extent permitted by law, the entirety of the response to the information request with them. They also recommend two additions.

First, the FTC should inquire about the role of legal counsel, who may play a central role in patent assertion schemes. Second, the FTC should increase the number of patent trolls, manufacturing firms and other firms to which the information request will be submitted.

“We firmly believe that efforts by FTC to examine the problem of patent enforcement abuse, which undoubtedly presents risks of antitrust and unfair and deceptive trade practice violations, are entirely consistent with the FTC’s function and purpose,” the attorneys general wrote. “Given the value that increased knowledge would have in pursuing efforts to prevent violations of antitrust and unfair and deceptive practice laws, we believe the merits of the proposed information request are beyond question.”

Congress and the federal government have demonstrated a renewed interest in controlling such abusive patent practices.

Earlier in December, the U.S. House of Representatives approved House of Representatives Bill 3309, known as the Innovation Act, in an overwhelming bipartisan vote of 325-91.

Among other things, the legislation requires plaintiffs to disclose who the owner of a patent is before litigation, so that it is clear who the real parties behind the litigation are.

Lawmakers argue that this will ensure patent trolls cannot hide behind a web of shell companies to avoid accountability for bringing frivolous litigation.