NOT SORRY: Federal Trade Commission Report on Patent Holding Companies Part 2

In my previous article I discussed key points of the 2016 Federal Trade Commission [hereinafter FTC] report above.[1] In this article I will address remaining points from this comprehensive report. To begin, biomedical patents comprised 21% of litigation patent holding company ownership, while biomedical patents comprised less than 1% of the total holdings of portfolio patent holding companies.[2] These statistics confirm that the pharmaceutical industry is NOT seriously harmed by patent holding companies. Also significant is that 75% of FTC study patents comprised software related claims.[3]

Many knowledgeable observers have concluded that legitimate patent holding companies enable small companies and individual inventors to enforce their property rights more effectively and for adequate compensation.[4] Furthermore, most researchers and commentators in the report do not perceive that patent holding companies are categorically either completely harmful or completely beneficial. [5]The FTC also acknowledged that patent infringement litigation is a significant and legitimate means by which to enforce the right to exclude others from authorized use or production of an invention and this conclusion included patent holding companies.[6]

Judicial decisions and review literature indicate that to date only two allegedly nefarious patent holding companies have  been found responsible for unfair business practices.[7]  Nevertheless, numerous associations  and observers originally looked to this 2016 report to support their worst suspicions for all patent holding companies.[8] As described above and in previous articles, the FTC’s factual  findings did not coincide with, or even support, contentions which disparaged any patent holding company asserting its rights. It also appears that for companies sending numerous infringement assertion letters, there has been no analysis of whether there was bona fide infringement by hundreds or thousands of end-users, and where their liability legitimately arises under U.S. patent law.[9]

©2021 Adrienne B. Naumann, Esq. All rights reserved. Ms. Naumann does not sponsor or endorse the advertisements at adriennebnaumann@wordpress.com.


[1] Patent Assertion Entity Activity: an FTC study, October 2016 at https://www.ftc.gov/system/files/documents/reports/patent-assertion-entity-activity-ftc-study/p131203_patent_assertion_entity_activity_an_ftc_study_0.pdf.  For a discussion of the Blackberry settlement and its consequences please refer to the author’s earlier articles in her series on patent holding companies at adriennebnaumann.wordpress.com.

[2] Id. at 131. Furthermore, the biomedical patents were overwhelmingly medical device patents. Id.

[3] Id. at 5 and 135.

[4] Id. at 26.

[5] Id.at 6.

[6] Id. at 9.

.[7] Landmark Technologies and MPHJ Investors. In Innovatio IP Ventures, LLC Patent Litigation, 921 F. Supp. 2d 903 (N.D. Ill. 2013) the court dismissed counts against Innovation IP Ventures, LLC, for RICO, unfair competition civil conspiracy, intentional interference with prospective economic advantage and unclean hands, because Innovati’s licensing program alleging patent infringement was not a sham. In 2014 the FTC brought a claim against MPHJ Investors because this company distributed many patent assertion infringement letters across numerous states. This FTC action ultimately ended in a consent decree. [7]

[8] https://www.crowell.com/files/pressure-increases-on-patent-assertion-entities.pdf; https://www.antitrustinstitute.org/work-product/aai-applauds-ftc-investigation-of-patent-assertion-entities/ (American Antitrust Institute applauds FTC investigation of patent assertion entities); https://internetassociation.org/files/the-internet-association-comments-on-patent-assertion-entities/ (workshop on patent assertion entities); https://www.squirepattonboggs.com/en/insights/publications/2013/10/ftc-announces-study-of-patent-assertion-entities.

[9] Patent infringement is a strict liability civil offense. 35 U.S. section 271(a).

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