RESPECT [JUST A LITTLE BIT]- Federal Trade Commission Patent Infringement Litigation Report [1]

We left off in the previous installment in this series where the Report addressed licensing practices of the study’s entities which asserted patent infringement. Such findings in and of themselves confirm that state anti-patent statutes do not resolve the alleged harassing patent infringement lawsuits by companies/entities which do not practice the patents they own.   In this installment I examine portions of the Report addressing actual (i) patent infringement assertion letters and (ii) litigation practice of these entities.

The Report’s findings for litigation practice further confirms the legitimacy of companies which protect patents originally transferred from smaller entities, and which cannot protect their innovations without assistance. For example, litigation entities[2] frequently employed contingency fee counsel.[3] Contrary to the popular image of patent owning entities garnering huge financial benefits, in realty their retained law firms often took a significant portion of any financial award.[4] Other litigation patent owning entities had similar relationships with other consultants who received the majority of any proceeds in return for their services. As a result, a litigation patent owning company by itself possessed little effective control over its own patent infringement assertion activity.[5] Moreover, the residual proceeds in such cases were often nominal, and the listed managers of a patent owning entity exerted a very small role even in their own management and patent acquisition.[6]

In addition, all patent infringement assertion letters from all patent owning companies are widely misconstrued as intentionally misleading the allegedly infringing targeted entities. However, the Report disclosed a range of letter substance: For example, some patent infringement assertion letters identified patents and accused products. Other letters simply requested a non-disclosure agreement prior to beginning licensing negotiations while some provided detailed infringement charts to the targeted entity.[7]Companies also sent demand letters to relatively few recipients, and only 10% sent over one hundred demand letters during the FTC’s study period.[8]

In a previous article I reported that the FTC expressly discouraged denigrating and unsubstantiated labels such as “patent trolls” and “non-practicing entities.” Unfortunately, despite the FTC’s factual findings patent owning companies struggle to combat the overwhelming avalanche of such labels five years after the Report’s release. Nevertheless, there is a partial solution if a patent infringement case proceeds in court: Immediately make a motion in limine to exclude these terms in all discovery and court documents as well as hearings, before the jury and during trial. In at least one case this motion was granted prior to the trial.[9]

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


[1] Patent Assertion Entity Activity, an FTC Study Federal Trade Commission, October 2016[hereinafter ‘the Report’ and “FTC”].

[2] For definitions of these terms, please refer to previous articles in this series at adriennebnaumann@wordpress.com.

[3]  The Report at 52.

[4][4] Id.

[5] Id.

[6] Id.

[7] Id. at 59.

[8] Id. at 61.

[9] Pacific BioSciences of California, Inc. v. Oxford Nanopore Technologies, Inc. et al., Nos. 2020-2155,2020-2156 (Fed. Cir. May 11, 2021) slip opinion at 6.

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