Patent Assertion Entities: Six Actions the Antitrust Agencies Can Take
CPI Antitrust Chronicle, Winter 2013, Vol. 1 No. 2
12 Pages Posted: 31 Jan 2013
Date Written: January 30, 2013
One of the most pressing issues confronting antitrust in 2013 (and beyond) involves patent assertion entities (“PAEs”), previously known as patent trolls. Supporters proclaim PAEs’ benefits to “invention markets.” Critics lament extortion-like demands. Into this debate tiptoes antitrust, wondering if it can play any meaningful role.
In this article, I offer six actions the antitrust agencies can take to address PAEs: (1) Offer guidance about potential harms from patent aggregation, (2) Promote transparency, (3) Prohibit transfers to PAEs that refuse to adhere to previous standards-based licensing promises, (4) Use PAEs’ distinct incentives to employ Clayton Act Section 7 when “plus” factors are met, (5) Monitor collusive activity, and (6) Consider the use of FTC Section 5.
Antitrust enforcement is crucial to the protection of consumers and a competitive marketplace. Even if certain PAEs can justify some of their conduct, that does not mean that all PAE activity is immune from antitrust scrutiny. For if it was so protected, then the most aggressive and unjustified behavior, undertaken by PAEs with the greatest market power and largest portfolios, and inflicting the greatest harm on rivals and consumers, would fall through the antitrust cracks.
The novelty of PAE behavior ensures that the framework must be applied flexibly. But antitrust enforcement cannot automatically be shunned in a context that presents new and powerful opportunities to inflict anticompetitive harm.
Keywords: patent assertion entity (PAE), nonpracticing entity (NPE), patent troll, antitrust
JEL Classification: K21, L40, L41, L63, O31, O34, O38
Suggested Citation: Suggested Citation