What Can the FTC's §6(B) PAE Study Teach Us? A Practical Review of the Study's Methodology

30 Pages Posted: 27 Jan 2016 Last revised: 5 Mar 2016

Anne Layne-Farrar

Charles River Associates; Northwestern University

Date Written: March 1, 2016

Abstract

The Federal Trade Commission (FTC) is currently conducting a survey of patent assertion entities (PAEs), under authority of section 6(b) of the FTC Act. The study is meant to move past the limited information that can be gleaned from litigation records – given that around 90% of patent enforcement activity occurs outside the courtroom – by compiling and publishing nonpublic data on licensing agreements, patent acquisition practices, and related costs and revenues. As such, the study should provide a better understanding of how PAEs operate. The empirical approach the FTC is taking and the constraints that the chosen approach entails, however, will, as the FTC acknowledges, constrain the study’s utility. This article discusses these constraints. In particular, the small sample size used for the study means that it will provide a “case study” (in the FTC’s words), rather than robust statistical data that can be extrapolated to a broader population. Moreover, the survey covers licensor activities only, with no questions for licensees. Because of these and other limitations discussed herein, the FTC’s 6(b) PAE study should be informative, but will not be generalizable and hence it should not form the basis for any policy changes.

Suggested Citation

Layne-Farrar, Anne, What Can the FTC's §6(B) PAE Study Teach Us? A Practical Review of the Study's Methodology (March 1, 2016). Available at SSRN: https://ssrn.com/abstract=2722057 or http://dx.doi.org/10.2139/ssrn.2722057

Anne Layne-Farrar (Contact Author)

Charles River Associates ( email )

1 South Wacker Drive
Suite 3400
Chicago, IL 60606
United States
312-377-9238 (Phone)

HOME PAGE: http://www.crai.com

Northwestern University ( email )

2001 Sheridan Road
Evanston, IL 60208
United States

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