Trolls, Nuisance Suits, and the FTC
20 Pages Posted: 4 Nov 2017
Date Written: November 2, 2017
The FTC’s Patent Assertion Entity Activity Report includes a path-breaking collection of data. Because of the FTC’s ability to force businesses and individuals to provide information, a power that no ordinary researcher possesses, the FTC has amassed a data set that can potentially be of great value. For example, the Report’s description of litigation PAEs and portfolio PAEs structure and behavior is, although not entirely new, very instructive. Unfortunately, the FTC made analytical errors that precludes using its work to directly support policy prescriptions. First, the FTC claims that if a suit settles for less than $300,000 then the suit was likely Negative Expected Value. In addition, the FTC claims that Negative Expected Value suits are bad. These claims are false. Second, the FTC’s policy recommendations have no connection to any of its factual analysis. And so, in terms of providing normative guidance, the Report is a failure.
Keywords: Nuisance Suits, Federal Trade Commission, Patent Assertion Entities, Patent Trolls, Patent Policy
JEL Classification: K10, K23, K41, L86, O34
Suggested Citation: Suggested Citation