FTC to launch inquiry into patent trolls, including issuing subpoenas


The Federal Trade Commission (FTC) is expected today to approve an investigation into so-called patent trolls, according to the New York Times. Results of the investigation could be used as part of a possible antitrust lawsuit.

FTC chairwoman Edith Ramirez has said the technology involved in one smartphone could spur thousands of patents. In 2012, patent trolls – politely referred to as patent-assertion entities – comprised 60 percent of some 4,000 patent lawsuits. In 2011, the number of patent lawsuits were half that amount, the Times reported…

The likely approval of an FTC probe comes after U.S. President Barack Obama issued a number of executive orders in order to “protect innovators from frivolous litigation.”

The Patent and Trademark agency, for instance, was told to better disclose who owns a patent. Among the questions the FTC probe is likely to ask is how much of the licensing fees the PAEs return to actual patent holders, the newspaper reports.

Along with having the power to subpoena companies, the FTC probe could provide ammunition to government investigators looking to file antitrust lawsuits against the trolls, as well as assist Congress.

Among targets of the likely FTC investigation: both shell companies that simply flood technology firms warning of patent infringement and patent trolls that purchase huge portfolios that then are wielded for profit.

According to today’s report, companies will be asked whether there is any collusion among patent trolls, a question that could open them to antitrust action.

The subject of patents is a hot topic in Silicon Valley. A firm’s patent portfolio could be seen both as an attractive property by potential suitors as well as a powerful weapon in court.

Nortel’s many patents drew the attention of Apple, among other technology giants. Apple also used its considerable library of patents to attack rival Samsung.

The most recent example of the power of patents and how valuable experts in the field are to patent trolls, Apple’s patent chief – who first alerted Steve Jobs and Tim Cook to Samsung’s alleged infringement – this week joined Technicolor, a French patent troll.