As we noted last October, the United States Federal Trade Commission (FTC) asked for public comments on its proposed study of patent assertion entities.  The proposed study will “examine how PAEs do business and develop a better understanding of how they impact innovation and competition”.   The Commission now has come back with a revised proposal and is asking for additional comments. We expect that this revised proposal substantially will be the basis of the study.  The FTC will begin the study after it has had time to consider the additional comments, most likely in the next couple of months.

The revised proposal has several significant differences from the original proposal.

First, the revised proposal makes clear that “the study will consist of two parts. The primary focus of the study consists of a descriptive examination of the PAE business model. The second part is a narrowly focused comparative case study of PAE activity in the wireless communications sector. Consequently, the FTC separated the questions addressed to PAEs from the questions addressed to [the wireless communications] manufacturers and NPEs”.  For the most part the questions asked in each part are the same, with some additional categories of questions for the PAEs related to their acquired patent holdings.

Second, to reduce the burden on the respondents, the FTC narrowed its questions from asking for “all documents” in a category to “focus on agreements and on strategic documents provided to officers and directors or shared with persons outside the firm”.

Third, with respect to patents potentially subject to licensing commitment such as standards-setting declarations, the Commission has shifted from asking respondents to identify all such patents to asking respondents to describe their commitments.

Fourth, the FTC is working with the USPTO to directly collect publicly available patent information instead of asking respondents for that same information.

Finally, the start of the relevant period for the study has been moved up a year to the beginning of 2009.  This might reflect the fact that the study actually will begin almost a year since it was first announced.

Conversant welcomes the Commission’s study of the patent licensing business.  Much of the “information” that gets media attention is anecdotal, perhaps apocryphal, and from biased sources.  But there isn’t a lot of reliable empirical data about patent licensing.  Conversant expects the FTC study will provide a truer picture of what’s really going on in our business.