FTC Not Updating Patent-Related Antitrust Analysis

Access practice tools, as well as industry leading news, customizable alerts, dockets, and primary content, including a comprehensive collection of case law, dockets, and regulations. Leverage...

By Tony Dutra

There is no evidence to suggest that the Federal Trade Commission should make a “radical shift” in how it conducts antitrust analysis of deals involving patent law issues, Acting Chairman Maureen K. Olhausen said April 6.

In particular, the courts are already addressing many problems with patent assertion entities, she told the Intellectual Property Law section of the American Bar Association Annual Intellectual Property Law Conference. Patent assertion entities don’t make a product, but make money from their patents through licensing and litigation.

Olhausen said that complaints about PAEs overwhelming involve software-related patents, and the U.S. Supreme Court’s 2014 decision that resulted in the cancellation of hundreds of those patents as ineligible for patenting has led to a significant decrease in the likelihood patentees will succeed in court. Alice Corp. Pty Ltd. v. CLS Bank Int’l, 134 S. Ct. 2347, 110 U.S.P.Q.2d 1976 (2014).

Olhausen was responding to comments that the commission needs to adapt its approach, particularly when PAEs are involved in a case. She also addressed charges that PAEs can engage in anti-competitive behavior by acquiring “standard-essential patents.”

Courts Solving Most Problems

Olhausen, the keynote speaker at the conference luncheon, said that two other court developments, in addition to Alice, lessened the FTC’s concerns.

The Supreme Court also forced lower courts, beginning in late 2015, to require more detailed infringement pleading and to limit expensive discovery in most cases, Olhausen said. Those changes addressed the complaint of the one-sidedness of patent infringement cases involving PAE where alleged infringers bore the most significant costs.

She further expected the high court to resolve “forum shopping” problems—PAEs often sue in the allegedly patentee-friendly U.S. District Court for the Eastern District of Texas—in its upcoming decision in TC Heartland LLC v. Kraft Foods Grp. Brands LLC, No. 16-341 (U.S., argued 3/27/17). The ruling, due before the end of June, could force patent suit filing closer to defendants’ home courts.

PAEs Have No Taste for Standard-Essential Patents

Olhausen also rejected the idea that PAEs’ control over standard-essential patents presented a growing concern. When a standard—such as how to conduct wireless communications—is set, some patentees claim that any party that implements the standard would have to infringe their patents.

However, citing the FTC’s report— Patent Assertion Entity Activity: An FTC Study—published in October, Olhausen contended that SEPs “are not a draw for PAEs,” because of standard-setting organizations’ onerous requirements that patentees make SEPs available on fair, reasonable and nondiscriminatory terms to all comers.

The report made a few recommendations as “informed guidance” to legislators in Congress who may want to address “nuisance litigation” by certain PAEs, Olhausen said. But there was no call for the FTC itself to address that concern, she said.

To contact the reporter on this story: Tony Dutra in Washington at adutra@bna.com

To contact the editor responsible for this story: Mike Wilczek at mwilczek@bna.com

For More Information

The FTC's study is at http://src.bna.com/jcn.

Copyright © 2017 The Bureau of National Affairs, Inc. All Rights Reserved.

Request Intellectual Property on Bloomberg Law