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FTC Testifies on Legislation to Prohibit Deceptive Patent Demand Letters

Written by Federal Trade Commission
Posted: May 22, 2014 @ 5:35 pm
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The Federal Trade Commission testified on consumer protection issues involving patent demand letters, patent assertion entities (PAEs), and proposed legislation to prohibit deceptive patent demand letters.

Delivering testimony before the House Subcommittee on Commerce, Manufacturing, and Trade of the Committee on Energy and Commerce, Lois Greisman, Associate Director of the FTC’s Division of Marketing Practices at the Federal Trade Commission, provided lawmakers with comments on a draft bill regarding deceptive patent demand letters, and recognized that demand letters raise broader issues about patents and the U.S. patent system.

“The Commission shares this Subcommittee’s goal of stopping deceptive patent demand letters while respecting the rights of patent holders to assert legitimate claims, and recognizes that achieving this goal is not easy,” the testimony states.

The testimony states that the activities of PAEs and the related issue of demand letters have been a topic of increasing interest and concern. The Commission is proceeding with a proposed study of PAE behavior, which was first announced last year.

The Commission believes that the agency’s authority under Section 5 of the FTC Act can and should be brought to bear with respect to demand letters where appropriate, the testimony states. The testimony also addresses proposed legislation that would grant the FTC civil penalty authority in this area. The Commission believes such authority would have potential benefit and may deter some bad actors. The testimony also notes potential concerns about a knowledge requirement that would apply to some violations under the proposed legislation.  The testimony further notes that the Commission is pleased that the proposed legislation would supplement, rather than replace, the Commission’s existing authority under Section 5 of the FTC Act.

The Commission vote approving the testimony and its inclusion in the formal record was 5-0.

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Posted in: Federal Trade Commission, Government, IP News, IPWatchdog.com Articles, Legislation, Patent Reform, Patent Trolls, Patents

3 comments
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  1. ““The Commission shares this Subcommittee’s goal of stopping deceptive patent demand letters while respecting the rights of patent holders to assert legitimate claims, and recognizes that achieving this goal is not easy,”

    Great sound byte, but the FTC is utterly disingenuous when they say the want to “respect[] the rights of patent holders to assert legitimate claims.” They’re interested in no such thing.

  2. They should be – from several Constitutional angles.

  3. EG-

    I’m not sure I agree that the FTC isn’t interested in legitimate claims.

    First, let’s distinguish between the political folks and the hard working attorneys and staff. I think the career people at the FTC do excellent work. The political folks follow the lead of the White House.

    Second, the White House has been following a course of action akin to taking out an elephant gun to kill a fly. But now Apple and Microsoft are criticizing the anti-patent climate. Forget for a minute that they and others spent most of the last 5 to 8 years working to fan the flames on the anti-patent climate. I think some powers that be in Silicon Valley realize the anti-patent sentiment in the public and in government has gone too far.

    Third, I thought it was interesting that they admitted that this is not an easy goal. The way the White House has been talking, and the way some of those pushing reforms have been talking, it is easy. Just do this, this, that and this… presto-chango… no “patent troll problem.” Of course, up until now the “this and that” have amounted to a frontal assault on the patent system and all issued patents, perhaps lead by the anti-patent forces on the PTAB. The fact that the Senate blinked and the FTC is saying “this isn’t going to be easy,” suggests someone in DC is starting to get it.

    Perhaps I’m being overly hopeful.

    -Gene