FTC, DOJ to Hold Workshop on Patent Assertion Entity Activities

The Federal Trade Commission (FTC) and Department of Justice (DOJ) announced today that they will hold a joint public workshop on December 10, 2012, to explore the impact of patent assertion entity (PAE) activities on innovation and competition and the implications for antitrust enforcement and policy.

This workshop will examine the economic and legal implications of PAE activity, as distinct from prototypical “non-practicing entity” (NPE) activity, such as developing and transferring technology.  By contrast, PAE activities often include purchasing patents from existing owners and seeking to maximize revenues by licensing the intellectual property to (or litigating against) manufacturers who are already using the patented technology.

Supporters of the PAE business model say that it facilitates the transfer of patent rights, rewards inventors and funds ongoing research and development efforts.  Critics describe adverse effects on competition and innovation, including increased costs and a lack of technology transfer, ultimately taxing consumers and industry.

The workshop will provide a forum for industry participants, academics, economists, lawyers and other interested parties to discuss the economic and legal analyses of PAE activity.  It will consist of a series of panels examining, among other topics, the legal treatment of PAE activity, economic theories concerning PAE activity and industry experiences. Panelists for the workshop will include academics, private attorneys, economists and industry representatives.

The FTC and Department of Justice are interested in receiving comments on PAE activities and will accept written submissions from the public before the workshop and until March 10, 2013.  Interested parties may submit public comments to: ATR.LPS-PAEPublicComments@usdoj.gov.  Submitted comments will be made publicly available on the Department of Justice and FTC websites.

The all-day workshop is free and open to the public. Individuals are encouraged to register by Dec. 5, 2012, for the workshop by sending an email to: ATR.LPS-PAEWorkshopRSVP@usdoj.gov. Please include “RSVP” in the subject line. Seating will be on a first-come, first-served basis.

The workshop will take place at the FTC’s satellite conference center at 601 New Jersey Ave., N.W., Washington, D.C. from 9:00 a.m. to 5:30 p.m. EST on Dec. 10, 2012. Additional participants will be added to the agenda as they are confirmed.  Updates to the agenda will be posted on the FTC and Department of Justice websites. The workshop will include the following panels, presentations and confirmed participants:  

9:00 a.m. – Opening RemarksFTC Chairman Jon Leibowitz


 9:15 a.m. – Lecture 1: Introduction to PAE Activity

Colleen Chien, Assistant Professor of Law, Santa Clara University School of  Law

9:35 a.m. – Lecture 2: Introduction to PAE Licensing

Carl Shapiro, Transamerica Professor of Business Strategy, University of  California at Berkeley, Walter A. Hass School of Business

10:05 a.m. – Q & A with Professors Chien and Shapiro

BREAK (10:20 – 10:30 a.m.)

10:30 a.m. – Panel 1: Realities of Licensing and Litigation Practices

  • Cynthia Bright, Associate General Counsel, IP Litigation and Public Policy, Hewlett-Packard
  • Scott Burt, Vice President & Chief Intellectual Property Counsel, Mosaid Technologies Inc.
  • John Desmarais, Partner, Desmarais LLP; Founder, Round Rock Research LLC
  • Peter Detkin, Founder and Vice-Chairman, Intellectual Ventures
  • Sarah Guichard, Vice President of Patent & Standards Strategy, Research In Motion (RIM)
  • Paul Melin, Chief Intellectual Property Officer, Nokia
  • Neal Rubin, Vice President Litigation, Cisco Systems Inc.
  • Alan Schoenbaum, Senior Vice President, General Counsel and Secretary, Rackspace Hosting
  • Mallun Yen, Executive Vice President, RPX Corporation

LUNCH (12:00 – 1:15 p.m.) 

1:15 p.m. – Remarks
            Stuart Graham, Chief Economist, U.S. Patent & Trademark Office


1:45 p.m. – Academic Introduction to Potential Efficiencies from PAE Activity

Panel 1: Potential Efficiencies from PAE Activity

  • Ron Epstein, CEO, Epicenter IP Group LLC
  • Anne Layne-Farrar, Vice President, Antitrust & Competition Economics Practice, Charles River Associates

Academic Introduction to Potential Harms from PAE Activity

Panel 2: Potential Harms from PAE Activity

  • Thomas Ewing, Principal Consultant, Avancept LLC
  • Robin Feldman, Professor of Law, University of California Hastings College of the Law
  • Michael Meurer, Professor of Law and Abraham and Lillian Benton Scholar, Boston University School of Law
  • David Schwartz, Associate Professor of Law, Illinois Institute of Technology Chicago-Kent College of Law

Panel 3:  Industry Reaction

BREAK (3:45 – 4:00 p.m.)


4:00 p.m. – Academic Introduction 

Phillip Malone, Clinical Professor of Law, Harvard Law School; Clinical Co-Director and Senior Fellow, Berkman Center for Internet & Society, Harvard Law School

4:20 p.m. – Panel Discussion

  • Logan Breed, Partner, Hogan Lovells
  • Susan Creighton, Partner, Wilson, Sonsini, Goodrich & Rosati PC
  • Hanno Kaiser, Partner, Latham & Watkins LLP
  • Hill Wellford III, Partner, Bingham McCutchen LLP

5:00 p.m. – Q & A

5:20 p.m. – Closing Remarks: Acting Assistant Attorney General for the Antitrust DivisionRenata B. Hesse

Reasonable accommodations for people with disabilities are available upon request. Requests should be submitted via email to skonstandt@ftc.gov or by calling Samantha Konstandt at 202-326-3348. Requests should be made in advance. Please include a detailed description of the accommodation needed and provide contact information.


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Join the Discussion

14 comments so far.

  • [Avatar for Stan E. Delo]
    Stan E. Delo
    November 21, 2012 09:07 pm


    Oops! Thanks for reminding me. I don’t want to cause any confusion for others that might not know the difference.


  • [Avatar for American Cowboy]
    American Cowboy
    November 21, 2012 10:38 am

    Stan, I think you are confusing the FTC with the ITC. The latter is the outfit that you go to for exclusion orders against the import of infringing goods.

  • [Avatar for Stan E. Delo]
    Stan E. Delo
    November 20, 2012 09:46 pm


    Usually a single post here is worth about 3 comments posted to various other places. Gene has a remarkable ability to attract attention to the real issues in question, at some of the highest levels. For me in particular, it is greatly appreciated.


  • [Avatar for Stan E. Delo]
    Stan E. Delo
    November 20, 2012 09:25 pm

    Not a bad idea Steve M-

    Since the FTC seems to be so biased, it might take some diligence to convince them to at least keep their minds open to the possibilities. Somewhat surprising, since they are supposed to be my last line of defense against infringing products being imported into the US.

    There are several very clever folks present here, so I expect that this will not pass without some active protest. The FTC should not be allowed to modify what Congress has instructed them to do. It is probably one, or maybe two folks there at the FTC that have promoted this trend. Perhaps some higher oversight might be in order.


  • [Avatar for Steve M]
    Steve M
    November 20, 2012 09:01 pm

    The anti-patent / anti-copyright / anti intellectual property FTC and DOJ have no business sticking their collective, biased noses under this tent. This is far outside their scope of duties and responsibilities; which should instead be properly directed to and spent going after the 1,000’s of bad guys hurting fellow Americans at this very moment.

    FTC and DOG; where were you when Bernie Madoff and his minions were ripping off thousands and thousands of people of millions and millions of dollars . . . for over 20 years?

    That’s right; nowhere.

    Where were you from the years 2000 – 2007 while home loan lenders and Wall Street crooks were lying, cheating, and stealing their way to untold billions in elicit gains . . . sening the US and most of the Western World into the worst economic calamity since the Great Depression?

    A Great Recession that the World has still not climbed itself out of.

    That’s right; nowhere.

    What other Ponzi schemes, frauds, and ripoffs are operating right now that you should be putting a stop to . . . instead of trying to weaken and let others steal the creations of hard-working American inventors?

    (I hope you folks above share your excellent, very lucid points with the FTC / DOJ.)

  • [Avatar for Stan E. Delo]
    Stan E. Delo
    November 20, 2012 07:18 pm

    AC and JM-

    I am also a bit mystified why they and Congress are so quick to reduce the value of patents, in favor of those that have already made it into industry. All the whining about all those evil NPE’s and Patent Trolls is just that, and little else. The litigation rate is less than 1% of all patents, and somehow we have a huge problem? I think not.

    During his testimony before the House during the 2009 effort at patent reform, Dean Kamen was saying almost exactly the same thing that AC is. Near the end of his testimony, he said very passionately that the Only thing a start-up company or independent inventor had going for them was a valid Patent, and little else. If you devalue the patents my making them easier to get around or invalidate, you are seriously damaging the possible creative output of the smaller entities, with potentially a huge effect upon the US economy.

    It might take a decade or so for it to *trickle down* and even be very noticeable, but by then the various Senators and Representatives will most likely have retired from office, and it will probably be too late to turn the ship around in time to help the economy recover any time soon. Just all the uncertainty over the last 5 years or so has had a pretty large dampening effect, which is only just now being recognized.


  • [Avatar for swpats]
    November 20, 2012 05:15 pm

    What this comes down to is picking who to give monopoly to:
    1) the innovators by granting them the patents
    2) the large companies by allowing them to copy others innovations

    The 1st allows entrepreneurs control over their monopolies – whether to build products, or to eventually sell their patents to the NPE’s and PAE’s (and possibly move on to continue innovating). While the 2nd takes from the 1st until there is nobody left to copy from.

  • [Avatar for Gene Quinn]
    Gene Quinn
    November 20, 2012 04:41 pm

    I have never understood how it can be an antitrust violation to exercise rights given. The only time there should be an antitrust issue in the patent world is when there is patent misuse of one kind or another. The legitimate exercise of rights granted simply cannot be a violation. That would mean that the antitrust laws and patent laws, both enacted by Congress and continually revised, would be in irreconcilable conflict. It is absurd to think a court, any court, even the Supreme Court, would ever come to such a ridiculous conclusion.

  • [Avatar for JM]
    November 20, 2012 03:47 pm

    Also, to add, the PAEs add value in the case of orphaned patents in which the patents at issue are bought up as part of bankrupcy of a company, usually of startups that flame out. Or in the case of giant companies such as kodak would entail thousands of patents which are still in force. The maintenance fees are every 4 years up to 11.5 years which still leaves some years of enforceability until public domain. In fast moving tech sectors, this is a problem. In the case of liquidated companies, the patents are usually sold off to the highest bidder. In the case no one gets them (if PAEs didn’t exist) , there is no one to go to to get a license from. Usually the receivership or trustee is not in the business of licensing or has other priorities, so usually wants to sell the patents off (where the PAEs come in). If all these portfolios were in limbo, then it would stop a lot of progress as a smart company would not want to infringe the patent but has no way to license it either. This is sort of the case when a copyright becomes orphaned in which the author can’t be contacted or is dead but the copyright is still in force. From a financial point of view, a PAE could be looked as an Asset (patents) Backed Security in which the risk is pooled and hedged across a variety of patents. Most individual patents aren’t worth much, but when you put them together, they are worth more than the sum of the parts. So when a PAE is buying up these patents, they are pretty much like a hedge fund making small bets, many of which don’t pay off, and then a few that pay big. Same as the venture capital model and pharmaceutical model.

  • [Avatar for American Cowboy]
    American Cowboy
    November 20, 2012 09:58 am

    The notion that PAE’s violate the antitrust laws is megagoofy. The Cisco’s of this world are much closer to being monopolists than the failed start-ups whose patents are absorbed by PAE’s or the PAE’s themselves. RIM, at the time it was sued by NTP, was a monopoly — that lawsuit weakened RIM enough to restore competition to the smartphone industry — clearly pro-competitive.

    The anti-NPE/PAE crowd are the same folks who tell startups and individual inventors to go pound sand. The only tools the little guy has to compete with these moneyed power-brokers are patents, and the anti-NPE/PAE effort is their way of killing them off altogether.

    JM makes an interesting point. Aren’t NPE/PAE’s essentially doing in patents what ASCAP does for copyrights?

  • [Avatar for JM]
    November 20, 2012 09:40 am

    What people seem to be missing in the argument for PAEs is the value-add that they bring to the table of the patent ecosystem. The liquidity for inventors argument I have seen in articles, but I have not seen a second argument that can illuminate the value-added that PAEs bring. As we all know many products especially complex high tech products can embody 10s if not 100s of patents owned by a multiple of organizations. The value the PAEs bring is in the ability for a product manufacturing company to negotiate and license from one or a handful of PAEs vs. having to negotiate and license from 10s or 100s of individual inventors and patentee organizations. Negotiating and coming to a deal takes time and resources. Thus much time and resources are saved by licensing from PAEs vs. individual licenses. That is a value-add in addition to the liquidity they afford patentees who would otherwise couldn’t monetize their property. Maybe an example might help. I can go to a PAE and license 10 inventions (probably even at a “bulk” rate and negotiate and close with that one entity, thus saving time and getting my product to market faster beating competition there(First Mover Advantage=also valuable). Or I can try to get licenses from 10 entities and get bogged down just getting freedom to operate while competitors get to market first. Which seems to be the better way to go?

  • [Avatar for EG]
    November 20, 2012 08:25 am


    They should call this seminar “How to Lynch the PAEs.” The Antitrust Division of the DOJ and the FTC are notoriously anti-patent and have been that way ever since I’ve been in practice (now over 35 years).

  • [Avatar for Jodi]
    November 20, 2012 01:45 am

    Someone at FTC or DOJ must have mistakenly misspelt “witch hunt” as “workshop” because clearly they already have reached their conclusions and started the fires.

    Where is the panel that presents and discusses the rampant, reckless, out of control stomping on others IP?

    Where is the panel on how this will affect the small innovators?

    The hunt has begun, small innovators are the witches that must be destroyed.

  • [Avatar for Gene Quinn]
    Gene Quinn
    November 19, 2012 06:07 pm

    Something tells me that the FTC and DOJ have already made up their minds that PAEs are bad.

    I have to be suspicious when the announcement say: “PAE activities often include purchasing patents from existing owners and seeking to maximize revenues by licensing the intellectual property to (or litigating against) manufacturers who are already using the patented technology.”

    In what world is maximizing revenue a bad thing, as suggested by that comment? In what world should it be an antitrust violation or concern of the government when an owner of a patent right goes after “manufacturers who are already using the patented technology”?

    Seriously, all the issues facing the U.S. right now and this is how the FTC and DOJ are going to occupy themselves? For crying out loud they didn’t even seem to know that the IPO is having their annual PTO Day on the 10th of December. Or do you suppose that scheduling was intentional? With all those who support patents otherwise occupied?