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AGs Support Federal Information-Gathering Project on “Patent Trolls”

December 17, 2013

Effort Will Protect Small Businesses from Baseless Patent Infringement Harassment

Washington, DC -The National Association of Attorneys General (NAAG) sent comments to the Federal Trade Commission (FTC) to express support for the Commission’s proposed project to collect a significant amount of data and information about Patent Assertion Entities (PAEs), also known as patent trolls. The attorneys general also suggested two specific additions to the federal information-gathering effort.

The term “patent troll” is commonly used to describe businesses that don’t invent or manufacture anything, but instead acquire patents with the aim of making money by asserting claims of patent infringement. Small businesses, retailers, and non-profit organizations have been targeted in various states with demands for licensing fees for the use of common, everyday technology such as scanners and Wi-Fi networks. The patent troll business model works because defending patent infringement lawsuits is disastrously expensive for small businesses. It has become a kind of silent extortion.

Several state attorneys general initiated innovative efforts this year to use existing unfair and deceptive trade practice laws to attack PAEs’ demand letter campaigns. The NAAG comments declare that the FTC’s proposed PAEs project will greatly assist enforcement efforts for both federal and state authorities.

The FTC request “should yield a trove of information relevant to PAEs’ practices, methods, and beliefs regarding the veracity (or lack thereof) of infringement claims, and the number and types of their target entities,” read the NAAG comments signed by 43 state and territorial attorneys general.

The NAAG comments suggest that the FTC share, to the extent permitted by law, the entirety of the response to the information request with state attorneys general. They also recommend two additions. First, the FTC should inquire about the role of legal counsel, who may play a central role in patent assertion schemes. Second, the FTC should increase the number of PAEs, manufacturing firms, and other firms to which the information request will be submitted.

“We believe the collection of such information will greatly assist enforcement efforts against PAEs where they are found to violate antitrust and unfair and deceptive trade practice laws,” conclude the NAAG comments.

A copy of the NAAG comments can be found here: http://www.naag.org/sign-on_archive.php.

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The National Association of Attorneys General (NAAG), www.naag.org, was founded in 1907 to help Attorneys General fulfil the responsibilities of their office and to assist in the delivery of high quality legal services to the states and territorial jurisdictions.

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