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Reports from inside yesterday's FTC/DoJ conference on patent assertion entities

The FTC/DoJ hearing on the affect patent assertion entities (PAEs, or NPEs to you and me) might have on the US economy took place yesterday. IAM was not there, but I have asked a few people who were in attendance (including some speakers) to provide feedback on what was said. A couple of people have so far come back to me.

Here's a brief comment from Intellectual Ventures co-founder and vice chairman, Peter Detkin:

One consistent theme was that regulators should focus on the behavior of patent-holders, not their identity. There were lots of call for more data, as what is currently available is not seen as enough; and some discussion of the transparency issue, but more focus on operating companies working deals with PAEs in possibly anti-competitive ways.

And a longer report from Tom Ewing of Avancept:

The possible anticompetitive impacts of patent assertion entities (PAEs) were discussed Monday during a day-long panel co-hosted by the US Dept. of Justice and the Federal Trade Commission. 

FTC chairman Jon Leibowitz opened the panel with a lecture that described PAEs as having certain “unsavory” aspects from a competition viewpoint.  Professors Colleen Chien and Carl Shapiro spoke next with Prof. Chien generally being fairly opposed to PAE business models and practices with Shapiro somewhat more skeptical of the harms, at one point describing PAEs as intellectual property “trucking” companies.

Subsequent panel sessions balanced ostensibly pro-PAE speakers with ostensibly anti-PAE speakers.  An industry panel that included Cynthia Bright of Hewlett-Packard, Scott Burt of Mosaid, Peter Detkin of Intellectual Ventures, Sara Guichard of RIM, Paul Melin of Nokia, Neal Rubin of Cisco, Mary Stich of Rackspace, and Mallun Yen of RPX split along generally predictable pro/con lines.  Detkin bristled at the notion that his company was secretive in its business practices.  Guichard took a more strongly anti-PAE stance along NTP lines than one might have expected given that RIM is one of the largest owners of the Rockstar Consortium.

Burt and Melin discussed Nokia’s Microsoft-assisted sale of Core Wireless to Mosaid.  Antitrust panelists in a later session discussed at length the potential anticompetitive impacts of the Core Wireless sale with half the panelists seemingly finding the transaction anticompetitive and the other half of the panelists finding the transaction within acceptable guidelines.  

Most speakers called for changes to rules and procedures that allowed patent ownership information to remain hidden and many similarly called for more openness regarding licensing agreements. 

An overflow crowd of 200+ economists and lawyers attended the event which was also broadcast over a weblink. 

It strikes me as noteworthy that FTC chairman Jon Leibowitz spoke of "unsavory" aspects to the PAE business model. We seem to be moving inexorably towards some kind of investigation of their activities by the antitrust authorities - though that is easier said than done given the the multiplicity of PAE/NPE business models and ownership structures there are out there (perhaps, as per Detkin's comments and as we have stated previously, it is the privateer model that is most likely to come under the microscope). Talking of which, Tom's observation that Sara Guichard of RIM took a pretty anti-NPE line sums up the ambiguity/hypocrisy of many operating companies' approach to the issue. As Tom notes, RIM is a shareholder in NPE Rockstar. 

As I say, I have asked for comments form other people as well. If these arrive, I will add them to this blog, so revisit if this is a subject that interests you.


Joff Wild
IAM Magazine
11 December 2012

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Licensing, IP politics, IP litigation, Patents, IP business

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