The US Federal Trade Commission wants to control the patent trolls.
On Thursday, the FTC released a report on patent assertion entities -- companies that make money by acquiring patents and then cutting licensing deals or suing accused infringers.
According to the report, dubbed Patent Assertion Entity Activity: An FTC Study, there are two types of PAEs, each using a distinctive business model. One, categorized as Portfolio PAEs, purchases patents outright. The other, called Litigation PAEs, frequently relies on revenue sharing agreements to acquire patents.
The study found that Litigation PAEs accounted for 96 percent of all patent-infringement lawsuits but generated just 20 percent of reported PAE revenue. Many Litigation PAE lawsuits were classified as nuisance litigation. The report stated that "nuisance infringement litigation...can tax judicial resources and divert attention away from productive business behavior."
Based on the report, the FTC proposes reforms to, among other things, address the imbalances in the cost of litigation for PAE plaintiffs and defendants; streamline multiple cases brought against defendants on the same theories of infringement; and provide sufficient notice of these infringement theories as courts continue to develop heightened pleading requirements for patent cases.