WASHINGTON Oct 6 U.S. regulators on Thursday
called for several reforms to how courts handle patent
litigation in an effort to curb what some companies call
nuisance lawsuits meant to extract settlements that may not be
The Federal Trade Commission issued a study in response to
complaints from high-tech companies and others that patent
assertion entities, or PAEs, sometimes called "patent trolls"
allegedly file frivolous lawsuits in hopes of winning a
"Nuisance infringement litigation ... can tax judicial
resources and divert attention away from productive business
behavior," the agency said.
As part of the study, the FTC examined business practices of
more than 300 PAEs and their affiliates, from 2009 to 2014.
According to the study, the PAEs typically acquired the
patents from third parties and used them to sue potential
licensees, and would then settle shortly afterward.
The license royalties were usually below $300,000, which is
in line with early-stage costs of defending a patent case in
federal court, the study said, suggesting that PAE behavior is
"consistent with nuisance litigation."
The FTC recommended that courts update rules and case
management practices to reduce the burden of discovery, a
pre-trial exchange of information between a plaintiff and
defendant. The cost of gathering that paperwork is often high
enough that smaller plaintiffs will opt to settle out of court.
The agency also urged courts to pause cases against users of
a technology if a PAE also sued the manufacturer on the grounds
that the manufacturer is better able to defend against the
The problem of nuisance patent litigation has been also
attacked from a number of different angles. In some cases,
companies fight back and win invalidation of the plaintiff's
patents. Additionally, the U.S. Patent and Trademark Office has
set up a board to consider invalidating certain patents.
Advocates of strong patent rights criticized the study as
too small, and its questions too open-ended, to explain how PAEs
might affect innovation or competition.
"Due to methodological flaws in this study, it does little
to shed light on this important issue and provides no basis on
which to justify sweeping policy changes," said Brian Pomper,
executive director of the Innovation Alliance, whose members
include Qualcomm Inc and Dolby Laboratories Inc
(Reporting by Susan Heavey and Diane Bartz in Washington.
Additional reporting by Andrew Chung in New York; Editing by
Cynthia Osterman, Bernard Orr)