The Federal Trade Commission announced today a proposal to target about 25 patent assertion entities (“PAEs”) with a series of inquiries aimed at forming a better understanding of the entities’ impact on innovation and competition.

After a public comment period, the commission will seek clearance to compel answers from the entities with the hope of answering the following:

  • How do PAEs organize their corporate legal structure, including parent and subsidiary entities?
  • What types of patents do PAEs hold, and how do they organize their holdings?
  • How do PAEs acquire patents, and how do they compensate prior patent owners?
  • How do PAEs engage in assertion activity (i.e. demand, litigation, and licensing behavior)?
  • What does assertion activity cost PAEs?
  • What do PAEs earn through assertion activity?

“Patents are key to innovation and competition, so it’s important for us to get a better understanding of how PAEs operate,” said FTC Chairwoman Edith Ramirez. “What we learn will support informed policy decisions.”

PAEs, colloquially known as patent trolls, purchase patent rights and then assert them against others who already practicing the allegedly patented technologies—essentially demanding a toll for those who wish to continue operating.