WASHINGTON (6/21/13)--The Federal Trade Commission said Thursday it will launch an inquiry into the business practices of "patent troll" companies that buy technology patents and then file lawsuits against software designers, product manufacturers and even financial institutions that may use processes similar to the patent.
Credit unions, banks, and check processors, for example, have been sued by companies over their remote-capture-image services by companies claiming to have a patent for that process (News Now May 30) and for Internet security technology used to provide identification authentication for mobile transactions on devices such as smartphones and tablets in the so-called "smartphone wars" (News Now July 13, 2012).
FTC Chairwoman Edith Ramirez said she would ask the commission to approve an inquiry to enable the FTC to issue subpoenas to patent-assertion entities (PAEs), often dubbed "patent trolls" (PCWorld.com June 20). PAEs accounted for more than 60% of about 4,000 patent lawsuits filed last year, said The New York Times (June 19).
The agency will monitor for possible anticompetitive lawsuits and take antitrust enforcement action against the PAEs if warranted, Ramirez said in a patent law workshop Thursday sponsored by the American Antitrust Institute and the Computer & Communications Industry Association.
Many businesses find themselves victims of nuisance lawsuits that are far cheaper to settle than litigate, Ramirez said.
Credit unions, banks and entities such as PNC Financial Services Group, Electronic Data Systems Corp., Diebold, and First Data Corp. have been among the businesses that have entered settlements with companies trolling their patents (News Now May 30). In one case, Catalyst Corporate FCU filed a preemptory lawsuit seeking a judgment it had not infringed on any process patents after it received such a demand letter from IP Navigation Group (News Now April 23, 2012, and July 13, 2012).
Last week President Barack Obama issued several executive orders directing the Patent and Trademark Office and other executive branch agencies to take action in protecting innovators "from frivolous litigation" by heightening disclosure of the names of patent owners.
The Times noted that one lawsuit threatened thousands of companies with patent infringement charges by hooking a document scanner up to a computer network and sending a scanned file by e-mail to an employee.
The FTC does not plan to single out any particular company in its investigation, but indicated it would focus on companies that are small, legal shell companies that gather patents and cite them in demand letters sent to businesses, and on large companies that snap up intellectual property rights portfolios from technology innovators such as Microsoft and Nokia.