Earlier this week I took part in a workshop in Washington, DC jointly hosted by the Federal Trade Commission (FTC) and Department of Justice (DOJ). The intent of the workshop was “to explore the impact of patent assertion entity (PAE) activities on innovation and competition and the implications for antitrust enforcement and policy.” (See conference link for more information: http://www.ftc.gov/opp/workshops/pae/)
I joined academics, economists, tech companies, as well as other IP experts and IP market participants as we responded to questions regarding the role of patents in innovative markets and whether some of the emerging business practices and models – from both operating companies as well as non-operating companies – could potentially be anti-competitive. My panel was called Realities of Licensing and Litigation Practices.
I’ve attended several of these types of events over the years and have sat on panels with many of the same people. During this week’s panel, I talked about where IV fits into this new market and addressed some of the misconceptions that surround our model. The issue of transparency was one of the main topics of discussion, and I basically laid out what I discussed in last week’s blog on the topic.
My primary observation from the conference? Even though I’ve seen some press accounts trying to play up the feuding between the critics of new business models and those who support them, I actually heard more common points of interest and concern than bickering and attacking. What I heard was that all interested parties should be considering the following as they continue to study the market
· The focus should be on the behavior of market participants, not the identity of the patent holder. While we couldn’t all agree on a common definition of PAE, we could agree on the activities that might raise concerns, regardless of what you call them.
· There is a need to focus on the effects these models and activities could have on competition as a whole -- not on the possible effects on particular competitors.
· Ultimately there is not enough data on either side to establish real conclusions that would support or warrant dramatic policy actions or different rules for specific business models at this point.
We’re entering an interesting time in the latest evolution of the secondary market for patents – a market that has existed since the formation of the patent system. No one label covers any one company’s patent-related activities. In fact, this blurring of roles was illustrated by the comments of the people who were on my panel. Operating companies shared stories of being a defendant one day and a plaintiff protecting their investments the next. The same company might sell to a PAE to return a profit on their investment and then later criticize this type of market behavior when a PAE knocks on its door seeking payment.
There was no agreement on labels, which seemed appropriate. The consensus was that more data is needed. This tells me that we are likely a long way from being ready to create different rules for different business models. Clearly we need to reframe the debate away from labeling if we hope to make real progress.
The first step to solving any problem is identifying what it is. I think everyone at this workshop agreed that there are many problems with the patent system, big and small, though I don’t think any would claim to have completely identified the nature of those problems yet. Events like this workshop, along with further academic study and a continued open, honest discussion will help us further narrow down and give shape to the challenges facing the patent system, and eventually agree on reasonable and lasting solutions.
In the meantime, I’ll keep pounding the pavement to ensure IV’s point-of-view is heard. And if it’s not clear to you, just drop us a note at @AskIV.