Study Looks at Patent Trolls' Negative Effects

The FTC's 300-page report examines the effect that patent trolls — or as the agency dubs them, "patent assertion entities" — have on competition in the marketplace.

Scores of adult entertainment companies have been hit with complaints in the past few years that have cost their operators millions in legal fees.

Patent holding companies like Acacia, which took on adult operators over the use of so-called digital media transmission patents, and Patent Harbor, which sued 10 adult studios over patents that allow DVDs and Blu-ray discs to organize and skip to chapters and scenes in a menu, are prime examples of trolling on the adult entertainment industry.

In preparing the report, regulators held eight days of hearings, cosponsored a workshop with the Patent and Trademark Office and the Justice Department and received more than 50 written submissions.

“Some applicants may have incentives to draft ambiguous claims that might be viewed narrowly by the PTO and then construed broadly in litigation,” the FTC said.

The FTC suggested that the Patent Office adhere to “an indefiniteness standard that weeds out claims reasonably susceptible to multiple interpretations.”

Also, the FTC recommended establishing undisputed claim term definitions, saying that “litigants disputing claim interpretation may turn to different dictionaries to find a favorable definition.”

The FTC urged the Patent Office “to build a record that improves claim scope clarity” and to “make greater and more informative use of statements of reasons for allowance and for withdrawing indefiniteness rejections.”

Another recommendation was for legislation requiring publication of patent applications 18 months after filing, whether or not the applicant also sought patent protection abroad.

Applications under current law can be kept secret until the patent issues.

The FTC also urged judges to cap royalty damages at an amount a willing licensee would pay by reining in infringement damages by grounding calculations and injunction analysis in “economic principles that recognize competition among patented technologies.”