The Seattle Times | July.06.2013
This op-ed authored by partner Jay Jurata discusses the Federal Trade Commission's recent announcement that it will open a market study into patent-assertion entities and cautions against inadvertently harming the valuable secondary market for patents. An excerpt from the op-ed is included below.
After repeated attempts to rid the Bushwood Country Club of a destructive gopher in the movie "Caddyshack," Bill Murray's character rigs the golf course with explosives.
With the gopher seemingly in his cross hairs, the commando-style groundskeeper slowly pushes down on the detonator. A flurry of explosions rip through the entire golf course to the background score of Tchaikovsky's "1812 Overture." When the smoke clears, the course is left in scorched ruin.
The gopher sneaks away unscathed.
Last week, the Federal Trade Commission (FTC) announced that it likely would open a market study into "patent-assertion entities," or PAEs. These entities buy patents but do not use them to offer products or services. Rather, they generate revenue through licensing the patents or suing alleged infringers. Therein lies the controversy.
The FTC's investigation is an important step to combat the abusive use of patents. Some companies, known as "patent trolls," exploit imperfections in the patent system to inflict harm, similar to the gopher in "Caddyshack."
But trolls are just one of several participants in a valuable secondary market for patents. It is important for the FTC to resist a "Caddyshack" solution that inadvertently eliminates the secondary market's benefits in attempting to stop the trolls.