The Other Shoe Dropped
In the world of government bureaucracy one of the last steps before an agency can mount a data collection effort from the public is to get Office of Management and Budget approval under the Paperwork Reduction Act to conduct a survey. On August 8th, the Federal Trade Commission received approval from OMB to move forward with the Patent Assertion Entity Study.
According to the OMB approval FTC can seek 40 responses - 25 PAEs and 15 manufacturing firms and non-practicing entities in the wireless communications industry as was outlined in its Federal Register Notices. The OMB document notes that the FTC will spend 29,600 hours or the equivalent of 14.5 people working on the study for the next year (assuming the one year timeline contemplated by the study is actually met.) Given the scope of the data the FTC seeks, this is likely to be a low estimate of the level of effort to collect, organize, analyze, and report on the survey. OMB has given the FTC until August 31, 2017 to complete the work.There's an interesting catch here. The Commission believes a detailed study will enhance the quality of the policy debate surrounding PAE activity but OMB added the following Terms of Clearance,
Where possible, the Federal Trade Commission should note the limitations of the studies, and in particular note where and why the results of the collection may not be generalizable in any final reports, recommendations, and/or presentations that the Commission produces based on the studies.
The FTC can collect the data but can't use the information to make overly broad statements on the nature of the business models employed by Patent Assertion Entities beyond the scope of the survey. How far it can go beyond that to make broad statements of the nature of the patent monetization remains to be seen. Our prognostication is that the FTC will quickly find that PAE structures are largely bespoke ventures and investment vehicles driven by the specific business objectives of the parties. Like those who have studied patent assertion entities or its cohorts patent monetization entities and non-practicing entities, a single list of cohesive findings will prove allusive.
Be sure to read the most recent version of the questions the FTC will be asking. The data collection and survey questions are expansive in their breadth and complexity. The FTC estimated the labor costs per company in a range between $68,750 (275 hours × $250/hour) and $211,250 (845 hours × $250/hour). Please tell me where I can find a good patent attorney who only charges $250/hour. This will require the talents of some of the best people in the patent world to pull all this stuff together in a coherent form.
This study may single handedly slow down patent litigation because the top 25 PAE organizations and another 15 firms engaged in making products and conducting R&D in the wireless business will be busy negotiating with the FTC, assembling documents and data, asserting their rights to keep their business models private and their concern about the FTC's inadvertent release of such sensitive information, requests for clarity on the cybersecurity protocols around this sensitive information, wordsmithing their responses and on and on. The list of patents owned by 40 companies in the wireless space will be ENORMOUS. And if the FTC isn't careful to make sure the data comes in in an electronic format, there will be very large trucks clogging up the streets of Washington unloading the data in lots of boxes of recycled dead trees. Now it's going to get interesting.