Just like a Wendy interview, the FTC is about to get all up in the patent trolls’ business. The full list of questions can be found on the FTC site and boy do they get specific. Like, seven appendices worth of specificity, which on the official Specificity Scale is pretty much an F5. So, seriously specific.
Thankfully, they’ve posted a summary of the types of answers they’re after as well, and this is much easier to digest:
- How do PAEs organize their corporate legal structure, including parent and subsidiary entities? (Request B)
- What types of patents do PAEs hold, and how do they organize their holdings? (Request C & D)
- How do PAEs acquire patents, and how do they compensate prior patent owners? (Request E)
- How do PAEs engage in assertion activity (i.e. demand, litigation, and licensing behavior)? (Request F)
- What does assertion activity cost PAEs? (Request G); and
- What do PAEs earn through assertion activity? (Request H)
Intellectual Ventures has likely received their personalized FTC Troll Expose’ Kit and are busy
cutting and pasting their standard PR rhetoric preparing their answers. Don’t tell anyone, but what follows is an advanced copy of their reply. Remember, shhhh. You didn’t get this from me, OK?
*********** SUPER SECRET INTERNAL RESPONSE TO FTC QUESTIONS ***************
1. How do PAEs organize their corporate legal structure, including parent and subsidiary entities?
We’re a private company. We take money from investors and on occasion, actually pay them back. That’s not going so well for us right now, though. What’s a subsidiary? We don’t have any, and Lodsys certainly isn’t one of them, whatever they are. From a legal structure perspective yes, we have lawyers. Is that what you’re asking?
2. What types of patents do PAEs hold, and how do they organize their holdings?
The kind that we can extort money for, of course. My cooking lessons aren’t going to pay for themselves, you know! We organize our holdings into file folders by patent number. ?? Geez, what a stupid question.
3. How do PAEs acquire patents, and how do they compensate prior patent owners?
Well, sometimes we go through brokers. Other times, we send our henchmen to all those nifty little incubator meet ups and convince first-time inventors to let us help them file and obtain a patent for whatever they’re doing that could be even remotely similar to something that we can sue people for infringing on. As far as compensation goes, we spring for dinner at the local taco wagon after we have their signatures. Because seriously, nothing says “We value your contribution to our monolithic patent coffers” like some ground beef and beans wrapped in a week-old tortilla. Yeah, baby!
4. How do PAEs engage in assertion activity (i.e. demand, litigation, and licensing behavior)?
“Yes” to the first two, “Aggressive” to the third.
5. What does assertion activity cost PAEs?
Money. Wampum went out of style when all the beaches on the Atlantic seaboard eroded.
6. What do PAEs earn through assertion activity?
Money. While I’d like to be paid in solid gold bars, it just never seems to work out that way, you know? Besides which, we also earn a reputation that we’re not to be messed with which is actually worth way more than money. You pick on enough of the people enough of the time, and word gets around. All of a sudden, it only takes one or two meetings to get the signature you need. Holla!
*********** END OF SUPER SECRET INTERNAL RESPONSE TO FTC QUESTIONS ***************
Right now, this is all just a bad dream for the trolls, who have 60 days to send in comments about this proposal that questions their livelihood. They’ll not go down quietly, so we should all be on the lookout for complaints from all the usual suspects. From the FTC’s site:
If you want the Commission to give your comment confidential treatment, you must file it in paper form, with a request for confidential treatment, and you have to follow the procedure explained in FTC Rule 4.9(c), 16 CFR 4.9(c).6 Your comment will be kept confidential only if the FTC General Counsel grants your request in accordance with the law and the public interest.
Considering how far under the hood they’re willing to dig, I’d be surprised if any of the responses were actually kept confidential.
In a way, I’m sad to see the gov’t having to get so involved in this problem because I remain of the opinion that if we let the market ferret these guys out by doing things like tracking the demand letters they send (at That Patent Tool, come on and join in the fight!!) we can solve this issue on our own. It always worries me when law-makers set out to bring down one rogue section of an industry because the effects are almost always more far-reaching than initially thought. The “Law of Unintended Consequences”, and all that.
That said, I get a fiendish delight thinking of how much these trolls are squirming right now, just reading the list of questions.