FTC Draws Praise, Criticism on Patent Demand Letter Settlement

The FTC deserves praise for reaching a settlement with patent assertion entity (PAE) MPHJ Technology Investments, Sen. Claire McCaskill, D-Mo., said Friday. But the settlement also highlights the need for legislation to give the commission “clear authority” to take action against PAEs, she said. The FTC’s settlement with MPHJ, announced Thursday (see 1411060044), bars the PAE from sending out deceptive pre-litigation demand letters to entities it claims have violated its patents. Application Developers Alliance President Jon Potter separately criticized the FTC’s settlement with MPHJ, saying in a statement it “doesn’t even qualify as a slap on the wrist.” The settlement is “further evidence that comprehensive patent legislation -- including demand letter provisions with teeth -- is necessary,” Potter said. McCaskill said in a news release that her Transparency in Assertion of Patents Act (S-2049) would give the FTC more authority to take action against deceptive demand letters by requiring specific information disclosures in the letters. McCaskill chairs the Senate panel on Consumer Protection. Some of the ideas included in S-2049 made it into compromise language for the Patent Transparency and Improvements Act (S-1720), but the Senate Commerce Committee has not moved to consider S-2049 on its own due to concerns about the bill’s provisions.