NPE’s In FTC/DOJ Cross-Hairs

In a post on, Hogan Lovells attorneys Logan M. Breed, Joseph Krauss and J. Robert Robertson report that:

“Senior officials from both the Department of Justice Antitrust Division (DOJ) and the Federal Trade Commission (FTC) have made recent public statements that the antitrust agencies should evaluate the behavior of NPEs and their effects on consumers. FTC Chairman Jon Leibowitz recently acknowledged that practicing entities have complained to the agency about NPEs, and the FTC’s chief economist said at a recent conference that NPEs are ‘worthy of some very serious attention.’ Similarly, Joe Wayland, the head of the Antitrust Division, stated in a recent speech that NPEs raise ‘a number of competitive concerns’ and the DOJ is ‘looking at the exercise of intellectual property rights’ by NPEs.”

Translation: NPE’s – GET READY! The Feds are coming after you. How many times have we seen these types of statements before? And they always lead to investigations, hearings, and ultimately action.

Potential sources of FTC/DOJ statutory oversight? As reported:

“The DOJ and FTC have not publicly discussed how they would apply the antitrust laws to NPEs. But they may explore several possible theories. First, the transfer of patents to an NPE may raise unique issues under Clayton Act § 7, which prohibits acquisitions that may tend to substantially lessen competition in a relevant market. If NPEs use a series of patent acquisitions to create a portfolio that enables the NPE to charge a supracompetitive price for its patents for the reasons discussed above, the DOJ or FTC could possibly block or undo those transactions. Second, NPEs that force practicing entities into package license agreements for thousands of the NPE’s patents (even though the NPE may not have a colorable basis to believe that the practicing entity actually infringe many of those patents) arguably may violate the Sherman Act § 1 prohibition on anticompetitive ‘tying’ contracts. A third relevant theory may be Sherman Act § 2, which prohibits anticompetitive conduct that creates or maintains monopoly power (e.g., an NPEs likely pursuit of sham litigation, or use of deceitful or unethical conduct). Finally, the FTC may be able to use § 5 of the FTC Act, which prohibits ‘unfair methods of competition’ and ‘unfair or deceptive acts or practices,’ to enjoin certain NPE behavior.”

So, NPE’s get ready to spend lots of $ on Washington insiders, lobbyists and attorneys.

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Filed under NPE News, Patent Trolls

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