The American Antitrust Institute has joined those urging the U.S. Patent and Trademark Office to require companies transferring patents to make a public filing providing notice of the transaction. In November, the USPTO concluded that “[a]n incomplete ownership record . . . presents a significant barrier to competition and market efficiency.” The AAI concurred in that assessment, arguing that now non-practicing entities and companies with standard essential patents can avoid disclosing transactions and thereby restrain competition. Moreover, shell companies that own patents and assert them anticompetitively may shield the real parties in interest from the reputational impact that would limit the well-known parent company from using the patent in a similarly questionable way.
“A complete patent ownership record,” the AAI argued, “can help operating companies, both incumbents and potential new entrants, manage their legal risk and reduce their search cost.” For example, a public record of the real party in interest can help standard setting bodies avoid patent hold-up by enabling it to ensure that essential patents are disclosed. And this disclosure becomes increasingly vital, the AAI contended, as patents grow in importance to the international economy. In short, disclosure enables innovating companies to do their work free from the distraction of groundless and unanticipated legal challenges.
The AAI, like the USPTO, ultimately concluded that disclosure will help insure that the rewards to patents actually support innovation rather than patent trolls that hold patents solely to profit from licensing revenue.