Startups Set the Stage for Patents at the FTC


The Federal Trade Commission held a workshop on patents on Monday, December 12, bringing together lawyers, academics, and industry experts to discuss issues surrounding patent litigation in the United States. Concern about startups drove the conversation at the workshop as the biggest losers in the increasingly litigious patent ecosystem, especially in presentations by Colleen Chien and Carl Shapiro.

Lawsuits filed by patent assertion entities (PAEs) -- companies that focus on buying patents for the purpose of litigation -- have increased 61 percent in 2011, according to Chien. Shapiro noted that large companies absorb the costs created by patent litigation, but that high costs for startups are emblematic of the potential harm to innovation created by PAE litigation.

As we’ve pointed out before, startups face steep costs when confronted with patent suits, especially compared to larger companies. Despite this fact, the discussion about patent litigation has centered on the battle over smartphone patents between companies like Apple, HTC, and Motorola.

We’re working to move startups to the center of the debate over patent litigation and patent reform. Reforms enacted last year in the America Invents Act provide some short-term fixes that can protect startups that have been sued. More steps are needed to protect entrepreneurs and innovation in the longer-term. At Engine, we encourage more discussions like the one the FTC held this week, bringing together stakeholders from across the ecosystem to learn from their expertise and experience.

Photo courtesy of Priya Deonarain