The Federal Trade Commission (FTC), an organization that works to ensure that US markets are vigorous, efficient and free of restrictions that harm consumers, has released a report on how to promote innovation by finding the right balance of competition and patent law/policy. Although both competition in markets and patent protection for inventors can be beneficial in fostering innovation, the report states that each domain requires a policy properly balanced with the other for such innovation to occur. The report stems from hearings convened by the FTC and the Department of Justice (DOJ), and makes recommendations for the patent system. A second report by the FTC and the Antitrust Division of the DOJ will make similar recommendations for antitrust law.

Among the ten recommendations, the FTC proposes legislative and regulatory changes to improve patent quality. Patents of questionable validity can slow down innovation and raise costs to consumers. The report also recommends that Congress should limit the award of treble damages for wilful patent infringement. Some hearings participants explained that they do not read their competitors' patents because of concern that learning about others' innovations will expose them to treble damages infringement liability. Failure to read competitors' patents, however, can harm innovation and competition. The FTC's recommended legislative change would allow firms to read patents to learn about new innovations and to survey the patent landscape to assess potential infringement issues, yet would retain a viable wilfulness doctrine that protects both wronged patentees and competition. The FTC also outlines in the report several steps it will take to increase communication between antitrust enforcement agencies, such as the FTC and the Patent and Trademark Office.

The hearings took place in February 2002 over 24 days and involved more than 300 panellists. The antitrust agencies heard perspectives from business representatives from large and small firms, the independent inventor community, leading patent and antitrust organizations and practitioners, and scholars in economics, as well as patent and antitrust law. Business representatives were mostly from high-tech industries: pharmaceuticals, biotechnology, computer hardware and software, and the Internet.