Alleged Patent Troll Targeted By Vermont Attorney General

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Patent Troll image 09-2013Previously, we posted about Governor Peter Shumlin signing into law Vermont’s first-in-the-nation (and so far only-in-the-nation) patent troll legislation helping Vermont businesses protect themselves from bad faith patent infringement claims. 9 V.S.A. §§4195-4199 (effective July 1, 2013). In the meantime, the Vermont Attorney General is pursuing patent troll claims against MPHJ Technology Investments, LLC under pre-existing Vermont consumer protection law while Nebraska investigates and Minnesota settles patent litigation against the same company.

MPHJ stands accused of a nationwide program of sending hundreds or thousands of threatening letters to businesses accusing them of using technology, without a license, under patents acquired by MPHJ — classic patent troll behavior. Specifically, these “cease and desist” letters assert that by using office scanners, without a license to do so from MPHJ, the businesses are infringing MPHJ’s patents. More specifically, and ominously, in these letters MPHJ demands that the businesses pay MPHJ a licensing fee based on the number of employees in the businesses, and tells them that a patent infringement lawsuit against them is imminent if they don’t pay the fees. Several commentators have written about this “patent troll” behavior by MPHJ:

The Vermont lawsuit against MPHJ, filed in May, 2013, was the first state patent litigation case against that company for patent troll behavior. In the lawsuit, the Vermont Attorney General alleges that MPHJ has engaged in unfair and deceptive acts in violation of Vermont consumer protection law by sending letters to many small businesses and non-profit organizations in Vermont: (i) accusing them of infringing on MPHJ’s patents by scanning documents into email attachments; (ii) demanding that they pay MPHJ a licensing fee; (iii) threatening patent litigation if the businesses do not pay the licensing fees; but (iv) without ever intending to actually sue if the businesses do not pay. In other words, the Vermont case accuses MPHJ of engaging in a scheme to extort money out of businesses by frightening them with the false threat of expensive patent litigation. Here’s a copy of the legal complaint filed by the Vermont AG.

Meanwhile, the Nebraska and Minnesota Attorney General’s offices have gone after MPHJ as well. In July, the Nebraska Attorney General indicated that it is investigating MPHJ and issued a cease and desist letter to MPHJ alleging that it was engaging in false and deceptive conduct in Nebraska, in violation of the Nebraska Consumer Protection Act, by pursuing Nebraska businesses.

The Minnesota Attorney General’s office just announced that, after investigation, it has reached a settlement with MPHJ whereby MPHJ will no longer be allowed to send out “cease and desist” letters in that state. According to a press release issued by the Attorney General’s office, MPHJ was engaging in the same kind of behavior in Minnesota that is the subject of the Vermont Attorney General’s lawsuit. The Minnesota Attorney General began investigating after receiving complaints from Minnesota small businesses that had been targeted by MPHJ.

For an excellent article on the campaign against patent trolls, and Vermont’s role in it, see “Anti-Patent Troll Campaign Hits Vermont”.

As for MPHJ, the Vermont patent litigation lawsuit against it is still pending, and the parties are currently fighting over whether the case should be in state or federal court. The merits of the case have not yet been addressed.

We will keep you posted on further developments concerning the Vermont lawsuit and other issues involving MPHJ, as well as any activity under Vermont’s new patent troll law.

 

 

Topics:  Abuse of Process, Bad Faith, Patent Infringement, Patent Trolls, Patents

Published In: Business Torts Updates, General Business Updates, Consumer Protection Updates, Intellectual Property Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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