Over the past year, both the legislative and executive branches of the federal government have expressed increasing support for legislation and other measures targeting patent litigation abuse by non-practicing entities (NPEs), notwithstanding some opposition expressed by members of the federal judiciary. (See our previous alert here.) Given federal jurisdiction to hear patent suits, it makes sense that many states have stayed out of the debate. But a recent settlement agreement between the New York Attorney General and an NPE demonstrates that states can address litigation abuse by NPEs, even if less directly or expansively than Congress might. The settlement not only limits abuse by the NPE expressly subject to its terms, but also attempts to set standards for all NPEs targeting New York businesses.

On January 13, 2014, New York Attorney General Eric T. Schneiderman reached a settlement with MPHJ Technology Investments, LLC. MPHJ was widely considered one of the most abusive NPEs, having sent letters to more than a thousand small- and medium-sized New York businesses between September 2012 and May 2013, claiming that the businesses “very likely infringed” MPHJ’s patents related to scanning and emailing documents. The demand letters were sent from a hundred different subsidiary companies, making it “more difficult for targeted businesses to find information about the Company,” according to the New York Attorney General. Many letters threatened suit by attaching draft complaints alleging patent infringement, but the Attorney General noted that MPHJ has not, “to this day, filed a single patent infringement lawsuit against a New York business.”