Patent Troll Receives Push Back

by BakerHostetler

Over the past eight months, thousands of businesses across the United States received the same five-page letter from "The Licensing Team" of any one of 40 shell companies affiliated with MPHJ Technology Investments, LLC:

"We are the licensing agent for certain U.S. patents listed below. We have identified your company as one that appears to be using the patented technology, and we are contacting you to initiate discussions regarding your need for a license....."

The letter claims that the recipient, through the use of standard office equipment, allegedly infringes four U.S. patents and a pending patent application, all listing Laurence C. Klein as the inventor: U.S. 7,986,426; U.S. 7,477,410; U.S. 6,771,381; U.S. 6,185,590; and U.S. Patent App. 13/182,857. Klein no longer owns the patents. The actual owner is the mysterious MPHJ, which was created and assigned the patents late last summer. Around the same time, a stable of six-letter limited liability companies were created -- among them AdzPro, EntNil, FolNer, and GosNel -- to license the patents. Perhaps not coincidentally, this restructuring took place after two abandoned attempts by the prior owner, Project Paperless LLC, to enforce the patents through litigation.

Through its "licensing agents," MPHJ asserts that the patents cover the use of scanning equipment that connects to a company's computer network and sends scanned images directly to email, a location on an internal network (e.g. using Microsoft SharePoint) or an FTP/SFTP site. The earliest of the patents claim priority from provisional patent applications filed in October 1996. Most tip the scales at around 90 pages long.

The assertions made by the MPHJ licensing entities, which claim to have the exclusive right to license the patents within certain geographical areas and fields of use, make the venture sound like a scam to a company that is not familiar with U.S. patent law. The patents, however, exist and have not yet been invalidated by a court or the U.S. Patent and Trademark Office. And, MPHJ is attempting to expand its patent protection. On March 15, 2013, MPHJ filed three additional applications that are not yet publicly available but claim the benefit of the earlier patents.

The objects of MPHJ's attention tend to be small to medium-size companies that have achieved success and recognition in their region and/or area of business. The letter admits that the licensing agent has no particular knowledge of any company's document imaging technology. In many instances, the licensing agent is sending letters to entities that no longer exist, having been folded into the operations of larger enterprises of the type MPHJ appears to be actively avoiding. The sole factual basis for the letter is MPHJ's "review of several marketplace trends and surveys" that led MPHJ "to the conclusion that an overwhelming majority of companies" use network addressable scanning equipment.

The reason why MPHJ targets these types of companies is clear. It assumes that small to medium-size businesses that have achieved recognition in their field presumably have the resources to pay some amount to license the patents. At the same time, they typically are not experienced in patent law, lack a background in the technology and/or lack the resources and motivation for what they assume will be a lengthy and costly court battle.

MPHJ's apparent fear of litigation is further evident by the steps MPHJ takes to avoid involving the scanning equipment and software manufacturers. MPHJ's opening letter includes an almost apologetic explanation for why it is not contacting the manufacturers of the scanning equipment or application software directly. This explanation relies on the legal technicality that patents claiming a computer system are infringed when the system is implemented and the direct infringer is the party responsible for implementing the system. MPHJ does not address, however, whether the scanning equipment and/or software manufacturers would be liable for indirect infringement under inducement or contributory infringement theories when customers use the equipment and software for their intended purpose and according to manufacturer instructions.

Industry watchers object to MPHJ's claim to own basic office technology that, they assert, was known in the industry prior to the earliest invention date of the patents. Those sensitive to "patent trolling" by non-practicing entities object to MPHJ's strategy for pursuing the parties least able and motivated to challenge the patents. Companies receiving letters object to feeling coerced into paying MPHJ tens of thousands of dollars simply to use a multifunction printer/scanner they already paid several hundred or several thousand dollars to purchase. The State of Vermont has taken action on behalf of its small businesses and non-profit organizations that have received solicitations from MPHJ. The Vermont Attorney General filed suit against MPHJ on May 8, 2013, alleging violations of the Vermont Consumer Protection Act. A few weeks later, on May 22, 2013, Vermont enacted a new provision making bad faith assertions of patent infringement a violation of its Consumer Protection Act (9 V.S.A. §4195 et seq.).

Setting the ethical debate over MPHJ's licensing strategy aside, what should a company that receives a letter from one of the MPHJ licensing entities do? Companies that ignore the initial letter from MPHJ likely will receive follow-up letters from a Texas law firm, Farney Daniels, that threaten litigation and even include signed, but not yet filed, complaints alleging patent infringement. Also, under current law, a company that acts, despite an objectively high likelihood that its actions constitute infringement of a valid patent and knows or should know of the objectively high risk of infringement, could be found liable for willful infringement and subject to enhanced damages. Addressing these risks does not require conceding to MPHJ's misleading demands. While each company's situation will be different, defenses such as invalidity, unenforceability and non-infringing alternatives are common to all. An attorney experienced in patent law can help answer questions, identify defenses and formulate an effective response strategy that mitigates the company's risk. Having dealt with these patents, we are prepared to apply that experience to find an efficient solution for our clients.

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.

© BakerHostetler | Attorney Advertising

Written by:


BakerHostetler on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
Privacy Policy (Updated: October 8, 2015):

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.


JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at:

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.