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First Government Lawsuit Against a Patent Troll
walterbyrd writes "Late last year, a vigorous and secretive patent troll began sending out thousands of letters to small businesses all around the country, insisting that they owed between $900 and $1,200 per worker just for using scanners. The brazen patent-trolling scheme, carried out by a company called MPHJ technologies and dozens of shell companies with six-letter names, has caught the attention of politicians. MPHJ and its principals may have gone too far. They're now the subject of a government lawsuit targeting patent trolling—the first ever such case. Vermont Attorney General William Sorrell has filed suit in his home state, saying that MPHJ is violating Vermont consumer-protection laws."
Sure, but I patented the process of suing patent trolls. Pay up.
I would say that pulling out innards from a tiny hole for coyotes to eat (a la Blue Duck) would not constitute cruel and unusual punishment.
while(1) attack(People.Sandy);
The MPHJ letters also include misstatements. First, they imply litigation was imminent, stating recipients could be sued if they don't pay within two weeks, and they include draft complaints. Still, MPHJ hasn't filed a single lawsuit, in Vermont or anywhere else, more than 130 days since Vermont businesses starting getting the letters.
Also, the shell companies each state they have an "exclusive license" letting them enforce the patents against businesses within a specific geographic area. But the Vermont complaint states that "each Shell LLC was actually assigned a combination of geographic and commercial fields that was identical to at least one other Shell LLC," and thus the shells "do not possess exclusive licenses." The letters also state that "many" or "most" businesses show an interest in purchasing licenses, which isn't true, the complaint notes.
If I got a letter with that kind of language from an entity that has a name that looks like it was spewed out by a random letter generator, I'd chuck it into the trash thinking it was a scam. Because there are TONS of scams where "companies" bill for office supplies and other services that were never received with the hopes that the recipient would just pay it.
I applaud this.
Hopefully, it will catch on.
Down With Slashdot BETA!!! I've been around the corner and seen the oliphant; you can only abuse me from your perspecti
Generally the goverment doesn't decide who is and who isn't a troll. The Attorney General can only sue based on current law, and the judge getting the case can only decide based on current law. "Patent Troll" is not a legal term, and MPHJ doesn't get sued for being a patent troll, but for fraudulently representing what they are selling (licenses to patents they claim to have exclusive rights on, which they don't have, for instance).
Sure, but I patented the process of suing patent trolls. Pay up.
Why? That's a little cynic/pedantic if you ask me.
See, this sets a state-level precedent for individual states to go after trolls. It is also easier to initiate as opposed to the Feds initiating it and the trolls cooking some stupid shit like the Feds lacking jurisdiction (arguing that it is a states' right manner, hard to argue, but in our systems of laws you can keep throwing shit against the wall till something hopefully sticks.)
It's great to hear that these patent trolls are being held to account, but it looks like it is being done under consumer protection laws. Yet the real problem isn't consumer protection. The real problem isn't even patents. The problem is an abuse of the legal system that has the potential to undermine the legal system, particularly in the public mind since they used the threat of legal action. (It would undermine the legal system in practice if they actually followed through with those threats.)
I wouldn't be surprised if the troll wasn't someone expecting to get money out of the practice, but rather some person or company sick of the flaws in the patent system, how easy it is to abuse patents, and how hard it is to get the government to take action on fixing it. Maybe someone just wanted to draw attention to the issue to have patent law locked down a little better to prevent such activities. I imagine someone writing all these letters, chanting all the while, "Stop letting me do this!"
For a lawyer to cook up this operating scheme strongly suggests that what he is doing is technically legal in the sense that it is likely within the letter of the law.
If you look at Prendalaw, it more suggest that the lawyer thought he could get away with it. They often can. Sometimes they can't.
Even more so, don't let them directly sue consumers.
If I can walk into Wal Mart and buy a product, and you think that product infringes on your patent, you can sue the company who made it, but the consumer can't be sued.
This is a case of people being sued for using scanners -- technology we've had ready consumer access to for quite a long time.
Consumers should be indemnified from such things -- they didn't infringe on your patent, they probably have no idea what you're talking about. By the time you can walk into a retail store and buy a product it should be too damned late to sue consumers.
This is just shaking down people who are using stuff that has been readily available since the 90s, and which you can buy damned near anywhere -- what's a scanner cost these days? An all in one printer is what, $50?
If they haven't been filing patent lawsuits by now, they've essentially given up any rights to be suing anybody, let alone end users of technology which an be picked up pretty much anywhere.
Lost at C:>. Found at C.
Generally the goverment doesn't decide who is and who isn't a troll. The Attorney General can only sue based on current law, and the judge getting the case can only decide based on current law. "Patent Troll" is not a legal term, and MPHJ doesn't get sued for being a patent troll, but for fraudulently representing what they are selling (licenses to patents they claim to have exclusive rights on, which they don't have, for instance).
According to the article, they are in trouble because they threatened to sue people for patent infringement, when they had (1) not checked whatsoever if patent infringement had been committed, and when (2) they had no intent whatsoever to take anyone to court but only were interested in settlement payments.
They would have been fine if they actually had checked that there was at least a likelihood for patent infringement, and if they then had taken people to court.
That is bizarre, your quote is from the FP and not the post you actually replied to.
I'm a good cook. I'm a fantastic eater. - Steven Brust
Assuming of course, they ever actually owned any patents, which I'm not certain they did in this case.
Lost at C:>. Found at C.
I patented that, and response to such occurrences, so pay up.
rewriting history since 2109
Just to mention something, they already had a legal term for patent trolls before the Internet or whoever came up with that term. Companies that engage in these sorts of tactics are called NPEs: non-practicing entities. They're companies that litigate without actually making anything based on the patents that they hold, and you will find that term all over the place if you start looking into various patent trolling statistics and cases.
I'm glad to see Vermont have passed the related legislation, initiated this lawsuit and hope they kill the troll. Quite frankly the legislation needs to be far stronger. If someone sues over a paten without actively marketing or producing a product with said patent then they should be considered a patent troll. Ideas are a dime a dozen. It is implementation, production, marketing and sales that bring the products to the users. The whole patent system should be simply eliminated. It was designed for a time when a much longer term was needed. Now that does not make sense with the rapid changes in technology and with the abuses of the system. Simple fix: eliminate all patents including all existing ones as well as not allowing new ones.
This is hardly a new phenomenon.
"No one ever went broke underestimating the intelligence of the American Public" -- H. L. Menken (1880-1956)
"There's just no federal laws they can really go after these fuckers for violating."
RICO
http://www.wisegeek.com/what-is-rico-law.htm#did-you-know
"Windows is like the faint smell of piss in a subway: it's there, and there's nothing you can do about it." - Charlie Br
Don't forget to use and abuse all his women - he lacks the energy for that as well.
"Windows is like the faint smell of piss in a subway: it's there, and there's nothing you can do about it." - Charlie Br
My "company" received one of these letters. I use quotation marks because it was address to our location to an old name for our company that hasn't been used in years. It is a name associated to a small business, but none of the much much larger business under which we official go these days have received such letters. They are most certainly targeting small businesses that can't afford legal consul while ignoring larger businesses who have lawyers on retainer and could easily afford to litigate.
They ask four questions in their letter to determine if you are infringing the patents
1. Do you use document scanning equipment that is network addressable.
2. Do you use MS Exchange/Outlook, Lotus Domino/Notes, or a compaable system for company email.
3. Are employee email addresses loaded into the scanner or are the addresses able to be entered.
4. Can the scanner transform the paper document into a pdf file and have it transmitted to email by pressing one button.
So their logic is that the scanner itself is not infringing (so companies like Sharp and Brother aren't liable) but the act of connecting the scanner to a network and having it send scanned documents as PDF files is infringing on a patent. That is what they believe makes the end consumer liable.
Captcha: certify
Depends. What you have described suggests a case of correct application of patents, and I'm assuming that your example patents are valid (things that really are patentable).
While the troll act like a mobster, claiming to have patents on things unpatentable, obvious or clear cases of prior art. It relies on the fact that the U.S. courts have the ridiculous detail you have to pay dearly to defend himself from false accusations, and that therefore it would be cheaper to pay the troll demands than defend themselves in court.
PS: I think is a better idea just do not go in the "lawyers game", simply blow off the troll head.
Religion: The greatest weapon of mass destruction of all time
Well, then they can sue the companies who made the technology for scanners which integrate with your email system.
It's not like those customers went out and built that functionality themselves and in the process infringed on a patent, they used a feature implemented by the company who sold it to them. To the company who uses it, it's a black-box.
So either the scanner companies are liable for producing an infringing product, or the companies who make the email systems are (which would be insane), or this is bullshit. I'm voting for the latter.
This is a shake down for after-the-fact licensing of features provided to you by someone else.
Lost at C:>. Found at C.
What a ripoff.. I wouldn't pay those guys a penny over $699.
RICO can only be used if they can prove you also committed another crime. Which means somebody has to convict these guys of something before ANY conspiracy charges stick, much less RICO which only applies to certain crimes.
None of those crimes seem to be relevant to Vermont's lawsuit.
Company come along in various guises through various subsidiary and makes vague patent claims against companies further down the chain demanding money.
How is it any different from the patent fraud Microsoft has been perpetrating against Android?
One small problem, dear AC: To be fair, Microsoft actually has filed suits based on their patents, against specific companies, who in turn were proven to be using whatever technology is being contested (not sure how many of those suits actually made it to a verdict, though, since most settled either before or during trial).
While yes, most (IMHO) of Microsoft's patents and claims thereof are either crap or based on crap concepts, they're still legal.
Quo usque tandem abutere, Nimbus, patientia nostra?
Wouldn't help.
Under eminent domain rules you have to pay at least the fair market value of the thing you seize. Frequently you pay double or triple.
If these patents are valid, and do what the trolls say they do, they are worth a shit-load of cash. We're talking hundreds of millions, minimum.
If trolling is rewarded with a nine-figure check from Barack Obama, an awful lot of people are gonna start trolling.
I will just assume your reply went to the wrong post as well.
I'm a good cook. I'm a fantastic eater. - Steven Brust
MS has used nearly identical tactics, but for copyright enforcement rather than patent enforcement.
My mom used to co-own a small, 3 person artists studio/gallery and received a very threatening letter from MS, saying that they were going to come into her studio and audit all of her computers for unlicensed software. If any was found they'd receive stiff penalties or potentially a lawsuit. The letter asked her to provide receipts and serial numbers for all of the software on her computers, and if she couldn't provide them, re-purchase them before the audit occurred.
She was really freaked out about this, thinking that they actually had the right to come into her studio and look around! Obviously, I explained to her that she could just ignore the letter, but I imagine /many/ people simply paid up due to the threat.
What, you mean the same feds who granted these patents in the first place?
Common mistake. There are no "same feds". The "feds" are people from all walks of life, and come with opinions that vary as much as the general population. The people who granted these patents will most certainly not be the same people who would file suit, and probably have never even heard of each other. Like most other stereotypes, this one is just wrong.
Just another day in Paradise
Extortion would be relevant. Organized extortion efforts across the nation would be very relevant. What's going on here is very much the same as a protection racket. "You pay me $100/week, and your home won't be broken into." Except, it's "You pay me $xxxx and you won't have to defend yourself in court." It's outright extortion.
"Windows is like the faint smell of piss in a subway: it's there, and there's nothing you can do about it." - Charlie Br
You provided goods / services whether directly or indirectly via that patent. Not trollish in the least.
That said, there needs to be (time) limits. We, as a society, do not need your grandchildren having a right to sue for having done nothing but being your relations.
That's a stretch.
They have this patent. That means they have the right to sue you for infringing it. That means they have the right to tell you "we will sue your ass if you don't pay us." To be extortion they'd have to threaten actual violence.
The legal options to thwart them are basically a) creative prosecutions such as this one, and b) patent reform. Since the Federal government runs patents, and the Federal government is designed in such a way that reform requires lots of people to really want it, b) is not a practical option.
It went to every post just in case.
rewriting history since 2109
Interesting thought, but in this world of "eBay" selling things sourced from China, that's sometimes hard to do.
That said, I also disagree with the notion of consumers being sued. What if I made the device with my own two hands using off-the-shelf components and some software I wrote?
They have this patent. That means they have the right to sue you for infringing it. That means they have the right to tell you "we will sue your ass if you don't pay us."
Actually, they probably don't. They're not sending out threatening letters themselves, but are using forty different shell companies to send out their threats. That's intentional obfuscation. It's the sort of thing you'd do if you didn't actually hold the rights you're claiming.
And if they do own a patent, any patent, it isn't going to be for the end use of scanners. That is (pardon the pun) patently ridiculous. Of course, that would still need to be borne out in court, and the victims would need to shell out cash to lawyers to prove it.
To be extortion they'd have to threaten actual violence.
I'm not an expert in law, but this statement seems dubious. I wonder what it would take for this to be deemed extortion.
From Wikipedia
Under United States federal law extortion can be committed with or without the use of force and with or without the use of a weapon. A key difference is that extortion always involves a written or verbal threat whereas robbery can occur without any verbal or written threat.
Neither extortion nor blackmail require a threat of a criminal act, such as violence, merely a threat used to elicit actions, money, or property from the object of the extortion. Such threats include the filing of reports (true or not) of criminal behavior to the police,
This is a threat, not including violence, used to elicit money from another party and includes the threat of filing reports (probably quite false) with... not the police, but the judiciary.
I doubt the courts will be willing to besmirch their bread-and-butter with the term "extortion", but this is extraordinarily close to what's happening.
I won't join Slashcott. OTOH, If Beta goes live, I just won't be back until it's fixed. Sorry Dice.
Common mistake. There are no "same feds". The "feds" are people from all walks of life, and come with opinions that vary as much as the general population.
Apologies in advance. I'm about to be pedantic.
Federal employees do come from all walks of life, and their beliefs do vary as widely as the general population, but not "as much as the general population". Their beliefs have a tendency to cluster. The distribution is not at all the same as the general population.
Why do their beliefs tend to cluster, because they have common factors: traits that led them to chose to apply for work in the Federal government; traits selected or filtered out during the hiring process (to varying degrees depending on the job); a shared set of interests (pay, working conditions, retirement packages); and a shared set of experiences that shape belief over time.
None of these are terribly strong factors, and there are still wild differences between different federal employees. But they simply don't "vary as much as the general population". There are distinct clusters around particular job types and organizations.
I won't join Slashcott. OTOH, If Beta goes live, I just won't be back until it's fixed. Sorry Dice.
According to the article, they are in trouble because they threatened to sue people for patent infringement, when they had (1) not checked whatsoever if patent infringement had been committed, and when (2) they had no intent whatsoever to take anyone to court but only were interested in settlement payments.
This was another one of the issues, yes.
>Even more so, don't let them directly sue consumers.
WHOA... Hold on. If you can walk into walmart and purchase product X. Then walk into Kmart and purchase product Y. Then walk into Costco and purchase product Z. Then use X, Y, and Z together against a patent, then you open yourself up for a lawsuit. Not Walmart, nor the manufacturer of product X.
That is what the patent trolls are claiming what is going on here. Buy a copier/scanner. Hook it up to a network. Copy a file and send it across the network (nevermind that isn't really what the patent is about) But that is what they claim (and nevermind that the device is performing exactly as the manufacturer designed it. The patent trolls claim it isn't. (Also ignore the fact that one of the patents was applied for just 4 short years ago)
While I believe the patent trolls are wrong, they are claiming this isn't a simple matter of buying a product and doing what that product is supposed to be doing.
A car analogy would be, you buy a car. Then take the car home, and hook some other device up to the car. (and thus breaking some random patent) Then claim "you can't sue me, I bought the car legally.