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Notorious Patent Troll Sues Federal Trade Commission

Posted by Unknown on from the your-business-is-stupid dept.

Fnord666 writes with news that the notorious scanner patent troll MPHJ Technology caught the eye of the FTC, and decided to file a preemptive lawsuit (PDF) against the Federal government. From the article: As the debate over so-called "patent trolls" has flared up in Congress, MPHJ became the go-to example for politicians and attorneys general trying to show that patent abuse has spun out of control. ... The FTC was going to sue under Section 5 of the FTC Act, which bars deceptive trade practices. MPHJ says that the FTC is greatly overstepping its bounds. The patent-licensing behavior doesn't even amount to 'commerce' by the standards of the FTC Act, because the letters are not 'the offer of a good or sale for service,' argues MPHJ. Furthermore, MPHJ has a First Amendment right to notify companies that it believes its patents are being infringed."

11 of 102 comments (clear)

  1. No by Carewolf · · Score: 5, Insightful

    They are right. It is not commerce it is blackmail.

    1. Re:No by Anonymous Coward · · Score: 5, Interesting

      I have to agree, I hope this turns out well.

      Will it, though? If they end up taking that point all the way to the Supreme Court, what will the opposing arguments be?

      On the one hand you'd have the FTC probably arguing that these corporations exist only to prey on the market, that they use and/or abuse a system through which they purport to profit by, essentially, extorting compliance fees, all the while without ever actually creating or selling a product, which is to say, without ever actually *adding* to the system (outside of eventual taxable revenue and personal income).

      But on the other you'd have a company arguing that they have a right to *notify* a "competitor" when they believe their commercial rights have been violated -- and, strictly speaking, don't they? More importantly, *shouldn't* they? The larger issue is the system itself -- this is truly a "don't have the player, hate the game" situation. I hate patent trolls and any such equivalent entities with passion and wish they'd die a fiery death, but if there are any situations where a company has a legitimate gripe with another company "stealing" their products, then the right to send them a "cease and desist/pay us what you owe" letter should exist, right?

      So unless this results in serious reform, which I doubt (and whatever the courts' jurisdictions and power may allow them to do, I doubt even the Justices of the SCotUS would go so far/dare to throw the whole thing away), it'll be a lose-lose situation. We either get a ruling that makes it a lot harder for patent trolls to exist (while also making legitimate infringement harder to fight) or an affirmation of essential rights that would validate patent trolling.

    2. Re:No by sirlark · · Score: 5, Insightful

      The best outcome here would be to have a law introduced saying you are not allowed to rent-seek on patents (or any other IP for that matter). You may only hold a patent if you are actively using it yourself. Not a subsidiuary, or parent company. The company that holds the IP must be using it. If the patent is sold off then the buyer must actively start using it within X amount of time, or it becomes invalidated. Researching and development should buy you a couple of years so you can patent early and still take some time to market.

    3. Re:No by JeffAtl · · Score: 4, Insightful

      Maybe there should be more options than just "approved" or "rejected". There could be a weaker status than "approved" that forces the burden on the patent holder if it is ever challenged.

  2. Yeah right by gstoddart · · Score: 5, Interesting

    The patent-licensing behavior doesn't even amount to 'commerce' by the standards of the FTC Act, because the letters are not 'the offer of a good or sale for service,'

    No, they're an offer for them to pay them money to license your patent, which may or may not even apply or hold up under scrutiny.

    If your business model is holding onto patents and getting people to license them, guess what? That's commerce guys.

    I sincerely hope these guys get some form of smackdown, or charged under the RICO act or something.

    --
    Lost at C:>. Found at C.
    1. Re:Yeah right by gstoddart · · Score: 5, Interesting

      And, as a follow on to that, scan to email has been available in printers for at least 10 years now.

      The time to defend that patent was a long time ago.

      I'm of the opinion that by the time I can buy something in Staples, the patent situation isn't my problem. I bought a commercial product in good faith, and don't know or care about the myriad of patents involved.

      If you think the vendor of said product is infringing your patent, take it up with them. This 'go directly to users of the technology with a shakedown letter and a threat of a lawsuit' should bring criminal charges.

      --
      Lost at C:>. Found at C.
  3. bombastic and completely unexpected. by nimbius · · Score: 5, Funny

    this could never have been the anticipated action of a poorly regarded yet widely recognized patent troll. In other news

    toast nationwide falls jellyjam side down!
    the blinky signage never lasts long enough to navigate across the road!
    politicians found to be corrupt and unreliable champions of their constituents!
    icecream zealously consumed begets raging cranial agony!
    religious doctrine conspicuously omits reason when confronted by legitimate debate!
    im also beginning to suspect this version of windows is in fact NOT the best version ever...despite what the install screen insists.

    --
    Good people go to bed earlier.
  4. Speech act? by Vintermann · · Score: 4, Insightful

    Legal notification of infringement is an example of a speech act that does more than convey information. Like giving a marriage vow, signing a painting or entering the password to your net bank, it has a function outside conveying information (formal commitment in the first case, asserting authorship and identity in the next).

    Using free speech as an argument to defend that is idiotic. They might as well argue that they have a constitutional right to lie on their tax forms, or to their shareholders.

    --
    xkcd is not in the sudoers file. This incident will be reported.
  5. Fire! Fire" by Chrisq · · Score: 5, Insightful

    MPHJ has a First Amendment right to notify companies that it believes its patents are being infringed.

    This is the corporate equivalent of shouting "fire" in a crowded theater.You really need to be sure that you are right before shouting.

    1. Re:Fire! Fire" by camperdave · · Score: 4, Funny

      This is the corporate equivalent of shouting "fire" in a crowded theater.You really need to be sure that you are right before shouting.

      I see. You have to shout "Ready" and "Aim" first.

      --
      When our name is on the back of your car, we're behind you all the way!
  6. Links on the subject by satch89450 · · Score: 4, Informative

    The patent: http://www.google.com/patents/US7986426

    Another view: http://stop-project-paperless.com/wp-content/uploads/2012/04/Patent-US7986426.pdf

    Analysis of the patent: http://www.patentbuddy.com/Patent/7986426

    The dispute of the patent: http://www.ricoh-usa.com/news/news_release.aspx?prid=1052&alnv=pr

    Dispute filing: http://www.sutherland.com/portalresource/Ricoh_institution_decision.pdf

    Possible prior art:

    http://en.wikipedia.org/wiki/Xerox_DocuShare

    http://bitsavers.trailing-edge.com/pdf/xerox/xns/XNSG058504_XNS_Introduction.pdf (1985)