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First Government Lawsuit Against a Patent Troll 96

Posted by samzenpus
from the when-the-man-comes-around dept.
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."
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First Government Lawsuit Against a Patent Troll

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  • Meta Troll (Score:4, Funny)

    by locster (1140121) on Thursday May 23, 2013 @08:11AM (#43801663)

    Sure, but I patented the process of suing patent trolls. Pay up.

    • by Anonymous Coward

      Hey. That was MY idea...Pay up.

    • by thaylin (555395)
      have fun. You cant sue the state unless the state lets you sue it.
      • have fun. You cant sue the state unless the state lets you sue it.

        People here in Washington State sue the state (and often win) all the time.

      • by dcw3 (649211)

        People sue states all the time. See Article 3, Section 2 of your copy of the U.S. Constitution:
        (The judicial Power shall extend to all Cases, in Law and Equity, arising under this Constitution, the Laws of the United States, and Treaties made, or which shall be made, under their Authority; to all Cases affecting Ambassadors, other public Ministers and Consuls; to all Cases of admiralty and maritime Jurisdiction; to Controversies to which the United States shall be a Party; to Controversies between two or m

  • ho hum

    wake me when the feds file suit

    • 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.)

      • That is bizarre, your quote is from the FP and not the post you actually replied to.

    • wake me when the feds file suit

      What, you mean the same feds who granted these patents in the first place?

      But that's OK, you just go back to sleep. You're too tired to use the shift key, you obviously need the rest. I'll wake you up after I've drank all your beer and emptied your wallet.

      • Don't forget to use and abuse all his women - he lacks the energy for that as well.

      • by dcw3 (649211)

        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.

        • by gd2shoe (747932)

          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 hirin

  • 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.
  • by Anonymous Coward on Thursday May 23, 2013 @08:16AM (#43801691)

    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.

    • 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.

      And the fact that these scams keep happening demonstrates that there is money in it because some people fall for it. Same with spam. So the only way to stop these scammers is to actually litigate rather than just ignoring it, throwing it away and claiming it isn't a problem.

      • by Cenan (1892902) on Thursday May 23, 2013 @09:17AM (#43802033)

        And the fact that these scams keep happening demonstrates that there is money in it because some people fall for it

        And a really low barrier of entry into the market. All it takes is a carefully worded email and a public search on people to send it to, and you're good. You don't need to worry about court fees or anything, since you plan on dropping the case before any papers are filed.

        • And a really low barrier of entry into the market. All it takes is a carefully worded email and a public search on people to send it to, and you're good. You don't need to worry about court fees or anything, since you plan on dropping the case before any papers are filed.

          It's almost as low a barrier as the stupid "executive directory" scams and the "your $domain.asia domain name has been bought up! For a small ($$$$$!) fee, we can secure it for you." emails.

          The sad part is, as a former email admin, having to tell the CEO of your employer that such an email (which he pulled out of his quarantine folder) is a scam (and then still having to provide similar examples to prove it as such) is pretty effing sad sometimes.

          • by Cenan (1892902)

            The sad part is, as a former email admin, having to tell the CEO of your employer that such an email (which he pulled out of his quarantine folder) is a scam (and then still having to provide similar examples to prove it as such) is pretty effing sad sometimes.

            Oh that is just not right. And here I thought my boss was a moron for suggesting that adding an if-then-else was too complex a solution, he would like 2 separate methods instead. I bow my head in sympathy, having been trumped - you played the ace of idiots.

      • by Kardos (1348077)

        Yet, litigating is expensive, and ignoring/throwing it away is cheap

      • by gstoddart (321705)

        So the only way to stop these scammers is to actually litigate

        Oh, it's not the only way to stop these guys ...

      • But it is not a problem to competent people. Sure, I am all for the government protecting its citizens in this manner. But someone is going to scam that money out of the people who actually fall for it; There is no saving people from themselves.

    • by Alan Dee (2856647) on Thursday May 23, 2013 @09:23AM (#43802085)
      It happens far more common then most people think. I worked at a company where the Accountant was paying bills as they come in. It was only after she left and her replacement questioned it did we realize that we'd been paying a company like that for years.
      • If you pick an A/P department that is overly-busy, ignorant-as-hell, and/or way understaffed (many of them these days are), you could make a pretty tidy profit as a scammer, if you knew how to set it up right.

      • by Solandri (704621)
        I've seen the same thing. Accountant got a bill looking like a subscription renewal to some expensive magazine. Since it as a renewal, he just paid it. Turned out nobody subscribed to the magazine, nor could remember ever receiving a copy of it.

        Another common one is an official-looking letter sent by a company whose name makes it sound like a government office. The letter says your company needs to file its annual statement of information and includes a form and an invoice for $100. The company has
    • by rgbrenner (317308)

      there's another corporate scam: sending fake compliance notices that look like they are from the state w/ an official looking seal, citing some state law, and demanding $X for compliance. I've received 3 of them over the past few years.

      If I'm willing to risk tossing a state notice in the trash, then the trolls letter has no chance.

      This guy posted an image of one on his blog:
      http://parasec.files.wordpress.com/2013/04/screen-shot-2013-04-05-at-9-23-41-am.png [wordpress.com]

  • by rts008 (812749) on Thursday May 23, 2013 @08:21AM (#43801711) Journal

    I applaud this.
    Hopefully, it will catch on.

  • by MacTO (1161105) on Thursday May 23, 2013 @08:46AM (#43801813)

    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.)

  • 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 nothing else defines what is wrong with the notion that "legal == right" this does. (Yes, I know there are things that do this better.)

    I think a very simple law should be put into place which outlaws "NPEs." That would put a dent in the operations of these low-overhead trolls. But it would serve to embolden a select few who would claim t

    • 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.

    • Re: (Score:3, Informative)

      by gstoddart (321705)

      I think a very simple law should be put into place which outlaws "NPEs." That would put a dent in the operations of these low-overhead trolls.

      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 inde

      • by gstoddart (321705)

        Assuming of course, they ever actually owned any patents, which I'm not certain they did in this case.

      • by Anonymous Coward

        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 fo

        • by gstoddart (321705)

          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.

          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 infr

      • by erroneus (253617)

        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?

      • by chrismcb (983081)

        >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) B

  • by BlueMonk (101716) <BlueMonkMN@gmail.com> on Thursday May 23, 2013 @09:01AM (#43801943) Homepage

    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!"

    • 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!"

      And, bonus! if anybody sends them money. Huh? :)

    • by gstoddart (321705) on Thursday May 23, 2013 @09:28AM (#43802125) Homepage

      I'm pretty sure this was just bullshit lawyering, not some principled stand of protest against the patent system.

      This reads much more like shady asshole lawyers than any caped crusaders. Because good guys don't send threatening legal notices to innocent bystanders and demand settlement money.

      • by rahvin112 (446269)

        There is a massive surplus of lawyers. Many can't find work as a lawyer even years after graduating.

        The sociopaths in the group are moving out and working scams created by a legal system focused towards fairness that allows it to be gamed by those who know the in and outs of making litigation as expensive as possible.

        The hope is that the actions by these sociopaths will get some small fixes applied to the system to get rid of these people.

        • There is a massive surplus of lawyers. Many can't find work as a lawyer even years after graduating.

          The sociopaths in the group are moving out and working scams created by a legal system focused towards fairness that allows it to be gamed by those who know the in and outs of making litigation as expensive as possible.

          The hope is that the actions by these sociopaths will get some small fixes applied to the system to get rid of these people.

          Definition of "a shame": A bus occupied by lawyers goes over a cliff.

          Definition of "a DAMN shame": Same bus, two empty seats.

  • by pubwvj (1045960) on Thursday May 23, 2013 @09:41AM (#43802247)

    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.

    • Re:Bravo Vermont (Score:5, Interesting)

      by LynnwoodRooster (966895) on Thursday May 23, 2013 @09:59AM (#43802423) Journal

      Here's a question for you...

      I have a patent (well, several, actually). I used this patent to make product at my own factory, and sold the product for 6 years. Then I wanted to get out of the manufacturing business, and back to my true love - engineering. I now license that patent to many other companies, and have taken action against infringement of my patent.

      Given that I no longer actively market or produce a product with my patent, am I a patent troll? I did produce at one time, and other companies produce with my patent - but I, the sole patent holder, simply market and sell licenses to my patent. Am I a patent troll?

      • by Anonymous Coward

        If you don't take action against the infringing company manufacturing the product and are suing customers then yes.

      • Re: (Score:3, Interesting)

        by Khyber (864651)

        "Given that I no longer actively market or produce a product with my patent, am I a patent troll?"

        No, because you were a truly practicing entity.

        You made the product AND the patent.

        You didn't just buy a patent so you could sue.

      • 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 the
      • By the general definition of patent troll, no.

        Patent trolls typically patent something that's obviously going to be needed in a few years, without doing any actual engineering work. Then when somebody does the engineering work they demand a cut of the profits. The technical "work" they do is about as difficult as that of Star Trek producers. There are actual diagrams of how a Phaser works, but nobody's ever built one. Patent trolls simply figure out how the parts of several potential future technologies wou

      • by Solandri (704621)
        I think your case highlights where patent law needs to be changed. The patent is to grant you exclusive marketability for an invention for a limited time. If you are not marketing any product using the patent, you should not qualify for patent protection.

        In other words, if you are manufacturing and selling a product which is covered by your patent, then you should be able to license it to others. If you stop selling significant quantities of the product however, you should not be allowed to license it
      • 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.
      • by gonzo67 (612392)

        I would say that if you invented the thing that you hold the patent on, then the answer is no.

        However, if you were simply someone who bought a patent from someone else and sued based on that, then the answer would be yes.

      • Even though your question has been answered already, I'll jump on the Bandwagon.

        The fact that you used to produce the product in question doesn't really factor into a troll or not. you say that you license them to other companies, and have taken action against infringment of your patent. While you may fall into some people's definition of a patent troll, I understand that you have not acquired a patent and let it sit on your shelf until enough it has entered widespread use before you took action against it.

  • by Anonymous Coward

    What a ripoff.. I wouldn't pay those guys a penny over $699.

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