MPHJ Technology patent troll fights back, sues US federal government

Jan 14, 2014
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MPHJ Technology patent troll fights back, sues US federal government

Patents, especially software patents, have become a major point of contention of late. Patent trolls are on the rise and the US government is, somewhat ambiguously, taking steps to lessen their activities. Curiously, one of the more well-known patent trolls, MPHJ Technology, has apparently chosen to bare its legal fangs against the government itself, by suing members of the US Federal Trade Commission.

MPHJ's lawsuit is really more of a preemptive strike against the FTC, who it claims is preparing a lawsuit against it. The FTC will be allegedly suing MPHJ, the Farney Daniels law firm retained by MPHJ, and Jay Mac Rust, the sole owner of MPHJ and its 101 oddly named subsidiary LLCs, whose identity until now was mostly a well-kept secret. MPHJ claims that the FTC is overstepping its legal boundaries and is trampling on the company's First Amendment rights.

MPHJ Technology's history isn't that spotless. It came under a microscope after it was learned that it had sent thousands of letters that eventually ended up with a demand for a licensing fee of $1,000 per worker. According to the company, it holds a patent that covers networked document-to-email scanning technology and that the recipients of those letters are infringing on their patent. Letters to over 16,000 small businesses were sent out, but in the end only 17 licenses were actually sold.

According to MPHJ, the FTC's interest in the company is largely politically motivated. Furthermore, it holds that the FTC has actually no jurisdiction to even sue the company, since the section of the FTC Act being cited by the commission doesn't cover letters being sent out by MPHJ. The company says that it has a First Amendment right to inform other companies that are infringing its patents. Furthermore, it accuses the FTC of trying to threaten it to agree to a judgment that would bag the FTC more than what it could in a federal court trial.

The FTC's grounds for suing MPHJ is based on the patent troll's deceptive practices, particularly in its sending out of waves of threatening letters. However, the Commission has not yet actually filed the lawsuit and we are only hearing things from MPHJ Technology's point of view. It will be interesting to see how this legal drama plays out, which could affect the US government's attempt to reform a convoluted patent system that gave birth to patent trolls in the first place.

VIA: Ars Technica


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