PublishedJanuary 15, 2014

MPHJ Aims at FTC, Shoots Foot?

Cartoon - self-inflicted painMPHJ is probably the most notorious bottom feeder troll, threatening thousands of small businesses who might own scanners that scan documents and email them. It’s been so active that it’s drawn fire from the attorneys general in Vermont, Minnesota, and Nebraska. New York recently joined the fray, negotiating a settlement with MPHJ that requires the troll to refund license fees to some New York businesses.

One big complaint about MPHJ has been that its threats were empty, because it never sued anyone. (Except for one company — an earlier incarnation of MPHJ called Project Paperless sued a company called BlueWave Computing and ran when the company fought back. Soon the patents were transferred to MPHJ and a network of shell companies started sending thousands of threat letters.)

Until now.

It turns out that MPHJ’s strategy of sending thousands of demand letters to small businesses didn’t work too well. It seems that MPHJ got only seventeen companies to take licenses.

So not only did MPHJ become the symbol of the patent troll problem, it didn’t even manage to make much money for all that grief.

Well, MPHJ is mad as hell, and it’s not going to take it any more. MPHJ recently sued some big companies, including Coca-Cola, UNUM, and Dillard’s.

And in even bigger news, MPHJ has now sued the Federal Trade Commission along with all of the Commissioners. It seems that the FTC was ready to take action and MPHJ decided to sue preemptively. MPHJ is basically claiming that it’s doing nothing wrong and the FTC is cramping its style.

It’s clear that MPHJ has been preparing for this for a while. It sued those big companies back in November to counter the charge that its threats were empty. And the patents it’s using now are continuations of its first patent, which was filed in 1999. These continuations have claims that are much more clearly targeted at e-mailing scanners (the most recent patent just issued last year). And MPHJ submitted all of the prior art that has been thrown at it to the USPTO as part of prosecuting those continuations. That arguably makes the patents stronger, rather than the worthless junk patents MPHJ was accused of using.

MPHJ is going for the big money and is openly daring the government to try and stop it. In its complaint against the FTC, MPHJ declares that its business model is constitutionally protected, and the government has no right to interfere.

MPHJ’s attitude perfectly illustrates the philosophy of the patent troll industry. According to the trolls, a patent is an unrestricted property right, and a patent owner can do anything it likes with the patent.

In MPHJ’s case, the constitutional right to do whatever it wants with its patents includes harassing innocent small businesses, as well as the occasional non-profit or Alzheimer’s patient, with bogus patent infringement claims. MPHJ is so brazen that it will even sue the FTC to protect that supposed right.

Which patent system do we want? The one envisioned by MPHJ and the rest of the patent trolling industry, where anything goes? Or one that promotes innovation and protects both small inventors and small businesses?

If there were any doubt that Congress needs to act, I think that doubt should be gone now, don’t you agree?

Matt Levy

Previously, Matt was patent counsel at the Computer & Communications Industry Association

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