This week the Federal Trade Commission settled a casewith one of the most notorious “patent trolls” in the country, which used “deceptive sales claims and phony legal threats” in an attempt to collect unnecessary licensing fees from businesses.
As part of the settlement, MPHJ Technology Investments is forbidden from “making deceptive representations when asserting patent rights,” according to the FTC's press release.
“Patent troll” is the colloquial term for what's formally known as a “patent assertion entity,” or PAE, which the FTC defines as “companies that obtain patent rights and try to generate revenue by licensing to or litigating against those who are or may be using patented technology.”
In America, patent trolling is widespread enough that there's even some fairly common jokes about it: “Here's a get-rich-quick idea — I'm going to patent 'the wheel,' so I charge licensing fees to every car, bike and wagon-maker in the world!”
“Oh, yeah? Well, I'm going to patent ones and zeroes, and charge money to everyone who writes, sells or uses computer software!”
“Too late — I just patented the alphabet plus the very concepts of reading and writing, so you can't so much as fill out a patent application without paying me for the privilege.”
The actual examples of MPHJ's patent trolling are almost as ridiculous. New York's attorney general made a similar settlement (applicable only in that state) with MPHJ last January; back in 2012, the company paid one dollar to buy five seemingly obscure patents related to computer processes, then sent letters to over 1,000 businesses in New York State alone, accusing them of “likely” patent infringement, demanding licensing fees and even threatening patent-infringement lawsuits in some instances.
What sort of patent-infringing activities would MPHJ accuse businesses of actually doing? Among other things, MPHJ said it held a patent on the process of scanning items directly into emails, and demanded licensing fees of up to $1,000 per worker.
The letters were also filled with false statements, such as claims that other businesses had already paid the demanded licensing fees, or threaten to file lawsuits which MPHJ had no actual intention of filing (since it surely knew it would lose).
As part of the FTC settlement, if MPHJ sends any more such letters out, it can be fined $16,000 for each one.