More Details Revealed On The Patent Lawyers Demanding $1000 For Every Worker At Companies Using Scanners

from the those-shakedown-artists-sure-are-nice dept

Earlier this year we wrote about Joe Mullin’s excellent reporting on a series of patent holding shell companies, led by one called MPHJ Holdings, who were sending demand letters to tons of companies demanding that they pay between $900 and $1200 per employee for using scanners connected to a network with a “scan to email” feature. Mullin is back with more on MPHJ, talking to two of the lawyers working for the patent troll, though the identity of the actual patent holder remains a secret.

One of the lawyers is heading up the whole threat letter and (expected) litigation campaign (no lawsuits have been filed but “draft” complaints have been sent to various companies, indicating lawsuits will be coming soon) and the other is in charge of talking to “irate” recipients of the shakedown letter. That lawyer, Jay Mac Rust, apparently is one of a few lawyers who have certain “territories” in this scheme, but in a recorded message that Mullin obtained with a discussion between Mac Rust and one of the letter recipients, Mac Rust explains that he’s the one who deals with the angry ones. Mac Rust repeatedly suggests that letter recipients consult a patent lawyer to find out that this is all “legal.” Of course, doing so also will help people realize just how much a patent lawyer costs and can then do the math on the value of fighting back.

Also, it’s somewhat amusing that a lawyer who claims to have spent time understanding patent law seems quite confused about copyright law. Mullin tried to reach Mac Rust a bunch of times, only to finally get him to call when told that the article was soon to be published, and would include quotes from the recorded phone call with the letter recipient and a picture of Mac Rust. Mac Rust didn’t like that and said that copyright law meant Mullin couldn’t use his photo:

“I’d appreciate you not running a photo of me, anywhere,” said Rust. “You know how photographs work, with copyright and all. If there’s a photograph up online of me, I own it.”

That’s not true. At all. The copyright is normally with the photographer, not the subject of a photo, for one thing (though the copyrights can be assigned). But, on top of that Mullin publishing such a photo at Ars Technica is clearly protected by fair use.

Mullin also runs through some somewhat shady business practices that Mac Rust was sued over in the past, though Mac Rust seems to suggest that the questionable stuff was done by the guy employing him, and for the most part it looks like he’s gotten out of the various lawsuits through settlement or dismissal.

Mullin then talks to the lawyer officially representing MPHJ, who doesn’t seem to think there’s anything wrong with what he’s doing, arguing that inventors deserve to be protected. He doesn’t seem to acknowledge that the “inventor” appears to have “invented” a general idea that lots of people had, but few people implemented, not because the idea wasn’t there, but the tech itself wasn’t ready. The fact that the “inventor” on the patent failed to actually successfully sell a product in the market should be indication enough that there was nothing special about the patent itself. But the lawyer, Bryan Farney, doesn’t seem to see how that’s an issue.

“The inventor obviously came up with something that’s widely used,” Farney said. “That happens sometimes.”

This is the frustrating thing about patent system supporters. They never seem even marginally willing to admit that there are massive problems that come about when someone gets a patent on a general idea that lots of people have, but which the technology is not yet ready for. They seem to think this is fine, never acknowledging how they’re actually stomping on the basic rights of everyone else who came up with the idea, followed by (in this case) everyone who is using a basic technology offered by nearly every scanner maker today. There is no way anyone can view this as a reasonable result or the intention of today’s patent system.

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Companies: mphj

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Comments on “More Details Revealed On The Patent Lawyers Demanding $1000 For Every Worker At Companies Using Scanners”

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Gracey (profile) says:

They can’t be serious?

Okay, I’ll admit up front I didn’t actually read the case documents but scanning to email isn’t just used in companies.

I use myself, as an individual, to scan documents directly to email.

So essentially, they’re gonna sue every individual in the world who uses a scanner that’s capable of scanning documents to email?

er… okay. You’re on. Have at it. Cause it isn’t going to take a patent lawyer for this one.

Anonymous Coward says:

I would imagine most of this is covered by the maker’s license. If not then the courts need to take a look at this one as it is a plain out pure shake down. These businesses didn’t make the scanner nor the email apps. I just can not see they are responsible for licensing under those conditions.

Would be quite happy to send them an image of a bare posterior.

Ben (profile) says:

Re: Re:

I agree; context:

“Because of the way the patents are written, MPHJ actually can?t go after scanner manufacturers. Only the whole ?system??putting the scanner together with a network?infringes.”

I’m pretty sure this is wrong; you cannot violate a patent if you (or a company for its internal use) assemble the invention. Patents are a market restriction; Apple sought to ban Samsung phones from sale – Samsung could make as many ‘copies’ as it likes provided it does not offer them on the market. Given this read, a copy shop which copied the ‘invention’ of “scanner”+”internet” would be liable when offering their scan&email product to the public, but the common, internal use of multifunction printers does not infringe.

Keroberos (profile) says:

Re: Re: Re:

Yes, a business can infringe on a patent like this. They are using the patent on the process of automated scanning+e-mailing of documents to shake down businesses–not the use of a specific device. So a business could be held liable, but an individual doing this at home most likely would not be.

Of course this patent is complete shit and so obvious that it would probably get thrown out, which is the reason they aren’t suing the manufacturers of these scanners–they don’t want to have to go to court against someone with a well funded legal team. This is why it looks like they are targeting smaller businesses and giving the ones that complain the advice to talk to a patent attorney. That advice would probably be something along the lines of–“You could probably win, but it might take a million plus dollars to do it. It’s better to just give them the $100,000 they want so they’ll go away”.

anonymouse says:

Re: Re: Re: Re:

Wrong Wrong Wrong. A patent is in no way involved in this farce, seriously who are the people saying this has anything to do with a patent. I know and i am sure most people know this is one big farce and as i said before, i would love to be taken to court to be sued, cos i would be suing them back for a few million and not only would i almost be guaranteed to win but i would hopefully have them charged with some serious crimes at the same time. As i said previously patents do not cover businesses using their own purchased equipment with features that that equipment has, even if it means plugging it into a network. Sorry techdirt but you got this one very wrong and there is no way in hell this is real. I would think it was an april fools joke if not for the fact that april the first is long gone. Surely you have a few people there with common sense. A judge would throw this case out , even if it somehow got to his courtroom. And the reason it has not is because they know they will not win. There is big money if they won even one case, they would then have the president to go after everyone, Microsoft , Amazon etc, safe in the knowledge that they had a president to use, imagine getting $1000 oer person amazon and google employed. there would be trillions at stake by the time they were finished, but guess what they will not take anyone to court because they know it would finish their nice little game.

No i am saddened that techdirt would fall for this rubbish . The best thing to do with trolls like this is to blatantly tell them where they can go and not to harass them again otherwise there would be a court case.

This is a simple troll case , nothing more , and the sad thing is the troll has talked the talk and walked the walk, up to a point. Come on why does someone not sue them for the threats they are making, now that would be fun to see.

Keroberos (profile) says:

Re: Re: Re:2 Re:

I think you are confused about what can be patented or not. From the USPTO site…

?…new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof, may obtain a patent,?

What they claim these patents (I believe there are four) cover is the process of network scanning–not the actual equipment. So yes, there really are patents involved. And yes, you can infringe on a process patent using your own equipment that you purchased. Whether or not these patents would pass the obviousness test, and can be interpreted the way these trolls claim is irrelevant until someone actually takes them to court. Which will probably not happen because they are avoiding shaking down any company large enough to have a well funded legal team and enough employees that the cost of fighting could be justified as opposed to paying the settlement.

i would love to be taken to court to be sued, cos i would be suing them back for a few million and not only would i almost be guaranteed to win

Doesn’t work that way, the best that you could hope for is to get the patent invalidated. You can’t sue for damages (not even attorney’s fees), because these trolls would use the defense–“A good faith belief in the validity of their patents”, which gets them off the hook and might make you liable for their attorney’s fees (you’re the one maliciously suing, not them). Not that it would get that far. These trolls do not want to have these patents challenged in court, so the second someone with the wherewithal to take this to court stands up to them, they will use the last defense of any patent troll worth his salt and file for dismissal without prejudice but would except a dismissal with prejudice if they had to. And you’re now sitting with a big fat pile of attorney’s fees for your troubles, and they can continue their shakedown operation on someone else.

Anonymous Coward says:

Re: Re: Re:2 Re:

1) You clearly did not read the article.
2) You’re saying that techdirt got this wrong, when all they are doing is writing an article on a REAL company.
3) What the hell are you talking about “A patent is in no way involved…”? Yes patents are involved – how stupid are you?
4) Go read the article in its entirety, then go do some research on MPHJ and their patents, and you’ll see that this is a real, legitimate issue being fought over.

Andrew F (profile) says:

Re: Re: Re:

Unfortunately no. Patent law is not violated solely by market activities. For reference, here’s 35 U.S.C. 271(a) of the U.S. patent laws:

Except as otherwise provided in this title, whoever without authority makes, uses, offers to sell, or sells any patented invention, within the United States or imports into the United States any patented invention during the term of the patent therefor, infringes the patent.

MPHJ could try suing the scanner manufacturer on the grounds that the seller is “inducing” infringement, but there’s nothing in patent law that keeps them from suing the end user as well.

Andrew F (profile) says:

Suggested Fix

Easiest way to fix this: If the act of infringement consists solely of using a product as it was intended to be used (or as advertising depicts it being used), then the manufacturer or retailer of the product becomes a necessary party to the suit. This forces trolls to face companies that can actually spend money on lawyers.

It’s not a complicated change to patent law and, for better or worse, wouldn’t affect patent law except to discourage this type of trolling. I’m surprised Congress hasn’t taken this up yet.

MikeW (profile) says:

Secretely on our side trying in vain to highlight the insanity of our patent system

One has to wonder, hearing all of these stories of ridiculous patents, if some of the perpetrators of these actions are misguided souls who are trying to push the limits of the patent system in order to somehow get it across to the policymakers that it is ridiculous.

Kind of like the guy in Australia who patented the wheel

staff (user link) says:

more dissembling by Masnick

‘but which the technology is not yet ready for’

Enablement is a requirement in s patent specification. All you know about patents is… you don’t have any.

These are mere dissemblings by huge multinational thieves and their paid puppets -some in Congress, the White House and elsewhere in the federal government. They have already damaged the US patent system so that property rights are teetering on lawlessness. Simply put, their intent is to legalize theft -to twist and weaken the patent system so it can only be used by them and no one else. Then they can steal at will and destroy their small competitors AND WITH THEM THE JOBS THEY WOULD HAVE CREATED. Meanwhile, the huge multinationals ship more and more US jobs overseas.

Do you know how to make a Stradivarius violin? Neither does anyone else. Why? There was no protection for creations in his day so he like everyone else protected their creations by keeping them secret. Civilization has lost countless creations and discoveries over the ages for the same reason. Think we should get rid of patents? Think again…or just think.

Most important for many is what the patent system does for the US economy. Our founders: Jefferson, Franklin, Madison and others felt so strongly about the rights of inventors that they included inventors rights to their creations and discoveries in the Constitution. They understood the trade off. Inventors are given a limited monopoly and in turn society gets the benefits of their inventions (telephone, computer, airplane, automobile, lighting, etc) into perpetuity and the jobs the commercialization of those inventions bring. For 200 years the patent system has not only fueled the US economy, but the world?s. If we weaken the patent system we force inventors underground like Stradivarius and in turn weaken our economy and job creation. Worse yet, we destroy the American dream -the ability to prosper from our ingenuity for the benefit of our children and communities. Who knows who the next Alexander Graham Bell will be. It could be your son or daughter. It could be you. To kill or weaken the patent system is to kill their futures.

For the truth, please see

Patent troll sceptic says:

Do these trolls act in the spirit of the constitution?

Patent trolls are legal today, but are they in the spirit of the constitution? Protection of intellectual property had a purpose.
Do patent trolls promote the progress of Science and useful Arts? No one seems to have picked up the idea of scanning and e-mailing from this patent.

To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries.
(US constitution)

Is the patent troll practice going after end users acting in good faith unconstitutional?

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