Patent Troll Sues The FTC, Saying It Has A First Amendment Right To Shake Down Companies Using A Scanner
from the good-luck-with-that dept
We’ve written a few times about patent troll MPHJ, a company which had a bunch of bizarrely named shell companies sending threatening letters to thousands of small businesses, demanding $1,000 per employee, if those companies happened to have a network connected scanner that had the common “scan to email” feature. MPHJ claimed it had a patent that covered this, and wanted to go after the end users with threats, in order to clean up on “settlements.” MPHJ had become one of the poster children for extreme patent trolls abusing the system, and various states had begun suing the company for threatening local businesses. In fact, just today, NY apparently settled with MPHJ — and revealed that MPHJ acquired its five patents for… $1.
When the FTC began investigating patent trolls, apparently MPHJ was near the top of its list, to the point that it was preparing to file a lawsuit against the company. MPHJ took the rather aggressive route of suing the FTC and its five commissioners directly.
MPHJ claims that the FTC’s action “violate MPHJ’s constitutional rights.” It claims that the FTC has “no authority to regulate or interfere with the patent enforcement activity at issue…” This seems to ignore a Supreme Court ruling from just a few months ago that showed that the FTC does, in fact, have a mandate over patent enforcement issues, when that enforcement goes into areas that the FTC regulates, such as antitrust violations or unfair or deceptive commerce practices — basically the core stuff the FTC regulates.
On top of this, MPHJ argues that it has a first amendment right to shake down companies for money. It’s going to have a very difficult time supporting that argument. It seems unlikely that MPHJ’s case will get very far. However, the FTC’s suit against MPHJ may spell a world of trouble not just for it, but for other patent trolls, who may want to take notice.