Scanner Patent Troll Slapped On The Wrist By FTC; Told To Stop Misleading Behavior.

from the it's-something dept

For a few years now, the FTC has talked about taking on patent trolls. In 2011, 2012 and 2013, we heard stories about the FTC putting patent trolls "on notice" and getting ready to crack down on them for deceptive practices. Last year, it finally "launched an investigation" into certain patent trolls, starting with notoriously crazy patent troll MPHJ, famous for its rather aggressive form of trolling, using a questionable patent on "scan-to-email" technology, sending out thousands of demand letters from a range of shell companies, telling lots of small businesses that they had to pay between $900 to $1200 per employee if they had a scanner with the "scan-to-email" function (most modern scanners).

Sensing it was in trouble, MPHJ tried suing the FTC (along with each of the five commissioners personally), arguing that the investigation violated its constitutional rights. Yeah, right. A few weeks ago, the courts rejected that plan, and now the FTC has reached something of a "settlement" with both MPHJ and the law firm it used, Farney Daniels, P.C., which allowed MPHJ to send out its demand letters on its own stationary.

Unfortunately, the "settlement" seems fairly weak. There's no money being paid. There's no admission of guilt. There's just a promise that MPHJ won't use certain deceptive tactics, such as claiming that others had already paid thousands of dollars for licenses, or threaten lawsuits unless the company is actually going to sue. It seems like a pretty minor slap on the wrist, getting at some of the worst behavior by MPHJ, but hardly doing much to stop lots of other egregious trolling actions. It's something, but a very minor something.

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  • icon
    That One Guy (profile), 7 Nov 2014 @ 3:45pm

    Worse than before

    It seems like a pretty minor slap on the wrist, getting at some of the worst behavior by MPHJ, but hardly doing much to stop lots of other egregious trolling actions. It's something, but a very minor something.

    Actually I'd say such a result leaves the matter even worse than before. If a company can get away with such blatantly ridiculous tactics with nothing more than a moderately stern warning not to do it again, what message exactly does that send to other patent trolls? 'The FTC is cracking down on patent trolls, get out intact while you can', or 'The FTC doesn't care about patent trolling, continue on as normal'?

    Before this there was at least a minor worry that if they got to be too blatant in their shakedowns, someone in the government might bring the hammer down. Now though? The FTC have just shown themselves to be toothless in the matter, unwilling to actually levy any sort of fine or punishment, so now nothing is holding them back.

    reply to this | link to this | view in chronology ]

  • icon
    M. Alan Thomas II (profile), 7 Nov 2014 @ 6:45pm

    Well, it does give the FTC unambiguous grounds for future fines. Whether or not MPHJ would agree that the things it has agreed to stop doing were illegal or governable by the FTC, they have now consented to the FTC being able to fine them $16,000 per violation from this point forward. Including for threatening lawsuits that they don't intend. Given that a blizzard of threatened lawsuits that they have no interest in pursuing is part of the definition of trolling in this context, that seems significant to me.

    reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 7 Nov 2014 @ 7:18pm

    coxtco says it is legal.

    reply to this | link to this | view in chronology ]

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    Marbo20 (profile), 9 Nov 2014 @ 3:53pm

    FCC joke

    A punishment like that is almost a reward.great website

    reply to this | link to this | view in chronology ]


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