On Wednesday, the Vermont Attorney General’s Office brought suit
against an alleged patent troll, MPHJ Technology Investments, LLC, for violation of Vermont’s Consumer Protection Act. The Vermont AG claims that the troll engaged in “unfair and deceptive acts” by sending numerous, threatening letters via a host of shell companies to small businesses and not-for-profit organizations in Vermont. The Defendant claims to have a patent on the process of scanning documents and attaching them to email via a network.
At first glance, the suit complains of, among other things, tactics that are fairly commonplace in this arena:
- threatening litigation when the Defendant was neither prepared or likely to bring a litigation;
- targeting small businesses that were unlikely to have the resources to fight patent-litigation; and
- sending letters threatening infringement without independent evidence of infringement.
However, this is probably not what caught the attention of the Vermont AG’s Office. Rather, the numerous complaints by small, Vermont-based businesses and the pursuit of not-for-profit organizations, such as one providing home care to developmentally disabled Vermonters, probably provided the impetus for the State to take action.
The AG claims that various deceptive statements were made in what appears to have been an aggressive letter writing campaign, including:
- Defendant’s licensing program had received a positive response from the business community;
- Many or most businesses were interested in promptly purchasing a license from Defendant;
- The fair price of a license was $900-$1200 per employee (when the average license fee was under $900 in total);
- The shell companies had exclusive enforcement rights; and
- Defendant would sue the target business if it did not respond within two weeks (when Defendant and/or its shell companies had never sued anyone anywhere in the U.S., much less in Vermont).
Ordinarily, you don’t see a state becoming involved in private patent infringement disputes. However, one can understand Vermont’s involvement because of the numerous complaints by those without adequate resources to respond, especially the local, not-for-profit agencies servicing disabled Vermonters.
In spite of the foregoing, it’s not likely that we’ll see other states take action against patent trolls engaging in aggressive patent infringement campaigns against mainstream companies. The states don’t have the resources or the stake in the fight to get involved. Nonetheless, if one of your clients is a small business that receives a baseless infringement letter, it might be worthwhile to check in with your state’s AG’s Office. If enough companies have received similar threatening suits in your state, the AG’s Office may follow Vermont’s lead and consider taking action.