Those nasty patent trolls
–those (largely) non-practicing entities (NPEs) which buy up patents to license them. Yet most of their revenue stream comes from pouncing on startup and early-stage companies to challenge their patents and systems, extracting la mordida
to avoid further legal action. Now the Federal Trade Commission (FTC)
has moved to curb one egregious practice: deceptive demand letters. The FTC issued an order to MPHJ Technology Investments LLC (MPHJ)
banning its allegedly deceptive letters to companies which MPHJ considered to be infringing on its scanning technology. MPHJ filed first a draft complaint, and now a legal action against the FTC in the US District Court for the Western District of Texas, alleging violations of the First Amendment on free speech. Under US law, ‘deceptive’ may not be good enough–their letters threatening lawsuits must be shown to be ‘objectively baseless.’ The FTC requested dismissal of MPHJ’s suit this past Monday. Their rejoinder: the suit would disrupt its work. National Law Review
(subscription/Lexis Nexis access required).
Previously in TTA on patent troll strategies and how companies defend themselves: TTA 13 Sep 13, 10 Feb 13. (Also search on ‘patent troll’, ‘MMRGlobal’ and ‘patent infringement’.