Vermont Sues Patent Owner Under Its Consumer Protection Act

By Don Jeffrey, Bloomberg | May 23, 2013

Vermont sued a patent owner over claims it violated the state’s Consumer Protection Act, saying it’s the first state to file such a complaint against a company whose business is suing for patent infringement.

The state sued MPHJ Technology in Vermont state court. The company sent letters to small businesses in Vermont demanding money because of alleged violations of the company’s patent on technology for scanning documents and attaching them to e-mail, according to a statement today from state Attorney General William Sorrell.

In its announcement, the state referred to MPHJ as a “patent troll,” a term sometimes applied to a company or individual whose principal business is demanding royalties on patents it owns from business it accuses of infringement.

“Patent trolling is a national problem,” the attorney general’s office said in the statement. “A recent major study out of Boston University estimated the cost of patent trolling on the U.S. economy at $29 billion in 2011 alone.”

MPHJ demanded $1,000 in damages for each of a company’s employees in its letters, according to the statement.

“The company’s position is that it has patents on this scanner technology that were issued by the U.S. Patent Office, and there are lots of people using the technology,” Bryan Farney, a lawyer who represented MPHJ in making royalty demands, said today in a phone interview. “The company is simply trying to get people to get licenses to use the technology.”

Farney, a partner in Farney Daniels PC in Georgetown, Texas, said the state attorney general asked about letters he sent to businesses, and the practice was stopped while he awaited an answer to his reply.

“We never heard back until he filed this complaint today,” Farney said.

The case is State of Vermont v. MPHJ Technology Investments LLC, 282-5-13, State of Vermont, Superior Court, Washington Unit.

Editors: Charles Carter, Mary Romano

©2013 Bloomberg News

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