“Scanner trolls” kicked out of Minnesota

In the decade-plus history of the modern patent troll, perhaps none other has received as much attention from the government as MPHJ Technologies. The notorious “scanner trolls” began sending out threatening letters to small businesses late last year. The letters insist that anyone using a common office scanner was violating its patents and needed to pay up, to the tune of up to $1,200 per worker.

The MPHJ campaign, led by the Texas law firm Farney Daniels, has become quickly notorious. It’s been mentioned by more than one member of Congress looking to reform the patent system.

Targeting small businesses has also generated push-back from an unprecedented source: state attorneys general. First, the Vermont attorney general sued MPHJ, saying that it violated state consumer protection laws. In that state, the patent-licensing company sent demand letters to at least two non-profits, including one that helps developmentally disabled adults. Next, Nebraska’s AG told the company to back off.

Now Minnesota’s Attorney General, Lori Swanson, has become the third to take action against MPHJ. Her office has negotiated an unprecedented order forcing MPHJ to stay out of her state altogether.

“Patent trolls shake down small businesses to pay ‘license fees’ they may not owe to avoid threats of costly litigation,” said Attorney General Swanson.

“Under the Assurance of Discontinuance, which is believed to be the first settlement of its kind in the nation between an Attorney General and patent troll, MPHJ Technology must cease its patent enforcement campaign in the State of Minnesota and cannot resume such business activities in Minnesota without the permission of the Attorney General,” reads a statement from Swanson’s office. “The settlement also prevents MPHJ Technology from assigning its patents to anyone who does not agree to be bound by these terms.”

As in Vermont and Nebraska, the legal justification for going after MPHJ was that it was violating state consumer-protection laws. The AG’s statement notes that some businesses are likely to take licenses to avoid the cost of litigation, even if they aren’t infringing a patent.

Swanson also acknowledged that while her office may keep MPHJ away from Minnesota, the problem is bigger than just one aggressive licensor, and needs to be solved on a national level.

“While this settlement and court order may affect one patent troller, the practice of ‘patent trolling’ will continue until Congress enacts laws to prohibit such activity,” said Swanson.

UPDATE: A spokesman for MPHJ lawyer Bryan Farney noted: “It’s important to note that the agreement does not restrict MPHJ’s right to bring patent infringement suits against Minnesota companies. The agreement does provide that for its future licensing or infringement inquiry letters to Minnesota companies that MPHJ will first provide them to the AG for review and consent.”

He added that MPHJ welcomes the Minnesota review process, and the questions regard the form of MPHJ’s licensing letters, “not the substance.”