Patent Troll Told That It Can't Sue The FTC For Merely Investigating Its Shakedown Scam

from the making-quick-work-of-it dept

We've written a bunch of times about the "scanner patent troll" MPHJ (which also goes by a bunch of other names, because that's how patent trolls roll). This was the company that claimed to have a patent on a network connected scanner that allowed people to email a scan. It sent out letters to tons of companies demanding between $900 and $1200 per employee for merely owning a modern scanner. While the company is a bit sketchy and hard to track down, reporter Joe Mullin more or less outed lawyer Jay Mac Rust as the "brains" of the operation.

The details were so egregious that MPHJ became the poster child for the absolute worst in patent trolling. Vermont sued the company for shaking down local businesses, and the FTC began an investigation into a short list of patent trolls, with MPHJ's name at the very top.

In response, MPHJ... sued the FTC, claiming that it had a First Amendment right to shakedown companies with bogus threats and demand letters.

That lawsuit has gone over about as well as you might expect, with a court dismissing it a few days ago. The court basically says the FTC is allowed to investigate, and MPHJ's claim is ridiculous:
May Plaintiff derail the FTC administrative process by bringing this declaratory judgment action? The short answer is, "No."
Basically, the court ticks off each of MPHJ's objections and points out that the FTC is allowed to run its investigation, and MPHJ can't claim that merely being investigated is somehow a violation of its rights. MPHJ, of course, now claims it is thinking about appealing this ruling:
MPHJ respectfully believes the Court erred in its decision. The FTC had threatened to sue MPHJ in that court, and MPHJ sought only to have the FTC's claim resolved in that court. It is important to note that MPHJ was willing to litigate the issue in the federal courts, as it is confident that its conduct was lawful, a point recently confirmed by the Nebraska Federal District Court.
Of course, the whole point of the ruling is that the FTC has to be allowed to complete its investigation before MPHJ can challenge it in court. As for the situation in Nebraska, MPHJ is correct that a court in Nebraska did say that the company has a constitutional right to send shake down letters, but even if that's true, it doesn't mean the FTC isn't allowed to investigate what's happening.
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Filed Under: first amendment, ftc, investigation, lawsuits, patent trolls
Companies: mphj


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  1. identicon
    Anonymous Coward, 22 Sep 2014 @ 6:20pm

    Re: (Parody)

    That's not a parody; that's a recreation.

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