New Guidelines for Patent Trolls

The New York state Attorney General, Eric T. Schneiderman, yesterday announced a settlement with non-practicing entity MPHJ Technology Investments, over MPHJ’s “deceptive and abusive practices”.

MPHJ apparently mailed over a thousand letters in multiple waves to small and medium-sized New York businesses demanding a license for each employee for scan-to-email patents.  The letters came from over 100 subsidiaries, making it difficult for the recipients to find out information about the owner and the licensing possibilities (for example, the patents have been licensed to Canon and Sharp).  Other states have sued MPHJ, including Vermont, Nebraska and Minnesota.

What was unique about this settlement was that it set “guidelines for all patent trolls engaged in similar patent assertion behavior”:

  • Diligence and good faith when contacting potential infringers (this prohibits mass mailings and “using a lawyer as a threatening mouthpiece for baseless allegations”)
  • Providing material information so an accused infringer can evaluate the claim
  • No misleading statements about a license fee (this includes fair pricing of licenses)
  • Transparency of the true identity of the patent holder

While applicable today only in New York, this can be viewed as a code of conduct specifying acceptable behavior for patent assertion entities overall.

The full settlement document includes a history of MPHJ’s actions in New York, the findings of the Attorney General and detailed requirements for future conduct by MPHJ, including a sample conforming demand letter.

Most importantly, according to the Attorney General’s press release, these guidelines apply to other patent-assertion entities who are claiming infringement by small New York businesses and want to avoid attention from the Attorney General.

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