Patent Trolls Go After Scan-to-Email Users

Ars Technica introduces us to "nice-guy lawyers who want $1,000 per worker for using scanners."

Patent Gavel

Ars Technica introduces us to “nice-guy lawyers who want $1,000 per worker for using scanners.”

Starting late last year, hundreds of US businesses began to receive demand letters from secretive patent-holding companies with six-letter gibberish names: AdzPro, GosNel, and JitNom. The letters state that using basic office equipment, like scanners that can send files to e-mail, infringes a series of patents owned by MPHJ Technologies. Unless the target companies make payments—which start at around $9,000 for the smallest targeted businesses but go up from there—they could face legal action.

[…]

Demanding payouts from small business users of everyday technology isn’t the typical patent enforcement strategy, but it’s perfectly legal under US law. As a business strategy, however, it has generally been considered unworkable—and unwise.

Well, until now. As the art of modern “patent trolling” enters its second decade, the MPHJ scanner-trolling scheme has opened a new front in the battle. The company has a patent that it believes is being violated by “99 percent” of American office workers. And it wants to get paid.

[…]

Telling target companies to consult an attorney may seem like a surprising suggestion for an enforcer of controversial patent claims. But suggesting that small companies lawyer up probably yields excellent results for Rust and MPHJ. A patent lawyer will likely tell targets that the letters shouldn’t be ignored, and the lawyer will quickly let them know the cost of fighting an issued patent, which can be hundreds of thousands of dollars—or millions, if a case actually goes to trial. That’s far more than the cash asked for by AdzPro, GosNel, and the other MPHJ entities, which will grant a license for between $900 and $1,200 per worker—around $100,000 for a 100-employee business.

“I promise, they’ll help you to understand how patent law works,” says Rust. “You’ll figure out it’s not a scam. It’s not some kind of bull. We’re not trying to harass people. They’ll look up the patents and tell you whether or not what you do infringes. And if you don’t infringe, hey, let us know that.”

[…]

The practice known as “patent trolling” certainly has its detractors, but it is unquestionably legal. Patents can be licensed by anyone, whether they’re being used or not. Whoever “the client” behind MPHJ is, he or she is unlikely to be accused of criminal behavior.

Regardless of whether this is legal, it’s certainly outrageous. It’s incomprehensible that individuals—or even businesses—would be liable for violating patent rights for using technology that they purchased in good faith. Obviously, if Toshiba, Xerox, or other companies that manufacture and sell copiers and scanners with this technology in violation of someone’s patent rights—not the unwitting end user to whom they sell—should be the ones on the hook.

But, as Ars points out, the beauty part of patent trolling is that, right or wrong, it’s typically cheaper to settle these outrageous suits out of courts than to lawyer up and fight. The filing fees alone would likely outstrip the settlement. And that makes for a broken system.

FILED UNDER: General
James Joyner
About James Joyner
James Joyner is Professor and Department Head of Security Studies at Marine Corps University's Command and Staff College and a nonresident senior fellow at the Scowcroft Center for Strategy and Security at the Atlantic Council. He's a former Army officer and Desert Storm vet. Views expressed here are his own. Follow James on Twitter @DrJJoyner.

Comments

  1. john personna says:

    The Republicans were right the first time, before the walk-back. Our IP laws are now a block on business and innovation – not an enhancer.

    (I guess calling it “intellectual property” was one of those seminal cases of linguistic ju-jitsu. As soon as it was “property,” it had a posse. Of course, the case above illustrates the absurdity of that property concept taken to the modern extreme. Someone has as “property” the idea that you can push “one button” and get a desired result. Amazing.)

  2. Mikey says:

    We’re not trying to harass people.

    Lying asshole.

  3. Franklin says:

    it’s typically cheaper to settle these outrageous suits out of courts than to lawyer up and fight

    Short term thinking.

    Also, it’s time to dismantle the USPTO.

  4. Tsar Nicholas says:

    This is nothing. You should see the copyright trolls. They’re worse than the patent trolls, if you can believe that.

    A year or so ago a client of mine got hit with a cease and desist letter, penalty invoice, and threat of a copyright infringement lawsuit, for using software for which the license was set to expire and where, until the troll’s very own shakedown tactics were unveiled, my client was going to renew the license. Through some investigation I found out that that company used the same tactics for all of its licensees. IOW that particular copyright troll was so hell bent on being a troll it basically was in the business of pushing away its own existing customers! And I’ve seen similar approaches from other software companies. It’s beyond penny wise and pound foolish; it’s deranged.

    So, yeah, we need fundamental IP law reforms and attendant lawsuit reforms. As in yesterday. But even with those reforms in place you can’t entirely fix lack of business acumen and dearths of common senses.

  5. john personna says:

    @Tsar Nicholas:

    The term “copyright troll” is not normally used to describe a vendor-client relationship.

    It sounds like that vendor blew the sale for contract renewal, and made your friend feel “criminalized” before the existing contract expired, which is bizarre … but your example has really nothing to do with copyright itself.

    The software use contract was the issue in question.

  6. rudderpedals says:

    I couldn’t agree with James more. Let’s hear it for business process and software patents. Pfffffui

    Patent counselor wanted in comments. We do have a patent atty here (not me)…

  7. Pat says:

    Expanding on the copier issue. How is taking a picture and putting it into e-mail not also a violation? I take pictures and e-mail them all the time.

  8. James in LA says:

    Patents, copyrights and trademarks are on borrowed time. Secure, decentralized always-on networks are coming, and once the ISP becomes redundant, there can be no enforcement of (alleged) “intellectual property.”

    Entitlement is a horrible way to live, and makes a worse business model. Means you have to exist always in a defensive crouch. Those days will be ending. By 2020, absolute latest.

  9. grumpy realist says:

    Large businesses get these sorts of things all the time. Immediate circular file. They don’t even bother to answer them.

    If one of these landed on my desk I’d be tempted to front up the money to dig up some prior art through crowd-searching and go for an ex parte re-exam (or whatever the new thing is under the AIA.) Much cheaper than litigation. And trust me, with the way these old IT patents were written, you can probably attack them on quite a few levels. A nice general purpose claim looks to be wonderful because it’s so broad, but it also means that you can get it chucked if you find any prior art that falls under it in any way. Which means that there is a LOT of stuff out there that could probably work as prior art.

    The other thing about an ex parte re-exam is that if the USPTO accepts your argument that you have raised a valid issue of patentability, it’s totally out of your hands at that point. The USPTO will ignore any settlement between you and the patent troll. And if they don’t think the patent troll’s claim is novel in light of the uncovered prior art, poof, no claim.

  10. grumpy realist says:

    Oh, and yes, the cost of patent litigation is extreme. $3M for the average case on the low end.

  11. grumpy realist says:

    You wouldn’t want to go to a regular lawyer to get an opinion if you got one of these things. You would need to go to a patent lawyer. (also the standard disclaimer–I am not a patent lawyer yet and what I’m giving is not legal advice.)

    I’d have to look it up, but somewhere in the back of my brain I seem to remember that if you’re a general consumer of a product one of the warranties provided under UCC regs (unless disavowed by the producer) is against infringement. And if the software is being used under license (which is the normal method) again a warranty against patent infringement is considered the included default unless disclaimed.

    Where the real ding-dong infringement catfights occur are between producers and patent holders.

  12. john personna says:

    @James in LA:

    By 2020 these things will be expired, and that is perhaps why some legal thinkers take the long view.

    One thing I’ve noticed in a software career is that there are a lot of dumb little patents each time a new territory opens up. 30 years ago it was in simple graphics. Later in UI, and so on. Often the first guy assigned to a new segment was not that bright, but he was innovative just because he was first in.

    That’s very frustrating to the rest of us, for the term of the patent, but in the long view it isn’t really that long. I mean, I type this on a Linux Mint notebook that would violate all kinds of early Xerox and Apple patents on graphics and UI, except those are old and expired.

    In 2020 the trivial patents, and their associated trolls, will have moved on.

    (The assertion of mesh network nirvana makes no sense to me, but that’s a lesser issue.)

  13. john personna says:

    (I do think we would have more total business activity, and higher GDP, without the software and business practice patents. We are a nation of trend-eaters. We consume must-have products. More innovation means more turn-over in those, and a faster fashion treadmill.)

    Remember, that 1990 computer is “worthless” now, only because you know what comes after.

  14. john personna says:

    (It’s possible that algorithms should also be rejected from patent code. They can be kept secret (trade secret law), or when published they contribute to that faster treadmill.)

  15. grumpy realist says:

    @john personna: There have been some recent SCOTUS decisions that have been trying to squeeze the toothpaste back into the tube. Somewhat along the lines of “we aren’t going to say we’ll never allow a software patent, but we think they’re overly abstract.” They did the same with business method patents.

    SCOTUS has been attempting to protect the development of new areas of technology by expanding the use of 101 (overly abstract) rejections as a big meat-axe to whack patent applications with.

  16. James in LA says:

    @john personna: (The assertion of mesh network nirvana makes no sense to me, but that’s a lesser issue).

    That is not the claim being made. Broadcast T.V. is still with us. ISPs will not cease to exist. Dependence on them for access will wane, as with land lines.

    So the problem for enforcers of anti-piracy laws becomes, how do I stop those who bypass the ISP? How do I corral back in the hackers who have already moved well beyond the ISP model? How do I stop communications through the air that do not require me to exist?

    How do you even know it’s happening if the data is encrypted by keys you and the receiver of your message control and no one else?

    And now Uncle Tesla’s works are getting another look: http://www.popularmechanics.com/technology/engineering/infrastructure/skimming-the-surface-the-return-of-teslas-surface-waves-15322250?utm_medium=referral&utm_source=pulsenews

    Meshnets are nothing new. Nor is the greed that will assure the fights ahead will yield anything but Nirvana. Meshnets do offer at least of glimmer of hope, in my view, that the next iteration of social networking will yield more direct participation in politics, and filibusters, for example, of bills which enjoy majority public support will become impossible to sustain.

    See also: FOX vs Aereo. Even a 10% loss scares the bejeesus out of these (impossibly wealthy to begin with) cats who’s business models will keep crumbling because they refuse to adapt to modern truths.

    See also: King Dot Com. Can’t touch him, and all those like unto him have already diversified beyond any warrant. His suppliers most assuredly use meshnets today.

  17. rudderpedals says:

    @James in LA: Are surface waves the same thing as ground waves? Ground wave propagation is the more common term if so and pretty well known. Primary problems in an ad hoc meshnet depending on ground waves involve finding a large enough allocation at the long wavelengths needed to exploit ground waves, and getting wifi-ish performance with small antennas, low power and high noise levels.

  18. James in LA says:

    @rudderpedals: One of a handful of many technical issues facing a realm without ISPs. But they all have solutions, given the proper motivation, say, threats to close access to otherwise public domain information.

    Securing stable bandwidth is a huge problem today. Only ubiquitous coverage can cure that, and that will take time. It’s coming, as more and more devices are unboxed.

    Another route will be personalized micro-satellites. Watch co-ops band together to create the launchers of arrays of micro-orbs, the pieces of which will be built using 3d printers. Then watch the government try to disable them based on some “court order” or such nonsense. The fights will be epic. Who owns space?

    And information will win. That genie is not going back into the bottle until the internet is shut down or the earth is unmade.

  19. Franklin says:

    I believe one of the problems is the patent office is for profit. This is *exactly* why you shouldn’t allow business types to run government.

  20. grumpy realist says:

    @Franklin: Um, dude, one of the results of the AIA is that the fees the USPTO charges are to remain within and for the use of the office. So it can’t get used as a cash cow any more for the rest of govt.(which the politicians have been doing up to now.)

    What they’re doing right now is hiring qualified judges for appeals like mad. They’ve got a backlog of 26,000 appeals.

    And if you think the US system is crazy, wait until you try to get a patent through the European Patent Office.

  21. Serve Me Process says:

    I don’t care what someone sends me in the mail. I am waiting for a process server to come to my door. Then we can talk. Do these clown really think someone will pay them thousands of dollars just because they sent out a scary looking form letter? Most businesses get about 10 or 20 of those a week. As for the attorney Rust has destroyed his future. Who/What is going to hire some scumball that helped in a shakedown attempt? Would you hire that guy to be inside your legal team? Would you want that kind of a guy working with your internal legal briefs? Opppsss…. bad career move young man.