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Summary:

Patent trolls have been bleeding legitimate businesses for years — now a state government has turned the tables and asked a troll to pay $10,000 for each of the hundreds of threatening letters it has mailed out.

Norwegian Troll
photo: Flickr / Jacob Bøtter

Well, this is good news. The state of Vermont has decided to join private companies like Twitter in taking the fight to patent trolls — shell companies that don’t do anything except use old patents to extort businesses into paying licenses for common technology.

In a complaint filed in Vermont’s Superior Court, the state accuses MPHJ Technology — which operates 40 shell companies through a UPS store in Delaware  — of violating consumer protection law by demanding small businesses buy a license or face a patent lawsuit.

“Hopefully would-be patent trolls will see this and realize that if you want to prey on Vermont businesses large and small they’re going to have a fight on their hands,” Attorney General, William Sorrell, said by phone on Wednesday.

The patents in question date from the year 2001 and involve technology for scanning documents and attaching them to an email. Despite being around for more than a decade, no one tried to enforce the patents until 2012 when an attorney from Texas — a notorious troll forum — named Jay Mac Rust began brandishing them.

The Vermont complaint explains that Mr. Rust and his friends have been sending letters to hundreds of businesses in Vermont, including non-profit groups that help the disabled, and telling them to pay $900-$1200 per employee or face a federal lawsuit.

Patent trials are one of the most expensive forms of litigation and are an ordeal for even big companies — let alone a small shop in the Green Mountains. Worse, the defendants are out of luck even if they win since the shells that sue them don’t have any assets.

According to Sorrell, “patent trolling is a national problem” and the trolls have been harassing Vermont’s tech sector, as well as small business and non-profits, for years.

Vermont’s lawsuit, which demands the troll pay $10,000 for each letter it sent out, is based on consumer protection laws that forbid deceitful communications. The state’s governor this week also signed a new anti-troll law that Sorrell describes as “another arrow in the quiver.”

The suit will almost surely raise constitutional issues concerning state power and patents but, for now, businesses will welcome a big new ally in the fight against patent trolls; others include Google and patent scholars like Mark Lemley and Brian Love. It will be interesting to see if states with big tech centers, like California and Massachusetts, ask to intervene or file suits of their own. You can read the complaint yourself here:

Vermont v MPHJ Technologies Complaint

  1. Glenn Foster Thursday, May 23, 2013

    We are talking about bringing a lawsuit against a much larger patent troll, called Intellectual Ventures, that has far too close ties to Microsoft for Bill Gate’s own good. Patent trolls usually take a large collection of patents that they had nothing to do with innovating (for example, they get them at fire sales/ auctions, etc., and they bundle them and threaten others with patent litigation annihilation. Intellectual Ventures (within a few miles from Microsoft) is the World’s largest patent troll, for example, and they collected tens of thousands of such patents from auctions, etc., and IV plays the shell game such that it is very likely that these “ambiguous” Vermont type trolls are ancestors of IV. As I described to members of U.S. Congress, Intellectual Ventures represents a major antitrust problem for Bill Gates, because Bill Gates could tell IV to destroy or harass whatever company that Microsoft or IV wished to compete unfairly against or even end. As such, while IV (in all of its shell versions) remains in existence, such antitrust/ patent misuse lawsuits can continue which will ensure that IV protects a Microsoft-centric universe.

    Almost all of such lawsuits brought by such patent trolls are against open source software companies (and IV has brought lawsuit against such innovative companies like Motorola Broadband, HP, etc.).

    Unfortunately for IV (and Bill Gates/ Microsoft since they are IV’s largest customer) and any other patent troll, since the licenses they obtained are obtained under duress (license my crappy patents or the troll will sue), the licenses are completely illusory. Consider the Al Capone licenses (I will give you an offer you cannot refuse), these licenses are not worth anything either.

    Small inventors are not a patent troll since you had something to do with the innovation (being an inventor). Article I, Section 8 of the U.S. Constitution specifically ties in the patents and inventions with their writings (in a similar manner that the same section ties in copyrights and writings with their writers). Since patents are by definition a monopoly, the only way they can be excused is based on the public disclosure of the innovation by the inventor to the public at large (we the people). Since patent trolls do not disclose any innovation, they cannot overcome the basic antitrust problem. As such, you being the inventor (or the company you are associated with, or that at least produces the product) would not be a patent troll. The real purpose of the patent troll is to wipe out areas of innovation (such as computer software, printers, etc.) such that they control the only ones that can practice in that area. You would not have that capability. If anyone has any questions, I can be contacted at info@ConstitutionalChallenge.org; and I believe this Constitutional challenge of Intellectual Ventures/ and potentially Bill Gates et al could develop into the largest antitrust/patent misuse lawsuit in the Country’s history. Bill Gates will be given the option of working with us and putting an end to all patent trolls, or his personal reputation and fortune could very much be at risk in this Federal lawsuit. Since Bill Gates is a consummate businessman and a hero of American innovation, I full expect him to make the right choice and take the opposed side to patent trolls, or he could be risking his entire fortune (along with Warren Buffett who is also closely tied in to the patent troll).

    ConstitutionalChallenge.org is also contacting such anti-troll companies as Apple, Google, Motorola, HP; the USPTO; the President, and discussing assisting them in starting their own similar anti-troll patent litigations against the top corporate officers and patent attorneys of the patent trolls (AND Microsoft with Bill Gates et al. as well unless they assist in putting an end to IV, the World’s largest patent troll). It might appear that ConstitutionalChallenge.org might be getting in on a game of Constitutional Poker (not to mention Federal Antitrust, patent misuse, and discrimination) with the patent troll and possibly Bill Gates. This time, Bill Gates and the troll are on the opposite sides of We the People.

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