Blog Post

FTC orders scanner patent troll to cease sending scam letters, but imposes no penalty

Even by the standards of patent trolls, Jay Mac Rust is a bottom feeder. The Texas lawyer is responsible for more than 9,000 letters that demanded small businesses across the country pay for using scanners, or else face a patent lawsuit. And in more than half the cases, Rust drove home the threat by including a draft legal complaint naming the business and the nearest federal court — all the while counting on the fact that the victims would simply pay up rather than risk costly litigation over nonsense.

The good news is that the FTC has finally clipped Rust’s wings (sort of), announcing a settlement that requires him to stop sending out deceptive letters — meaning his particular brand of scanner scam is at an end. That scam involved Rust’s shell companies claiming to own a patent to a “document-to-email” technology, first described to the Patent Office in 1997, and demanding businesses pay $1,000 for every one of their workers who used a scanner.

The bad news, however, is that the settlement lets Rust escape without any punishment, even after his sprawling shakedown — which demanded honest merchants pay $1,000 for every worker who used a scanner — made a further mockery of America’s troubled patent system.

In describing the settlement, the FTC explains that Rust will now face a fine of up to $16,000 in the future if he fails “to refrain from making certain deceptive representations when asserting patent rights.” But there will no be penalty for what he’s already done.

Rust likely considers this the slap on the wrist. He sued the FTC this summer for allegedly violating his free speech rights to be a patent troll.

This outcome is not entirely the FTC’s fault. Its legal remedies are limited in situations where a person is not already under a consent decree and, thanks to the failure of patent reform, Rust’s tactic’s are borderline legal.

Still, it is hard to believe that Rust is not facing disbarment from the state of Texas, or another form of criminal prosecution from the feds. After all, if the Justice Department can use a white collar crime law to jail a man over a few fish, surely it can find a way to put the screws to a guy like Rust.