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State of Vermont Sues Patent Troll

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By Kelly Cheung on May 24, 2013 12:58 PM

The State of Vermont filed a lawsuit against a patent troll company for allegedly violating the state’s consumer protection laws. The company is accused of threatening small businesses and non-profits of patent infringement lawsuits if they do not pay licensing fees to them.

Vermont Attorney General Bill Sorrell said in a statement that this is believed to be the first time that a state is suing a patent troll company. There have been efforts lately to crack down on the problem of patent trolls, including some from Congress. Patent trolls have been found to make up 56 percent of the federal patent infringement lawsuits filed in 2012.

Patent trolls, or non-practicing entities, are companies that have a business of collecting fees for patent licensing from their patents and do not actually produce products or use the patents.

The defendant company, MPHJ Technology Investments, LLC. and its wholly-owned subsidiaries are allegedly sending out threatening letters to Vermont businesses and businesses outside of the state. The letters claim that the recipient is potentially infringing on their scanner-related technology patents.

The letters push for the recipient to either pay a suggested $900-$1,200 licensing fee or provide MPHJ with evidence that they are not infringing their patents. There are a series of letters supposedly sent out to each business, but sometimes a business will only receive the last letter, demanding a response or else a complaint will be filed against them. A draft complaint is usually attached.

The State of Vermont is seeking an injunction to stop MPHJ from sending more of these letters to businesses. The state claims that the company is violating Vermont's consumer protection laws by not performing their due diligence and using unfair and deceptive trade practices under 9 VSA Section 2453(a).

Among Vermont's claims are that MPHJ is sending out these letters without having any evidence of patent infringement by the businesses. The state alleges that MPHJ is making threats of litigating when they actually are not even prepared to do so.

This is just one way Vermont is attempting to put a stop to patent troll companies draining business' resources through frivolous lawsuits. Vermont also passed a "Bad Faith Assertions of Patent Infringements" law. These are steps towards stopping the abuse of patent infringement lawsuits.

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