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Vermont AG wins remand regarding complaint against MPHJ Technologies

The state of Vermont has won the first round of a case in federal court against an alleged patent troll, but litigation is likely to continue in state court.

A U.S. District Court judge has remanded the state of Vermont’s case against MPHJ Technologies – which opponents claim is a patent troll – back to state court.

Vermont’s Attorney General Bill Sorrell has alleged that MPHJ Technologies sent unfair and deceptive demand letters to small businesses and non-profit organizations in the state, claiming patent violations.

His office further claimed the practice was a violation of the Vermont Consumer Protection Act, “which prohibits unfair and deceptive acts and practices in commerce in the state,” according to InsideCounsel.

The letters were described as “containing threatening, false and misleading statements.” The State of Vermont is trying to get civil penalties imposed on the company. The state also wanted a permanent injunction prohibiting the company from engaging in further unlawful business activity in Vermont and from sending letters threatening Vermont businesses with patent-infringement lawsuits, full restitution to businesses that suffered damages due to the unlawful acts, civil penalties of up to $10,000 per violation, costs and fees, and other relief.

On the other hand, MPHJ wanted the case dismissed because of a “lack of personal jurisdiction.”

“Because the Court does not have subject matter jurisdiction, the remaining motions are remanded to the state court for further resolution,” according to a ruling by U.S. District Court Judge William K. Sessions.

He ruled that the case should not have been filed in federal court under relevant laws, and remanded the case to the Washington Superior Court in Vermont.

According to the judge’s ruling, MPHJ is a limited liability company that operates in Vermont through 40 wholly owned shell subsidiary companies.

To get an idea of the kinds of letters being sent out by the company, the judge cited an example of a letter, which says, “We have identified your company as one that appears to be using the patented technology” owned by the Shell LLC. It asks that the recipient to either purchase a license from the Shell LLC or confirm that it is not infringing the patents. It claims too that the Shell LLC has “had a positive response from the business community to [its] licensing program,” and further claims that most contacted businesses “are interested in operating lawfully and taking a license promptly,” and that many “have responded to this licensing program in such a manner.”

In addition, the letter claims the fair negotiated price for a license is between $900 and $1,200 per employee, the judge’s ruling said.

Among the state’s allegations was that the company “targeted small businesses in commercial fields unrelated to patent law.”

 

Further reading:

Vermont attorney general brings aggressive stance to patent trolls

New report examines the economic cost of patent trolls

Will U.S. patent reform take place this spring or continue to be delayed?

 

 

 
 

Contributing Author

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Ed Silverstein

Ed Silverstein is a veteran writer and editor for magazines, websites and newspapers. A graduate of Harvard's Kennedy School of Government, he has won several...

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