High profile case between patent troll and FTC impacts IP law

The FTC urges the rejection of patent troll MPHJ Technology Investments’ argument that a law gives the company standing to sue the agency over an investigation of its business

The Federal Trade Commission (FTC) has recently urged a Texas court to reject patent troll MPHJ Technology Investments LLC's argument that a U.S. Supreme Court ruling on an Ohio election law gives MPHJ standing to sue the agency over an investigation of its business. It turns out that the latest developments of the case have a strong impact on patent law and IP litigation.

I recently sat down with Hogan Lovells’ Logan Breed to discuss the new developments of the high profile case and how it is affecting many facets of intellectual property. Today, Breed concentrates his practice on antitrust clearance of mergers and acquisitions, antitrust litigation, and non-merger antitrust investigations. Additionally, he represents clients in matters before the U.S. Federal Trade Commission (FTC), the Antitrust Division of the U.S. Department of Justice (DOJ), and various State Attorneys General, with experience in a variety of industries, including computer software and hardware, e-commerce, telecommunications, media and entertainment, defense, healthcare, and energy.

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According to Breed, as the FTC pointed out in its brief, the Ohio election law case has little bearing on patent law.  MPHJ tried to use the case to show that its complaint is ripe even though the FTC has not yet taken any “final action” yet.  MPHJ’s complaint argues that the FTC’s investigation of MPHJ’s practice of sending widespread demand letters violated its rights and should be enjoined.  In fact, MPHJ has argued that its behavior was consistent with appropriate patent enforcement, and the FTC has violated MPHJ’s First Amendment right to access to courts.  

“The FTC’s response is that MPHJ’s complaint is premature because the FTC’s hasn’t actually done anything yet that could infringe on MPHJ’s First Amendment rights (even assuming those rights would be infringed by an FTC action),” he explained. “The Ohio election law case is distinguishable because the plaintiff in that case was challenging the facial validity of the law – which MPHJ clearly is not doing – and the FTC has not yet even made a finding of probable cause against MPHJ.” 

Looking into the future, Breed thinks the resolution of MPHJ’s complaint in this specific case may not have much of an effect on IP litigation over the next 10 years, but the FTC’s efforts to apply Section 5 of the FTC to “patent troll” activity may have a profound impact if the agency starts to bring cases against entities like MPHJ.  Section 5 prohibits unfair and deceptive acts and practices, and the FTC believes that the practice of sending vague demand letters without a good faith basis for believing there has been any infringement may violate the Act.  Some state attorneys general, including the NYAG, have taken a similar position based on their analogous state laws.   

He said, “If the courts agree with the FTC and reject the First Amendment claims that MPHJ and others will surely raise, then some of the most egregious conduct by “patent trolls” may be swept away – thereby reducing both the volume of frivolous patent litigation and the amounts paid by operating companies to patent assertion entities for licenses to circumspect patent portfolios.”

Contributing Author

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Amanda Ciccatelli

Amanda G. Ciccatelli is a Contributing Writer for InsideCounsel, where she covers the patent litigation space. Amanda earned a B.A. in Communications and Journalism from...

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