Beware of Patent Troll

By Katie Johnson
You’ve got options if a licensing agent demands a fee for scanning and e-mailing documents.
If your brokerage has been contacted by a company to pay a license for the right to scan a document to e-mail, you’re not alone. Real estate offices around the country have received letters from companies called AllLed, AdzPro, GanPan, and HeaPle, among others, claiming to have the exclusive right to send documents via e-mail from a multifunction copier machine, and demanding that you pay a licensing fee of $900 to $1,200 per employee before you can send a document.

Katie Johnson

Behind these demands is a company called MPHJ Technology Investments Inc., which owns several patents on the process of scanning or copying a document and sending it via e-mail from the same machine.
MPHJ is known as a nonpracticing entity, or patent troll, because it doesn’t produce anything; it merely asserts its rights to exclude others from using its patents. MPHJ has created about forty shell companies, usually with six-letter LLC names, to assert its patent rights.
Escalating Threats
It’s been widely reported that this patent troll has been targeting small and mid-sized businesses in a variety of industries in its effort to generate license fees by sending three standard demand letters through its shell companies. The initial letter is on company letterhead and requests a license fee. If that goes unanswered, a second letter is sent from a Texas law firm called Farney Daniels P.C. seeking a response and threatening legal action. If the second letter is ignored, a third letter is sent from the same firm and it contains a draft complaint that the firm threatens to file if a license agreement is not reached.
There is no evidence that MPHJ knows of any infringement before sending these letters. If you receive a letter, you should discuss your options with your legal counsel. Among the options to consider is:

• Ignore the letter. We’re not aware of any case that has actually been filed against an alleged infringer.
• Respond with a request for specifics. Ask why your equipment or software infringes the patents.
• Deny in writing that there is any infringement.
• Pay the license fee.
• Challenge the patent’s validity. After all, the patented process of scanning a document and sending it via e-mail from the same machine is a common, widely accepted practice. To submit a challenge, you can file a declaratory judgment action against the patent troll in which you seek a ruling by a judge on the patents’ validity. One company in Louisiana is trying to do this right now with a lawsuit it filed in federal court in April.

However, a more effective approach might be to file what’s known as an inter partes review with the U.S. Patent and Trademark Office, asking it to invalidate the patents. The manufacturers of the machines that make this patented process possible have taken a great interest in MPHJ’s efforts because it is their customers who are being asked to pay the fee. So, Xerox, Ricoh, and Hewlett Packard have recently filed inter partes reviews.
In addition to these attempts to invalidate the patents, Vermont’s attorney general has recently filed a consumer fraud lawsuit against MPHJ, alleging the patent owner’s aggressive licensing campaign amounts to unfair and deceptive acts. Unfortunately, it could be a long time before there is an outcome to any of these legal proceedings. In the meantime, you’re encouraged to consult with your legal counsel and consider your options if this patent troll finds you.
Learn more in a 6-minute audio podcast presented by NAR Legal Affairs.