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 The settlement with MPHJ Technology Investments LLC heralds what the
attorney general, Eric Schneiderman, called new guidelines to assure
that so-called "patent trolls" do not use improper tactics.
Also known as "patent assertion entities," patent trolls try to
extract licensing fees or file infringement lawsuits that some
critics view as frivolous.
Last month, the U.S. House of Representatives passed a bill to
require companies filing infringement lawsuits to disclose more, and
encourage judges to require losing plaintiffs to pay defendants'
legal fees.
That bill later moved to the Senate. Other state attorneys general
are also investigating patent trolls, and the Federal Trade
Commission is studying the impact of abusive patent litigation on
competition.
"So-called 'patent trolls' exploit loopholes in the patent system
and have become a scourge on the business community," Schneiderman
said in a statement on the MPHJ settlement.
"The guidelines established in today's settlement will put an end to
some of the most abusive tactics by placing the industry on notice
that these deceptive practices will not be tolerated in New York,"
Schneiderman added.
Schneiderman's settlement with MPHJ was reported earlier by The Wall
Street Journal. MPHJ could not immediately be reached for comment.
Its lawyer did not immediately respond to requests for comment.
According to settlement papers, MPHJ in 2012 acquired five patents
related to computer architecture for $1.
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It then created 100 subsidiaries with "cryptic" names such as "AbsMea,"
"FolNer" and "GosNel," which sent more than 1,000 letters to New
York businesses accused of "likely" patent infringement, the papers
show.
Targets had to sign non-disclosure agreements before receiving basic
information about the patents, and MPHJ sent more than 300 letters
threatening lawsuits unless recipients negotiated for licenses on
"reasonable terms," the papers show.
MPHJ has "to this day" filed no patent infringement lawsuits against
New York businesses, the papers show.
The settlement requires MPHJ to reveal its true identity to targets,
describe with "reasonable specificity" its claims, and have a good
faith basis for claiming infringements.
In a statement, MPHJ told the Journal it considered its patent
enforcement efforts lawful, but called the guidelines "reasonable"
and the settlement an "acceptable resolution."
(Additional reporting by Karen Freifeld;
editing by Christopher Cushing)
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