MPHJ Technology Calls Vermont’s Lawsuit a Sham, Seeks Sanctions

Lead MPHJ Technology litigator Jay Mac Rust, from 2006 magazine cover of Super Lawyers Texas “Rising Stars.”

Law360 reports that notorious patent-enforcement firm MPHJ Technology has struck back against Vermont’s attorney general, petitioning a court on February 14th to impose sanctions on the state of Vermont, calling that state’s lawsuit “a textbook case of sham litigation.”

In May, Vermont Attorney General Bill Sorrell alleged in lawsuit that MPHJ engaged in deceptive practices by accusing small Vermont businesses of infringing upon MPHJ’s document-scanning patents. MPHJ argues that a recent ruling by the Vermont Supreme Court shows that Sorrell’s suit is “frivolous and cannot succeed.” MPHJ is referring to a December 13, 2013 court decision for Foti Fuels v. Kurrle Corp., in which the high court held that Vermont’s consumer protection statute only applies to “practices that occur in the consumer marketplace.”

MPHJ, which has proven indefatigable in its efforts to counter government scrutiny of its tactics, said in its sanctions motion that the ruling means its private licensing efforts cannot violate state law, so the state “can no longer reasonably contend that it has any good faith basis to maintain this suit.”

“One would expect that a party in the same position as the state should not be able to persist in maintaining what has become demonstrably sham and frivolous litigation without there being sanctions, remedy and recourse,” MPHJ said. “And, such sanctions remedy and recourse are in fact available and should be awarded in this case to MPHJ.”

In his lawsuit, Vermont Attorney General Sorrell argues that MPHJ deliberately targets small businesses that are unsophisticated about patent law in the hope that the companies will quickly concede to MPHJ and pay its licensing fees.

Nebraska Attorney General Jon Bruning has also sought to block MPHJ’s activities, ordering to MPHJ’s law firm to stop sending demand letters that seek licensing fees for companies using their MFPs’ scan technology. However, last month, a federal judge in Nebraska granted MPHJ an injunction that barred Bruning from enforcing his order, ruling that it interfered with MPHJ’s First Amendment right to assert its patents and hire the counsel of its choosing. MPHJ is trying to use this Nebraska ruling to block Vermont’s enforcement actions.

Last month, MPHJ filed suit against the Federal Trade Commission over the agency’s investigation of its tactics.

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