Judge Dismisses MPHJ Technology's Lawsuit Against Federal Trade Commission
Ars Technica reports that on September 16th, U.S. District Court Judge Walter Smith dismissed MPHJ Technology Investments’ lawsuit against the U.S. Federal Trade Commission (FTC).
In its lawsuit filed in January 2013 against the FTC (complaint), MPHJ contended that the FTC had threatened to file suit against MPHJ, on the grounds that MPHJ’s patent-enforcement activities are a deceptive trade practice. (In the last several years, MPHJ has sent out thousands of demand letters to businesses across the United States, claiming that use of an MFP’s scan technology infringes on MPHJ’s scan patents. The letters typically demand that the business pay MPHJ $1,000 per worker or else face a lawsuit.)
In its lawsuit against the FTC, MPHJ argued that the FTC was violating its right to talk about and enforce its patents, a right it says is protected under the United States Constitution’s First Amendment.
However, U.S. District Court Judge Walter Smith sided with the FTC: “Being required to participate in an agency proceeding does not constitute final agency action,” he wrote in a 13-page order. To issue a declaration that MPHJ’s patent letters didn’t violate trade laws “would usurp the fact-finding responsibility vested in the FTC.”
According to Ars Technica: “Smith acknowledged that MPHJ has a constitutional right to petition the government, and that includes the right to file lawsuits and threaten to file lawsuits. The only exception is when such ‘petitioning” activity is a ‘sham.’ But again, Smith refused to determine whether MPHJ’s various letters were a sham or not, as that too would ‘usurp’ the FTC’s powers.”
In an e-mailed statement, an MPHJ spokesperson said the company is considering an appeal: “MPHJ respectfully believes the court erred in its decision. The FTC had threatened to sue MPHJ in that court, and MPHJ sought only to have the FTC’s claim resolved in that court. It is important to note that MPHJ was willing to litigate the issue in the federal courts, as it is confident that its conduct was lawful, a point recently confirmed by the Nebraska Federal District Court.”