16,000 demand letters, 17 agreements to pay

by Walter Olson on January 21, 2014

Is this patent asserter seriously overestimating the persuasive validity of its claims to own the process of scanning a document to email? Or is there a rash of inappropriate resistance by small businesses nationwide? “MPHJ has sent letters to approximately 16,465 small businesses nationwide. … it only received 17 (yes, 17!) licenses. Yet the price of these 17 licenses was thousands of small businesses going through the stress and expense of facing a threat of patent litigation.” MPHJ is said to believe that if a business has more than twenty employees and operates in various fields such as “professional services,” it very likely infringes on its patent and owes a royalty of $1,000-$1,200 per employee. [Julie Samuels, Electronic Frontier Foundation; Joe Mullin, ArsTechnica, more and related last year on patent asserters in the office scanning field]

{ 7 comments }

1 Richard Nieporent 01.21.14 at 11:34 am

My first reaction was that we should kill all the lawyers. However much satisfying that would be, the real problem is with the patent examiners. If they wouldn’t keep on issuing patents for basic software programming concepts, then we wouldn’t have to worry about patent trolls. One of the patents states the following:

In addition, the method described herein for creating a component factory creates a well-defined multi-tiered architecture for a component and automates, substantially automates, or manually expedites hereinafter automate the process of migrating a “C”-API from its native state through the various tiers of the architecture resulting in a standardized component. … The purpose of the Virtual Copier (“VC”) aspect of the present invention is to enable a typical PC user to add electronic paper processing to their existing business process.

In essence the patent is for a method for standardizing the API for copying a document on a fax and sending it to a computer over the Internet. The original Telnet and FTP RFCs specify a Virtual Terminal and a Virtual File for allowing uses to remotely access a terminal and to allow files to be transferred between computers. This technology dates back to the early 1980s. In other words, even if you believe that one should be allowed to patent such a concept, which I don’t, there is prior art for this concept.

Clearly the quality of the patent examiners leaves a lot to be desired. This is made evident by the fact that many perpetual motion machines that have been patented. You would think that a patent examiner that approved such a patent would be fired for incompetence. However, being a government employee means that one never has to worry about losing his job.

2 Don 01.21.14 at 12:27 pm

my employer got one of those demand letters about 18 months ago. I did some research into the validity of their patent, and decided there was enough prior art, and potential liability on the part of the companies who make the scanners, that we would be safe. We ignored them.

In the letter, they try to make it a special point of emphasis that the patent attaches when we make the decision to use the scanning device as designed, not to the manufacturer who offers the feature. I think this is legally shaky ground

3 gasman 01.21.14 at 12:38 pm

What is the basis of this shakedown?
Scanners, if I understand correctly the technology being described here, obtain a digital image of a paper document.
If the maker/seller of these devices has overstepped their patents on the hardware or software components sold to me, then they should be the target.
Moving a scanned digital file into and e-mail seems like something the computer’s operating system enables, and if there is a patent problem here they need to take it up with Apple.
And as for the idea that a scanned document can be incorporated into an e-mail, then that does not meet the patentable test of being non-obvious. For two decades now every school child could figure this out on their own; and even some of their parents and teachers, so definitely obvious by any definition of that term.

So why would any small business not toss such demand letters in the trash or forward to their legislator as an example of the dreck that is abusing the patent system.

4 jdgalt 01.21.14 at 2:53 pm

Nit: Electronic *Frontier* Foundation.

5 Walter Olson 01.21.14 at 3:03 pm

Whoops, fixed now.

6 JTW 01.22.14 at 1:06 pm

“So why would any small business not toss such demand letters in the trash or forward to their legislator as an example of the dreck that is abusing the patent system.”

Same reason many companies and individuals enter into plea bargains and pay up when threatened with legal action: they don’t want the trouble and/or the cost of paying the protection racket is lower than the cost of fighting against it (and yes, things like this are a protection racket).

I worked for a small startup some decade ago. We got hit by something similar.
Lawyer sent us (and tens of thousands of other small companies) a letter threatening legal action for intellectual property theft if we didn’t pay up several tens of thousands per employee for “photocopies made from magazines and books”.
Never mind that such would be both perfectly legal and he didn’t even bother to ask whether we even had a photo copier (we didn’t).

We sent a nice form letter back thanking him for his worrying about our legal problems and telling him we didn’t have a photocopier and he could go to hell.
Never heard back from him.

7 Ron Miller 01.22.14 at 1:32 pm

“So why would any small business not toss such demand letters in the trash or forward to their legislator as an example of the dreck that is abusing the patent system.”

Obviously, they are in massive numbers, they toss them in the trask You could probably send out 16,000 letters asking for donations because “I really need it” and get a similar response rate.

Comments on this entry are closed.