Patent Troll to Repay NY Businesses in Settlement

The following appears on PCWorld.com

A settlement with a so-called “patent troll” requiring it to repay all money received from organizations in New York should serve as a warning to other companies engaged in similar practices, the state’s attorney general said.

Patent trolls are typically small companies run by a handful of people who buy old patents. They then contact target businesses claiming they may have violated certain terms of the patent and propose either a lawsuit or a settlement. The settlement is usually much cheaper than a possible legal battle, so the recipients of the letters typically pay the licensing fee.

New York State’s action was against MPHJ Technology Licensing, a company that has an online reputation as a notorious patent troll.

MPHJ contacted “hundreds” of small and medium-sized companies in New York over “likely” infringement of patents related to document scanning technology, according to a statement from the office of New York State Attorney General Eric Schneiderman, which announced the deal Tuesday.

The “deceptive letters” implied that MPHJ had already analyzed the target company’s scanning system and found it to be possibly infringing its patents when in fact, “MPHJ merely sent form letters to companies of a certain size and industry classification,” the state attorney general’s office said.