August 21, 2013 | By Julie Samuels

Minnesota: Patent Trolls Are Not Welcome Here

Minnesota is the latest state to join the fight against patent trolls. It announced yesterday that it reached a settlement with the "scanner troll," who claims to own the technology for scanning documents to email and has been demanding that companies large and small who use this widely available technology pay up. This settlement follows what appears to be an investigation by the state's attorney general.

Patent law is federal law, which means that state courts usually don't get to hear patent cases. But lately, patent trolls have hit a new low, targeting end users and consumers. This behavior has gotten the attention of state attorneys general, starting with Vermont, who filed a complaint in May against the same now infamous "scanner troll" (MPHJ Technology), alleging unfair and deceptive acts under Vermont's Consumer Protection Act (PDF of the complaint).

But Minnesota's settlement with the troll goes even further. Now, before it sends any letters to Minnesota businesses, MPHJ must give the attorney general's office 60 days' notice and obtain its consent.

The Minnesota attorney general's reasoning was pretty simple:

The Attorney General's Office began to investigate MPHJ Technology for violations of state consumer protection laws last spring, after receiving complaints from several Minnesota small businesses that were targeted by the company. MPHJ Technology, through its affiliates and law firm, sent a series of increasingly threatening letters to small businesses that alleged infringement of its patents for using basic office equipment to scan documents to e‑mail. The letters pressed businesses to pay a fee of $1,000 to $1,200 per employee for a license in order to avoid litigation. Many of the letters promised litigation -- and some even included a draft lawsuit to be filed in federal court -- if the business did not respond or purchase a license.

There are no two ways about it: this settlement makes Minnesota companies safer, not just from MPHJ, but by creating an environment hostile to patent trolls in general. In fact, MPHJ has publicly stated that it "welcomes" the review process that's part of the settlement agreement. We have a sneaky suspicion that MPHJ, who, as far as we know has never even filed a lawsuit, will not be using this review process; instead, it will likely take its "business" elsewhere.

Hats off to Minnesota.


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