State of Vermont’s Demand Letter Case against MPHJ Continues

State of Vermont v. MPHJ Technology (Fed. Cir. 2014)

MPHJ has become the poster-child for bad patent trolling behavior and has been the subject of unfair-trade-practice action in several states. The basic idea is that MPHJ has mailed out more than 15,000 demand letters to small businesses who use scan-to-email technology. The set of five patents have a 1997 priority date. See patent, No. 8,488,173.

Vermont’s attorney general Bill Sorrell has been active in pushing against patent trolls and MPHJ in particular. In May 2013, Vermont sued MPHJ in State Court alleging that the company was engaging in unfair and deceptive trade practices under Vermont law and that the letters “contained threatening, false, and misleading statements.”

Up to now, the case has been in civil-procedure limbo. A major issue to be decided in the state-enforcement actions is the extent that state powers are preempted by the federal patent laws. MPHJ believes that preemption is more likely to be found if the case is decided by a federal court rather than a state court. As such, the patentee removed the case from state court to federal court on grounds of diversity and federal question. However, the federal district court remanded the case back to state court. In its recent decision, the Federal Circuit has tacitly affirmed the remand – finding that it lacks appellate jurisdiction over any appeal. In particular, the Supreme Court has held that there may be no appeal of a Federal District Court’s decision to remand under 28 U.S.C. § 1447(d).

The Vermont State Court will now handle the case and determine the extent that MPHJ’s actions violate the law.

IP Journalist Joe Mullin has written on MPHJ in several posts at ArsTechnica.

134 thoughts on “State of Vermont’s Demand Letter Case against MPHJ Continues

  1. Down below, Billy disparages Mullin’s credentials as an “IP Journalist” (apparently Dennis is an id i0t for suggesting that the term “journalist” could be applied to Mullin and no explanation is necessary for that conclusion — provided, of course, that you are as wise and objective as Billy).

    I think Mullin has done an excellent job for years now reporting on a diverse range of IP topics.

    The article “The six tech policy problems Congress failed to fix this year” (link here: link to arstechnica.com) is a good example. With respect to the patent reform bill that stalled out, Mullin reports:

    The Congressional standstill in tech policy is as visible and as hurtful as it is in any policy area. But there’s little excuse for it. Much of American political life results from the chasm between Republicans and Democrats: big-issue disagreements about taxes, health care, and hot-button social issues. Technology issues, by contrast, nearly always have zones of bipartisan overlap …

    [T]he Innovation Act … ultimately passed the House of Representatives on a 325-91 vote. The bill wouldn’t have shut down patent tr 0lling, but it would have made it a lot harder on the tr 0lls, giving tools to companies that were inclined to fight back….

    Reports on the bill’s untimely death all pointed to Sen. Majority Leader Harry Reid (D-NV), who told Judiciary Chairman Sen. Patrick Leahy (D-VT) that the bill wouldn’t be allowed to go to the floor. Insiders who spoke about the d eath of the patent bill said that two groups with serious political juice, big pharma companies and trial lawyers, pulled out the long knives to k ill the bill. More constituent-friendly opponents, like universities, provided cover…

    “I am furious with what happened,” Leahy said. “…I’m not going to give up.”

    This MPHJ litigation is going to keep the issue in the news, and it appears that a few Dem Senators (link to patently.wpengine.com), at least, are intent on keeping the spotlight on patent reform issues until we see another bill.

    Certainly there are many more important changes to come and very few of them are going to make patents easier to obtain or enforce. This pendulum ain’t going to be “swinging back” for a long, long time. And it’s never going to swing back to the State Street days. Not in any of our lifetimes, anyway. Anybody who tells you otherwise is either c l u e l e s s or they are trying to blow sunshine up your bu nghole in an effort to keep you interested in the future of their j nky patent gr ifting schemes.

  2. How is the July 2013 IPR activity progressing, on the asserted patents? How long before we know, whether the asserted claims are, actually, you know, what’s that word? Oh, I know, invalid!

    Anybody care to give me their best estimate of the timetable to a final decision on validity, one not susceptible of any further appeal?

  3. For those interested in the MPHJ saga, the oral arguments (open to the public, first come first served) in two of the IPR cases on their patents (there are a total of four so far, from what I’ve seen) will be next Monday, August 18, starting at 10:00am on the USPTO campus in Madison East, 9th floor.

    1. Thanks indeed, and interestingly the PTAB APJ’s on this apparently want oral arguments from all three petitioners. They are well aware from the briefs and media reports that they have an important and politically sensitive matter on their hands – i.e., that these are the patents of the mass-letter troll that set off the AG attacks and all the individuals and small and large business organizations running to Congress to seek anti-troll legislation.

        1. The attorneys, of course.

          More seriously, the troll lawyers would seem to have a lot more personally at stake here since IPR claim invalidity could logically be relevant to state AG consumer fraud charges. So I would expect them to file a Fed. Cir. appeal from what should be a PTAB IPR decison not more than a very few months from now, even if only to delay finality.

              1. “Rhyming slang works by replacing the word to be obscured with the first word of a phrase that rhymes with that word. For instance, “face” would be replaced by “boat,” because face rhymes with “boat race.” Similarly “feet” becomes “plates” (“plates of meat”), and “money” is “bread” (a very common usage, from “bread and honey”). ”

                link to ruf.rice.edu

                Anon, Google. Google, anon.

          1. Paul, unless one knows that a patent is invalid, I think one has a statutory right (the presumption of validity) to assert his patent against infringers.

            I would be aghast, appalled, and deeply angered if the Atty. Gen. lawsuit was premised in any way on the presumed invalidity of the patents involved.

            1. Hypothetical: Suppose the PTAB decides that the claims are unpatentable, MPHJ appeals to the CAFC, and while that appeal is pending, they continue sending out demand letters. Would you be equally aghast if the VT AG cited those circumstances to support their case against MPHJ?

  4. Do we have access to a copy of one of the subject demand letters?

    Also, don’t all demand letters include threatening statements? Is it the AG’s position that demand letters violate the law?

    As to alleging that the letters “contained …, false, and misleading statements.” Has the AG identified any of the alleged false and misleading statements?

            1. Who said anything about trying the actual case?

              I said the AG sent out a threatening letter with unsupported statements.

              I said based on this:

              “Vermont’s attorney general Bill Sorrell has been active in pushing against patent trolls and MPHJ in particular. In May 2013, Vermont sued MPHJ in State Court alleging that the company was engaging in unfair and deceptive trade practices under Vermont law and that the letters “contained threatening, false, and misleading statements.””

              and what was implied in your answer at 3.1 to my question at 3.0.

              The AG suit has all the characteristics of the terrible demand letters he is complaining about, threats (of expensive court litigation) and vague unspecified and unsubstantiated alleged infractions.

              1. Why does actually being in court make it worse?

                Again – they are in court – at this point trying to decide which court is the right court, and they have not yet gotten to the merits – which will come – there is no “threats” as per the demand letters, so I am not following what you are trying to say.

              2. No said otherwise Les – the point was not whether a suit was worse though. IT was whether the threat – being “unfounded” was worse – unless you are still moving goalposts, I am not sure your original comments to which I replied are still pertinent. Your post at 3.1.1 trying to draw a parallel doesn’t make it.

              3. Any deviation from parallel is in the direction of a suit from a state government with unlimited funding of other peoples money (tax payers) begin far worse that a demand letter from a non-practicing entity.

              4. Les,

                I get that you think that lawsuit by the State is bad.

                But that is not in the picture here. The comparison between entities is the threat of suit – if one entity already has brought suit, there is no threat.

                As I indicated, if you have moved the goalposts, that is a different matter. If you now want to quibble about a State ability to bring suit when the State is bankrolled by funds of the people, that is a completely different topic, and I am not sure how you are attempting a parallel to MPHJ. Can you clarify the parallel you are now attempting?

              5. I have not set or moved any goal posts. I merely used the Socratic method to make the point that the AG is doing (did do) exactly what he accuses MPHJ of doing.

                Why you think the fact that the suit is now moving forward erases that is beyond me.

                But please, don’t explain it.

              6. You did not use the Socratic method properly and you have failed to make any type of point for which my initial reply was addressed to.

                I have shown to you that the circumstances are different and that your original parallel does not fit. I attempted to give you the benefit of the doubt of a changes parallel.

      1. Wow, thanks Dennis.

        Do you see any portion of that letter that you would call : “threatening, false, and misleading statements.”

        It reads to me to be the most calm, friendly, helpful, clear and specific demand letter one could imagine.

        1. The letter itself is seemingly fine. The problem that the State Attorneys General are seeing is that the patentee mailed 10,000+ of these letters without conducted individualized due-diligence efforts to ensure that the letters are well targeted.

          The law allows patentees to communicate with infringers to demand that they stop and/or take-a-license. However, we also know that a patentee cannot undergo an enforcement campaign with total disregard to whether the campaign targets are infringing. The facts here are somewhere between these two flagstones and the Vermont court will decide more precisely how it falls out (assuming that the court first finds personal jurisdiction over the patentee).

          1. Isn’t “well-targeted” necessarily a function of the topic? If the patent is indeed valid and as extensive as claimed, how much is required to meet the “well-targeted” level?

            How much “targeting” was done? How much “targeting” did the State know was (or was not) done?

            How much is “total” in “total disregard”?

            (these are not questions asked with snark – and perhaps the case has some additional information, as in exchanges from the State, dutifully acting on complaints from its citizens)

            1. The vetting for suit topic appears not of much interest, but the letter itself does provide some background as to the target selection (“total” cannot be reached):

              Our research, which includes review of several marketplace trends and surveys, including various IDC reports, Infotrends reports and market share analysis, as well as a recent survey of an IT service company about the internal network environments of its clients…

              I “get” that the action has been unpopular, but infringement (by law) has not been written to excuse infringement by “end users” no matter how small that end user is.

              But for a patent, or a set of patents that cover “practice at least one of scenarios A through C above[,] Indeed such practices are now standard in many industries,” what level of particularization is needed beyond that which is plainly presented in the letter?

              Again – this is not snark, but even unpopular enforcement that appears to meet the legal requirements should not be singled out merely based on popularity or a misconception that “end users” are free to infringe.

              1. I think a patentee is obligated to consider the infringing product individually. Looking at economic reports and market shares might show that a business is taking away a patentee’s market share, but maybe the business is using a non-infringing substitute?

                Let’s say, for sake of argument, that MPHJ sent these demand letters to many people who are not infringers. You see the harm it does, right? I agree that the law shouldn’t protect infringers, but you need to protect the public from unwarranted demand letters.

              2. My questions go to what is the degree/standard for determining “warranted.”

                In this particular letter, is not the details shared meet that standard? The “standard” shared by Prof. Crouch included the notion of “total.” Clearly, the research done and the supposed widespread adoption of the patents indicate that no reasonable person could conclude that there was a “total” lack of proper determination of targeting.

                Does proper determination involve exacting individual determination? If so, surely “Tr011s” are not the only patent entity violating this protocol.

                The larger point being that “popularity” and wide-spread dustkicking are every bit at play here as is the supposed bad behavior – let’s not forgot exactly who coined the term “Patent Tr011″ and exactly why they coined the term (it was not for the public’s benefit).

              3. You are pointing to the particulars stated in the letter, but I don’t think that is enough. It’s not enough to say, “hey, we got a patent on scenarios A, B, and C.” (The writer can only assert as his opinion without a claim construction by a court.) You have to examine the infringing item and come to a decision, “that item might be infringing, let’s send a demand letter.” I don’t know what degree MPHJ has done that.

                Demand letters require more thought to how it is targeted than, say, an advertisement for children’s cereal. (And please notice I don’t use the politically charged word of “troll.”)

              4. OK – I see that the A, B, and C won’t satisfy – but the “infringing item” that you speak of appears to be addressed by the items as mentioned coupled with the IT customer type and configuration investigation.

                Again – my posts are neither a defense nor an offense – I am trying to gauge what the standard is, and knowing of and listing an exacting individual violation seems to be what is being promulgated. I don’t think that even comes close to the “total” notion and is in fact the opposite extreme of that “total” notion. What (safely?) removes one from the “total” notion is the apparently reasonable steps as included in the letter. If you think those are NOT reasonable (or sufficient), please provide the level that would be reasonable (or sufficient) with particularity. I “get” that you think the letter is not enough – but what is “enough?” You say that demand letters require more thought than a type of blanket advertisement, but I think that you make that statement too quickly and without regard to the patents at issue. It may very well be that a type of blanket “advertisement” is enough depending on the invention – that’s why A, B and C cannot be disregarded as you seem to want to do so quickly. On the other hand, are you saying that demand letters require MORE than notice pleading? That would be an odd state of affairs, would it not?

                The introduction of a non-infringing substitute seems to be a bit of a red herring.

                And yes, I notice that you do not use the politically charged word “Tr011.” But your “politeness” does not change the fact that others DO use that term – and more importantly – base their actions (or reactions) to that politically charged word. The reality is that the propaganda and denigration by use of the word DOES “work” to create actions where in the absence of such propaganda, action would not be taken. The reality is that propaganda works – much like the reality (to hearken to your advertisement model) that sex sells.

              5. From the standpoint of what I would consider good public policy (which is to say that I don’t know what the current legal standard is), I would say that a patentee should at least have evidence that the potential infringer in question has done something that at least looks, at first glance, to be an infringement. (Maybe an even higher standard would be justified, but this would be a minimum in my book.)

                On the other hand, simply saying that companies with non-infringing characteristics X, Y, and Z tend to be infringers some large percentage of the time is not sufficient. The allegations need to be particularized to specific possibly infringing behavior conducted by the potential infringer in question.

                Maybe one way of looking at it is that if you could convince a court to certify a “reverse” class action against all potential infringers similarly situated, then the allegations can reasonably be based on the ge neral behavior of members of the class. Otherwise, the behavior of members of the class is not sufficient to justify threats of rooting around through company records, etc., just to fish for evidence of infringement.

              6. Here is my answer. If the law is aimed is to prevent harassment of those who can not be reasonably inferred as infringers, then the patentee must tailor his exercise of his patent rights to individuals that can arguably called infringers. Whatever method used to find the infringers, it must not be over-inclusive. That is, demand letters cannot arrive on the doorstep of those who are clearly not infringers. (Notice I said, “arrive”… that means that language in the letter alone will not save a patentee.)

                Finding competitors in a particular market does not meet this standard. The considerations done by MPHJ do not seem like to me that they successfully prevent clear non-infringers from receiving this demand letter, in part because of my example that you called a red herring.

                I see your point when you say that, “maybe A, B, and C are enough” if the claims are, in fact, broad, or alternatively, A, B, and C are represented narrowly in the letter, then that might justify wide distribution of the letter. In circumstances when the invention truly changes the landscape, I will concede that it should be a factor in determining what steps the patentee must take to send out letters. The consideration must be of the claim itself, not the contents of the letter. Furthermore, even revolutionary patents do not justify indiscriminate sending out of letters. A revolutionary change in the screwdriver, by itself, doesn’t give the right of the patentee to send demand letters to every hardware store in the country. There still must be screening done by the patentee to ensure businesses that are clearly non-infringing do not receive the demand letters.

                I understand the distaste for the word “troll”, I think it is clearly a politicized word and now is almost useless… but not sure if you want to pick this battle to beat down the propaganda. As one shouldn’t rebuke another that is saying the sky is falling when an asteroid hit is imminent, one shouldn’t denounce the word “troll” in a thread about MPHJ.

              7. Sorry J, I cannot parse your answer to find clarity, as you use too many hedge words that remain unknown:

                If the law is aimed

                Aimed? what does that mean? Is there not a balance here? Where then is that balance? After all, patents are presumed valid by law, right? Does that fold into the calculation?

                of those who can not be reasonably inferred as infringers,

                Ah – but what is reasonably? Above you did not think the letter was reasonable. Why? I can easily see that same letter as eminently reasonable? What then?

                then the patentee must tailor his exercise of his patent rights to individuals that can arguably called infringers.

                How tailor? To what degree? What again is “arguably” and who decides?

                Whatever method used to find the infringers, it must not be over-inclusive.

                I disagree – you have moved to the opposite extreme of “total” – why should the patentee bear this extra burden of totally excluding anyone form an over-inclusive set? Again, you cannot arrive at your desired end point without a far more intrusive search and examination than even notice pleading requires. Since this is just a letter we are talking about, that cannot be right.

                That is, demand letters cannot arrive on the doorstep of those who are clearly not infringers.

                The goalpost moved – now you are at “clearly not” that is just not the same as the rest of your paragraph.

                I really don’t mean to be a pain, but are you beginning to see why I am questioning this entire “standard?”

                And without more I still must insist on excluding your red herring. Supposedly, the patents in issue are basically de facto standard for the conditions set up. If you are aware of some well known other non-infringing conditions, then perhaps I would cut you some leeway, but without more, and based on what is at hand, I think this must lean towards my view.

                The consideration must be of the claim itself, not the contents of the letter” I believe enough information is on the letter to cover what would be required of a letter – you seem edging again way past the state required to bring the lawsuit. Unless you can make a case that letters must be more stringent than lawsuits, I am going to rebuff these leanings of yours.

                Furthermore, even revolutionary patents do not justify indiscriminate sending out of letters.

                You clearly jump to assuming the conclusion that is not yet reached. What determines “indiscriminate?” I think that realistically speaking there is NO way to arrive at your desired state of NO noninfringers receiving letters. That is simply not even a realistic goal, given that that is what will be determined in court, not the letter.

                As for as the word “Tr011″ I do NOT pick this point to decide that MPHJ is or is not a Tr011 – I use it to draw attention to the fact that propaganda has been heavily bandied about and that ALL discussions must be aware of – and suitably discount the effect of that propaganda. Knowing a witchhunt is about is the first step in warding off the effects of the witchhunt. I need not – nor do not – fight the is/is not a “Tr011″ battle – in large part, because it is a political battle unconnected with the FACT that patents are meant to be treated as personal property and be freely alienable. Again – “unpopular” has nothing to do with the merits here.

              8. Do you want a standard or a bright-line rule? Of course some of the words are “hedgy”… it will have to be fact dependent. I’m speaking generally and beyond the facts of this case on the best way to enforce Vermont’s law.

                The statute aims to stop bad litigation practice of businesses being presented demand letters that are unwarranted. What is unwarranted? When there can be no reasonable argument presented that there is an infringing use of the product… considerations that courts consider all the time in all practices of law. (Your love of a Civil Law System is evident, as my love for the Common Law System).

                I understand your point that there is the balancing of one’s right to enforce one’s patents and the need to prevent abuse of those patents. I presented a standard that takes that into account: if there is any non-frivilous argument can be made that the recipient is infringing a patent, the patentee acted appropriately.

                In this particular case, what troubles me are the letters are unreasonable, not the letter itself. (In fact, I’m not sure the letter automatically allows for a DJ… except for the fact that 10,000 of them were sent. That is a topic for another day, though.) What I find particularly unreasonable is the volume of letters sent. Does MPHJ hope that at least SOME of the recipients will settle for a license even though one is necessary.

                One may get a license to go fishing, but I dislike the fishing for licenses.

                …why should the patentee bear this extra burden of totally excluding anyone form an over-inclusive set? Again, you cannot arrive at your desired end point without a far more intrusive search and examination than even notice pleading requires. Since this is just a letter we are talking about, that cannot be right.

                The desired end point is the policy objective of the statute. Questioning the wisdom of such a policy objective is different than questioning the manner to achieve it. I’ve answered for the reason for the objective (abuse of a patent can create a very big social harm), and my last post was all about the standard to get to it.

                As far as your point to notice pleading, Rule 11(b) imposes an obligation to attorneys to make reasonable inquiries and not use litigation to harass. I think the statute is trying to accomplish the same goals and apply them to businesses and their demand letters.

                I really don’t mean to be a pain, but are you beginning to see why I am questioning this entire “standard?”

                I understand why you dislike this entire standard thing… but you realize that your objection to my standard is no different than you can make to any standard, right?

                You are not being a pain, these are all fair questions. But I must ask for your opinion, now. Do you disagree with the policy objectives, or are you against this law because it has no workable standard?

              9. J,

                Thansk for the discussion – more later, but for now,:

                When there can be no reasonable argument presented that there is an infringing use of the product…

                I agree.

                But I would hold that the letter meets this requirement while you would not.

                How do we get to a point at which we both agree?

              10. Thansk for the discussion – more later, but for now,:

                “ When there can be no reasonable argument presented that there is an infringing use of the product…”

                I agree.

                But I would hold that the letter meets this requirement while you would not.

                I look forward to getting the full version of your opinion later.

                How do we get to a point at which we both agree?
                I don’t know, we’ll probably have to talk about something other than patent law.

              11. Standard or brightline rule?

                Interesting question. I want a standard that can serve MORE brightline than what I have seen so far. A standard that avoids any sense of “brightline” is not a workable standard, n’est-ce pa? The items that I took issue with in your response are critical items for us to resolve, otherwise, your answer is – and remains – a non-answer, as you have just run in a circle.

                I don’t mind a standard that is fact specific. But you have to be able to tell which way you will go with any set of facts. Not doing so is merely an excuse to make it up as you go. The letter here is an example. Under the facts given, I find the letter eminently reasonable. You do not. I ask of you: why not? And… what more?

                Is having a standard that can be understood a priori too much to ask for? I think not. Again, our discussion here is a perfect example: Respectfully, we have disagreed – and with your last comment, apparently will not be able to agree – as to the sufficiency of the letter to meet the standard. While you await my full response, I STILL await your explanation of what more should be required for a letter – without requiring more than what is required for bringing suit – or if you think more should be required in a letter than what is required to bring suit, why that should be so.

                I disagree with your characterization of I understand why you dislike this entire standard thing… but you realize that your objection to my standard is no different than you can make to any standard, right?

                I do not dislike “this entire standard thing” and there is NO way to arrive at that thought from what I have posted. My objections CANNOT be made to ANY standard – because my objections apply ONLY to those standards that fail for the purpose of having a standard in the first place, a far cry from your attempted portrayal of my views as being against all standards.

                You state What I find particularly unreasonable is the volume of letters sent. – this is a non sequitur. It is also a point that becomes subsumed into the context of the facts present – and one that I have already provided “justification” for. Given the facts presented – the nature that the patents at issue have become “standard” easily explains the volume of letters. I think you fall into the trap of “that’s unpopular” because of the volume, and because of the size of the entity being targeted. But a person who owns the property has every right to be selective in their enforcement – no matter how unpopular that may be. Your dislike for fishing for licenses has – or should have – zero legal impact on the legal issue at play.

                You ask Do you disagree with the policy objectives, or are you against this law because it has no workable standard? and I have to wonder why you even seek to question the policy objectives. How is that relevant to our discussion?
                I asked you about the aim – you want to spin my question around back to me? Let me answer thusly: an aim may be eminently worthwhile as an end unto itself, but the means to that end are not open to getting to the end no matter what or how. I have posted with vigor: the ends do not justify the means. Ever. As to your statement of and my last post was all about the standard to get to it. – read my reply again – your ‘all about to get to it’ was a FAIL. You did not ‘get to it’ because you inserted far too many of the same words that I am seeking clarification of. You provided a non-answer of circularity.

                You point out I think the statute is trying to accomplish the same goals and apply them to businesses and their demand letters. and I agree that this may be an aim – but you really don’t address my point that demand letters are NOT the filing of a law suit and that by attempting to make them on par, the AG is overstepping his authority and impinging on the lawsuit path. I “get” that the “severity” of sending letters is being sought to be placed under stricter control. I really do. But I have already pointed out that making that control as strict as filing a lawsuit cannot be the correct answer. You really do not address this point I make.

                I also find your comment (Your love of a Civil Law System is evident, as my love for the Common Law System). interesting – and perhaps more telling than you may have wished. You do realize that patent law in particular is NOT common law driven but statutorily driven, right? There is a critical understanding that must serve as a baseline in patent law discussions. Under our constitution, the courts are more strictly limited than in other areas of law. Congress had permitted the courts more latitude prior to 1952 to use common law evolution techniques to set the definition of “invention” in the formative “101” sense, but that power was expressly revoked in 1952. It is or paramount (dare I say Supreme) importance to understand this. Those who lean towards the common law view often make this fundamental mistake and seem clueless as to even making this mistake – even when this is explained clearly.

              12. Let me first say that the “we have to talk about something else” was only a joke… I said “I look forward to”, not “I await.” It wasn’t trying to be sarcastic, I was genuinely replying to your post that said, “more later.” We are busy people, reply if and when you want. And while I’m at the mea culpa stage of my post, I didn’t mean to say you are against all standards. (Straw man is the most annoying thing someone can do, and I hate to be accused of it.) You obviously are weary of my standard, alone. And all I meant to ask was, what standard doesn’t use my words of “reasonableness”, “trifling”, and so on? (More on the substance of that below.)

                You state the baseline is understanding that there isn’t common law in patent. Please note that I compared the Common Law with the Civil Law. I might as well has said, “standards” v. “bright-line” rules. Please don’t conflate Common Law system with common law. We begin and end with the statute, that much we agree, but the statute is not a complete codification in the same realm as the Napoleonic Code. I said it as a joke, harking back to our previous discussions on this issue.

                The discussion common law versus statute in patent is immaterial, because this is not a provision in 35 U.S.C., it isn’t even in a federal court. We are discussing how a state like Vermont can enforce this statute against bad business practice. Of course, there are preemption issues, but that is another discussion.

                I am trying to address your concerns, let me see if I can summarize them. 1) My proposed standard doesn’t provide enough clarity; 2) I ask too much of the patentee; and 3) I have yet to describe why the letter doesn’t meet my standard.

                I feel like you want to talk about different things than what I do. I am talking about the conduct behind the letter, you want to talk about the letter itself. The letter is not the problem, nor have I said the letter is unreasonable. I even asserted that the letter itself wouldn’t allow the recipient to seek a declaratory judgment. The problem is the misleading conduct behind the letter. Most likely (but I don’t actually know) people have received that letter in which there is no argument can be made that they are infringing. That is harmful, because these recipients might seek a license when they don’t need one, or cease their actions when they shouldn’t. Even if they get an attorney, that’s still money out of their pockets that they should never have spent. If every company sent out demand letters to every competitor for their patents, then businesses would be overwhelmed with continuous examinations of their product. The accused infringer shouldn’t have to do that, the patentee should do that!

                I keep beating a dead horse on the goal of the statute, but honestly, it is my justification to my standard, which you characterize as something more than notice pleading. My standard is quite simple, if not demanding of the patentee: “do not send demand letter to people that clearly haven’t infringed your patent, do some background research on the recipient.” The only time the contents of the letter will matter is determining if it is sufficient to serve notice. So the extent of my examination of the letter and its reasonableness is, “yep, it is a demand letter.” I really don’t care about the letter’s tone, I only care if a business got this letter when it was clear there was no infringment.

                Does it ask more than notice pleading? No, because the I feel like the same is asked of attorneys that serve lawsuits according to Rule 11(b). Note Rule 11(b) says nothing about the merits of the suit, investigation is still required. Why do you think that is? I think the answer is the same as why we don’t want demand letters to arrive at those who are non-infringers.

                Is it the same standard? Yes. Why is that ok? Because the public policy against the abuse of patents. And demand letters can be just as harmful as trifling lawsuits. (Remember, patents are an exception to the rule of allowing competition.)

                My means are not so unreasonable as you make them out to be. It is clear enough, “did you send a letter to someone that can’t be argued that is an infringer?” It is even “bright-line”-ish. Too harsh toward patent owners? To answer that question, you have to balance the policy objectives. I value businesses’ ability to conduct their business without undue harassment over the patentee’s ability to get every license it can… but it is still a balance.

              13. Respectfully J, you have yet to answer my question and instead have moved the goalposts and misrepresented my view point yet again.

                Particularly, you have ASSumed that on par with a law suit is an acceptable level of defining reasonableness for letters.

                Clearly, I have shown this cannot be so.

                You also seem to need to buttress your position with actions and facts beyond the letters.

                But this necessarily avoids the issue that I am pursuing.

                If you so need to draw in additional facts and circumstances, you are necessarily retreating from a discussion on the reasonableness of the letters in and of themselves – thus tacitly agreeing with me that the letter is reasonable.

                I am of firm belief that you really do NOT want to tacitly agree with me.

                But you do need to make your case on the facts here – and deal with the letter in light of those facts. You need to address the positions I have advanced, as those positions deal
                with the provided facts and the specific letter and deal with the reasonableness of the specific letter. I “get” that you want to have a different conversation on some different fact pattern involving more.

                But please, let’s have a conversation first on the merits here before we move to a different fact pattern involving acts beyond those presented.

            2. You cannot say “respectfully” and then later type, “you ASSume”. That’s just being a troll.

              I don’t see why requirements of sending lawsuits and sending complaints have to be different. Again, it is not asking more of the patentee, it is asking the same. You haven’t made it clear why this is a problem. All you have said is your personal opinion that “I used factors A, B, C to find 10,000 possible infringers” is enough to satisfy notice pleading. I wouldn’t use those factors used in the letter as a basis to serve compaints to 10,000 possible infringers without more investigation. Where is your support that such behavior wouldn’t make a lawyer subject to a Rule 11 violation? I don’t believe our pleading standard is that low.

              Speaking of pleading, I’m pleading ad naueam on my point that tone and words in the letter make no difference. You find the letter reasonable. To me, it depends on facts I don’t know. Much like whether to exercise jurisdiction in a declaratory judgment, the nature of the parties and their relationship determines if there is a “controversy” that triggers the statute.

              The letter alone is not enough to say that MPHJ is acting in a threatening, false, or misleading manner. Is that what you are trying to get me to say? MPHJ didn’t send a dead fish as in the Godfather, I admit, so it wasn’t that threatening. More than likely MPHJ didn’t misrepresent its patent, so we can’t say false. We’d need to know more facts to determine if MPHJ was misleading the recipient.

              1. I am sure that you don’t want to go the “That’s just a Tr011″ route, as you have now TWICE misrepresented what I have said and have NOT YET addressed the immediate issue which I have so clearly defined.

                Try again.

              2. Please don’t tell me to “try again” like you’re my mentor or something. You may think your writing is clear, but it’s not as clear as you think it is. You try again.

              3. Now you are getting snippy – and avoiding the fact that what I asked for in the very first place has not been delivered.

                (sigh)

                and I had hopes that you would actually want to discuss this. As it turns out, you want to discuss something else, and then circle around and around and around when it comes to the direct question on the letter here – and what standard would be needed – short of the standard for a lawsuit that such a letter would need to rise to. All we got was “’cause I feel that way.” Thanks.

              4. Snippy because you are being condescending. You say things that are “trollish.” For example, “I had hoped you wanted to discuss this.”

                I don’t have a standard lower than notice pleading because notice pleading is a low standard. It’s not a bar as much as a minor obstacle. You are setting up a game in which you will win. It’s the equivalent of me challenging you to a game of tennis but on the condition you can only use one hand.

                I find your comparison arbitrary, anyways. A heightened pleading standard prevented causes of actions because a plaintiff couldn’t learn the information until after discovery, so it was lowered and a liberal discovery enabled. Unless MPHJ has exhausted its researching efforts…

                You know what couldn’t be construed as threatening, fraudulent, or misleading? Sending a letter that requests information, but then cannot serve as notice.

              5. You are setting up a game in which you will win

                See link to en.wikipedia.org

                I do not “set up the game” – the game exists outside of me.

                And yes, I am a bit condescending, but hey, how many times do I have to ask nicely and have you yet mis-characterize what I say?

                You seem to have a real difficult time accepting any reality that is not in accord with how you want things to be. That’s a you problem.

                Bottom line is that it is a letter – not a summons, nor a complaint that invokes the law. You have simply set your “policy” filter too high, and you cannot provide any justification other than “that’s the way I want it.”

                Sorry, but that is just not reasonable. You can have the last word, and I am sure it will be a conniption.

          2. So then Dennis:

            Would you agree that the allegations of the AG that “that the letters “contained threatening, false, and misleading statements” is a false and misleading statement?

            1. I don’t know if any of the statements are strictly false. I also don’t know what precise duty-of-candor is placed on letter writers in this situation. To the extent that attorneys wrote the letters, they will also be accountable to their state bar ethics folks.

              1. Les,

                Is the focus that you are looking for more on the false and misleading, or is it in the mere threatening?

                I would agree with you that the State case (ANY State case) based on “threatening” is an instant fail. Such be impermissibly vague and overbroad (having serious First Amendment problems).

                Perhaps a link to the Vermont AG letter can be added (so statements of a false or misleading nature from the AG can be examined)…

              2. Anon –

                The main article says:

                “In May 2013, Vermont sued MPHJ in State Court alleging that the company was engaging in unfair and deceptive trade practices under Vermont law and that the letters “contained threatening, false, and misleading statements.””

                Surely the verb “sued” connotes the delivery of correspondence, a copy of the associated court documents perhaps. It is that “letter” to which I refer. Additionally, I assume there was correspondence “warning” of such a suit prior to the filing of the suit.

                If the quoted portions is correct (and I am sure that it is), then that letter alleges, and the assumed “warning” letters would have alleged that the letters sent by MPHJ “contained threatening, false, and misleading statements”

                I suspected, and now after reading one of said letters, believe even more strongly, that the allegation of the AG that the MPHJ letters include false statements, is itself false.

                Ergo, the AG is guilty of doing what it charges MPHJ with doing.

                capice?

          3. Dennis, I have not read the patents or know of the particularities of the basis for deeming the accused members of the public to be infringers, but it is possible, with functional claims, for virtually everyone who “does” something to be an infringer.

            1. My understanding is that the patentee’s review was a statistical analysis based upon the likelihood that particular types of businesses are likely to be infringing. It went something like this:
              (1) Conduct an analysis to identify types of businesses that are highly likely to be infringing;
              (2) Identify businesses that fit within the category of those “types of businesses”; and
              (3) Contact the identified businesses with the threat letter.

              1. Thanks, Dennis.

                Step 3 should be a determination of whether the identified business infringes in fact.

                Step 4 would then be a letter summarizing the results of that investigation and a demand if warranted.

                However, due regard should be given to the fact that when the patent covers a process or a machine used in producing products, the evidence of infringement normally is inferential at best.

                But what the Texas firm is doing here seems just one or perhaps two steps short.

      2. Sadly, the PTO proxy blocks Scribd, which is unfortunate because so many websites use it to share legal documents with their readers.

        1. APOTU – I can send you the letter. But, as mentioned in another comment, there is nothing striking or alarming about the letter itself. The “problem” is with the patentee’s shotgun approach to sending the letter to more than 10,000 small businesses without individualized due diligence to ensure that the target is a proper target.

          1. “But, as mentioned in another comment, there is nothing striking or alarming about the letter itself.”

            I just noted a few “striking” things in the letter itself below.

      3. Thanks for the letter D.

        “A good example of an infringing sytem, and one your company likely uses is an office LAN which is in communication with a server, employee computers having email software such as outlook or lotus, and a third-party scanner or multifunction printer with scanning functionality WHICH PERMITS the scanning of a document directly to employee email addresses as a pdf attachment. ”

        From what they just said it sounds like invention is “permitting” the scanning of a document directly to employee email addresses as as pdf attachment (in an embodiment) from a scanner. Or at least they subjectively believe it to be. Abstract at all? Lulz.

        Why on earth doesn’t someone put up a DJ 101 fight and tank all of the patents together?

        “We note here that the scope of the patents is technically defined by the claims” (because we or the drafters carefully disquised the abstract idea they were attempting to patent though we have no problem telling other people about it in demand letters lulz).

        1. Not to even mention that they seem to think the situation of not using their invention is “unusual” according to page 4. What, do they just presume infringement?

          And not to mention that they seem to believe that they have patented a “solution” not an invention at all, according to the last paragraph of page 4. “Solutions”, just like paradigms, are definitely not patentable subject matter :/

        2. Prior art: (1) Creating a digital file using a computing device capable of receiving data and creating a file from that data. (2) Sending the file to another person’s email address.

          What’s non-obvious about this invention? It’s “automated” or something, thanks to a “configured computer”?

          What an incredible piece of j nk. But not atypical j nk.

          This is the kind of j nk that the patent t e a b a g g e r s live and breathe for. It’s the sort of gar bage pretty much anybody can just dream up and file. And then you send the letters out.

          It’s “configured”, baby. That’s all anybody needs to know. And scanned files from printers are, like, totally different from other kinds of files that you can send to people by email. Really. Computers don’t like them because of the Android Printer Wars of 2219. Sooper compliriffic stuff, like rocket science except there’s no rocket and science.

          1. Prior art: 1)Birds fly and twist their wings while doing so; 2) Cloth has been used to harness the wind in sailing ships and windmills for hundreds of years 3) Wood has been used as structural material for thousands of years 4) rope has been used to tug on and pull things at least since the days of the pyramids.

            Whats non-obvious about this Flying Machine invention? The “configuration” of the pile of wood, cloth and rope?

            What an incredible piece of j nk

            Paleeeeese

            1. LOL – and if you want to get to the basics of even cloth, wood and rope, each of these things are configured merely of electrons, protons and neutrons, and these things are very, very, very old.

              /logically extreme but consistent

          2. MM,

            Not all fights have to be about patent validity. A patent can be perfectly valid but still be abused if demand letters are sent to non-infringers.

        3. no. What the letter says the claimed invention is is, scanning a document directly to employee email. They think they infringe because they own equipment that can do this.

          Its a bit like thinking someone drives because they own a car.

          Its not necessarily the case, but its a good bet.

      4. I believe there were other demand letters sent by MPHJ that are more problematic and contain outright lies. I can’t find a public example on the web to link to but look at the allegations in the FTC’s draft complaint.

        link to eff.org.

        1. “As part of their campaign to sell licenses for a portfolio of U.S.
          patents, the Defendants falsely threatened thousands of small businesses with imminent patent infringement litigation when, in truth, the Defendants did not intend to take and did not take such
          action. ”

          Threatened everyone with a suit agin em and had no plans to sue anyone. Just wanted to do a lil trollin’.

          “In addition, the Defendants falsely represented that substantial numbers of businesses had responded to their letters by purchasing licenses from the Defendants when, at the time of the representations, the Defendants had not sold any licenses to letter recipients. ”

          LOL. In other words, they allege nobody licensed this sht at the time the letters were sent claiming otherwise.

          1. “As part of their campaign to sell licenses for a portfolio of U.S.
            patents, the Defendants falsely threatened thousands of small businesses with imminent patent infringement litigation when, in truth, the Defendants did not intend to take and did not take such
            action. ”

            I’m sorry, lemme catch up… Are you telling me that the AG is complaining that MPHJ did NOT sue people?

            What’s he suing them under breach of promise?

            So, if he drops the gun possession charges against a mugger at some point, the mugger can sue the AG for NOT charging him with the crime he threatened to charge him with?

            Kewl. Someone make some pop corn. This should be good.

          2. “In addition, the Defendants falsely represented that substantial numbers of businesses had responded to their letters by purchasing licenses from the Defendants when, at the time of the representations, the Defendants had not sold any licenses to letter recipients. ”

            This is a misleading and false statement.

            What the letter says is that when informed that they are infringing SOMEONES patents, most businesses have TAKEN AN INTEREST IN operating lawfully and taking a license promptly.

            It also says they have had a positive response from the business community to their licensing program. I’m not sure what this means. Maybe it means their stock price when up when the business community heard about the program.

            It does not say anyone took a license from them.

    1. Interesting thread of comments here. But, much of the argument in favor of AGs behavior seems to assume that the provisions in HR3309 or S1720 regarding bad-faith demand letters and heightened pleading standards for patent infringement are law already. Both of these bills are stalled and likely won’t find there way onto the president’s desk in this session of congress.

      The AG is presumably relying on some Vermont state law to assert his claim against the alleged high volume sending of demand letters by MPHJ, but this is where it becomes worrying. Patents are a federal grant and enforcement against patent infringers comes under federal law, so AGs application of Vermont law to restrict a patent owner’s activities politely informing a range of potential infringers of the existence its (presumptively valid) patents seems to be overreaching on the AG’s part.

      1. Mark, I half recall that California or some such state recognized a cause of action for the bad faith assertion of a patent as a tort.

        What the AG is doing here sounds in tort as well.

        I assume the AG will have to prove his case without having to prove lack of infringement.

        But, what if the defendant attempts to prove actual infringement as a defense? Are we going to have a state court decide?

  5. Just a point of clarification, 1447(d) bars appellate review of a remand order. The SC has limited the scope of 1447(d) to remands based on 1447(c), lack of subject matter jurisdiction.

    The district court seems to have focused on the Federal Question issue, finding none.

    What is not clear to me is why there was no diversity jurisdiction.

    1. Comment: the whole point of diversity jurisdiction is not to be home-towned by the locals. If a federal judge will remand a case where there is clear diversity jurisdiction, the denial remand is obviously based on something else and not diversity.

      In Thermtron Products, Inc. v. Hermansdorfer, 423 U.S. 336, 96 S. Ct. 584, 46 L. Ed. 2d 542 (1976), the Supreme court reversed an appeals court decision not to hear a mandamus under 1447(d) when the judge remanded a diversity case because his docket was too full.

    2. Really Ned? You have trouble finding a lack of diversity?

      Not sure what Vermont’s actual long arm statute looks like, but for some reason, I would tend to doubt that diversity jurisdiction can be readily defeated.

      But I grant that you may in fact be correct – the court here should have addressed that for completeness sake.

      1. Not sure what Vermont’s actual long arm statute looks like, but for some reason, I would tend to doubt that diversity jurisdiction can be readily defeated.

        Ned’s talking about subject matter jurisdiction, not personal jurisdiction. Vermont’s long-arm statute is not relevant.

      2. “I would tend to doubt that diversity jurisdiction can be readily defeated”

        I do not think that says what you think it says.

      3. anon,

        In your comments (this and others), you truly are conflating diversity jurisdiction (which goes to whether the federal court has subject-matter jurisdiction given the limited jurisdiction of federal courts) and personal jurisdiction (which goes to whether the state in which the federal court sits can exercise jurisdiction over the party consistent with due process in the 14th Amendment). These are two separate concepts in civil procedure. A state’s long-arm statute, for example, is entirely irrelevant to diversity jurisdiction. A corporation is a citizen for diversity purposes where it is incorporated and it’s principal place of business. That’s true even if it is subject to personal jurisdiction in all 50 states via their long-arm statutes.

        (Putting aside that apparently a State has no citizenship for diversity purposes as explained by Dennis.)

        1. I think that the Prof. is trying to say that the State of Vermont is not a person (and is not a corporation) and thus, is not a “party” that would be affected by a diversity argument.

          However, I think that too misses the mark, as it is not the State that needs to be considered for diversity between a State court and a Federal court – it is the other party, here, the one claiming diversity because it is outside of the long arm reach of the state court (or so it claims – this claim is highly doubtful though).

          1. However, I think that too misses the mark, as it is not the State that needs to be considered for diversity between a State court and a Federal court – it is the other party, here, the one claiming diversity because it is outside of the long arm reach of the state court (or so it claims – this claim is highly doubtful though).

            You really aren’t the one who should be lecturing Les, since you clearly don’t know what you’re talking about. Once again, diversity is a subject-matter jurisdiction issue, and is entirely separate from personal jurisdiction. link to law.cornell.edu

            Diversity jurisdiction in the federal courts is a statutory creation – 28 USC 1332. Dennis is correct that the statute refers to “citizens,” which in the statutory context are clearly distinct from “States.”

              1. You continue to ignore how Ned is using the term – and it is that to which my comments go.

                LOL. You might want to read Ned’s comments again, including comment 2, where he initially raised the issue of subject matter jurisdiction and compared/contrasted federal question jurisdiction and diversity jurisdiction.

                Or you could just go on pretending that everybody except you is wrong to discuss subject matter jurisdiction, which is what the present case is actually about.

                Your choice.

              2. …or you can read his comment at 2:

                The district court seems to have focused on the Federal Question issue, finding none.

                What is not clear to me is why there was no diversity jurisdiction.

                …and continue to pretend that I am saying something other than what I said.

              3. “again, read what I have written – the actual words this time ”

                You mean like when you wrote:

                “I would tend to doubt that diversity jurisdiction can be readily defeated”

              4. or when you wrote:

                … it is not the State that needs to be considered for diversity between a State court and a Federal court – it is the other party, here, the one claiming diversity because it is outside of the long arm reach of the state court (or so it claims – this claim is highly doubtful though).

                This particular statement is nonsense regardless of whether we’re talking about diversity jurisdiction or personal jurisdiction.

              5. DanH he is a pa tho lo gic al liar pretending to be an attorney who is in reality a GUI designer. Why on earth are you going to sit and argue with him over lawl he learned how to fake talking about on the interbuts? Seriously?

              6. Aw, cmon, guys. You just need to try really hard to understand what Billy is talking about (and it wouldn’t be hard except that you two are both idi 0ts — at least that’s what Billy said).

                LOL.

        1. Postal Telegraph Cable Co. v. Alabama, 155 U.S. 482 (1894) (“A state is not a citizen. And under the judiciary acts of the United States it is well settled that a suit between a state and a citizen or a corporation of another state is not between citizens of different states, and that the circuit court of the United States has no jurisdiction of it, unless it arises under the constitution, laws, or treaties of the United States.”)

          1. ““A state is not a citizen. And under the judiciary acts of the United States it is well settled that a suit between a state and a citizen or a corporation of another state is not between citizens of different states”

            But NOW a corporation is a person….

            Mightn’t that change things a bit?

            If a corporation is Now a person, mightn’t a State also be a person under similar reasoning…a state representing a group of persons? ..and if corporations are persons of the U.S., mightn’t they also be citizens? They pay taxes, after all… or are at least subject to the loop holes of the tax laws.

  6. Seems like a straight forward procedural ruling -and one, absent the hyperbole attached to the players, would have been entirely unremarkable.

      1. You tell us, Billy. You seem to be trying to make a point but unable to find the words. Try harder. Ask your Mom to help you.

        1. LOL – “unable to find the words

          Not at all, Malcolm – the point is that I can make my point without providing the words.

          But for the simpletons (like you) that refuse to exercise your mind, let me be more clear: Joe Mullin continually FAILS to meet any reasonable standard for a journalist in that he refuses to check his sources and verify the factual basis for his rants. He continually FAILS to integrate into his rants corrected views that he builds his rants upon. He simply is not a journalist as would merit respect from a reasonable person in that profession. Does he meet some (extremely lowered) view of what that term means? – sure, but that standard is far more a cry of a joke than ANY diatribe cherry picked claim that you yourself can ever hope to post on this blog.

          Consider the source – ArsTechnica and Joe Mullin – those who know anything, know immediately the joke present. To those that need to be taught – consider yourselves taught. To those that are now taught (but will no doubt refuse that lesson) – well, did you hear the one about a horse led to water…?

          1. the point is that I can make my point without providing the words.

            Very impressive!

            ArsTechnica and Joe Mullin – those who know anything, know immediately the joke present. To those that need to be taught – consider yourselves taught

            Billy totally pwned Dennis, I guess.

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