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April 19, 2017

Vermont Federal Court Rules In Support Of Vermont And Against Alleged Patent Troll In Preliminary Decision

Vermont Federal Court Rules In Support Of Vermont And Against Alleged Patent Troll In Preliminary Decision

Vermont Attorney General William Sorrell won a significant victory in the groundbreaking effort to make use of condition law to hack lower on “patent trolls.” In Condition of Vermont v. MPHJ, LLC, the Vermont federal court has rejected the preliminary bid of MPHJ, an alleged “patent troll,” to prevent facing possible liability under Vermont consumer protection law. Vermont’s federal judge William Sessions granted the State’s motion to remand the suit to Vermont condition court for more handling, and declined to think about MPHJ’s motion to dismiss the situation altogether. That’s, a legal court agreed with Vermont’s Attorney General the State’s situation against MPHJ doesn’t need an answer of federal patent issues and for that reason belongs in Vermont’s condition court, not federal court.

Because of the current insufficient federal law to broadly safeguard against bad belief claims of patent violation, Vermont’s Attorney General is trying to use condition law – particularly, Vermont’s consumer protection statute – to safeguard Vermont’s world of business against such claims. His suit against MPHJ belongs to that effort.

The Vermont suit against MPHJ, filed in May, 2013, was the very first condition situation against a business for alleged patent troll behavior. Attorney General Sorrell initially filed the suit in Vermont condition court alleging that MPHJ, a Delaware company, had violated Vermont’s consumer protection law by delivering a number of “cease-and-desist” letters to Vermont companies and non-profit organizations inside a plan to gather money. During these letters, MPHJ asserts the recipients are violating MPHJ’s patent and threatens all of them with law suit if they don’t pay a “licensing fee” to MPHJ. MPHJ claims it’s patent legal rights to particular scanner-to-email technology which any company that’s using such technology with no license is infringing MPHJ’s patent. Representatives of Vermont’s world of business who’ve received such letters from MPHJ along with other alleged “patent trolls” complain bitterly this “trolling” behavior is getting a debilitating impact on their companies as well as on the Vermont economy generally. The Condition alleges the delivering of those threatening letters to small companies and non-profit organizations is really a practice that MPHJ has involved in through the country, and it is unfair and deceitful since the letters contain false statements meant to induce the grateful recipients into having to pay a licensing fee to MPHJ.

MPHJ “removed” the State’s suit to federal court. In that way, MPHJ contended the federal court has exclusive jurisdiction because addressing the State’s claims against MPHJ will need a legal court to look for the validity and/or enforceability of MPHJ’s patent, and patent law is really a purely federal law issue. MPHJ also contended it has federal legal rights under patent law and also the First Amendment to transmit letters to alleged patent infringers.

In granting the State’s motion to remand the situation to condition court, Judge Sessions rejected MPHJ’s arguments. He held the State’s situation against MPHJ doesn’t challenge the validity of MPHJ’s claimed patent legal rights. Rather, the State’s situation relies solely on Vermont condition law: MPHJ’s alleged bad belief conduct in the manner it’s going after alleged infringers in Vermont, i.e., by delivering threatening letters which contain false or misleading statements. Thus, Judge Sessions concluded, the government court was without jurisdiction within the State’s suit against MPHJ, and MPHJ had incorrectly removed the situation to federal court. Accordingly, he sent the situation to Vermont condition court, where it’d initially been filed through the Attorney General.

It is really an important ruling since it states that the condition can pursue consumer protection-type claims against a patentholder in line with the patentholder’s conduct towards alleged infringers, whether or not the patent is or perhaps is not valid, and whether or not the companies that received the threatening letters do or don’t infringe the patent. This ruling might be reported by other courts in the united states for that proposition that the condition can pursue condition-based (non-federal) claims, in condition court, against a patentholder for conduct unrelated as to whether the patent applies or perhaps is infringed.

Obviously, this decision is really a jurisdictional ruling and never a choice around the merits from the State’s consumer protection claims against MPHJ.

Additionally for this suit, which tries to use existing Vermont consumer protection law to prevent an alleged “patent troll,” in May, 2013 Vermont grew to become the very first condition in america to enact condition legislation particularly targeted against “patent trolls.” 9 V.S.A. §§4195-4199. The legislation was the merchandise of the cooperative effort from the Vermont world of business, the Vermont Attorney General, and Peter Kunin and Eric Poehlmann from the Downs Rachlin Martin law practice. The legislation provides the Vermont Attorney General, and companies, the opportunity to bring a suit against patentholders who – acting in bad belief – threaten to file a lawsuit, or really sue, a Vermont company. The very first time, Vermont companies are in possession of something to assist level the arena against patent trolls. Following Vermont’s innovative lead, many states have finally suggested condition-level anti-troll legislation. And, there’s now also anti-troll legislative activity in the federal level.

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