In a stark warning to patent assertion entities and their lawyers, in November the Federal Trade Commission settled charges against a Texas company and its outside counsel for using phony legal threats to pressure small businesses into buying licenses. It was the first time the FTC had taken action using its consumer protection authority against a patent assertion entity, commonly known as a “patent troll.”
According to the FTC’s administrative complaint, Waco-based MPHJ Technology and its outside counsel, Farney Daniels of Georgetown, Texas, sent more than 9,000 letters to small businesses, claiming that they were infringing its patents related to network computer scanning technology. Written on Farney Daniels letterhead, they warned that the firm “would file a patent infringement lawsuit against the recipient if it did not respond.” Also included was a purported complaint, ready to be filed at the nearest federal court.
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