Following an investigation of alleged deceptive patent-assertion practices, the FTC has reached settlement with non-practicing entity MPHJ (the so-called “scanner troll”) and its counsel, Farney Daniels PC. The resolution has resulted in an agreement and consent order that would bar MPHJ and the Farney Daniels firm from making misrepresentations — including deceptive claims concerning the results of licensing, sales, settlement, or litigation regarding particular patents, claims that a particular patent has been licensed to a substantial number of licensees, or claims that a particular patent has been licensed at particular prices or within particular price ranges – when asserting patent rights in the future. Under the proposed settlement, MPHJ and Farney Daniels are commissioned with certain recordkeeping practices and requirements that the parties fully document and substantiate any future patent assertion efforts and keep records demonstrating their compliance with the order for a period of twenty years. The FTC has invited interested parties to submit comments on the issues set forth in the proposed consent agreement via the FTC’s website through December 8, 2014.

As discussed in prior posts, MPHJ and its counsel drew nationwide attention after undertaking an extensive letter campaign in attempt to accumulate license fees on its scanner patents by threatening small end-users with litigation that MPHJ allegedly did not actually intend to pursue. MPHJ’s demand letters prompted legal action from the Attorneys General of several states, including Nebraska and Vermont. MPHJ also filed a complaint against the FTC in W.D. Tex. in January 2014, preemptively seeking to prevent an FTC-enforcement-action premised on the non-practicing entity’s demand practices. Judge Walter Smith dismissed MPHJ’s suit in September, writing, “There has been no FTC action beyond the investigative stage, other than FTC’s attempted settlement. There is, therefore, no imminent threat of prosecution.” The settlement also comes in the midst of the FTC initiating its “Patent Assertion Entity Study”, which was approved by OMB this August.