New York Attorney General (AG) Eric Schneiderman has entered an agree- ment with MPHJ Technology, a patent assertion entity (PAE) operated by Texas attorney Max Rust. The agreement provides exemplars of the letters this PAE may use when informing New York businesses that they are infringing MPHJ patents and must obtain a license for their use or face litigation. The letters must be signed by the company and Rust rather than by any of its subsidiaries, may not contain a cash demand or boasts about positive responses from other businesses, and may not use the word “lawsuit.” Under the agreement, MPHJ must also refund any New York business that paid for a license. See NY AG Eric Scheiderman Press Release, January 14, 2014.
Meanwhile, MPHJ has filed a complaint against the Federal Trade Commis- sion (FTC) in a Texas federal court seeking to forestall threatened litigation by the agency over its “lawful, proper, and constitutionally protected efforts . . . to identify and seek redress for infringement of its U.S. patents.” MPHJ Tech. Investments, LLC v. FTC, No. 14-0011 (W.D. Tex., filed Jan. 13,2014). According to the complaint, which seeks declaratory and injunc- tive relief under the First Amendment, “FTC’s threatened suit is principally based upon the FTC’s contention that if any U.S. patent owner threatens suit for infringement, even against a single infringer, and then fails promptly to bring suit for infringement, then that U.S. patent owner has committed an unfair trade practice under Section 5 of the FTC Act unless the patent owner bears the burden and can prove that at the time the threat was made, it intended to bring suit.”
According to a news source, the complaint’s attached exhibits reveal how MPHJ organized its 101 subsidiaries—bearing six-letter names such as GosNel and IntPar, discloses the number of MPHJ’s targets and how they were chosen, and attaches FTC’s draft complaint, which “reveals the mystery of who actually owns MPHJ . . . Jay Mac Rust, a Texas lawyer with a trail of troubled cases, including one where he was accused of running a ‘Ponzi scheme.’” See Ars Technica, January 14, 2014.