A federal court in Texas has dismissed for lack of standing and ripeness and for failure to exhaust administrative remedies a declaratory judgment action filed by MPHJ Technology Investments, LLC (a so-called “non-practicing entity”), seeking to disrupt the Federal Trade Commission’s (FTC ’s) investigation into whether the company’s efforts to enforce its patents constitute unfair trade practices. MPHJ Tech. Invs., LLC v. FTC, No. 14-0011 (W.D. Tex. Sept. 16, 2014). The company has been sued by a number of attorneys general for threatening alleged patent infringers in their states with litigation if they do not sign license agreements and pay licensing fees.
The court found the litigation premature, because FTC has taken no action against the company beyond the investigation stage, the court cannot declare that the company’s letters do not violate the FTC Act without usurping FTC ’s fact-finding responsibility, and the company has not suffered any injury other than a requirement that it respond to FTC ’s discovery requests. The court further found that the FTC Act requires exhaustion of administrative remedies and that no exemption to exhaustion applied.