The U.S. Federal Trade Commission (FTC) moved to dismiss patent monetization entity MPHJ’s W.D. Tex. complaint on Monday, alleging that the court lacks jurisdiction over the matter. Back in January 2014, MPHJ filed a complaint against the FTC in W.D. Tex., preemptively seeking to prevent an enforcement action threatened by the FTC. The FTC’s enforcement action was premised on MPHJ’s extensive letter campaign aiming to accumulate license fees on its scanner patents by threatening small end-users with litigation that MPHJ allegedly did not actually intend to pursue. See our January 14, 2014 post for more information on MPHJ’s complaint.
Moving to dismiss the action, the FTC argues that courts lack jurisdiction to enjoin future or pending administrative proceedings, which is precisely what MPHJ’s complaint seeks to accomplish. The FTC further notes that MPHJ’s claims are unripe because they constitute challenges to an enforcement action or administrative proceeding that have not yet been filed or initiated. So far, the FTC has merely begun investigating MPHJ and has invited MPHJ to consent to an order resolving the FTC’s potential claims against it. The FTC argues these activities neither constitute final agency action, implicate an issue that is solely legal in nature, nor impose a hardship on MPHJ that would give a district court jurisdiction over the matter.
To the extent the court is not persuaded by the lack of jurisdiction argument, the FTC argues in the alternative that MPHJ’s complaint should be dismissed under FRCP 12(b)(6). The FTC argues that MPHJ has failed to state a claim upon which the Court may grant MPHJ’s requested relief, noting that MPHJ’s Complaint does not identify statutory authority that the FTC has exceeded, that MPHJ’s First Amendment rights do not protect it from FTC investigation, that MPHJ has not provided ground to establish its attorneys are protected from liability for deception in violation of the FTC Act; and that the complaint fails to allege violation of any constitutional right to counsel.
MPHJ’s activities have been causing quite a stir nationwide. We previously posted about MPHJ receiving attention from the Vermont Attorney General in May 2013, and those of other states based on that letter campaign. In January 2014, we noted Judge Joseph F. Bataillon (D. Neb.) preliminarily enjoined the Nebraska Attorney General (AG) from enforcing a cease and desist order that would prevent or impede the law firm of Farney Daniels from representing patent assertion entity MPHJ to license or litigate MPHJ’s U.S. patents with respect to companies in Nebraska, agreeing to “revisit the preliminary injunction” if the AG’s continued investigation uncovers evidence that “supports a claim of bad faith” in MPHJ’s enforcement activities in Nebraska.
We also note that the Virginia General Assembly joined the state legislatures of Oregon and Vermont by approving legislation designed to protect entities doing business in Virginia from bad faith assertions of patent infringement earlier this month. See our May 10, 2014 post for more information.