Tim Steller: Eagle shows sharp legal talons to patent bullies

2013-06-07T00:00:00Z 2013-06-07T10:57:38Z Tim Steller: Eagle shows sharp legal talons to patent bulliesTim Steller Arizona Daily Star Arizona Daily Star
June 07, 2013 12:00 am  • 

An attorney general, three photocopier manufacturers and the White House all are confronting patent trolls, but what really demonstrates the trolls' retreat is their response to The Eagle.

In January, a Delaware company with a mumbo-jumbo name sent Tucson law firm Goldberg & Osborne a boilerplate demand letter asking for $1,000 per employee in licensing fees.

It's the same letter sent to thousands of small companies around the country, saying the recipient company owes the letter writer money because of the way the company presumably uses its photocopy machines to scan and send documents.

It was April before attorney John Osborne caught wind of the letters sent to his firm, which goes by the nickname The Eagle. On April 12, he sent the company a note on his law-firm letterhead saying he denied their claims and, indirectly, dared them to sue.

Five days later came the response: "It appears that the subject communications were sent to your law firm in error." In other words, "Oops, we didn't mean to demand money from a bunch of personal-injury lawyers!"

"I don't think they realized it till I responded," Osborne said with a laugh Thursday. "I got a big kick out of it."

The whole country seems to be catching on to the new wave of patent trolling that I first wrote about in February. For about a year, a set of strangely named companies - such as AdzPro LLC - has been sending letters to small companies, claiming the firms are violating obscure patents by using their photocopiers the way they're intended to be used - by scanning documents and emailing them using an internal network.

The companies doing this are sometimes called "patent assertion entities" in that they're formed strictly to make legal threats about business processes or technologies to which they claim to own the patent. They make money by demanding licensing fees.

Some companies have taken legal advice and quietly paid tens of thousands of dollars rather than expose themselves to expensive patent litigation. Tucson's GLHN Architects and Engineering received the same letters last year, and responded differently. Executives got their photocopier vendor to turn off the scan-and-send function, and told me their story for a column. That seems to have shaken the patent trolls.

"We're pretty comfortable with the idea that this is behind us," GLHN President Bill Nelson told me Thursday. "We're glad we didn't take our patent attorney's advice."

Back in February, Nelson told me he wanted the photocopier companies to step into the fray, since the patent trolls were demanding money from the photocopier firms' customers for using the machines the way they're meant to be used. Now, some are.

Xerox and Ricoh are challenging one of the patents that the patent trolls have been asserting. Hewlett Packard is challenging another.

Those are the most direct challenges to this patent-trolling campaign, but the Vermont Attorney General's Office also took it on May 8, when it filed a consumer-protection suit against MPHG Investments LLC, which owns the patents in question. The suit alleges MPHG, its companies and attorneys engaged in deceptive trade practices via their demand letters.

The White House also weighed in Tuesday, announcing a series of executive actions and requests for legislation related to patent trolling. One step was to tell the Patent and Trademark Office to design regulations ensuring that the real party holding the patents must be disclosed, not hidden in a series of shell companies.

Brian Farney, a Texas attorney whose firm represents the companies asserting the photocopier patents, said he has no problem with the president's executive actions.

"That's not a concern here," he said.

The companies are also getting more questioning responses to the demand letters they send, Farney said.

He added, "There's been an implication in the press that the client is trying to get them to pay whether they use the system or not. That's not the case."

In fact, as the experiences of Tucsonans Nelson and Osborne show, sometimes all you need to do with these bullies is fight back. These days it's not a lonely fight.

Contact columnist Tim Steller at tsteller@azstarnet.com or 807-8427. On Twitter: @senyorreporter

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