High Court Passes on Patent Demand-Letter Jurisdiction

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By Tony Dutra

April 18 — The U.S. Supreme Court's refusal to hear whether federal or state courts should deal with patent royalty “demand letters” could be bad news for 29 states with laws on the allegedly abusive letters.

The court rejected the state of Vermont's request that the Federal Circuit be barred from reviewing appeals from accused abusers.

But the high court also dealt a blow to MPHJ Technology Investments, rejecting its cross-petition. MPHJ, a non-practicing entity that mailed thousands of letters to small businesses in Vermont demanding royalty payments for using store-bought scanners, wanted federal courts to review its case for enforcing its patents.

Denial of its petition means Vermont can drag MPHJ into state court.

Dispute Preceded Special Legislation

MPHJ was accused of violating Vermont's general consumer protection statute, prior to Vermont's passing the Bad Faith Assertions of Patent Infringement Act (BFAPIA). Multiple decisions forced MPHJ into state court.

The U.S. Court of Appeals for the Federal Circuit handled MPHJ's appeal based on its patent-related counterclaim. The court ultimately gave Vermont what it wanted, but it also ruled that it would have authority to review BFAPIA judgments. Vermont v. MPHJ Tech. Invs., LLC, 803 F.3d 635, 116 U.S.P.Q.2d 1595 (Fed. Cir. 2015)(188 PTD, 9/29/15).

The other 28 states have laws similar to BFAPIA and would undoubtedly also be subject to the Federal Circuit's review.

Vermont had hoped the high court would tell the appeals court that it had no jurisdiction to even consider the counterclaim (02 PTD, 1/5/16).

MPHJ's Jan. 29 cross-petition argued that its letter-sending campaign was insufficient to meet the requirement of having “minimum contacts” with Vermont to establish personal jurisdiction (23 PTD, 2/4/16).

Vermont Solicitor General Bridget C. Asay was counsel of record for the state. Farney Daniels P.C. represented MPHJ.

Advocacy organizations Public Knowledge and the Electronic Frontier Foundation filed an amicus brief supporting review of Vermont's petition. PK's Charles Duan submitted the brief.

To contact the reporter on this story: Tony Dutra in Washington at adutra@bna.com

To contact the editor responsible for this story: Mike Wilczek in Washington at mwilczek@bna.com

For More Information

Vermont petition at http://src.bna.com/bOc.

MPHJ cross-petition at http://src.bna.com/coJ.