Access practice tools, as well as industry leading news, customizable alerts, dockets, and primary content, including a comprehensive collection of case law, dockets, and regulations. Leverage...
By Tony Dutra
Aug. 11 — The Federal Circuit refused on Aug. 11 to step into the patent licensing “demand letter” controversy, a hot topic in Congress and among states expanding their consumer protection laws.
The court rejected a petition for writ of mandamus filed by MPHJ Technology Investments LLC, the target of several states' attorneys general for its mass mailings seeking royalties for patents related to scanning a document directly to e-mail. MPHJ was trying to move its conflict with the state of Vermont to federal court, but the appeals court's decision here means that the Vermont Superior Court will rule on its allegedly abusive business practices.
The court said it simply lacked jurisdiction to hear an appeal of the district court's decision to remand, which was driven by the conclusion that Vermont's complaint against MPHJ did not arise under federal patent law.
MPHJ's business model is to send letters to small businesses and others likely to have an allegedly infringing scanning device and threaten a lawsuit unless the recipient pays a license fee of about $900-1,200 per employee. In Vermont, a first such demand letter was sent from one of 40 wholly-owned shell subsidiaries of MPHJ. If the recipient did not respond, two subsequent letters were sent from the Texas law firm Farney Daniels LLP, each letter amplifying the threat of litigation.
Vermont Attorney General William H. Sorrell (D) filed a complaint in May 2013 against MPHJ, No. 282-5-13 (Vt. Sup. Ct.). The state made the charge under the Vermont Consumer Protection Act, 9 Vt. Stat. Ann. §2453(a), for unfair and deceptive acts and practices in commerce.
MPHJ removed the case to federal court, asserting a federal question in that the case arises under patent law, per 28 U.S.C. §1338(a).
Judge William K. Sessions III of the U.S. District Court for the District of Vermont said, “The State's complaint here is premised solely on Vermont state law, not federal patent law.” Vermont v. MPHJ Tech. Invs., LLC, No. 2:13-cv-00170-wks, 2014 BL 107238 (D. Vt., April 15, 2014).
Sessions remanded to state court, and MPHJ filed the petition and appeal at issue here. Vermont moved to dismiss.
The Federal Circuit's short discussion began and ended with 28 U.S.C. §1447(d), which begins: “An order remanding a case to the State court from which it was removed is not reviewable on appeal or otherwise.”
The district court's ground for remand—lack of federal jurisdiction—is covered under Section 1447(c), the court said, and the Supreme Court has said repeatedly that remand orders on Section 1447(c) grounds are “immunized” from appellate review.
“Section 1447(d) precludes this court from second-guessing the district court's jurisdiction determination regarding subject matter,” the court said, even in the case of legal error ordering the remand—something the court said twice.
MPHJ's case before the Vermont district court also included a motion to dismiss for lack of personal jurisdiction and for sanctions—grounds not covered by Section 1447(d). But the court rejected MPHJ's argument that Section 1447(d) was then “not even relevant.”
It said that “the remand order dominates any proceedings on this appeal,” in addressing the sanctions request. And though a district court could address personal jurisdiction before turning to subject matter jurisdiction, the court said, that “does not create an exception to the §1447(d) bar.”
The court thus granted Vermont's motion to dismiss.
Judge Pauline Newman wrote the court's opinion, joined by Chief Judge Sharon Prost and Judge Todd M. Hughes.
Assistant Attorney General Bridget C. Asay represented the state of Vermont. W. Bryan Farney of Farney Daniels, Georgetown, Texas, represented MPHJ.
To contact the reporter on this story: Tony Dutra in Washington at firstname.lastname@example.org
To contact the editor responsible for this story: Naresh Sritharan at email@example.com
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to firstname.lastname@example.org.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to email@example.com.
Put me on standing order
Notify me when new releases are available (no standing order will be created)