Judge: State AG Can't Hobble Accused Patent Troll's Lawyers

, The Litigation Daily

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Even among so-called patent trolls, MPHJ Technology Investments LLC is short on fans. Last year state attorneys general in Vermont, Minnesota and New York launched investigations into the operations of the company, which has fired off more than 16,000 letters to small business demanding they take a license to its patent for scanning documents to e-mail.

But even scourges have legal rights. In this eight-page order issued Tuesday, U.S. District Judge Joseph F. Bataillon in Omaha granted MPHJ's motion for a preliminary injunction that bars Nebraska's attorney general from enforcing a cease and desist order issued to the company's lawyers at Farney Daniels, a small firm in Texas.

"[MPHJ's] constitutional right to hire counsel of its choosing to pursue investigations and lawsuits against infringers is clearly impeded by the cease and desist order," the judge wrote. "Further, the federal government has preempted to a great extent the area of patent law. Allowing the attorney general to interfere might be harmful to the patent process."

The judge wrote that if Nebraska AG Jon Bruning's investigation of MPHJ turns up evidence supporting a claim of bad faith, he is "free to revisit this preliminary injunction with the court."

The ruling is clearly welcome news for MPHJ and its lawyers, who were already in the midst of a busy week. As we previously reported, Farney Daniels filed a declaratory judgment lawsuit Monday against the Federal Trade Commission in Waco, Tx., federal district court, accusing the agency of trampling on MPHJ's constitutional rights. And on Tuesday MPHJ inked a settlement with New York's attorney general, agreeing to reimburse any New York business that sent settlement checks in response to demand letters.

Barry Pound, a spokesman for MPHJ, emailed a statement saying the company appreciated the order in the Nebraska suit. "As MPHJ has stated all along, its activity has been entirely consistent with current law, and is protected by the U.S. Constitution," the statement said.

In an e-mailed statement, Nebraska AG Bruning said the New York settlement shows the need for further investigation into MPHJ's activity. "Nebraska continues to investigate the bad-faith efforts of patent trolls targeting Nebraska consumers and small businesses," Bruning said. "The settlement also solidifies our commitment to support legislation in Nebraska to protect our consumers and small businesses from patent troll harassment"

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