Nonprofits Play Role in Patent Troll Debate

(Photo: Two Vermont nonprofits were threatened with a lawsuit if they did not pay licensing fees stemming from an obscure part of their office scanners)

It’s hard enough for business and nonprofit leaders to keep their organizations afloat without completely erroneous charges of patent infringement showing up in the mail. But that is exactly what has been happening to professionals around the country. Practiced by so-called “patent trolls,” these stunts involve shell companies that attempt to extract royalties from patents of dubious value. In many cases, the arguments are completely absurd and blatantly disingenuous. Two Vermont nonprofits play a big role in one of the most illustrative cases.

Lincoln Street and ARIS Solutions – Vermont nonprofits that provide disability-related assistance – were targeted by a Texan-owned, Delaware-based firm called MPHJ Technology Investments in 2012. The letters accused each nonprofit of owing thousands of dollars in payments stemming from the licensing fees of an obscure, MPHJ-owned patent relating to a specific part inside office scanners.

These patent-trolls may have stepped too far. The Vermont Attorney General has requested a federal court to dismiss a previous ruling that held that MPHJ could continue its duplicitous campaign. More businesses are starting to pay notice now that patent trolling has gained more traction in the media. Congress may also be taking serious steps to counter the phenomenon.

The trend continues, however, with many organizations simply choosing to pay for fear of costly legal services. This is awful and parasitic, stifling legitimate innovation and the work of fair-playing business and nonprofit leaders.

An online organization called Trolling Effects offers advice to victims of patent trolling. If you or an associate has received a confusing letter alleging patent infringement, consult their website, and contact other consumer advocacy organizations.

Indictment: Rep. Chaka Fattah Exploited Charities

Chaka Fattah – the longtime congressional representative for Pennsylvania’s 2nd district – was indicted this week on racketeering charges, potentially paving the way for a long prison sentence if found guilty.

Rep. Fattah purportedly used funding from his network of charitable nonprofits to pay off loans from his failed 2007 mayoral bid in Philadelphia. Other charges include using federal grants designated for his charities to line the pockets of Fattah family and political allies, as well as to pay off student loan debts for his son, Chaka Fattah, Jr.

Following the indictment, Rep. Fattah dismissed the charges as politically charged. The evidence against him – however – seems extensive, and paints a tragic portrait of how nonprofit organizations can fit into a nexus of greed, manipulation, and political power.

The FBI probe into the representative’s nefarious dealings have brought a number of potential infractions to light: Rep. Fattah engaged in a scheme to attract millions of dollars in federal grant monies to a scam charity, allegedly by using his privileged position on the House Appropriations Committee; he misused grant monies by doling out hundreds of thousands of dollars in consulting fees to closely-aligned friends and family; a former staffer and head of a Fattah-aligned scholarship charity directed $600,000 in federal money to pay off campaign debt following a failed mayoral bid; additionally, close political allies apparently funneled more than $22,000 of campaign funding to Drexel University and Sallie Mae in order to pay off Chaka, Jr.’s student debt.

The younger Fattah faces his own host of legal issues, as a trial is set to begin this fall over alleged bank fraud and scam consulting enterprises.

Whatever the result of the indictment and resultant trial, these allegations are an unfortunate blow to the Philadelphia nonprofit sector. Corruption and philanthropy for poor bed fellows, and any consequent distrust of the region’s predominately upstanding nonprofit professionals is a sad outcome of one political clique’s abuse of power.

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