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.

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