MPHJ Technology Investments allegedly made plenty of money last year using a rather interesting business model. First, according to a lawsuit filed by the State of Vermont, it bought patents of dubious validity that could theoretically cover basic technologies, such as the scanning of documents. Next, it and its subsidiaries sent threatening letters, with various misstatements of fact, to businesses and nonprofits around the country, alleging patent infringement and demanding payment. MPHJ never went to court; it is said to have just collected settlements, asking for a thousand dollars per employee of the targeted firm. It didn’t invent anything. It didn’t create anything. It just took advantage of our patent laws to leech money from companies that do.

It is time to declare total war on patent trolls. The federal government, and the states, should do everything they can to exterminate them and to make anyone regret getting into such crooked work. The existence of trolls is entirely a product of government: they abuse a government program (the patent law), and continue to exist only thanks to government inaction.

MPHJ, if the allegations are true, is an extreme case of a widespread problem. Patent infringement is easy to allege and expensive to disprove. The problem is compounded by theexcessive leniency with which patents have been issued over the past two decades, particularly for software and high technology. That creates ripe and lucrative opportunities for blackmail and extortion. One recent study suggests trolling costs the U.S. economy close to thirty billion dollarsa year. The mathematics of deterrence suggests that the government needs to make the life of a troll miserable instead of lucrative.

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Tags: MPHJ, patent infringement, patent law, Patent Trolls MPHJ Technology