FTC Settles First "Patent Troll" Consumer Protection Action

On November 6, 2014, the Federal Trade Commission (FTC) announced the settlement of its first action against a "patent assertion entity" (PAE), also known as a "patent troll," for employing deceptive sales claims and fraudulent legal threats in demand letters to thousands of small businesses. The PAE is MPHJ Technology Investments LLC (MPHJ), a company in the business of acquiring patents in order to assert infringement claims and garner licensing fees. Although many companies engage in "troll-like" business practices, MPHJ is among the most notorious and aggressive. Despite having only one member, owner Jay Mac Rust, MPHJ has allegedly sent out demand letters from dozens of shell companies to more than 16,000 small businesses over the last two years. Even before the FTC's investigation became public, several state attorneys general had already launched investigations into MPHJ's practices and filed suit under state consumer protection laws, which are still