Jay Mac Rust, pictured here in 2006, has reached a deal with the FTC after sending out 9,000 patent demand letters.
Last year, Congress held a vigorous debate over so-called “patent trolls.” One of the poster children repeatedly held up as an example of patent abuse was MPHJ Technology, owned by a Texas lawyer named Jay Mac Rust. Working with the law firm Farney Daniels, Rust sent out more than 9,000 patent demand letters to small businesses around the country, telling recipients that their networked scanner system infringed on MPHJ patents and asking them to pay a royalty of around $1,000 per employee.
Congress ultimately didn’t pass a patent reform bill, but MPHJ became mired in legal battles with state and federal authorities. Rust’s company was investigated by the Federal Trade Commission, and then it took the surprising step of actually suing the FTC first.
That lawsuit got thrown out, and now Rust, MPHJ, and Farney Daniels have reached a settlement with the FTC. Under the terms of the settlement, Rust and his lawyers are barred from making “misleading or unsubstantiated representations” in any letters they send out. There is no monetary penalty.
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