Use Network Scanners, Earn a Lawsuit

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Non-practicing entities, commonly known as patent trolls, have more often than not gained popularity for targeting small entities that do not have enough power to fight in courts and quickly settle the matter out of court. A study by the Santa Clara University’s School of Law has found that at least 66% of unique defendants to troll suits have an annual revenue of less than $100 million, and at least 55% come under the less than $10 million annual revenue bracket, with 40% of the threats targeting end users of technology rather than its creators.

There seems to be an emerging generation of patent trolls that leave aside technology as such and instead target entities using the end technology. If TQP Development demanded licensing fee for the use of SSL encryption protocol, ArrivalStar targeted users of vehicle tracking technology! A recent such incident that has taken the industry by storm is that caused by Virginia-based Project Paperless, LLC. It is believed to be run as a shell by an Atlanta law firm of Hill, Kertscher, & Wharton who are said to have created another group of LLC companies that have direct holdings in Project Paperless.

The modus operandi of Project Paperless seems quite a simple affair. Every entity uses an office scanner to scan and email documents. Project Paperless, LLC claims to hold a patent that requires licensing of this process of scanning a document, converting it into a PDF file and then emailing it! So all that Project Paperless, LLC does is spot potential targets (read small cash-strapped entities that prefer an out of court settlement) and issue letters stating every user needs to pay about $1,000 for utilizing this technology. While some companies were said to have paid damages to Project Paperless, some chose to ignore. But out came the warrior in Atlanta-based IT services provider, Blue Wave Computing.

Blue Wave found the demand for a licensing fee for its use of a network and scanner just the way it’s supposed to be used ridiculous and fought the matter successfully. But did that deter Project Paperless from continuing its trolling? NO! Determined to generate multiple returns on its patent investment, the LLC is believed to have created at least eight different licensing companies that send out nearly identical payment demand letters over the same patents once owned by Project Paperless! Quite a gold mine that it makes… but how long it lasts is something to watch out for.

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