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Notes on a “Scan”–dal

May 17, 2013

Step away from the scanner.

Or so says FolNer LLC and more than a dozen other shell companies, all claiming to own four patents allegedly covering the act of scanning a paper document and sending that scan by email. As reported by NBC Connecticut, a collection of LLCs with six–letter names (like FolNer) continues to target small businesses, like Southeastern Employment Services of Old Lyme, Connecticut. The LLCs are all Delaware entities associated with a company called MPHJ Technologies, to which the patents were assigned by an outfit called Project Paperless, which got them in turn from Renaissance Group. And, well, you get the picture. Hidden behind the screen of Delaware corporate law is a real party–in–interest behind this letter–writing campaign that cannot readily be identified from public records.

The pattern is familiar—indeed, so familiar we’ve discussed it before. FolNer sends a threatening letter alleging infringement of its patents, and demands that the recipient take a license that might cost upwards of $75,000. That’s a large sum of money to a small business, but not nearly as much as it would cost that company to defend any potential lawsuit to a final resolution in federal court. And businesses like Southeastern Employment Services don’t make or sell scanning technology; they’re just users with no particular connection to their scanners, software, and servers. It takes determination to stand up and fight a potentially expensive battle to defend a business tool made by someone else that has nothing to do with your core business competency. But there can be strategic value to taking a strong stand against this kind of intimidation. Not every company has Newegg’s appetite or resources for litigation; but that doesn’t mean there aren’t smart, effective, and cost–efficient defensive strategies that even small businesses can employ to resist demands like this one.

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