A patent aggregator agreed to submit licensing letters targeting small businesses to Minnesota's attorney general for approval in what appears to be the first such settlement in the United States.
Companies that amass intellectual property portfolios but don't manufacture products - dubbed "patent trolls" by critics - have come under increased regulatory scrutiny. President Barack Obama called for reforms in June and federal trade officials launched an investigation of patent aggregators' impact on the U.S. economy.
In an announcement on Tuesday, Minnesota Attorney General Lori Swanson said MPHJ Technology Investments LLC had pressed businesses to pay a licensing fee of up to $1,200 per employee for patents that cover basic office equipment like document scanners.
According to the settlement, Delaware-based MPHJ agreed to submit future licensing letters to the AG's office for review. MPHJ had not yet collected any licensing fees when it agreed to the revised procedures, the settlement says.
In a statement, Delaware-based MPHJ said the agreement does not allege any wrongdoing by the company, and does not restrict its right to bring patent lawsuits against Minnesota companies.
"MPHJ welcomes this review process, as the questions that have been raised by the Minnesota AG went to the form of MPHJ's licensing and infringement inquiry letters, not the substance," the company said.
Swanson called the settlement the first of its kind between an aggregator and an attorney general.
MPHJ was also sued in June by the state of Vermont, which accused MPHJ of similarly targeting Vermont businesses with lawsuits over its scanner patents. MPHJ and Vermont are currently litigating over whether the case will proceed in federal or state court.
(Reporting by Dan Levine in San Francisco; Editing by Phil Berlowitz)