Antitrust Law Daily Wrap Up, CONSUMER PROTECTION—D. Vt.: Deceptive claims against supposed patent troll remanded for second time, (Jan 14, 2015)

By Greg Hammond, J.D.

Vermont Consumer Protection Act claims filed by the State of Vermont against alleged patent troll MPHJ Technology Investments, LLC were remanded a second time to state court by the federal district court in Burlington, Vermont. In granting Vermont’s motion to remand, the court determined that MPHJ’s second notice of removal was untimely (Vermont v. MPHJ Technology Investments, LLC, January 12, 2015, Sessions, W.).

Background. The state originally filed suit against MPHJ—a limited liability company that operates through 40 wholly-owned shell subsidiary companies—in May 2013, claiming that MPHJ engaged in unfair and deceptive business practices by sending letters to Vermont businesses and non-profits claiming patent infringement. The letters requested that businesses either purchase a license, or confirm that the recipient was not infringing. The letters also purportedly represented that MPHJ’s licensing program had received a largely positive response and that many recipients of such letters paid for a license. Follow-up letters were also allegedly sent from a Texas law firm, threatening legal action if the recipient did not respond.

Vermont alleged that MPHJ’s letters were false, deceptive, and misleading in violation of the Vermont Consumer Protection Act (VCPA) and the state sought a permanent injunction and full restitution for businesses that suffered damages. MPHJ removed the case to the federal district court in Burlington in June 2013, but the case was remanded because the claims did not invoke either federal question or diversity jurisdiction. After Vermont filed an amended complaint, supposedly deleting only one phrase from its prayer from relief, MPHJ responded with an answer, six counterclaims, and a second notice of removal, arguing that the state’s request for an injunction necessarily implicates the recently-enacted Vermont Bad Faith Assertions of Patent Infringement Act (BFAPIA). Vermont moved to remand and—in the alternative—to dismiss.

Untimely. In support of its motion to remand, Vermont argued that its amended pleading did not provide MPHJ a second opportunity to remove the case because the second complaint was essentially identical to the original complaint. The court noted that an amendment of a complaint will not revive the period for removal if a state court case previously was removable, unless the amendment provides: (1) a new basis for removal or (2) changes to the character of the litigation so as to make it substantially a new suit.

The court first noted that the state’s amended complaint did not change the character of the litigation in any way. Rather, similar to the original complaint, the amended complaint alleges that MPHJ violated the VCPA by engaging in various types of unfair and deceptive trade practices. Neither complaint seeks relief under the BFAPIA. Consequently, the amended complaint did not revive MPHJ’s ability to remove the case.

Second, the court determined that, even if the passage of the BFAPIA provided a new opportunity for removal, the second notice of removal was untimely. The BFAPIA was enacted in 2013, prior to the court’s initial remand. In addition, the court found that MPHJ was aware of the statute in 2013, as the company cited to the statute in documents. Consequently, MPHJ could have cited the BFAPIA as a ground for removal initially, or could have moved to amend to add its counterclaims at that time. MPHJ’s counterclaims therefore did not provide a basis for an untimely second removal, and the case was remanded to state court.

The case number is 2:14-cv-192.

Attorneys: Bridget C. Asay, Vermont Office of the Attorney General. Andrew D. Manitsky (Gravel & Shea PC) for MPHJ Technology Investments, LLC.

Companies: MPHJ Technology Investments, LLC

Cases: ConsumerProtection StateUnfairTradePractices VermontNews