The FTC has forced notorious patent troll MPHJ to pay $16,000 for every misleading shakedown letter it sends in future.

Texas-based MPHJ, which owns a handful of patents, has been demanding money from 16,000 small businesses since 2012: it demands royalties of $1,000 per employee from companies that use networked scanners with a "scan to email" function – a patented technology it claims it owns.

If companies don't pay up, they're threatened with patent-infringement lawsuits; a headache no one wants.

In response to these ongoing shakedowns, US watchdog the FTC stepped in to put a stop to the practice, resulting in the deal announced on Friday. MPHJ will be fined $16,000 per letter that attempts to unfairly strong-arm others into signing licensing deals.

"Patents can promote innovation, but a patent is not a license to engage in deception," FTC director of consumer protection Jessica Rich said in announcing the deal.

"Small businesses and other consumers have the right to expect truthful communications from those who market patent rights."

The order [PDF], which allows MPHJ to neither affirm nor deny any guilt, says the company cannot threaten legal action against a business unless it has sufficient evidence to pursue a patent infringement case.

Additionally, MPHJ will be penalized if it misrepresents the number or dollar amount other companies have paid for similar licensing agreements.

To verify its claims, MPHJ will be required to keep track of its proceedings, including copies of patent assertion letters, contact information for all companies it issues letters to, copies of subpoenas and documents that show the company is complying with the order including "tests, reports, studies, or other records that relate to the truth or falsity of representations about the sale of licenses for a patent."

MPHJ a notorious patent troll firm in the IT industry: it has pursued thousands of claims against small businesses for activities such as scanning documents for email messages.

The FTC had alleged that the patent hoarder misrepresented itself in the letters by lying about the number of other companies who had agreed to licensing deals with MPHJ and claimed that the company intended to file suit when in reality it had no such plans. ®