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Still No Answer From PTAB on Apple Sanctions Request Against VoIP-Pal After Six Months
“[M]any smaller, truly innovative entities find themselves slammed into a brick wall when attempting to enforce their intellectual property against one of the established Silicon Valley tech-elite. It’s no wonder why so many patent owners feel as though they’re the victim of a fraudulent promise…”

July 11, 2018 -- (via IPWatchDog.com) On February 9th, 2016, Bellevue, WA-based digital multimedia communications firm VoIP-Pal filed a lawsuit alleging claims of patent infringement against Cupertino, CA-based consumer tech giant Apple. According to VoIP-Pal’s complaint, the asserted patents represented fundamental advances to Internet protocol (IP) communications, especially the transmission of video, photographs and mixed media. VoIP-Pal had alleged that Apple’s iMessage and Wi-Fi calling features, both implemented on a wide range of Apple’s computing products, infringed upon the patents-in-suit.

Not preferring to challenge the validity of asserted patents on an even playing field in a U.S. district court, Apple turned to its old friend, the Patent Trial and Appeal Board (PTAB), to knock out VoIP-Pal’s patents. It’s no surprise that Apple would have relied on the PTAB to serve its goals given that the company benefits from the presence of an administrative patent judge (APJ) who used to serve Apple as a lawyer on defense in patent infringement proceedings. The PTAB is also the same agency that helped Apple skirt the rules on the statute of limitations for filing inter partes review (IPR) petitions in order to knock out incredibly valuable patents earned by VirnetX.

However, Apple’s PTAB campaign against VoIP-Pal didn’t exactly go according to plan. As legal filings published on VoIP-Pal’s website show, a total of seven IPRs petitions challenging the two patents asserted by VoIP-Pal were filed with the PTAB, four by Apple and another three by Dallas, TX-based telecom giant AT&T. Two of the Apple IPRs and all three of the AT&T IPRs were denied institution. The two Apple IPRs which reached final written decisions led to all challenged claims of the VoIP-Pal patents being upheld on the technical merits. In addition, the PTAB also denied an IPR challenge filed against VoIP-Pal by Unified Patents.

And yet, despite this apparent vindication of VoIP-Pal’s patents against the strongest of odds in an executive branch tribunal where APJ panels are stacked in the interest of achieving policy objectives, VoIP-Pal and its current CEO Emil Malak still find themselves to be stuck in patent purgatory over a sanctions motion which the PTAB hasn’t decided for more than half a year. Last December, Apple filed a motion for an entry of judgment in favor of itself as a sanction for improper ex parte communications by VoIP-Pal or, alternatively, for new and constitutionally correct proceedings. Apple’s allegations of improper ex parte communications revolved around a series of six letters sent between May and October of 2017 by Thomas Sawyer, former board chairman and CEO of VoIP-Pal. Most of these letters were addressed to PTAB Chief Judge David Ruschke while Commerce Secretary Wilbur Ross and former acting USPTO Director Joe Matal are included on some of the letters as well.

Sawyer’s first letter noted potential biases of two APJs named to the panels adjudicating the IPRs filed against VoIP-Pal’s patents: Stacy Margolies, who represented Apple in a patent infringement case in 2011; and Barbara Benoit, a former principal at Fish & Richardson, a law firm which has represented Apple in patent litigation at the PTAB. Sawyer’s letter also noted that the third APJ, Lynne Pettigrew, worked for eight years at AT&T, another party targeted in a patent infringement complaint filed by VoIP-Pal, and that then-USPTO Director Michelle Lee was a former executive for Google, another company which VoIP-Pal alleged patent infringement against. After Sawyer’s first letter, the entire panel of APJs in Apple’s IPR was replaced. Throughout his letters, Sawyer raised various concerns over the potential for bias and corruption at the PTAB, especially in service to major Silicon Valley firms like Apple.

Despite all these well reasoned arguments, the PTAB continues to drag its feet and every day that it does, the uncertainty surrounding the decision adversely impacts Voip-Pal. “It’s frustrating. I have shareholders calling me everyday asking me what do I have to do to monetize these patents now that we’ve prevailed at the PTAB,” VoIP-Pal CEO Malak said. “What can I do? Do I dig a grave and go into it, or do I fight? I will fight for my shareholders until I take my last breath.”

It’s clear that Malak has been facing no small amount of pressure and frustration stemming from a situation which has dragged on far beyond the point that VoIP-Pal should have been vindicated. It’s bad enough that patents issued by the U.S. Patent and Trademark Office are supposed to have the presumption of validity but the PTAB employs questionable standards in invalidating patents which the USPTO issued. It’s worse that, in case after case, the PTAB appears to be a servile puppy dog to Silicon Valley interests. In fact, many smaller, truly innovative entities find themselves slammed into a brick wall when attempting to enforce their intellectual property against one of the established Silicon Valley tech-elite. It’s no wonder why so many patent owners feel as though they’re the victim of a fraudulent promise which is broken far too many times by the USPTO and has had the effect of decimating the international ranking of our nation’s patent system. For too many inventors, a U.S. patent is not worth the paper it is written on and the forces which have accomplished this coup still hold sway over the PTAB, as is evidenced by VoIP-Pal’s current situation.

 

It is interesting to note that in at least two of Dr. Sawyer’s letters, he referenced the appointment of the former USPTO Director, Michelle Lee, who was previously lead patent litigator at Google, as the head of the USPTO during the formation of the PTAB by the passage of the America Invents Act. Despite Dr. Sawyer’s request that Lee be compelled to disclose her personal stock and options holdings in Google, invoking disclosure rules laid out by 28 U.S.C. § 455, the public is still unable to know about those potential financial benefits which alone would have represented an enormous conflict of interest for impropriety as Google is often involved in patent litigation. Ms. Lee resigned as the Director of the USPTO a short time after Dr. Sawyer’s first letter, which brought her interests into question. It’s not clear that the reason she left is connected to his letter but it would be interesting for the public to have a clearer understanding of what motivated President Obama to appoint someone so closely tied to Silicon Valley.

The fact that ex parte communications have caused such a stir in Apple’s IPRs against VoIP-Pal is very interesting given how the PTAB has reacted to allegations of such communications in the past. Anyone who followed the St. Regis Mohawk Tribe’s case at the PTAB will likely remember that the agency revoked the tribe’s ability to file motions in response to a request for discovery on the potential of political pressure caused by ex parte communications between APJs assigned to the case and their superiors at the PTAB. The PTAB denied that motion and restricted the St. Regis tribe’s ability to file motions within a month of St. Regis’ discovery request. That the PTAB has dragged its feet for more than six months on Apple’s request for sanctions on ex parte communications without the same level of punitive response is very telling. Interestingly, part of the PTAB’s reasoning for denying St. Regis’ discovery request was that the request came after a deadline was passed in the trial’s scheduling order even though the proceedings hadn’t yet concluded. The fact that Apple’s motion for sanctions came after the final written decision was issued in its IPRs against VoIP-Pal ought to make this decision even more cut and dry, one would think. That is, of course, if anyone at the PTAB were interested in things like fair play and justice.

In his first few months on the job, USPTO Director Andrei Iancu has been working diligently to set a new dialogue for the U.S. patent system, one which is “centered on the brilliance of inventors, the excitement of invention, and the incredible benefits they bring to the American economy and the country as a whole.” Bringing certainty to the legal proceedings of the PTAB by deciding this sanctions motion in a way that’s consistent with the PTAB’s previous holdings would be a good step in the right direction. It is also crucial for Director Iancu to address the lengthy process endured by small inventors and companies. It is far too heavy of a burden on these innovators to go through years of litigation, hearings and appeals.

Lastly, it’s interesting to note that Apple’s motion at the PTAB asks for new and constitutionally correct proceedings in the alternative to sanctions. Although the constitutionality of the PTAB was recently upheld by the U.S. Supreme Court in Oil States, a different case decided more recently by SCOTUS could call into question the constitutionality of the APJs deciding cases at the PTAB. In Lucia v. Securities and Exchange Commission, decided in late June, the Supreme Court decided that administrative law judges (ALJs) at the SEC were “officers of the United States” and thus subject to the Constitution’s appointments clause. In deciding the case this way, the Supreme Court overturned the D.C. Circuit Court of Appeals which held that ALJs were mere employees. Because ALJs take testimonies, conduct trials, rule on the admissibility of evidence, have the power to enforce compliance with discovery orders and issue decisions, the Supreme Court found that constitutional appointment of the ALJ in Lucia was required. The case was remanded for rehearing by a constitutionally-appointed judge who must be different than the original non-appointed ALJ deciding the case. It doesn’t take a great leap of intellect to see how the Supreme Court’s 7-2 decision in Lucia could be used to build a salient argument against the constitutionality of the non-appointed USPTO employees who carry out a slew of similar activities.

None of this deters VoIP-Pal’s resolve to protect its shareholders’ interests as evidenced by the initial legal proceedings against Apple, AT&T and Verizon, followed by action against Twitter and a second suit against Apple (based on recently granted patents), and a suit against Amazon relating to Alexa, Dot, and related products. Whether the PTAB will allow VoIP-Pal to assert its vindicated patent rights and provide a fair and efficient process that defends inventors’ patent rights, however, is anyone’s guess at this point.