“Apple, Google, and other tech titans have manipulated and gamed the system so that it costs tens of millions of dollars and takes a decade or more to enforce a patent in court. This is no problem for the trillion-dollar tech titans, but inventors have virtually no chance.”
Apple made headlines with its recent decision to close its stores in Frisco and my home town of Plano, Texas. The rumor is that Apple was afraid of the dreaded “patent troll.” However, Apple is not afraid of patent trolls. They are afraid of inventors.
Whenever you hear the term patent troll, think of inventors. Inventors like my friend Bob Short, who solved an important technical problem in 1998 with his invention—a protocol that encrypts real-time audio and video transmissions. Apple wanted his technology for their FaceTime app, so they took it. Bob’s company, VirnetX, has spent six years trying to stop them and make them pay. Meanwhile Apple, Google, and other tech titans have spread propaganda and paid lawyers, academics, lobbyists, and politicians to destroy the U.S. patent system.
They called us trolls. They said patents stifle innovation. They said the Eastern District of Texas Court was biased and unfair. They persuaded the Supreme Court in 2006 that inventors must no longer be allowed to determine who gets to use our inventions or how they are used. They pushed for creation of the Patent Trial and Appeal Board, an administrative tribunal tasked with revoking our patents. They convinced the Supreme Court in 2017 to prohibit inventors like me from filing suit in my home state of Texas.
Gaming the System
The coup d’etat was in 2018, when the Supreme Court declared that patents are no longer property rights, thereby stripping inventors of the protections of an Article III court and a trial by jury. They have manipulated and gamed the system so that it costs tens of millions of dollars and takes a decade or more to enforce a patent in court. This is no problem for the trillion-dollar tech titans, but inventors have virtually no chance. It not only hurts inventors, but it drives private investment away from cutting edge R&D ventures and suppresses real innovation. Without time and capital, inventors will not be able quit their corporate job and fund their companies, like Bob and I did.
Bob and VirnetX have survived….so far. Apple despises the Texas judge who made them go to trial and they are aggravated by the Texas jury that said they owe VirnetX millions of dollars for using Bob’s invention without permission. They don’t want anyone telling them they have to obey the law. They are leaving Plano and Frisco out of spite and arrogance. They know that judges in other places, such as California, move cases slower and have less scruples about overturning jury verdicts. Another inventor friend of mine recently won a similar case against Apple, only to have the Silicon Valley judge overturn the jury verdict.
No End in Sight
I have experienced all of this. For four years I’ve been in a nightmare legal battle over my Bunch O Balloons invention. Telebrands, Walmart, and a host of other big corporations helped themselves to my invention, in complete disregard of my patent. They brought in the biggest lawyers in the business in an effort to crush me in court and destroy my business. They filed hundreds of motions, tens of thousands of pages, and drove my legal bills into the tens of millions of dollars. They filed a countersuit against me, serving me with a temporary restraining order on Christmas Eve of 2015. We have four massive cases in Texas, one in New Jersey, eight at the Patent Trial and Appeal Board, and 13 cases at the Court of Appeals in Washington, D.C. This blog reported that I won a jury verdict in 2017, but that was a hollow victory—I haven’t been paid a dime of it and probably never will. Their lawyers have fought another 16 months post-trial, and this is just for one of the three (so far) variations of knockoffs. They argue that they should get to keep most of their profits and pay me only a small fraction. They plan to appeal everything and drag this out several more years. They will argue on appeal that the case is illegitimate because it should have been moved to New Jersey. They will say my patents are not valid, and that even if they are valid, they don’t infringe them, and that even if they infringe them, they only owe me a small fraction of their profits. There is no end in sight. And this is in the famous “plaintiff friendly” Eastern District of Texas.
Apple senses correctly that inventors are in dire straits and one more blow will exterminate us. That is why they are moving their stores out of Frisco and Plano.
Image Source: Deposit Photos
Vector by jpgon
Join the Discussion
25 comments so far.
ClintMarch 30, 2019 02:41 pm
Lets get real here. Play smart.You know some fat cats behind the scene of this TC Heartland case got their palms well lubricated, don’t you know, big time, who paid these fat cats? why of course, the deep pocket guy! come on man! smarten up. The way to play this game is once you get something worth patenting. don’t patent, go to the deep pocket guys #1, #2, #3, etc and in that order of deep pockets, deepest first. and say hey i can do this and this do you need and want it? ok, deal or no deal, ok how much? done deal. take the $$$$$ and run to the next idea (no patents please). Play smart
angry dudeMarch 22, 2019 02:54 pm
Dude, thanks for your concerns and efforts
My own situation is just fine – most inventors can make a good living regardless of patents. Although I took a sizable loss but had wisdom to walk away just before being sucked into massive patent litigation (that was before the AIA – nowadays I would go bankrupt at the PTAB stage)
But without enforceable patents I have absolutely no incentive to publicly disclose anything new, useful and unobvious (and commercially applicable of course)
So back to trade secrets like in the Middle Ages
Fool me once – shame on you, fool me twice – shame on me
JacekMarch 22, 2019 02:50 pm
In China they solved the venue problem very simple truly 21st century way. They have specialized “Internet Courts”. So you can attend the hearings not leaving your office. Common sense solution.
JacekMarch 22, 2019 02:41 pm
My neighbor just gave me advise. If you are loosing use of your patent rights due to infringement and you feel that you are on the end of the rope, go to Moscow and assign your patent to some oligarch and forget about whole thing. They will take care of their business their own original way making offers without the option to refuse. Some people need to have their lesson. He said. I have no sympathy for white collar thief’s. He said.
AnonMarch 22, 2019 01:29 pm
As far as venue reform goes, I would be happy with the reasoning that when one obtains a patent, that patent is Federal, and applies throughout the US, making the right to enforce correspondingly throughout the US.
It matters not then where the Infringer is located, nor (except, of course, being within** the US), where the infringement took place, since the matter does not impugn a local or state matter.
Call this a “super” Federal Long Arm if you want.
**recognizing that certain items outside of the US may well be implicated, which does not affect the reasoning of Federal versus local or state reach.
KeyserMarch 22, 2019 01:12 pm
Its game over! Silicon Valley is more powerful then the NRA and the Vatican combined. Apple is a Trillion dollar company, Judges, Doctors, Electricians, Politicians, Lawyers all own shares and like their RoI. Greed will eat it self and this is exactly what Russia and China want. As Silicon Valley’s lobbyists pay off the politicians to keep in place the laws like EBAY-ALICE to keep the inventors from getting paid. America is slowly killing it self. Look Google, FB, Apple, Amazon are no longer American companies, they do not need America but America needs them. Apple owns $52.6 Billion in U.S. Treasury and has over $500Billion in off shore and on shore accounts. The American people love money and have been Hoodwinked once more and can not see that once IP is gone so is the nation. Apple, Amazon will survive, the American people will see even greater pain then they have ever experienced. Russia and China will thrive all because of Americas greed and love for money and their stock price. They say its easier to fool a person then it is to convince them they have been fooled its hard to listen to the warnings when your ears are plugged full of Silicon Valley’s dollar bills. No point having a patent in America as it not worth anything anymore, Its ok Germany and China’s hands are opening up with great welcoming. Every great empire has an expiry date.
Pro SayMarch 22, 2019 12:38 pm
Thanks for the article and your efforts on behalf of all independent inventors Josh.
While I knew about your battle(s), I had no idea that it’s an actual full-blown IP war you’re fighting.
I’ll never buy any products from Telebrands — ever.
I hope other of Gene’s readers will do the same.
PTO-IndenturedMarch 22, 2019 11:50 am
A Different ‘Blindfold of Justice’:
Intended in the U.S. to be a pinnacle of discernment of evidence, when set clearly before them, the U.S. courts ‘managing patents’ — at all levels — have turned a blind eye, and likely will never concede it was they principally perpetuating this, the darkest, most unjust span in the history of the U.S. patent system.
How ironic that this so readily endures, at a time when you’d think, an instantaneous access to information and transparency of accountability, would suffice to expose ongoing favoring by the courts, by Congress, of a new, most-powerful U.S. ‘Oligarch Class’. Wow, who needs inventions anymore, when this ultimate invention has been invented (contrived), and unleashed?
And still, the ‘evidence’ before OUR courts includes, favored Oligarchs since AIA, having stagnated, woefully absent a ‘Next Big Thing’; innovation so relegated to ‘incremental improvement’, that an ‘Apple’ of their eye loses an unprecedented half-trillion dollars in stock value in a single day; that U.S. ‘legacy handheld tech’ absent differentiation is now rapidly being supplanted by ISO 9000 quality tech from Asia — selling at a quarter of U.S. pricing.
U.S. justice is wearing a blindfold — but it is anything but the one intended to yield impartiality.
angry dudeMarch 22, 2019 11:37 am
Justice will come @10
Dude, it’s not that simple
Those biggest corporate *willful* infringers are all public companies and are the biggest constituents in Dow and Nasdaq (read 401K)
So lemmings will probably object to you doing justice old fashioned way or any way at all – as much as they may hate mega rich people like Bezos they also don’t want their 401K to drop like 30%
Elected politicians represent general population lemmings and not inventors (what percentage of US population are listed on US patents as inventors?)
concernedMarch 22, 2019 11:18 am
My “simplicity” is that any possible idea, not patented because of the view of theft and heartache, can bring the public to their knees.
Sub prime mortgages did it and so could a hypothetical “Star Wars” missile system that does not get developed. Does anyone really want to tell their neighbor they could have prevented being bombed into oblivion because “why even try to patent the idea and develop it?”
The public at large will not get to pick and choose which inventor will just say screw the whole patent process and keep their ideas to themselves. Our lawmakers need to protect even the thought of that happening. Different products/inventions, same underlying premise: What invention could we have but do not have, what mess could have been avoided and should have been avoided?
I am sorry for your situation that occurred.
CommentatorMarch 22, 2019 11:12 am
The great thing about our patent system in the past is that it allowed the small guy to take on the big guy, unlike most of the patent systems in Europe which have been stacked in the favor of the big guys for years. But the “troll story” was used to change all that — particularly through the AIA and activist courts. It is sad, but today there is little to dissuade the big guy from just taking from the small guy. In general, what is the worse that happens — paying what they should have for a license in the first place.
concernedMarch 22, 2019 10:21 am
I just talked to Nick Bush, Deputy Chief of Staff for Representative Stiver’s. He remembers you and has authorized me to give you his name, email and phone number. He said he heard your presentation yesterday(?).
I sent Mr. Bush’s contact info and also my info to Mrs. Quinn at IP Watchdog for her to share with you.
Thank you Josh and thank you IPWatchdog!
angry dudeMarch 22, 2019 10:10 am
To add to my previous comments:
Truly fixing US patent system means restoring injunctions, agreed ?
BUT… doing this will bring stock market to its knees – too much patented tech PURPOSELY stolen by big public tech companies over the last 10-15 years
– they stole patented tech from small to mid-size private US companies and individuals – including myself
AND those biggest tech infringers are the biggest Dow and NASDAQ constituents
What do you think is more important to a general-population lemming – his/her Amazon stock/401K or your/my ability to earn a decent living by inventing/patenting new stuff ?
angry dudeMarch 22, 2019 09:54 am
Dude, I hear you
But you lump together things that should stand apart
Like lumping Jobs (read Wozniak) and Gates from very early days of personal computers with relatively recent Brin, Page and Zuckerberg who succeeded with different types of products – neither computer hardware nor even computer software that executes on that hardware – just a bunch of software in the cloud providing searches and emulating some social interactions
BUT once those big tech companies got off the ground (regardless of their origin) they started to branch out like giant octopuses into all kinds of things – hardware, software, online services etc
Nowadays Google, Facebook, Amazon etc. are hardware, software and who knows what else companies (heck, Amazon wants to become your food provider too…)
The giant tech corps grow and branch out by acquiring few lucky startups (for outsized and unjustifiable amounts of money – e.g. Oculus) and steamrolling the rest of the startup competition – which is extremely unhealthy and bad for the whole startup ecosystem and tech economy
Patents are just part of this devastation – very important part, of course
Unfortunately, general lemming population could not care less about US patent system and American inventors
This is not even close to subprime mortgage crisis affecting millions of lemmings
sucked into debt
You can shoot all inventors (and patent attorneys) in this country and close down USPTO and lemmings won’t even notice it (maybe they will in 20 years when their popcorn runs out)
Try to do it to real estate agents and lawyers..
The situation with patents is grave and there is no easy fix for it
You should try not to simplify it by making irrelevant comparisons with e.g. subprime mortgage crisis etc.
P.S. My patent will run out in a few years and I do not expect to be paid a dime
(it solved 50 year old technical problem with over 200 issued US patents btw)
Looking back I regret time, money and effort spent on useless US patent
– I could keep it a trade secret and sell some products in small volumes under the radar OR just publish the whole thing online “to promote the progress”
Night WriterMarch 22, 2019 09:49 am
Wow. Great title and great framing of the problem. You are absolutely right.
Justice will comeMarch 22, 2019 09:05 am
These criminal corporations that steal inventor’s patents will never stop until they are held criminally accountable. The system that is supposed to protect inventors has failed miserably. Maybe its time to go directly to the corporate officers of the infringing companies and get justice the old fashioned way. Maybe then, these criminal infringers will know what was meant by “thou shall not steal”
Josh MaloneMarch 22, 2019 06:59 am
@concerned: please contact me. I am on LinkedIn. We need to work with Congressman Stivers on this. The bill he introduced last year does not help these problems, and in one way makes them worse.
Mark MartensMarch 22, 2019 06:15 am
It’s well spoken Josh. Kudos.
concernedMarch 22, 2019 04:21 am
Like Mr. Malone, my invention also solved a 63 year old problem that existed since the program’s inception in 1956.
Many of these tech giant companies were started by one or two individuals that were most likely college drop outs. Jobs, Zuckerberg, Gates and the Stanford “Google” duo had legal environments that allowed their companies to get off the ground. These people would be anonymous in today’s environment.
I think this article nails the current patent situation. However, just like the sub prime mortgage fraud, this patent fraud cannot sustain itself either. Little by little, the gamesmanship of the patent process will expose itself as an enemy of this country. The lawmakers will also be forced to correct the patent mess because it will threaten this country and the lawmakers’ power and position.
I talked to U.S Representative Steve Stiver’s Office and I really think his Office “gets” it. Will the solution be in time? Or will this country have another mea culpa announcement in the rose garden by the president and his cabinet members just like the sub prime mortgage mess.
I still can see the disgusted look on President Bush’s face when he addressed the nation from the rose garden to tell us we were almost on the verge of financial collapse. Of course, this event was preceded by an emergency meeting by the Federal Reserve on a Sunday (before the Asian markets opened as it was feared the worst would happen).
Some lawmakers involved in the sub prime mess were hoodwinked. Some lawmakers knew sub prime was wrong but never thought it would get that far out of hand. Some lawmakers did not want to know about it. 40% of the sub prime mortgage loan originations in 2006 and 2007 did not even make the first payment on a 360 month note. Sticking your hand into the sand does not make the situation go away.
Will Mr Malone, myself and others be able to hold on until the madness stops? We shall see.
mikeMarch 22, 2019 12:40 am
So, after subsequent court decisions following TC Heartland (2017) where Apple can ultimately find the reality of what venue implications exist, it pulls its stores out of Texas. This is a telltale sign that Apple knows it infringes and will continue to infringe. Apple cares more about continuing to break the law and prefers to infringe rather than sell its commercial products in a United States district. Hypocrites!
Why hypocrites? Well, fecall that last fall an ITC judge found that Apple infringed on Qualcomm’s patents. Nevertheless, Apple gets away scot-free by crying that “an injuction will not promote innovation — we must sell our products”, and the judge thus claims that Apple is too big to fail and the “public interest” weighed against issuing an exclusion order. So is it in the public interest for Apple to pull its commerce out of this United States district in Texas??? Because I thought society needed their products. This is a 100% hypocritical play by Apple.
This too is also part of the efficient infringement calculus performed by infringers — forcing independent inventors to travel to an infringer’s judicial district in order to protect his patent rights.
What if ALL COMPANIES decide to do the same and pull out of a district located within the United States? Is this also in the public interest for those citizens?
We need fair venue law so that companies like Apple will stop their illegal infringing activity, period. Regardless of location.
Congress needs to provide venue reform.
At a minimum: Congress needs to amend section 1400(b) to state that any civil action for patent infringement may be brought in a judicial district “where an inventor named on the patent in suit conducted research or development that led to the application for the patent in suit”.
This was introduced as S.2733 of the 114th Congress, but it stalled because the TC Heartland decision was pending. Now that TC Heartland tipped the scales way too far in favor of the infringer, and Apple is now skirting the law and being hypocritical about the public interest, venue reform is mandatory.
Opening venue include inventor-based research in a limited fashion as found in S.2733 protects against forum shopping, while also protects independent inventors, and thus innovation is promoted all the more.
@DaveBarcelouMarch 21, 2019 06:53 pm
Great article Josh!!! Couldn’t have said it better myself…yet! Would like to take this opportunity though to ask Gene to discuss the subject of “Past Infringement” re patents which expired w/in the past six years. An interesting subject I’ve learned…
Jason LeeMarch 21, 2019 06:23 pm
Josh I have been following your story for many years and I thank you for being a voice for the small patent holders out there, keep up the fight!! The evil patent pirates like Google Apple and Amazon must and will tumble with a united voice. Laws like EBay/Alice/Majo/PTAB/101 must be overturned. Politicians and the SCOTUS must be forced to do the right thing and stop catering to the Trillion Dollar Silicon Valley Oligarchy. There is still lots of work that needs to be done before a patent holder can get paid. Keep up the fight and thanks again for your voice in fighting this great injustice!!
Jan HvatumMarch 21, 2019 06:13 pm
I understand your frustration, the system for resolving patent infringement is frankly insane. Based on your summary of your invention, it seems you are owed a settlement.
Allowing software method patents was a grave error however, because they are equally used abusively by large tech companies to bully smaller startups (Microsoft/ vs. Linux). That abuse has made it widely popular and acceptable to seriously weaken the patent system. It’s also unfortunate that you compare VIrnetX patents with yours, quite frankly the patent that VirnetX case against Apple rests on should never have been granted. 6,502,135, specifically, is in essence a patent on having a DNS server for secure domain names only and then creating a secure connection. In no way did VirnetX (or SAIC) invent “a protocol that encrypts real-time audio and video transmissions”, actually the patent just mentions encryption as one possible method of providing security. Apple certainly didn’t get the idea of using a VPN from VirnetX.
StrongPatentsMarch 21, 2019 05:31 pm
Keep fighting the good fight, Josh. You are not alone!
angry dudeMarch 21, 2019 05:08 pm
Who goes to those Apple stores anyway ?
They recently closed one in South Jersey for lack of customers I believe