Bellevue company patent infringement win gives small inventors hope

Business Commentary: an in-depth view of issues impacting people and our economy

In America, when people invent things, they expect their trade secrets to be protected by

federal law when their government patents are approved. However, that isn’t always the case.

Patent infringements are life and death for inventors especially when their ideas are

incorporated into products made by larger and better financed competitors who avoid paying

licensing fees. Too often the originators sue, run out of money fighting off competitors, and simply

fade away.

Until recently, our courts have been little help to patent owners. However, an obscure

Patent Trial and Appeal Board (PTAB) provides new hope for the small guys who worked tirelessly

perfecting their innovations.

The PTAB was formed in 2012 to implement the American Invents Act of 2011, a measure

passed by Congress and signed by President Obama. It consists of three members who rule on

patent infringements. It has been frequently criticized as a tool of major companies; however, the

game-changer is its unanimous decision favoring Voip-Pal. Its patent granted by the U.S. Patent &

Trademark Office was infringed upon.

Mike Flynn, retired publisher of the Puget Sound Business Journal and author of Flynn’s

Harp column, investigated the issue after learning the small Bellevue technology company won a

landmark PTAB ruling which could lead to multi-billion-dollar patent infringement settlements

from huge corporations such as Amazon, Apple, AT&T and Verizon.

Flynn found that Voip-Pal.com has a suite of patents on technologies dealing with what are

known as “Voice Over Internet Protocol” and has filed $9.7 billion in lawsuits against 60

companies claiming they are infringing on its patents.

Amazon is the latest tech giant to be sued by Voip-Pal. Voip-Pal alleges Amazon’s Alexa

calling and messaging services use its patented technologies to direct voice and video calls and

messages without licensing agreements.

In fact, according to Voip-Pal president Dennis Chang, Flynn wrote, “we could make an

enormous amount of revenue just licensing our patents since people have been infringing for

years.”

Flynn also interviewed Voip-Pal CEO Emil Malak who believes the PTAB has finally put

some teeth into patents. “I fully expect that infringing entities will either license or acquire the

Voip-Pal technology bringing major returns to our shareholders.”

Malak said the suit against Amazon came after investigating the Alexa platform and Echo

line of products which Voip-Pal technicians found violated its patents.

Malak told Flynn: “We had the vision that within 10 years, the Internet would become the

primary means for telecommunications and realized that, in the future, calls, media and messages

would be primarily routed using the Internet, with a seamless transfer to cell phones, landlines, or

computers where necessary.”

It was a revolutionary idea at the time, three years before Apple’s Steve Jobs unveiled the

iPhone. “At the time most people were making calls using landline-based or cellphones, with

information traveling over phone lines and cellular networks,” Flynn wrote.

Despite the grumbling from the federal judges, the PTAB decision has received no media

attention. It is a “non-appealable” verdict.

The American Invest Act in 2011 was intended to transitioned U.S. patent law from a “first

to invent” patent system where the priority is given to the first inventor to “file a patent

application” to a system which has tended to benefit large companies.

Malak now believes major tech companies may decide that it is more logical financially to

pay licensing fees to Voip-Pal than to face treble damages if the infringements continue.

The Voip-Pal decision has sweeping ramifications. Hopefully, Congress will act to restore

patents as property rights and give startups a better chance to protect their property from entities

which have greater resources.

Don Brunell is a business analyst, writer and columnist. He retired as president of the Association of

Washington Business, the state’s oldest and largest business organization, after over 25 years as its CEO

and now lives in Vancouver. He can be contacted at TheBrunells@msn.com.

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