Still No Answer From PTAB on Apple Sanctions Request Against VoIP-Pal After Six Months

By Steve Brachmann
July 11, 2018

“[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…”

Question slot machineOn 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.

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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.

VoIP-Pal filed an opposition to Apple’s motion for sanctions in January, arguing that the Sawyer letters are not improper ex parte communications under 37 C.F.R. § 42.5(d), the statute under which Apple filed its motion for sanctions. As VoIP-Pal noted, this statute doesn’t prohibit communications referencing a pending case in support of a general proposition or to illustrate a systemic concern. Such systemic concerns were by and large the subject of Sawyer’s letters. Further, VoIP-Pal argues that Apple’s contention that the proceedings were biased because of the letters fails because the claims were upheld on their technical merits. VoIP-Pal also argues that Apple’s motion for sanctions is not timely because the request wasn’t made promptly. For example, VoIP-Pal argues that Apple knew about Sawyer’s May letter about one week after it was sent and yet waited until December, after the final written decision was entered, to raise a sanctions argument.

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.

The Author

Steve Brachmann

Steve Brachmann is a writer located in Buffalo, New York. He has worked professionally as a freelancer for more than a decade. He has become a regular contributor to IPWatchdog.com, writing about technology, innovation and is the primary author of the Companies We Follow series. His work has been published by The Buffalo News, The Hamburg Sun, USAToday.com, Chron.com, Motley Fool and OpenLettersMonthly.com. Steve also provides website copy and documents for various business clients.

Warning & Disclaimer: The pages, articles and comments on IPWatchdog.com do not constitute legal advice, nor do they create any attorney-client relationship. The articles published express the personal opinion and views of the author and should not be attributed to the author’s employer, clients or the sponsors of IPWatchdog.com. Read more.

Discuss this

There are currently 12 Comments comments.

  1. Bemused July 11, 2018 11:03 am

    The PTAB’s refusal to timely address this serious issue and dispel any cloud on these patents is emblematic of the complete and utter contempt that agency has for patent holders.

  2. Anon July 11, 2018 12:31 pm

    Perhaps one reason for the lack of sunlight is that once sunlight is let in, then the “status quo” operational mode will be exposed (and need to change).

    I believe that THAT may involve an extraordinary level of effort.

    It is one thing to be caught “red-handed” with a single program like SAWS, and pull the plug on that one program (while committing an “Oops” and admitting publicly that SAWS was but one of such programs), and quite another to have to actually create (and run) a “judicial system” that is absent from the shadow work that the executive agency is so accustomed to.

    It would be downright “shocking” to actually have to follow the rule of law and proceed on ALL applications on the written (and shared) record. See 37 CFR 1.2.

  3. Concerned DC Insider July 11, 2018 12:33 pm

    The corruption inside PTAB has only been growing over time. We must start a grassroots campaign to investigate Apple’s dealings with PTAB. Can you imagine what we’d find? The U.S. is about protecting individual property, right? Apple is stamping all over that. What else is Apple doing with PTAB, our data and more?

    Here are the bios for the leadership of PTAB: https://www.uspto.gov/about-us/executive-biographies

  4. Gwen Avalon July 11, 2018 3:09 pm

    With respect to Lucia, the APJ’s are appointed by the Secretary of Commerce. 35 U.S.C. 6. Their appointments would appear to be valid whether or not they are “officers of the United States.” There was a question some years ago about the legality of some APJ appointments, but that was corrected by legislation and the appointment by the Secretary of Commerce of APJ’s that had previously been appointed only by the USPTO director.

  5. Anon July 12, 2018 8:48 am

    Voip-Pal has every reason to be outraged by this uncalled for delay by the PTAB to decide what most would call an elementary decision. Apple’s motion request for sanctions made AFTER THE FINAL WRITTEN DECISION should be denied as a matter of law as the Final Written Decision should be considered THE END OF LITIGATION as far as the IPR is concerned. If Apple wants to appeal the IPR final written decision it should take its grievances to the Federal Court of Appeals.

    There is a loophole here that needs to be CLOSED. How the PTAB can take an indefinite amount of time to make a decision is beyond the pale. There should be a requisite limit of time afforded to the PTAB to make a decision on ANY motion for an appeal. The fact that the PTAB has taken 6+ months to decide Apple’s motion is really very suspicious and has unduly harmed the shareholders of Voip-Pal. This delay does not play into the PTAB’s favor as it paints a picture of corruption.

    90%+ of appeals to the PTAB have been REJECTED OUTRIGHT.

    Something must be done to fix this loophole and require the PTAB to make a decision within a reasonable time period – which is not 6 months!

  6. Gene Quinn July 12, 2018 9:23 am

    Everyone –

    Anon @5 does not appear to be our longtime friend “Anon”. Anon @5 is using a different e-mail address.

    Anon @5, if you could use a slightly different moniker when commenting so we can differentiate between you and the original Anon that would be appreciated.

    Thanks.

  7. Nunyo Business July 12, 2018 10:28 am

    Hi Gene,

    Oops that was my mistake. I’ll make sure to change the name from now on.

    Just to add to what I said previously, I am astonished that the PTAB even agreed to allow Apple’s motion for a rehearing and sanctions. Vplm won on the merits on all its challenged claims. Vplm should not have to pay such a penalty for something that could be resolved by a slap on the wrist (fine). This seems very harsh to me.

    The lack of a ptab decision is also causing an undue delay in vplm’s federal infringement suits against Apple and others (who are seeking to consolidate their cases with Apple).

    These dilatory tactics are unacceptable!

  8. Anon July 12, 2018 12:18 pm

    No problem Gene – some overlap will be unavoidable. Here, the tone is not quite what I would use (and the statement of “90%+ of appeals to the PTAB have been REJECTED OUTRIGHT.” seems to be on its face a bit too much hyperbole), but this is not like a position that would be against a position that I have taken.

    Further, this does show that the use of a “real email” – which is not divulged, provides value to the commenting (and the necessary editorial oversight to maintain that value).

  9. Nunyo Business July 12, 2018 7:57 pm

    Anon, thank you for your comments and opinion on the “tone” of my previous statements.

    While the intent of my earlier statement was not meant to come off as hyperbole, I can now see how it might be construed as such absent any further explanation.

    My 90% statement was based upon these quotes:

    “Of the approximately 200 requests for rehearing decided as of the date of this writing, only 10 have been granted, and seven of these have granted only partial relief. This is roughly a 5 percent success rate for all motions. Of the requests related to the initial institution decision, only 3.5 percent (six of 169) have been successful. To date, the Board has not granted reconsideration of a final written decision.” (Source: Jones Day)

    And..

    For this analysis, the 21 Board decisions on requests for rehearing that issued in the month of August 2016 were considered. Of these, sixteen were requests for rehearing of institution decisions and five were requests for rehearing of final written decisions. None of the requests resulted in a reversal of the Board’s earlier decision. (Source: Patentchallenges.com)

    The point I was trying to make is that there is a very low percentage of motions for a rehearing that are granted and of those motions that are granted a rehearing that very very, if any at all, are granted from final written decisions.

    Lastly, I would like to add that the use of “real email” versus a “fake email” (is there even such a thing?) should be of no consequence if the comments made add substantively to the discourse and are not personally offensive. Wouldn’t you agree?

  10. Anon July 13, 2018 10:30 am

    Thanks Nunyo – I see now that your 90% statement is geared to “rehearings.” This of course is different than the appeal path that you ascribe the figure to.

  11. Anon July 13, 2018 12:07 pm

    Nunyo,

    As to your last point (fake versus real email), I do not agree.

    This is not to say that I disagree that comments should be geared to add substantively to the discourse. Hopefully comments do just that. And the editor here does a nice job of providing warnings – and then carrying out consequences** for those who choose otherwise.

    I hold the “personally offensive” limitation NOT to be as germane. Sorry, but I have never bought into the politically correct notion that “not offending people” should control expression of views – simply put, our First Amendment (in part) guarantees the right to so offend, and as I have noted previously, words may be appropriately sharp (the Declaration of Independence is one such example).

    Only the great generalizations survive. The sharp words of the Declaration of Independence, lampooned then and since as ‘glittering generalities,’ have turned out blazing ubiquities that will burn forever and ever.

    — Ralph Waldo Emerson

    Where I disagree is in the plain fact that THIS SITE has come under attack (many times) for its pro-patent stance, and typically this is orchestrated by individuals that violate the simple editorial control of providing a real e-mail address. By “real,” I mean traceable to a real person. I do realize that one is not FULLY anonymous because of this editorial control mechanism. But as one that has repeatably defended the ability to post anonymously (or pseudonymously with “Anon” or other chosen monikers), the editor here has never violated the trust of that sharing of personal identifiable information.

    Thus, as an advocate for the ability to post anonymously, I do not see an issue with submitting to an important editorial control.

    **One of the fruits of the control IS to make consequences enforceable. This blog has had its share of the “usual suspects” that plague other patent boards with continual nonsense and outright falsehoods. After a fair warning, several of these “contributors” have rightfully been banned from this site. Some have attempted to continue to plague this site with their nonsense even after being banned by using fake email accounts.

    Being able to make such consequences enforceable is – in my opinion – one of the reasons why this blog maintains its high credibility rankings while still inviting contrary views and informed opinions.

    I state “informed opinions” because while anyone may have an opinion, when one maintains an opinion without being willing to become informed, then all one is doing is being a mouthpiece for propaganda.

  12. Bal August 23, 2018 1:36 pm

    Great article! The judges have finally been assigned to the panel to oversee Apple’s motion in this case (8/22/18).
    Any idea what the average time frame to decision on a motion is once the judges are assigned?
    Thank you..

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