Acting Attorney General Matthew Whitaker Connected to World Patent Marketing Fraudulent Scheme to Bilk Inventors

By Gene Quinn
November 9, 2018

Whitaker Connected to World Patent Marketing Scheme to Bilk Inventors

Matthew G. Whitaker, Acting Attorney General of the United States.

In May 2018, Scott Cooper and his companies, World Patent Marketing Inc. and Desa Industries Inc., agreed to a settlement with the Federal Trade Commission that bans them from the invention promotion business, and ordered payment of $25,987,192. The FTC charged World Patent Marketing with being nothing more than a scam, bilking millions of dollars from inventors. “The record supports a preliminary finding that Defendants devised a fraudulent scheme to use consumer funds to enrich themselves,” concluded United States District Judge Darrin P. Gayles as he issued a preliminary injunction in August 2017. Matthew G. Whitaker, the Acting Attorney General of the United States who ascended to the position with the resignation of Jeff Sessions, served on the advisory board of World Patent Marketing. Worse, as PatentlyO reported yesterday, Whitaker was involved in some of the egregious intimidation that led to the charges, issuance of an injunction and ultimately the settlement.

The Federal Trade Commission originally charged the operators of World Patent Marketing with deceiving consumers and suppressing complaints about the company by using threats of criminal prosecution against dissatisfied customers. At least one such threat of criminal prosecution was made by Whitaker.

“I am a former United States Attorney for the Southern District of Iowa and I also serve on World Patent Marketing’s Advisory Board,” wrote Whitaker via e-mail in August 2015 to a disgruntled inventor who was attempting to get relief from World Patent Marketing for broken promises. “Your emails and message from today seem to be an apparent attempt at possible blackmail or extortion. You also mentioned filing a complaint with the Better Business Bureau and to smear World Patent Marketing’s reputation online. I am assuming you understand that there could be serious civil and criminal consequences for you if that is in fact what you and your ‘group’ are doing.”

Any attorney threatening a non-attorney with criminal prosecution when that person is demanding a refund after having been scammed is unconscionable. Calling a demand for a refund extortion is also grossly inaccurate, and borders on unethical conduct. Making a threat to sue and/or file complaints with the Better Business Bureau unless a refund is provided does not rise to extortion, and Whitaker knows or should have known that — any competent attorney would. Indeed, if such a statement does constitute the criminal act of extortion we would need to build far more jails because every litigator in the country has or will engage in that same type of pre-suit settlement banter. But for an attorney to make such egregiously inaccurate claims to a non-attorney at a minimum shows disregard for the candor expected by Rules 4.1 and 4.4 of the ABA Model Rules of Professional Conduct, if not a violation of those ethical Rules directly.

Indeed, as I wrote previously, the most egregious of the charges brought against World Patent Marketing, in my opinion, were the threats and intimidation directed toward complaining customers. Inventors are a hopeful and eternally optimistic bunch, that is what makes them successful. Scams that prey on that hope and optimism are an abomination, and need to be stopped. Stomping on that hope and engaging in a scheme to defraud inventors coupled with intimidation tactics is nothing short of reprehensible. And Whitaker participated in that intimidation.

Explaining his concerns about World Patent Marketing’s scheme of intimidation (although not Whitaker specifically) at the preliminary injunction stage, Judge Gayles wrote:

When customers became frustrated and complained to Defendants that WPM did not fulfill its promises, many threatened to report WPM’s actions to the Better Business Bureau (“BBB”), offices of state attorneys general, the FTC, and other consumer agencies. In response, Defendants—including Cooper and WPM’s head of security—and WPM’s lawyers intimidated and threatened customers to prevent them from complaining and to compel them to retract complaints.

Judge Gayles then recounted the events surrounding one particular customer who was intimidated and threatened. Judge Gayles wrote:

After months of trying to receive a refund or services, she filed a complaint with the BBB. She received a letter from a second lawyer who told her that seeking a refund constitutes extortion under Florida law and, “since you used email to make your threats, you would be subject to a federal extortion charge, which carries a term of imprisonment of up to two years and potential criminal fines. See 18 U.S.C. § 875(d).”

“Defendants made a series of misrepresentations to potential customers to induce them to purchase WPM services. Even after customers made initial investments, Defendants continued making misrepresentations to induce them to purchase more services and to make larger investments,” wrote Judge Gayles. Gayles would go on to specifically detail more than a dozen typical misrepresentations made by World Patent Marketing to customers.

Important questions need to be answered. Did Whitaker know about the fraudulent scheme devised by World Patent Marketing? Was he unwittingly allowing his name to be used on a Board of Advisors without really knowing what was going on inside the business? What are the facts surrounding his August 21, 2015 e-mail threatening civil and criminal prosecution if the defrauded inventor went to the Better Business Bureau?

 

Image Source: Public Domain – Wikipedia.

The Author

Gene Quinn

Gene Quinn is a Patent Attorney and Editor and founder of IPWatchdog.com. Gene is also a principal lecturer in the PLI Patent Bar Review Course and an attorney with Widerman Malek. Gene’s specialty is in the area of strategic patent consulting, patent application drafting and patent prosecution. He consults with attorneys facing peculiar procedural issues at the Patent Office, advises investors and executives on patent law changes and pending litigation matters, and works with start-up businesses throughout the United States and around the world, primarily dealing with software and computer related innovations. is admitted to practice law in New Hampshire, is a Registered Patent Attorney and is also admitted to practice before the United States Court of Appeals for the Federal Circuit. CLICK HERE to send Gene a message.

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 25 Comments comments. Join the discussion.

  1. Kevin R. November 9, 2018 2:03 pm

    If you’re going to be on an Advisory Board, it’s best to take the time to understand what that company does and what it values.

  2. Rick Neifeld November 9, 2018 4:39 pm

    Gene – Shocking! I hope that others do what I just did. Contact their representatives and urge them to do something about it! Here is the link to find you reps: https://www.house.gov/representatives/find-your-representative

  3. Astraea November 9, 2018 5:00 pm

    Given that he wrote an email (or an email was written from his email address, claiming to be him, and he did not disclaim its existence even as it came out in litigation), I don’t think he can claim ignorance.

  4. Anon November 9, 2018 6:43 pm

    I think that this is about more than merely being on an advisory board.

  5. Ternary November 9, 2018 8:40 pm

    One commentator pointed out that the Justice Department in general pursues fraudulent organizations, and not recruits from them.

    In light of diminishing trust in the US patent system and difficulty of enforcement of IP, this is again another nail …. It is absolutely discouraging.

  6. Daniel Burbank November 10, 2018 8:59 am

    Drain the swamp!

  7. Anon November 10, 2018 10:27 am

    Our local paper is spinning the developing story of Trump distancing himself from Whitaker.

  8. Michael E. McCabe, Jr. November 10, 2018 11:36 am

    The OED has in the past couple of years imposed harsh, lengthy suspensions on a number of patent practitioners because they committed the cardinal sin of accepting a referral of an inventor from World Patent Marketing. The vast majority of those practitioners are patent agents who have no training in the rules of ethics of the USPTO. In those cases, the OED alleged that the patent agents aided the unauthorized practice of law by World Patent Marketing by receiving referrals.

    And yet despite hammering unwitting patent agents–most of whom lack the time and money to defend themselves against the USPTO’s solicitors and resources–here we have former U.S. Attorney Whitaker being richly rewarded by WPM, serving as its pit bull when inventors voiced concerns, and acting as the “heavy” for WPM. It is surreal to think that he should escape discipline when he just as much (if not more) aided and abetted WPM’s unauthorized practice of law.

    Moreover, this piece of work who is now our “Acting” Attorney General certainly should know better. Any claims of ignorance by him would seem to be far fetched and disingenuous. Whitaker knew full well what he was doing and was plainly in WPM’s pocket, earning thousands of dollars in fees and lending the prestige of his prior position as U.S. attorney to advance WPM’s mission.

    So why doesn’t the Office of Enrollment and Discipline investigate Whitaker? He is not immune from their disciplinary jurisdiction. He is not above the law. On the contrary, his conduct in communicating with inventors and representing the interests of WPM adverse to such inventors puts him squarely within the USPTO’s definition of “practice before the Office in patent matters” pursuant to 37 C.F.R. Section 11.5. In my opinion, if these patent agents aided WPM in the unauthorized practice of law (and have been severely punished for such conduct), then why not Whitaker too? Whitaker, in my opinion, aided WPM’s practice of law by using his position of power as an attorney to stifle criticism and put fear into the hearts and minds of inventors who dared to speak up against WPM. No patent agent ever engaged in anything close to that type of reprehensible conduct.

    The patent agents who received referrals from WPM are getting suspended left and right for many years. Most will never be able to represent another client in any matter before the USPTO. Whitaker, on the other hand, gets a free pass. Not only does he receive no sanction from the USPTO–he gets a promotion.
    And not just any promotion–he gets promoted to the highest law enforcement position in our nation.

    Where is the justice? Where is the equal treatment? Why doesn’t OED investigate Whitaker with the same vigor and intensity that it does against others?

    This whole thing with Whitaker, his role with WPM, his playing a “bag man” to Scott Cooper, WPM’s former CEO, and then getting richly rewarded (both by WPM and now Trump), frankly stinks.

  9. Anon November 10, 2018 12:51 pm

    Michael E. McCabe, Jr.,

    So why doesn’t the Office of Enrollment and Discipline investigate Whitaker?

    As we have discussed recently, the OED limits itself to those that actually have registration numbers with the Office.

    Clearly patent agents have such.

    Whitaker?

    No.

    And while the answer is simple, I am left a bit dissatisfied (as I imagine you to be as well).

  10. George November 10, 2018 7:00 pm

    How can this guy be allowed to keep his law license and serve as an AG?! Take his law license! Seems like a no-brainer to me. Shouldn’t be that hard to do given the number of people who were ripped off!

  11. Software Inventor November 10, 2018 7:24 pm

    Who was victimized? The small inventors, …again! This time by the lawyer who became the acting AG. Who is pulling the feathers out of the goose? Let’s see, prosecution and enforcement attorneys, USPTO, PTAB, Commerce, CAFC, SCOTUS, and of course the big tech efficient infringers. There sure are a lot of mouths after those golden eggs. Ask yourself: what are you, personally look in the mirror, and anyone else that makes a living off the US patent system, doing to take ACTION to protect and improve the system…for inventors? The golden goose cannot take it anymore…no more eggs for you!

  12. Michael E. McCabe, Jr. November 11, 2018 7:45 am

    Anon: Actually OED investigates non-registered attorneys all the time. While people with registration numbers are one group that fall within OED’s disciplinary jurisdiction, so too are trademark attorneys (who don’t have reg. nos.). More generally, OED has the power to (and does) investigate non-registered attorneys who engage in “practice before the Office,” which is very broadly defined.
    See 37 CFR 11.5. Whitaker “practiced before the Office” when, on behalf of WPM, he represented that company against inventors who complained to WPM about its patent-related services.

  13. Anon November 11, 2018 10:27 am

    Michael,

    Thanks for the push back.

    Let me retract my broad statement then, but I have to wonder about the edge of your own broad statement, vis a vis “practice before the Office:” does Whitaker’s actions really place him before the Office? I am not sure that a general complaint (and handling thereof) — even of a patent-covered item — need not per se rise to a level of “before the Office.” It should be plain to see that the word “patent” does not so automatically invoke the “before the Office” view.

  14. Mark Nowotarski November 11, 2018 10:51 am

    “The vast majority of those practitioners are patent agents who have no training in the rules of ethics of the USPTO”

    Agents pass the same patent bar exam as attorneys and are equally obligated to know and understand the ethical requirements of practice before the office.

  15. Anon November 11, 2018 2:01 pm

    Mark,

    You should know that the patent bar exam has zero** questions as to the legal ethics so often involved in the types of situations that attorneys (who MUST not only deal with substantial legal ethics, but must also undergo continuing legal education with a number or required hours). The patent agent has NONE of these types of continuing legal education opportunities.

    ** Even if by chance a stray “ethics” question does appear, the fact of the matter that an agent merely need hit 70%, and simply study the material that has the FAR higher percentages of being tested.

    I think that the very opposite of what you are trying to say is simply much closer to reality.

  16. patent leather November 11, 2018 9:05 pm

    This is absolutely shocking. Mike’s post @#8 very skillfully sums up the situation.

    While the USPTO can discipline Whitaker, I think they realize this is a very political matter and for political reasons will most likely refrain. The USPTO needs the support of the Attorney General and doesn’t want to alienate the President or the Republican Party.

    Mike M, question for you: if the USPTO were to successfully discipline Whitaker, is there a possibility that his state bar associations would be required to impose (or at least look into) reciprocal discipline? Otherwise, if the USPTO disciplines him, he probably couldn’t care less.

  17. CJW November 12, 2018 10:28 am

    Wow. Thanks for sharing this. If true, that’s a pretty low form of graft. Bullying inventors… shameful.

  18. Michael E. McCabe, Jr. November 12, 2018 6:24 pm

    To patent leather: Thanks for your comments and the answer is “yes.” Every state in the U.S. has rules that cover the situation when an attorney is disciplined by one jurisdiction on ethical grounds, and the PTO qualifies as a “jurisdiction.” Thus, the state’s recognize and give full faith and credit to disciplinary decisions of the PTO under their respective rules on reciprocal discipline.

    Anon: Your observation is very astute. Not saying it would be a slam dunk to argue that Whitaker’s Conduct falls within the definition of “practice before the Office.” But if he was advising WPM on matters relating to the patent rights of inventors, there would at least be a hook to tie him into the PTO disciplinary system.

    As others mentioned, he probably gets a pass because of politics. I don’t really see OED going after an acting AG. In my experience they would prefer to use their resources steamrolling solo practitioners who lack political clout and rarely have the time or money to put up a defense.

    Just hope his tenure as “acting” AG is short lived! Just the fact that he was in bed with WPM and aided them in their mission would seem to be disqualifying enough from holding high office.

  19. George White November 12, 2018 8:23 pm

    I’m a patent agent and am well aware of the ethical responsibilities I am obliged to follow.

  20. Anon November 13, 2018 9:22 am

    George White,

    Thank you — my posts are not meant to impugn patent agents per se.

    May I ask how it is that you came across your knowledge, and how it is that you recognize what the level of practicing ethics of an attorney to be? Does the hat include the traditional 5 C’s?

  21. Don Cuillo November 13, 2018 1:22 pm

    You know what? I’m an inventor, and I’ve been brushed off by Invention Companies; ripped off and mis-advised by invention attorneys; lied to by executives on the so-called “expert boards” that pretend to assess the viability of inventions (when none of them have every assessed a successful product… and it appears Whitaker was one of these SOB’s.

    Nevertheless, he was put in place on the advice of Sam Clovis, who to the majority of Americansis is very solid.

    Looks like Whitaker was not forthcoming about his past business dealings when President Trump’s people vetted him. However, he will not be the guy to replace Sessions. He’s just a place-holder. Look higher up the food chain people: Christi, Giuliani, Gowdy… (hopefully not Gowdy…

    However, the GOP should rightly be on notice that we know many of them are Bush, McCain, and Flake acolytes (right Martha McSally?) and we will push all of them out. Don’t think so? Just watch us…

  22. Anon November 13, 2018 1:57 pm

    pardon the typo: “the hat” ==> “that”

  23. Daniel Cole November 13, 2018 3:15 pm

    @ Michael – were anything he did in defending WPM done at the patent office or with the patent office? If so then I agree with you. I am not sure if defending them ethics is “patent matters” though. The people recieving refferals were writing applications. Extending the jurisdiction of the PTO ethics board to anyone beyond those writing applications who have passed the patent bar is problematic.

    Still this is by far the worst of the things I have heard about him as WPM is a disgusting organization who committed fraud (a state bar should have sanctioned Whittiker for supporting this). I will definitely be contacting my representatives.

  24. Daniel Cole November 13, 2018 3:37 pm

    My representatives and senators have been contacted.

  25. K. David Crockett November 16, 2018 4:01 pm

    In California, threatening criminal action to gain advantage in a civil dispute is a form of extortion specifically prohibited by the ethics rules (Rule 500). Several states have similar rules, and I suppose all states criminalize extortion.

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