Note to President Trump: Silicon Valley Pirates Are a Bigger Threat to Intellectual Property Than China

By Emil Malak
August 20, 2019

“As CEO of a company with more than 20 U.S. patents, and myself personally a named inventor on two patents, I could never with good conscience advise anyone to file for a patent with the USPTO until the AIA is repealed and the Alice law on patent eligibility under Section 101 as we know it is cancelled.”

https://depositphotos.com/6496641/stock-photo-looking-at-the-opinion-section.htmlThere is a lot of focus—and rightly so—on China’s stealing of U.S. intellectual property (IP). Recently, Trump economic adviser Larry Kudlow stated on CNBC’s Squawk Box that China has stolen at least $600 billion in American IP. Additionally, one in five North American-based corporations on the CNBC Global CFO Council said that Chinese companies have stolen their IP within the last year. In all, 7 of the 23 companies surveyed said that Chinese firms have stolen from them over the past decade. The annual cost to the U.S. economy for these actions is estimated to be greater than $600 billion.

The Real Weapons

While this is a serious matter that must continue to be addressed, domestic theft of U.S. IP is just as bad if not worse. It is easy to point fingers at China, given their track record, but small U.S. companies and inventors are not having their dreams extinguished by the Chinese. They are being victimized by Silicon Valley’s big tech companies, which make billions of dollars using their stolen IP, and use the U.S. Patent and Trademark Office’s (USPTO’s) Patent Trial and Appeal Board (PTAB) to invalidate their patents while tying them up in court for years in an effort to drive them out of business. The passing of the America Invents Act (AIA) was purposefully orchestrated to destroy the chances of patent owners and inventors monetizing their IP. It has weaponized the courts and USPTO against the very patents they have issued.

Not STRONG Enough

I commend the efforts of Senators Chris Coons (D-DE) and Congressman Steve Stivers (R-OH) and those who have signed on as co-sponsors of the STRONGER Patents Act 2019. This proposed legislation will go a long way to restoring credibility to America’s broken patent system, but in my opinion does not go far enough. I hope Congress will not only pass this legislation, but also take the bigger step to completely repeal and replace the AIA. The AIA is hostile towards patent owners and there is no room for window dressing. Innovation has been crippled and we continue to lose revolutionary inventions as more and more inventors choose to forego the USPTO and go underground, keeping their ideas as trade secrets. As CEO of a company with more than 20 U.S. patents, and myself personally a named inventor on two patents, I could never with good conscience advise anyone to file for a patent with the USPTO until the AIA is repealed and the Alice law on patent eligibility under Section 101 as we know it is cancelled.

Stolen Profits

While the Chinese may be guilty of stealing more than $600 billion of American IP annually, I would estimate that to be small in comparison to the enormous value of IP stolen by American big tech companies since the passage of the AIA. The value of that theft could easily top $1 trillion or more. Big tech companies have experienced astronomical growth in the eight years since the AIA became law.  Today, the top 10 U.S. technology companies have a combined value of more than $5.25 trillion. On the day the AIA was signed into law, those same companies had a combined valuation of $1.36 trillion. That’s a nearly fourfold increase in just eight years. No doubt, much of that increase was the result of stolen IP.

My advice to inventors is to keep your inventions trade secrets and, for the time being, do not patent with the USPTO.

Image Source: Deposit PHotos
Image ID: 6496641
Copyright: stuartmiles 

 

The Author

Emil Malak

Emil Malak is the largest single shareholder of Voip-Pal.com, Inc., a publicly traded company where he serves as a Director and Chief Executive Officer. He has spent the last 16 years overseeing the development of the company’s intellectual property comprised of more than twenty telecommunications patents in the United States and several international patents in Europe, India, Canada and Indonesia. In addition to his work as Voip-Pal’s CEO, Mr. Malak has spent the last 7 years involved with a medical research team of doctors, serving as the chairman of the board of Thorne BioMed Ltd. They are currently conducting cancer research in Germany where they are committed to pursuing a possible reduction to cancer metastasis.

For more information or to contact Emil, please visit his company profile page.

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 33 Comments comments. Join the discussion.

  1. Concerned August 20, 2019 7:57 am

    I only have one patent application and it has been a horrible experience.

    I worked with the State Attorney General’s Office on legal matters as a liaison for my Agency for decades. I am shocked that the rule of law between my career and my patent application is no where similar.

    I would have been embarrassed to take the position my patent examiner has advanced toward my patent application. If a corresponding position would have been advanced by me in writing, I would be afraid the Governor would rip me a new one. In fact, a couple of my predecessors were ripped after newspaper articles.

    Facts and truth, so readily obvious on the surface, have to prevail in a legal setting.

    I agree with this article. Correct these issues, whatever is fostering the problem. An agenda seem to be advanced on my patent application, not due process. The patent examiner 3 times told me during a phone interview he saw patentability, yet the official notice rejected the same.

    Interestingly, the examiner just switched on my application, right in front of the USPTO’S response to my PTAB appeal, reason unknown.

    Hopefully the new examiner will not pick up the same arguments as the first and we can put this one in the resolved column.

    It cannot be routine, conventional and well understood if proved nobody in “any” field does the inventive step.

    It cannot simply be analyzing and collecting data if the world’s storehouse of the best Social Security data could not solve the problem for 63 years, which is the Social Security Administration.

    If I would have advanced such arguments, I could have counted on getting the phone call from the Governor’s office and it would not be a fun phone call assuming I was still employed.

  2. angry dude August 20, 2019 9:48 am

    “AIA is repealed and the Alice law on patent eligibility is cancelled” is a MUST

    But the real answer is injunctions restored to pre-EBay state

    Alas, not gonna happen
    Money talks, money works..
    This country is slowly eating itself until China has it for breakfast

  3. Night Writer August 20, 2019 9:55 am

    I guess you can’t blame the SV companies. They are doing all they can to lock down their near monopoly powers. I think, though, that we need to understand the full extent of what they are doing. They also influence academia and the media. We need to look at this as a whole because their money has bought them a lot more than just laws in Congress.

  4. Pro Say August 20, 2019 2:15 pm

    Big +1 Emil — bingo.

    Big tech? Break ’em up.

    PTAB? Shut ’em down.

    Mayo/Alice? Bury ’em.

    Congress — Sept is now just around the corner. America needs you — now.

    Please don’t let another another Holiday season come and go with our Country in such dire innovation straights.

  5. Carrie Hafeman August 21, 2019 9:24 am

    There is a guy from the Wall Street Journal that is interested in writing a story on “Apple and its approach to IP and how that can sometimes affect smaller companies’ Please Linkin and message me, if you would like his contact info and would like to contribute to his story – Thanks! Carrie https://www.linkedin.com/in/carriehafeman/

  6. TFCFM August 21, 2019 9:29 am

    I question the decision to lead the article with such a non-sensical quotation:

    “I could never with good conscience advise anyone to file for a patent with the USPTO until the AIA is repealed and the Alice law on patent eligibility under Section 101 as we know it is cancelled.”

    Are we to believe that Mr. Malak is advising inventors (especially in all fields and not just ‘Alice-questionable’ fields) to forego patent protection merely because his company has had a few patents invalidated. Even if that advice is genuinely his and cited in context, are we doing anyone a service by broadcasting such nonsense?

    Patent protection remains an important means of protecting innovation in the US (and even in China). That some sub-set of “technologies” (computer software, video game rules, ideas about how to operate a business, ???) may face greater doubt as to its eligibility for patent protection than it did for a brief period (since the State Street Bank decision) does not change this fact for the vast majority of other technologies.

    Mr. Malak will experience little resistance to criticizing the Alice decision and its unworkable standard. That, however, is no reason to broadly dismiss the value of patenting — and certainly not for technical fields largely immune to Alice-analysis.

    Perhaps requesting that blog contributors flavor their contributions with even a modicum of common sense and perspective might yield more relevant and credible content.

  7. Jeff Hardin August 21, 2019 1:48 pm

    @TFCFM

    >> Perhaps requesting that blog contributors flavor their contributions with even a modicum of common sense and perspective might yield more relevant and credible content.

    Here’s some common sense:

    An inventor has an invention. Said inventor desires protection of said invention. Said inventor inspects the patent bargain in filing for a patent with the USPTO. Upon learning about the current United States patent system, said inventor learns that

    – the separation of powers are gone — the executive branch can both give and take
    – an Article III court, jury, impartial judge, limited discovery, and presumption of validity on the patent that is actually issued is now gone
    – the rules can be retroactively changed in the middle of the game and property can be taken, so, no 5th amendment protections either
    – a patent is no longer considered a private right
    – the stats show the odds are very much against a patent holder when a patent is challenged at the PTAB
    – the appointments clause has been overlooked — no third-party vetting by Congress and PTAB panels have been stacked, and there is no code of conduct either
    – it costs on average $450K to defend a patent at the PTAB for a SINGLE challenge, and serial challenges and parties of interest are an issue
    – business models such as those that use surrogates to challenge patents without having time bar limitations reign free

    Why pay to disclose your invention with the government and the public in hopes of receiving this in return? There is no bargain here. If said inventor then finds it more reasonable to keep said invention a trade secret until the ship is righted, this seems like common sense to me.

  8. jacek August 21, 2019 5:51 pm

    “I could never with good conscience advise anyone to file for a patent with the USPTO until the AIA is repealed and the Alice law on patent eligibility under Section 101 as we know it is cancelled.” — From Inventor point if view his opinion is well justified. From patent lawyer point of view it is just statistics. Scratch on the surface of otherwise shiny vehicle of his/hers carrier. Inventor invest untold number of hours, effort and hope developing new solution. Lawyer role is paid help, one of many steps inventor has to take to bring his work to fruition (or rather catastrophe facing AIA) Not so long ago I was reading complain of a patent lawyer that inventors are skimping on his legal work. I think his and yours point of view is as far from reality as the French Quinn asking why if people have no bread would not switch to cake. Guys you are not so important and your profession will not exist without inventors.

  9. TFCFM August 21, 2019 6:03 pm

    @JH “…There is no bargain here.

    Much would appear to depend upon whether one’s “invention” is nonsense or something legitimately patent-worthy. That questionable patents exhibit a high casualty rate when asserted/challenged is neither surprising nor an undesirable outcome, IMO.

  10. Software Inventor August 21, 2019 10:32 pm

    @TFCFM Only big tech with big dollars have “something legitimately patent-worthy,” according to their enablers in Congress, USPTO, PTAB, CAFC and SCOTUS. Others such as small business or independent inventors have “nonesense.”

    No inventor in their right mind, other than those with deep pockets and political connections, would patent anything in this country. See comment #8 above.

    Your comments are consistent with a prosecution and enforcement attorney industry fighting an ever shrinking market, and income. Rightfully so…

  11. TFCFM August 21, 2019 11:18 pm

    @SI

    What you say might be a common view among software “inventors.” Certainly not in many other fields, including the ones I’ve serviced in the past and the one in which I’m presently immersed. The increasing number of filed patent applications suggests that yours is a minority view.

    It has always been the case that asserting a patent against an entity (in whatever field) having deep pockets is challenging. The ‘trick,’ of course, is having solid patents on patentable technology. With those in your pocket, financing follows.

    If one’s pocket contains nothing but generically-written patents functionally claiming ideas, financing – understandably – hesitates. Between those extremes, circumstances vary.

  12. Software Inventor August 22, 2019 7:07 am

    @TFCFM

    The majority will eventually catch on, if their technology has any commercial value, what the minority has learned the hard way since the AIA and PTAB: their patent is not worth the paper its written on. The PTAB outcomes data makes it quite clear.

  13. angry dude August 22, 2019 8:55 am

    TFCFM@11

    “software “inventors.”

    Dude, why don’t you stfu

    My patent is on dsp algo which is implemented in software, firmware, silicon hardware – you name it

    software = hardware

    write it on your forehead and give it a rest

  14. TFCFM August 22, 2019 9:29 am

    Oddly enough, after I wrote my revision of Einstein’s theory of special relativity on my forehead, the patent examiners STILL said that merely reducing an idea to writing doesn’t make it patent-eligible…

    Nonetheless, all of our squabbling reinforces my long-standing view that, as patent protection is both inappropriate for, and ill-suited to, software innovations, the best solution for properly awarding software innovation may well be a newly-made form if intellectual property, more appropriately drawn to the subject matter. For example, looser description requirements, but tighter standards for infringement and shorter overall term.

    That is, of course, a much heavier legislative lift than trying to come up with a new rule to bridge the gap that State Street Bank / Bilski / Alice have revealed.

  15. Anon August 22, 2019 12:54 pm

    TFCFM,

    Software simply is not about mere writing, and any comments from you to that effect only show that you are not interested in being inte11ectually honest on the topic, and your views should be summarily dismissed.

  16. TFCFM August 22, 2019 1:11 pm

    @anon “…your views should be summarily dismissed

    That you cannot, or choose not to, respond has no bearing on whether a new protective scheme for IP rights in software ought to be devised.

  17. TrollStomp August 22, 2019 1:26 pm

    This is laughable. Though the state of the law around subject matter eligibility has been a joke for years now, this is not big tech’s fault per se. There have been other actors that have contributed to this mess, including trolls who would love to see broad software-based patents in their portfolios regain their status as valid and enforceable in federal court.

    And I don’t mean to be the fly in the cream here, Mr. Malak, but your premise is quite rich coming from the largest shareholder in a VoIP troll firm that makes its living off of holding SV tech firms hostage for ransom. This article is clearly self-serving and lacks any logic to support its basic proposition. How this made it through the gates and into print is actually confounding.

    To any inventors here: Consider the source. The patent process is supposed to be difficult and slow-moving. If you do not file a patent application now before you bring its underlying technology to market or disclose it publicly, you could lose your ability to protect it internationally and within a year from certain disclosure events, even domestically. Seek unbiased advice before taking this article to the bank (because it belongs in the landfill).

  18. Software Inventor August 22, 2019 4:26 pm

    @TrollStomp I agree that the source should not be the only resource. Inventors, do your own independent research. Consider the data. Suggest you roughly start with:

    1. What is the historical data on your USPTO technology center and examiners on allowance rates, for example?
    2. Prosecution time frames and costs?
    3. What are the PTAB IPR outcomes data?
    4. What are the CAFC outcomes data?
    4a. What percentage are Rule 36 judgments?
    5. What are the SCOTUS exceptions outcomes data?
    6. How many patent infringement injunctions have been granted since 2006?

    You will learn that unless you have deep pockets and political connections your patent is actually a liability. Why?

    If your IP/technology has commercial value, it will be infringed, because the infringement model is very lucrative. The infringers will label you a troll, and they know that you cannot enforce your patent. Even if you could, the SCOTUS 2006 eBay decision makes it very unlikely you can get an injunction, and the infringer can choose when to settle for pennies on the dollar, or not at all. See the VirnetX Apple Aug 20, 2019 ‘Indefinite Delay’ piece on this blog, for example.

    Hence, you will spend many years and $$$ with little assurance of any benefit from your time and innovation. More likely, as the data will reveal, you will suffer an enormous expense.

    The time and relatively few dollars spend now on your own independent research may be your best investment of all.

  19. Josh Malone August 22, 2019 10:28 pm

    Great discussion! I just emerged from the nastiest patent enforcement litigation imaginable. Every frivolous argument and abuse under the sun…except Alice/101!

    I agree with Malak and the Voip-Pal inventors – do not share your discovery with the USPTO. It is 100% scam. Keep it a secret. Hide it behind a server. File in China if it is a consumer product. Do not rely on the USPTO to protect your investment with a fake patent.

    How can I say this, since I won?

    Should a lottery winner advise their friends to spend all their grocery money, rent, college funds, and grandma’s savings on lottery tickets?

    No. That would be stupid. I was outrageously lucky. And I had deeper pockets than the infringer. And I filed my case in a real court prior to the TC Heartland decision. And I lobbied the President to fire the Google appointee and pass over her heir apparent. And C-SPAN and BBC exposed the abuse.

    If you have $20M and friends in the government then go ahead and file for a fake public franchise patent. Doesn’t matter if it is hardware or software.

  20. angry dude August 23, 2019 8:40 am

    Josh Malone @19

    I have to add something many people here do not quite understand

    In case of relatively simple mechanical inventions like the Bunch-of-Balloons or toys in general it is very easy to reproduce it once you see it – one does not need expensive reverse engineering to make an exact copy
    Once it hits Walmart shelves anyone with some resources and manufacturing facilities in China can flood the US marker with exact same thing
    In this case filing for patent “protection” makes some sense – even as a lottery ticket for future drawings, simply because your invention is out there, you can’t hide it behind trade secrets, anyone can make it

    In my case I had a choice to make: an algorithm can be well hidden in obfuscated compiled code or, even better, behind a server
    Or it can be publicly disclosed in a patent application for everybody to see and learn… “to promote the progress”…

    This was back in 2002 and I decided to file for US patent
    Looking back it was the most stupid decision in my entire life
    Trusting US government with protecting your commercially valuable know-how and not keeping it a trade secret

    From now on – trade secrets only (and software copyright on binary executable, of course)

  21. Anon August 23, 2019 9:19 am

    TFCFM,

    Your “ought” is rubbish.

    There is ZERO need to try to divide and conquer and move innovation protection for the innovation that occurs in the computing arts into some separate vehicle than innovation protection that is the patent system.

    You fail at the first instance, as your pre-determined views lack substantive merit — AS has been noted many times now.

    This is not a case of my “not wanting to or not having an ability to” respond – it is a case that there is nothing there (from you) WORTH responding to.

  22. TFCFM August 23, 2019 11:03 am

    @anon:… there is nothing there (from you) WORTH responding to.

    Saying so does not, of course, make it so — no matter how many times you say it without responding substantively.

  23. Software Inventor August 23, 2019 1:42 pm

    @Angry Dude #20

    Inventors, while you are conducting your research, a good case study of what Angry Dude presented in his third paragraph, is Popsockets Wins General Exclusion Order…presented on this blog dated Aug 1, 2018.

    The infringement business model thrives globally.

    Yes, our country has enforcement laws on the books, yet are unenforceable. Our government only cares that our infringers get the lions share.

  24. angry dude August 23, 2019 4:20 pm

    Software Inventor @23

    So we, “software inventors”, are actually in a much much better position than “hardware inventors” … unless of course we apply for US patent…

    There is just no way you can keep a phone holder or a bunch-of-balloons a trade secret for longer than a few minutes(!) after the first unit is sold to the public

    And to hell with “promoting the progress”…

  25. angry dude August 23, 2019 4:38 pm

    Software Inventor @23

    Re: Popsockets Wins General Exclusion Order

    Its hard to be a “hardware inventor” these days..

    Let’s see – I buy a phone holder at Walmart, take a few pictures of it, take it apart to individual pieces, scan each piece with 3D scanner (those are cheap too), email pics and scans to my manufacturing partner in China … all in less than 1 hour … and voila..

    With bunch-of-balloons it’s even easier – you don’t need a 3D scanner

  26. Anon August 23, 2019 4:43 pm

    TFCFM,

    On the contrary I have engaged with you and taken you apart on substantive matters.

    If you are going to start LYING in your posts, you will quickly come to the attention of the blog master, as those types of shenanigans are not tolerated here.

    If you want to brazenly prevaricate, there is another well-known patent law blog that more than tolerates that behavior.

  27. TFCFM August 23, 2019 4:49 pm

    “Whining” and “Taking apart” are, to most ears, very different things.

  28. angry dude August 24, 2019 1:39 am

    jacek @8

    The queen of France Marie Antoinette, who was asking why people who have no bread would not switch to pastries, was guillotined by those same people…

    I was telling patent lawyers here many years ago (right after EBay) that they and their entire profession would be finished if patent rights are gone and no one would believe me

    The guillotine is coming…

  29. Anon August 24, 2019 10:43 am

    TFCFM,

    Your post at 27 rings true – just not how you would think it to be. YOU are viewing as “whining” what in reality was “taking apart.”

    You are of course, free to delude yourself. That however does NOT translate into you being free to lie.

    As I stated: this blog is NOT like that other blog, and there IS a shorter leash for brazen prevarications. I suggest that you rethink your approach.

  30. ElGuy August 25, 2019 7:09 pm

    @TFCFM Thanks for demonstrating how one might “respectfully add to the discussion” which is unfortunately rare on such boards nowadays. Those few thoughtful posts, winnowed from all the personal crap posted by others, make the comments sections occasionally worth the read. Keep it up dude(tte).

    Since I should probably add something relevant to the discussion. I agree wholeheartedly with Post #6.

  31. Software Inventor August 26, 2019 8:24 am

    @ElGuy, TFCFM, TrollStomp

    The data doesn’t lie…

    You guys just defame, babble and obfuscate. No value add.

  32. angry dude August 26, 2019 10:00 am

    ElGuy @30

    Josh Malone answered your concern at 19

    And I added to his answer at 20

    Those are 100% true statements

    Now get lost – the readers of this blog are not stupid to believe your nonsense

    P.S. “Software” is the fabric of our society – it’s everywhere, in each and every modern appliance and device, it runs your cell phone, your car, your coffee maker and the stock market – pretty much everything you touch and depend upon …except the “bunch-of-balloons” and few other things
    But, as Josh Malone correctly noted at 19, being exempt from Alice does not mean crap when one has to deal with lying and cheating parasites…

  33. Flippy August 28, 2019 6:02 am

    I blame Michelle Lee

Post a Comment

Respectfully add to the discussion.

Name *
Email *
Website