In Episode 37 of the “Law & Business” podcast, Anthony sits down with John Eastwood, partner of Eiger Law in Taipei, Taiwan.

Anthony and John discuss “worldwide patents,” a common misunderstanding that does lead to the scamming of those who have patents in a jurisdiction or wish to have patents in more than one jurisdiction.

For example, Anthony discusses several companies that have recently asked him about obtaining worldwide patents.

Then the topic turns to Matthew Whitaker, the former United States interim attorney general appointed to take the place of Jeff Sessions. For about 3 years, Whitaker had been on the advisory board of a company called “World Patent Marketing“, a company that was shut down by the Federal Trade Commission in 2017 and forced to pay out about $26 million for bilking customers of WPM out of millions that they thought were going for registering patents and getting licensing deals. How did WPM bilk them? The invention-promotion racket is actually an old con, going back to the 1960s or so — you put out ads promising to help inventors develop their ideas, get them into the market and to turn the inventions into money through license deals. The FTC has been shutting these down pretty actively since the 1970s, and Congress even passed a law in 1999 called the “American Inventors Protection Act” that put out a lot of disclosure requirements for invention-promotion firms, including their success rates, which in truth were pretty abysmal. They promise non-existent things like “global patents,” take in money from inventors, barely review the inventions, do nothing about getting them registered while demanding more and more money — until the inventors are sucked dry. Some of these poor guys took out loans and refinanced their houses.

The FTC registered over 600 complaints from consumers.

From the FTC complaint: “A few days after consumers submit their ideas in writing, salespeople typically call consumers and inform them that Defendants have accepted their inventions. and reiterate that they are great ideas. Salespeople ingratiate themselves with consumers and build up consumers’ confidence through praise for their ideas. Salespeople represent that if consumers buy Defendants’ invention-promotion services, consumers are likely to realize financial gain by licensing their future patents, or through the manufacture, distribution, and sale of their inventions in well– known stores, including Walmart. Salespeople often make projections about how much money consumers will make. Sales people may also talk about t he good consumers’ inventions could bring to society.”

Also from the FTC complaint:  “Defendants also generally fail to procure patents for consumers. Though Defendants use offshore drafting services and contracted patent agents and attorneys to file patent applications, those applications arc of poor quality, and are often not approved by the United States Patent and Trademark Office (“PTO”‘) on its first review. Requests for more in formation or corrections from the PTO on Defendants’ customers patent applications often go unanswered by Defendants and their contractors, and eventually the PTO rejects the patent applications or considers the patent applications to have been abandoned. 33. In the end, after months or even years of stringing them along, Defendants leave most of their customers with nothing. A very few receive a patent, some receive an assortment of useless marketing materials; but none successfully enter into third-party licensing or manufacturing agreements brokered by Defendants, and none actually make money. Indeed, many of Defendants’ customers end up in debt. or losing their life savings or inheritances, after investing in Defendants’ broken promises.

More from the complaint:  “Defendants fail, in almost every case, to provide many of the other promised invention-promotion services, such as promoting consumers‘ inventions at trade shows and other events, and providing ongoing support from a ‘licensing agent.’ Most importantly, Defendants fail to secure the promised third-party licensing and manufacturing agreements for consumers. In some cases, responding to consumers who insist that their inventions be manufactured Defendants tell consumers that consumers will need to pay tens of thousands, or even hundreds of thousands of dollars more to actually commence manufacturing.”

This also happens in the trademark world and the United States Patent and Trademark Office does have a page to help consumers with trademark scams, also.

For those of us in the intellectual property world, this is horrifying stuff. Because patents and trademarks just don’t work that way at all. There’s no such thing as a “global patent” — patents, like trademarks, are very much locked into the specific countries where you file an application. All the time, we’re having to think about the best jurisdictions for our clients to file into. For the average non-lawyer, they don’t know this.

But Whitaker wasn’t just sitting on some panel with no clue. He appeared in promotional videos and photos for the company, vouched for the integrity of the company, and he served as their lawyer.

Some lessons to be learned in this episode:

  1. The FTC.  Take this advice about FTC regulations and the FTC’s power.  The FTC can shut down companies and fine their owners when participating in deceptive advertising.
  2. World Patent Marketing claimed that the company worked with AutoZone, Bed Bath & Beyond, Best Buy, The Home Depot, HSN, Lowe’s, PetSmart, QVC, Sears, SkyMall, Staples, Target, Toys “R” Us and Walgreens.  It’s easy to talk about some of the logistical issues of working with big retail (like stocking fees) – ESPECIALLY for new companies.  But it is difficult to have a brand new product appear on those shelves.
  3. Several of the more unusual inventions and partnerships that World Patent Marketing listed in their press releases included the “Masculine Toilet” for unusually well-endowed males, a partnership arrangement with “World-renowned physicist, author, and scholar Dr. Ronald Mallett [who] believes time travel is possible, perhaps within the next decade,” and a website that claims that “DNA evidence collected in 2013 proves that Bigfoot does exist,” which sells Bigfoot items such as stuffed animals. Many intellectual property law firms try not to be impressed with the invention itself, but prefer to know what their clients’ business plans are, and how clients will make money after spending the money on intellectual property and many of these products referenced above have zero business plan.
  4. Inventors should contact qualified intellectual-property counsel. The best shortcut and way to save money is to work with an experienced patent counsel.