Matthew Whitaker

Trying to get a patent is a daunting proposition. Not so much if you're a corporation or a university—you just hire a firm like Oblon, McClelland, Maier & Neustadt or Fish & Richardson.

But if you're working in your garage on a better mousetrap … good luck. It's one more area where our legal system is extremely difficult for individuals to navigate.

And that's part of what's so distressing about Acting Attorney General Matthew Whitaker's role in World Patent Marketing, which earlier this year settled charges by the Federal Trade Commission of defrauding starry-eyed inventors. The now-defunct company agreed to pay $25 million (though most of the penalty was suspended for inability to pay) to resolve allegations that it bilked would-be entrepreneurs out of millions of dollars with empty promises of helping them realize their inventions.

Whitaker was apparently willing to throw around his legal experience to stifle complaints against the company and its CEO Scott Cooper, writing this threatening email to a person whose name is redacted on August 21, 2015:

“I am a former United States Attorney for the Southern District of Iowa and I also serve on World Patent Marketing's Advisory Board. 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.”

So wow. “Serious civil and criminal consequences” for filing a complaint with the Better Business Bureau?

I weep for the Justice Department.

(The ham-handed threat didn't even work. The person responded, “Do not email me again with your scare tactics …You will be exposed. I hope I make myself clear Mr. Whitaker.”)

The correspondence came to light in response to a Freedom of Information Act request by The Wall Street Journal when the Federal Trade Commission last week released a trove of World Patent Marketing documents. The 332 pages of emails and marketing materials shine a light on Whitaker's role in company operations—revelations which appear to contradict the claim by Justice Department spokeswoman Kerri Kupec that he “was not aware of any fraudulent activity.”

It's also not clear if  he lied to FTC lawyer James Evans. When Evans interviewed Whitaker by phone on October 24, 2017, the FTC lawyer reported that Whitaker told him that he “never e-mailed or wrote to consumers.”

(That same day, Evans also emailed his FTC colleagues, writing “You're not going to believe this … Matt Whitaker is now chief of staff to the Attorney General. Of the United States.” “O.M.G.” one responded. “O.M.G is right” wrote another.)

As a member of the company's advisory board, World Patent Marketing offered to pay Whitaker $1,875 per quarter, plus a free trip to Miami Beach for its annual meeting.

The board itself was one sign that World Patent Marketing wasn't on the up-and-up. The other members—a random collection of vaguely important-sounding people—seem to have had virtually no experience with patents and invention development. For example, members included Pascal Bida Koyagbele, a presidential candidate for the Central African Republic; Richard Paul Sulaka II, deputy public works commissioner for Macomb County, Michigan; Nitzan Nuriel, a retired Israeli Brigadier General; and Kelsey Swanson, Miss Rhode Island USA 2017.

Whitaker though—he lent an aura of legitimacy, with his tenure from 2004 to 2009 as U.S. Attorney for the Southern District of Iowa.

And oh boy, did World Patent Marketing make use of that, using Whitaker as a spokesman and dropping his name at the first sign of trouble.

As a company employee wrote to a concerned customer, World Patent Marketing “has a 100% clean record and we have never been investigated …Mathew G. Whitaker is a former state attorney and he is on our advisory board along with many other reputable Political, Military, Civilian, and Medical experts.”

Whitaker went along with it. “As a former US Attorney, I would only align myself with a first class organization. World Patent Marketing goes beyond making statements about doing business 'ethically' and translates them into action,” he said in marketing materials.

There are also several emails in response to customer queries or complaints where CEO Cooper wrote things like “I have copied my board member and Former US Attorney, Matthew Whitaker.”

Moreover, there are instances where unhappy, frustrated customers contacted Whitaker directly. He'd forward their messages to Cooper with comments like “Fyi, I don't plan to respond, unless you want me to. MW.”

All of which makes it hard to believe Whitaker when he claimed that he had no idea that there was anything fishy about the company.

The FTC in court documents outlined the whole sleazy, sordid operation.

In a complaint filed last year in U.S. District Court for the Southern District of Florida, the FTC alleged that the company “bilked thousands of consumers out of millions of dollars. Defendants promise consumer inventors a patent and a lucrative licensing or manufacturing agreement that will allow consumers to successfully monetize their inventions … In truth and in fact, Defendants fail to fulfill almost every promise they make to consumers.”

According to the FTC, company sales people “almost invariably tell consumers that they have great ideas” and then hit them up for up to $1,295 for a “Global Invention Royalty Analysis.”

The reports usually ran about 70 pages, included a “patent search, market demographics, and a study purportedly conducted by Ivy League researchers.”

According to the FTC, once the customer gets the report, that's when the real sales pitch began—packages ranging from $7,995 to $64,995 for varying levels of patent protection and invention-promotion services. “Salespeople depict defendants as offering a one-stop shop for patenting and invention-promotion, as well as licensing and manufacturing.”

But according to the agency, the company deceived consumers across the board.

For example, “Defendants represent to consumers that [World Patent Marketing] has a manufacturing plant in China, and sometimes refer to it as 'WPM China,'” the FTC said. “WPM China and World Patent Marketing China do not exist.”

The company also allegedly bragged that its inventors sold their products in stores like Walmart, Target, Lowes, The Home Depot. Not true, the FTC said. World Patent Marketing “clients' products are not sold in brick and mortar stores.”

“Defendants also generally fail to procure patents for consumers,” the FTC said. “Though Defendants use offshore drafting services and contracted patent agents and attorneys to file patent applications, those applications are of poor quality, and are often not approved by the United States Patent and Trademark Office.”

Nor did they ever secure the promised third-party licensing or manufacturing agreements, the FTC said—and none of their customers “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.”

So look. Either Whitaker didn't know what was going on, which makes him wildly careless to get involved in a business without checking out basics like whether it really had a factory in China or delivered the services it promised.

Or else he was a party to scam.

Either way, it's appalling that he is now the highest law enforcement official in the United States.

 

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