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Vancouver man sues Apple, Verizon, AT&T for $7 billion over alleged patent infringement

Source: The Province - Susan Lazaruk

emil-malak-voip-infringement-photoEmil Malak says VoIP tech was developed by a firm he bought

A Vancouver restaurateur who once tried to sue Avatar director James Cameron for $100 million now has set his sights on bigger targets by filing a lawsuit against Apple, Verizon and AT&T.

Emil Malak and his company Voip-Pal have filed a lawsuit against the three telco giants for $7 billion US for patent infringement, and Malak says he’s putting 50 more companies, including Telus, Rogers and Blackberry, on notice they’re next.

“We’ve sent letters of intent to Google, Microsoft (which owns Skype) and CenturyLink,” said Malak, 64. “We made them aware we intend to sue them.”

He said billions more are at stake — the $7-billion figure is based on an average of similar judgments — in what he expects to be a “long, tough fight.”

The lawsuit was filed last week in a Nevada court, alleging companies are using the Voice over Internet Protocol technology that Voip-Pal (and its predecessor Digifonica of Vancouver) spent $17 million designing and building over 13 years without paying for it.

Malak claims 80 per cent of the telecommunications industry uses his company’s patented technology for billions of texts, phone calls and video calls.

He said VoIP, which allows people to speak over the Internet, existed in the early 2000s, but Digifonica improved upon on it, taking out costly patents.

Malak said that in 2003 Voip-Pal bought out a bankrupt Digifonica and its patents by taking on its debt and now owns 11 VoIP patents.

“We came and made it more advanced and that’s what everyone’s using now,” said Malak at his Bellaggio restaurant.

The company’s billion TSX shares are worth 13 cents each, or $130 million in total, said Malak, who owns 40 per cent.

Malak said he would rather avoid court but it was the only way to get the attention of the telcos and get paid for his researchers’ work.

“When you write to them and they ignore you, you have no choice (but to sue),” he said. “You can’t let them walk all over you because they’re big. They have very deep pockets and we’re just a small tech company. They’re going to try to tire us out. They want us to eventually fade away.”

Wikipedia credits Israel-born Alon Cohen of Phone.com, as co-inventor of the Audio Transceiver (U.S. Patent 5,825,771), with the earliest VoIP technology. Cohen has four patents.

Malak said he knows he has a case because Apple corresponded for months.

“Why would (one of) the largest (telecommunications) companies in the world enter in a back-and-forth with a nincompoop company (if there wasn’t merit)?”

Apple didn’t reply to Province email and phone requests for comment.

Verizon’s Bob Varettoni said in an email: “The allegations of violations of the law are without merit, and we are confident the court will rule in our favour.” Marty Richter of AT&T emailed: “We don’t have a comment on this one.”

Like all large corporations, Apple is facing dozens of lawsuits, including some from “patent trolls,” or someone who “purchases a patent, often from a bankrupt firm, and then sues another company by claiming that one of its products infringes on the purchased patent,” says Wikipedia.

But Jeff Gamet, managing editor of Mac Observer, an online industry magazine, said in an email: “Patent litigation is spinning out of control in the United States, so much so that we assume almost every company filing a court case is a non-practicing entity, or patent troll.”

But he said Voip-Pal “bought Digifonica, which actually does develop products based on its own intellectual property,” including software for call intercepting and communication industry billing.

“That’s different from so many other companies buying up patent portfolios with the intent to strong-arm money out of other companies over the threat of legal action.

“Are Apple, AT&T, and Verizon infringing on Voip-Pal’s patents? Maybe, or maybe not. Unless they decide to settle out of court, we’ll have to wait for a ruling” and the appeals.

Settling out of court is what Malak did with Cameron, after he dropped his lawsuit for alleged copyright violation against the Hollywood heavyweight on the first day of the trial two years ago.

Malak had claimed Avatar used material from his screenplay, Terra Incognita, which has a similar premise of humans wanting to mine precious minerals on a planet inhabited by indigenous people.

He sent a copy to Cameron in 2002.

Avatar was made in 2009 and grossed $2 billion. A confidentiality agreement prevents Malak from disclosing how much he settled for.

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