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MORE VPLM INFRINGEMENTS BY EXISTING LAWSUITED COMPANIES....
https://finance.yahoo.com/news/verizon-cisco-extend-software-defined-070000297.html
Verizon and Cisco to Extend Software-defined Networking to Support Future 5G Mobile Devices for Enterprise
PR Newswire PR NewswireFebruary 23, 2019
BARCELONA, Spain, Feb. 24, 2019 /PRNewswire/ -- As businesses aim to stay ahead of an increasingly digital economy, Verizon is expanding its offerings to help enterprises accelerate their digital transformation to support future 5G capabilities. Verizon's Virtual Network Services will support 5G devices on Cisco's software-defined wide area network (SD-WAN) platform, making it easier to manage network traffic and application performance across a wide area network on both public and private networks.
Cisco Logo (PRNewsfoto/Cisco)
Cisco Logo (PRNewsfoto/Cisco)
More
Verizon's Virtual Network Services will now support Cisco's SD-WAN portfolio using Cisco's intent-based networking capabilities, allowing enterprises to leverage the performance of 5G when using services such as network slicing and mobile edge computing.
"These solutions highlight what a transformative platform 5G will be for enterprises," said Shawn Hakl, senior vice president, Business Products, Verizon. "Cisco has been a close technology partner in driving SD-WAN based transformation in campus and branch environments, and we look forward to bridging those same best practices to mobile devices."
"We're excited to partner with Verizon to take the next step in SD-WAN. 5G is a transformational technology, and when combined with Cisco SD-WAN, users' application experience can be better than ever before," said Scott Harrell, senior vice president and general manager, Enterprise Networking Business, Cisco. "Verizon's new Mobile SD-WAN will help enterprise customers quickly and easily transition to 5G, giving them an edge as we embrace the next generation of mobile connectivity."
SD-WAN technology has become a popular approach to connecting enterprise wide area networks, including branch offices and data centers, over public and private connectivity services. The new offer from Verizon and Cisco sets the stage for enterprises to use Verizon's future 5G network as an extension of their campus and branch infrastructure and enable more control of the application performance on mobile and IoT devices. Potential use cases include the ability to enable an intelligent security perimeter for mobile workers, ensuring that access to corporate assets are governed by their security posture, with a different slice or policy on per application basis from the users' devices. IoT devices that sit outside the campus or branch could be managed and secured with the same network and security tools used inside the campus, giving enterprises a unified approach to applying networking and security policy across any environment.
About Verizon
Verizon Communications Inc. (NYSE, Nasdaq: VZ), headquartered in New York City, generated revenues of $130.9 billion in 2018. The company operates America's most reliable wireless network and the nation's premier all-fiber network, and delivers integrated solutions to businesses worldwide. With brands like Yahoo, TechCrunch and HuffPost, the company's media group helps consumers stay informed and entertained, communicate and transact, while creating new ways for advertisers and partners to connect. Verizon's corporate responsibility prioritizes the environmental, social and governance issues most relevant to its business and impact to society.
About Cisco
Cisco (CSCO) is the worldwide leader in IT that helps companies seize the opportunities of tomorrow by proving that amazing things can happen when you connect the previously unconnected. For ongoing news, please go to http://thenetwork.cisco.com.
Apple Pay activated on 383 million iPhones, worldwide
NO WONDER APPLE DOESNT WANT TO LOSE THE VPLM CASE.. A LOT OF USAGE MONEY INVOLVED HERE
By Malcolm Owen
Wednesday, February 20, 2019, 08:25 am PT (11:25 am ET)
Apple Pay is continuing to grow as a major player in the mobile payments market thanks to its loyal users, Loup Ventures notes, estimating that 43 percent of all iPhone users around the world have enabled Apple Pay on their devices.
Apple Pay Cash, launched in January, is Apple's peer-to-peer payments service
Apple Pay Cash, launched in January, is Apple's peer-to-peer payments service
A major component of Apple's ever-growing Services arm, Apple Pay is a well-used feature that is increasing in popularity as more countries are enabled. Working from data provided by Apple during its most recent conference call, Loup Ventures' Gene Munster and Will Thompson believes the service is becoming more popular because of its existing users.
According to surveys performed by Loup Ventures, as well as data from the growth in transactions, countries locations, and banks, the firm estimates 43 percent of global iPhone users have enabled Apple Pay by the December quarter, up from 36 percent estimated in the September quarter, and 20 percent for the December quarter of 2017.
Based on Apple's advice the iPhone install base has reached 900 million devices, it is extrapolated that there are currently 383 million Apple Pay users. This is up 21 percent in sequential quarters and 123 percent year-on-year, according to the firm's calculations.
"We believe this growth is fueled in part by the launch of peer to peer payments in January 2018," writes the analysts.
Using the number of active countries and use cases with each market, Loup Ventures also estimates that only 12 percent of Apple Pay users are based in the United States, while 21 percent of active iPhones are based in the market. It is suggested that the greater acceptance of Apple Pay on public transport systems in the UK, China, Japan, and Russia is one of a number of factors playing into the slightly skewed results compared to iPhone usage.
It is estimated 24 percent of US-based iPhone users have tried out Apple Pay, while 47 percent of international users have done the same.
"Although we believe just under half of global iPhone owners use Apple Pay, that number will continue to grow as more retailers, universities, municipalities, and public transportation systems enable contactless payments and people begin to think of their phone as their wallet," Loup Ventures advises. The firm also suggests that, while it won't have a meaningful measurable impact on Services revenue growth, the model and Apple's handling of user privacy "lays the groundwork for handling other sensitive data and bringing ease of use to areas like healthcare."
Arguably this is already happening, with Apple recently signing a deal with the Department of Veterans Affairs to bring health records to iPhones.
"We expect similar features and relationships to continue to develop in the near future," the note concludes.
While largely complementary on Apple Pay's growth, Loup Ventures does note one element that is a slight disappointment. Tim Cook advised during the conference call transactions had topped 1.8 billion during the quarter, which is more than double the volume seen a year ago.
According to Loup Ventures, this is a step down from the 300 percent year-on-year growth seen in the September quarter. The analysts are still optimistic, suggesting "While a decline in growth rate, it still represents an impressive ramp in usage."
,microsoft also gave up early in the game with their copy of vplms patents
VPLM 30 MINUTE MARK AND BIT BEFORE APPLE TALK
PODCAST LINK: http://hwcdn.libsyn.com/p/f/3/7/f372a83d6703e9ab/TMB-19-02-17-Using-25th-Amendment-to-oust-Trump.mp3?c_id=34504532&cs_id=34504532&destination_id=48789&expiration=1550433019&hwt=fc698f33e139132249a2b4eb57e6b808
HMMMMM PERHAPS.AN.INFRINGING.BUY BY APPLE?
–A+
Apple to acquire voice app firm PullString in deal worth below $100M, report says
By Mikey Campbell
Friday, February 15, 2019, 02:29 pm PT (05:29 pm ET)
As part of a larger push into voice recognition and artificial intelligence technology, Apple has reportedly agreed to purchase PullString, a San Francisco startup focused on the development and publication of voice apps for Amazon's Alexa, Google Assistant and "internet of things" hardware.
PullString
PullString Converse's conversational "AI canvas."
Citing sources familiar with the matter, Axios reports Apple's deal with PullString is worth under $100 million, though executives have the potential to gain larger payouts. As with most Apple acquisitions, the PullString deal is believed to target talent and technology, which in this case involves voice apps.
Formerly known as ToyTalk, PullString was founded by former Pixar executives in 2011 when voice-powered applications were still a novelty. Specifically, the firm's main product, Converse, is a voice design and artificial intelligence tool that allows customers to create "expressive apps" with custom voices and advanced sound design, according to its website.
Converse saw initial integration in toy designs from Mattel, including interactive Hello Barbie and Thomas the Tank Engine products. More recently, however, PullString moved into IoT devices with a focus on virtual assistants like Alexa and Google Assistant. The current generation of PullString Converse enables users to build out customizable, conversational interactions with users, a feature that Apple's own Siri product lacks.
A list of successful Converse integrations on PullString's website includes integrations like trivia and quiz experiences, choose your own adventure games, voice-enabled FAQs and customer support experiences aimed at troubleshooting product issues before escalation to a human operator.
What Apple has planned for PullString is unknown, though the firm's past endeavors strongly suggest Converse technology will be applied to bolster Siri's feature set. Whether that strategy involves a more developer accessible Siri is unknown, but the technology behind Converse would imply support for outside parties is a distinct possibility.
Despite being first to market with a voice assistant, Apple's Siri solution has in many ways been surpassed by open platforms like Alexa and Google Assistant. An abundance of voice apps — called Alexa Skills by Amazon and Google Actions by Google — powered by AI backends presents users of competing platforms access to a vast array of functions and services. Siri, on the other hand, is viewed by many as wanting.
Converse could help change existing perceptions by presenting developers the requisite tools to build advanced Siri-compatible apps. Alternatively, Apple could use PullString's toolset to help its own Siri software engineering team bake unique first-party functions into hardware interfaces like iPhone and HomePod.
OR.COULD.THE.SCOOPED.5.MILLION.DOLLARS.NOW.COME.BACK.INTO.VPLM.AS.A.PRIVATE.PLACEMENT.PLUS.A.WARRANT AND ADDITIONAL ANTI DILUTION SHARES GIVEN OUT TO THE BOD TO ENSURE 40% EQUITY?
IS THE PPS DROPPING SO ANOTHER PP PRICE CAN BE SET AT A LOW VALUE?
TAKING 70% OF THE TREASURY MONEY RAISED TO FUND THE LAWSUITS AS BOD BONUSES IS A BIT MUCH........
HAS THIS BEEN DONE PREVIOUSLY; AGAIN AND AGAIN AND AGAIN?
AND IF SO... IS IT LEGAL?
YUP.....VPLM.MUST.THEREFORE.HAVE.BEEN.SOLD.... WHO GOT IT IS THE QUESTION?
DID.THE.BOD.SCOOP.OUT.5.MILLION.TREASURY.DOLLARS.AS BONUS.MONEY.BECAUSE.A.DEAL.HAS.BEEN.STRUCK?
AND THEREFORE NO LONGER NEEDED FOR THE TRIALS AND THE LAWYERS?
OR BECAUSE THE 5 MILLION DOLLARS GAVE THE BOD A WHOLE PILE MORE FREE 40% DILUTION SHARES? HMMMMMMMMM
37 Voip-Pal.Com Inc. 12,402 VPLM 0.07 -0.001 -1.41% 843,422
MOST READ BOARD
https://investorshub.advfn.com/boards/most_read.aspx
WHO KNOWS?
Voip-Pal.Com Inc. 17,601 VPLM 0.071 0.002 2.90% 696,027
FEB 11 TODAY ..TONIGHT?
Direct download: TMB-19-01-27-facebook-story-about-power-privilege.mp3
Category:News & Politics -- posted at: 10:58am PST
Podcast link:
http://hwcdn.libsyn.com/p/4/6/1/461382d9be475515/TMB-19-02-03-Seniors-being-crushed-by-student-debt.mp3?c_id=33293810&cs_id=33293810&destination_id=48789&expiration=1549247549&hwt=2cca328d056a7396e1d2e4a6a83fa0f3
VPLM mentioned:
1:15 - vplm mentioned
3:10 - vplm has tech that has been used by big tech companies. Talks about various points made in a Time Magazine article written by a former Facebook exec and how it applies to
Vplm.
15:15 - how vplm tech is applied to current and changing technologies and that vplm doesn’t even know how much its patent portfolio reaches. Mentions he will know in about 10-15 days something about value in regards to vplm as he believes vplm will have completed its damages analysis. A lot more to the picture then we all thought and vplm will have a better idea of how to monetize its patents soon.
IS MYTHBUSTER SUGGESTING VPLM WILL HAVE THEIR DAMAGES ANALYSIS COMPLETED IN A COUPLE OF WEEKS AND THAT WE COULD BE SEEING REVISED DAMAGES SHORTLY AFTER?
OR A NEWS RELEASE OUTLINING THE PARTS OF THE ANALYSIS HE WANTED TO GIVE OUT TO THE PUBLI C BEFORE A SETTLEMENT OR TRIAL.
THERE ARE,HOWEVER, ABOUT FOUR ITEMS THAT WOULD STILL HAVE TO BE FINALIZED BEFORE A DEAL COULD BE CLOSED..
Malak would have to post the analysis on the VPLM website I believe
At about 34 minute mark
WHAT WILL THE ADDITION OF THE ANALYISTS PRICE evaluation of the patents do to the PPS now that it's
finished, in vplms hands , and l assume about to be HOPEFULLY MADE COMPLETELY AVAILABLE ON THE WEBSITE.......ANY GUESSES AS TO THE
VALUATION???......ITS NOW ABOUT TO GET VERY , VERY INTERESTING AND SHOULD HENERATE AT LEAST ONE OFFER,PERHAPS THIS WEEK...
Defendants.have.filed.an.identical.Motion.in.each.of.the.captioned actions.
For the Court’s convenience, references herein to ECF numbers are to the ECF numbers in the case styled VoIP-Pal.com, Inc. v. AT&T Corp., Case No. 18-cv-06177-LHK (N.D. Cal.). The various complaints are as set forth in Defendants’ Motion at FN 1.
I. INTRODUCTION
Defendants ask this Court to invalidate every asserted claim of the Patents-in-Suit at the motion to dismiss stage before construction of any claim and in the absence of any factual record. But this is not the first time VoIP-Pal has faced a challenge to its patents. First, the claims of the Patents-in-Suit were argued to be invalid in view of prior art challenges brought by both Apple, Inc. and AT&T Corp. in Inter Partes Review proceedings before the Patent Trial and Appeal Board in the United States Patent and Trademark Office. With VoIP-Pal having overcome those challenges, Verizon Wireless and AT&T Corp., only months ago, filed separate motions to dismiss under Fed. R. Civ. Proc. 12(b)(6), alleging the asserted claims were invalid under 35 U.S.C. § 101.
In view of evidence submitted by VoIP-Pal in the form of proposed amendments to its complaints, both Verizon Wireless and AT&T Corp. withdrew their motion(s) to dismiss, declining to argue that the amendments were futile, leading to only one obvious conclusion – that the modest development of the record by VoIP-Pal defeated their early stage attempt to rush this
a case out of court before VoIP-Pal could defend its United States pateN
VOIP-PAL’S OPPOSITION TO DEFENDANTS’ CONSOLIDATED MOTION TO DISMISS
The bottom line is that the claims are not ineligible under 35 U.S.C. § 101 and the Motion must be denied for at least the following reasons:
First, the asserted claims are not directed to an abstract idea, but are instead generally directed to an improved call routing technology enabling better interoperability of communication networks by, inter alia, evaluating a callee identifier provided by a caller in conjunction with caller-specific “attributes” located from a profile associated with the caller, to identify and classify an intended destination, as between two networks, and based on the classification, producing a routing message to setup a call controller to establish the call to the intended destination via identified suitable network communication infrastructure;
Second, the asserted claims constitute an improvement in call controller technology and are conceptually inventive, because the claims enable transparent routing of calls integrated over private and public networks based upon caller-specific profile information in conjunction with information about the callee; and
Third, the Motion is premature in that there are numerous factual disputes made of issue by the Motion and due to the nature of the evidence that VoIP-Pal would elicit during discovery as identified in VoIP-Pal’s proffer of evidence submitted herewith.
Defendants fail to even acknowledge the heavy burden they bear on their Motion, namely, to prove invalidity by “clear and convincing evidence.” Bascom Research, LLC v. LinkedIn, Inc., 77 F. Supp. 3d 940, 945 (N.D. Cal. 2015) (emphasis added); see also Card Verification Solutions, Inc. v. Citigroup, No. 13-cv-06339, 2014 WL 4922524, at *2 (N.D. Ill. Sept. 29, 2014)
(“dismissal is appropriate solely when the only plausible reading of the patent is that there is clear and convincing evidence of ineligibility” (emphasis added)).
Yet Defendants rely on unsupported factual allegations for key arguments and summarily dismiss contrary material facts asserted in VoIP-Pal’s Complaint.2 The Court should deny the current motion to dismiss because Defendants have not met its burden.
2
Because this Motion is consolidated, VoIP-Pal references only the Third Amended Complaint filed in the AT&T Action, Case No. 5:18-cv-6177-LHK (ECF. No. 59). See Malek Decl., Exhibit 1. To not burden the Court with additional filings, VoIP-Pal has not amended each complaint in each action with identical allegations but would do so if given permission and if necessary to the Court’s analysis of the Motion.
Accordingly, VoIP-Pal attaches the Third Amended Complaint in the AT&T action as an Exhibit to this Brief to be filed in each case in order to preserve the record.
If the Court desires that VoIP-Pal make the same information of record in each case through amended complaints, then VoIP-Pal respectfully requests permission to amend its complaint in each case to do so. VoIP-Pal submits that such action would be ministerial at this stage. See Aatrix Software, Inc. v. Green Shades Software, Inc., No. 2017-1452, 2018 WL 843288 (Fed. Cir. Feb. 14, 2018).
AND
C. Numerous Factual Disputes Show This Rule 12(b)(6) Motion is Premature.
Defendants’ Motion to Dismiss under § 101 should be denied for the separate reason that it is premature. Not only is claim construction required, but the factual record in this case is as-yet undeveloped. Given that the Motion is brought under Fed. R. Civ. P. 12(b)(6), VoIP-Pal is limited to the intrinsic record. Accordingly, VoIP-Pal submits the following as a proffer of evidence and notes that the material is being submitted for illustrative purposes and is not intended to convert
the Motion into a Fed. motion for summary judgment. See, e.g., Geinosky v. City of Chicago, 675 F.3d 743, FN 1 (2012).
If provided the opportunity to engage in discovery, VoIP-Pal would elicit evidence to show that a VoIP system is inherently a computer network,19 and that a VoIP system may use non-PSTN protocols such as Session Initiation Protocol (SIP) and a variety of caller/callee identifiers, including proprietary identifiers that are incompatible with PSTN callee identifiers.20
Consequently, for any routing controller or call controller intended to interoperate with both private and public network elements, there is a requirement for computer-based methods of communication to bridge the divide. Indeed, the patented method could not be performed without computing equipment such as the routing controller. (See generally, Mangione-Smith Decl.)).
Moreover, as stated in footnote 16 of this Brief, Defendants’ arguments about what is conventional should be regarded with skepticism absent a fulsome factual record based on submissions by Defendant Apple in various IPR proceedings.
hmmmm???? comments????
2018 CANCELED Status Check: Compliance(3:00 AM) (Judicial Officer Bulla, Bonnie)
Vacated - per Commissioner
01/24/2019 Motion
Third-Party Defendant TK Investment's Motion for Leave to File Counterclaim on Order Shortening Time
01/28/2019 Opposition to Motion
Defendants' Opposition to TK Investment's Motion for Leave to File Counterclaim on Order Shortening Time and Defendants' Countermotion for Attorney's Fees and Costs
01/28/2019 Motion for Summary Judgment
Defendants' Joint Motion for Summary Judgment and Memorandum of Law in Support
01/28/2019 Statement
Defendants' Concise Statement of Undisputed Material Facts in Support of Defendants' Motion for Summary Judgment
01/28/2019 Motion for Partial Summary Judgment
Motion for Partial Summary Judgment
01/29/2019 Motion for Leave (9:00 AM) (Judicial Officer Cory, Kenneth)
Third-Party Defendant TK Investment's Motion for Leave to File Counterclaim on Order Shortening Time
Parties Present
Minutes
Result: Granted
01/29/2019 Counterclaim
Third-Party Defendant TK Investment's Counterclaim
01/29/2019 Appendix
Appendix to Motion for Partial Summary Judgment
03/05/2019 Motion for Summary Judgment (9:00 AM) (Judicial Officer Cory, Kenneth)
Defendants' Joint Motion for Summary Judgment and Memorandum of Law in Support
03/05/2019 Motion for Partial Summary Judgment (9:00 AM) (Judicial Officer Cory, Kenneth)
Counterdefendants Locksmith Financial Corporation's Talisman Financial Inc.'s Cactus Venture Inc's and Third Party Defendants Terry Kwan's , Richard Kipping's and TK Investment's Motion for Partial Summary Judgment
05/02/2019 Calendar Call (9:00 AM) (Judicial Officer Cory, Kenneth)
05/20/2019 Jury Trial (9:00 AM) (Judicial Officer Cory, Kenneth)
PARTIES PRESENT AND MINUTES
Party Information
Lead Attorneys
Counter Claimant VOIP-Pal.Com Inc Kurt R. Bonds
Retained
702-384-7000(W)
Counter Defendant Cactus Ventures Inc Michael E. Smith
Retained
702-382-1714(W)
Counter Defendant Locksmith Financial Corporation Michael E. Smith
Retained
702-382-1714(W)
Counter Defendant Talisman Financial Inc Michael E. Smith
Retained
702-382-1714(W)
Counter Defendant VHB International LTD Harold P. Gewerter
Retained
702-476-5101(W)
Defendant Candy, Edwin Kurt R. Bonds
Retained
702-384-7000(W)
Defendant Chang, Dennis Kurt R. Bonds
Retained
702-384-7000(W)
Defendant Malak, Emil Kurt R. Bonds
Retained
702-384-7000(W)
Defendant Presidents Stock Transfer Inc Kurt R. Bonds
Retained
702-384-7000(W)
Defendant Sawyer, Thomas E Kurt R. Bonds
Retained
702-384-7000(W)
Defendant Tucker, Colin Kurt R. Bonds
Retained
702-384-7000(W)
Defendant VOIP-Pal.Com Inc Kurt R. Bonds
Retained
702-384-7000(W)
Defendant Waggett, Mike Kurt R. Bonds
Retained
702-384-7000(W)
Plaintiff Cactus Ventures Inc Michael E. Smith
Retained
702-382-1714(W)
Plaintiff Locksmith Financial Corporation Michael E. Smith
Retained
702-382-1714(W)
Plaintiff Talisman Financial Inc Michael E. Smith
Retained
702-382-1714(W)
Plaintiff VHB International LTD Harold P. Gewerter
Retained
702-476-5101(W)
Third Party Defendant Kipping, Richard G Michael E. Smith
Retained
702-382-1714(W)
Third Party Defendant Kwan, Terry Michael E. Smith
Retained
702-382-1714(W)
Third Party Defendant TK Investment Michael E. Smith
Retained
702-382-1714(W)
Third Party Plaintiff VOIP-Pal.Com Inc Kurt R. Bonds
Retained
702-384-7000(W)
Events & Orders of the Court
01/29/2019 Motion for Leave (9:00 AM) (Judicial Officer Cory, Kenneth)
Third-Party Defendant TK Investment's Motion for Leave to File Counterclaim on Order Shortening Time
Minutes
01/29/2019 9:00 AM
- Mr. Smith advised he had previously worked on this case as contract attorney and then in December he substituted in . Once on the case full time he found the only thing that had been done was the joint case conference report and no discovery had been done. Mr. Smith gave summary of case. Mr. Knecht argued if the motion is granted it would prejudice his client and further advised they are ready for trial. Further arguments by counsel. COURT ORDERED, Third- Party Defendant TK Investment's Motion for Leave to File Counterclaim on OST GRANTED; discovery extended to 3/12/19. Court DIRECTED counsel to assess the case if they feel the trial will need to be continued to file a motion as soon as possible. Mr. Smith stated the plaintiff would waive the 30 days notice on written discovery. Counsel agreed to file dispostitive motions by 4/2/19. Mr. Smith to prepare the Order.
Parties Present
Return to Register of Actions
Voip-Pal.com, Inc. v. Twitter, Inc.
California Northern District Court
Judge: Lucy H Koh
Referred: Virginia K Demarchi
Case #: 5:18-cv-04523
Nature of Suit 830 Property Rights - Patent
Cause 35:271 Patent Infringement
Case Filed: Jul 26, 2018
Docket
Parties (2)
Docket last updated: 8 hours ago
Friday, January 25, 2019
utility Set Deadlines/Hearings Fri 4:27 PM
Set Deadlines/Hearings per ECF Nos. (65 in 5:18-cv-06177-LHK, 73 in 5:18-cv-04523-LHK, 125 in 5:18-cv-06054-LHK, 77 in 5:18-cv-06217-LHK): Last Day to Amend the Pleadings/Add Parties by 2/13/2019. Case Management Statement due by 5/17/2019. Further Case Management Conference set for 5/22/2019 at 2:00 pm. Claims Construction Hearing set for 8/15/2019 01:30 PM. Close of Fact Discovery due by 11/15/2019. Close of Expert Discovery due by 3/2/2020. Deadline to file Dispositive and Daubert Motions due by 4/2/2020. Hearing on Dispositive and Daubert Motions set for 5/14/2020 01:30 PM in San Jose, Courtroom 8, 4th Floor before Judge Lucy H. Koh. (ecgS, COURT STAFF)
Replies to Message #145645487 on Voip-Pal.Com Inc. (VPLM)
DeerBalls Member Level Saturday, 12/22/18 03:17:33 AM
Re: nomorerollbacks post# 70185
Post #
70186
of 73566
It is a lot of reading, but seems pretty positive for VPLM. Yes, a bit of a re-look, but very expedited and limited!
Respond | View Replies (1)
lindsmarie Saturday, 12/22/18 03:20:05 AM
Re: nomorerollbacks post# 70185
Post #
70187
of 73566
I
Respond | No replies
nomorerollbacks Member Level Saturday, 12/22/18 05:06:32 AM
Re: nomorerollbacks post# 70185
Post #
70189
of 73566
COURT RESULTS OUTLINED IN BASEBALL TERMS
APPLE FINDINGS
STRIKE 1
The Motion is denied to the extent that Petitioner requests judgment to be entered against Patent Owner as to all of the claims challenged in these proceedings or, alternatively, vacatur of the Final Written Decisions and new proceedings in which Petitioner may file new petitions. In view of the unique circumstances and record before us, we determine that the proper course of action, as a matter of fairness in view of actions by both parties, is for the new panel to reconsider the Final Written Decisions on rehearing in view of the entirety of record in these proceedings
STRIKE 2
When considering the interests of the Office and public, judgment against Patent Owner would be an inappropriate sanction under the facts of these cases. It is not in the Office’s interest to have a party delay its investigation into issues of alleged impropriety, or to wait and see the results of a final written decision before raising any issues
STRIKE 3
For example, we do not wish to reward Petitioner with a “do-over” after it failed to raise the issues promptly. Furthermore, it is in neither the Office’s nor the public’s interest to vacate the results of 17 months of proceedings and commence entirely new proceedings
RESULT: APPLE, YOU ARE OUT !!!!!! SETTLE NOW....
VPLM FINDINGS
STRIKE 1
On the current record, there is evidence sufficient to conclude that Patent Owner intentionally violated 37 C.F.R. § 42.5(d)
RESULT ; VPLM IS STILL AT BAT
Respond | View Replies (2)
I HEARD THE SAME CARB MODIFICATION
NONSENSE 60 YEARS AGO WHEN I FIRST STARTED TEACHING SHOP COURSES. IT'S FUNNY HOW THESE STORIES KEEP REPEATING FROM ONE GENERATION.... TO THE NEXT
NEXT.
KEEP DREAMING. GAS PRICE THEN WAS ONLY ABOUT 2 BITS. 25 CENTS TO THE YOUNGER GENERATION
Facebook needs Vplm’s lawful.intercept.patent.to operate in....INDIA
https://finance.yahoo.com/m/37fbf5b4-d8dc-3dd7-9f90-44085df09775/%5B%24%24%5D-india-wants-access-to.html?ru=yahoo?mod=yahoo_itp&yptr=yahoo
CONSENSUS.OPINION..Once vplm pinpoints.infringement.which.should.occur during.pre-trial discovery things should not go much further. Companies will settle rather than disclose their source codes.
1. hardware manufacturing damages
(ruling that allows company to recover international manufacturing of hardware that contribute to infringement)
2. video damages
(new RBR child covers video)
3. passage of time damages
4. willful infringement
treble damages
Will we or a buyer become a trillion dollar company in a few years if we don't sell out first?
.
IT..... IS.SUPPOSEDLY.REDUCING.THE CURRENT WORKFORCE EMPLOYMENT BY 45% IN A FEW YEARS DUE TO THE 5TH GENERATION ITERATION COMING OUT NOW.
OUR BOARD MEMBERS WERE DEEPLY INVOLVED IN THE OTHER GENERATIONS AND ARE NOW ALSO WITH VPLM PATENTS...
GEN 5 HAS TO HAVE VPLMS PATENTS TO WORK
AFTER THE COURT TRIALS OR SETTLEMENTS END THE INFRINGEMENTS ... WHAT SHARE PRICE IS UPFOR PATENTS THAT SHOULD INVOLVE EVERY SINGLE PERSON ON EARTH?
WHO WILL WRITE THE VPLM HISTORY BOOK?
INTERESTING TIMES....ENJOY!!!!1
HOW ABOUT HUNDREDS OF BILLIONS IN DAMAGES?????
Green Back Club Posts 1,065 7:03 AM - Today #1
Well, thanks to the Mythbuster, we now have an inkling of what the new RBR child covers and can guess just how huge it can potentially be for vplm - especially with 5G tech coming.
Almost everything on the internet has video. What 5G does is that it allows videos to be streamed without special compression. This is huge for traditional cable companies wanting to to do digital subscriptions. Huge for cloud computing. Huge for next generation video gaming. Huge for anything dealing with videos.
And vplm now controls routing of ALL video routing across the internet? What!!??
Soon every company will realize just how valuable vplm’s Patent portfolio really is.
- it allows a company to become a fully compliant telecom
- it allows a company to charge toll for every video, text, e-commerce transaction made over the internet between public to public, private to private and public to private callers.
- it provides lawful intercept for countries that reuquire it (India and others)
The value of the portfolio is becoming rediculous. Excited to see what the revised damages will look like. I expect we may see revised damages once infringement is pinpointed during pre trial discovery. If it is pin pointed I would expect companies to settle toute suite rather than disclose their full source codes. My opinion, ofcourse.
check.out.THE.VPLM.SEGMENT AT the 46 minute pOINT.
video is now in the process of being APPROVED to the patent stream..... what % OF INTERNET IS NOW VIDEO... MAJOR VALUE ADDITION
https://hwcdn.libsyn.com/p/4/5/4/4547ce736be7381f/TMB-19-01-13-What-is-ahead-for-2019.mp3?c_id=31464191&cs_id=31464191&destination_id=48789&expiration=1547433205&hwt=c4dd27b283c88e1b0d3e187a9ab448ed
[b}UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
? Annual Report Pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934
For the fiscal year ended: September 30, 2018
or
? Transition Report Pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934
Commission File Number: 000-55613
VoIP-PAL.COM INC.
(Exact name of Registrant as specified in its charter)
Nevada 980184110
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification Number)
10900 NE 4th Street, Suite 2300
Bellevue, WA, 98004
(Address of principal executive offices)
1-888-605-7780
(Registrant’s telephone number, including area code)
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ? No ?
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ? No ?
Indicate by check mark whether the Registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to the filing requirements for at least the past 90 days. Yes ? No ?
Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files). Yes ? No ?
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ?
Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer”, “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ? Accelerated filer ? Non-accelerated filer ? Smaller reporting company ?
Emerging growth company ?
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. Yes ? No ?
Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ? No ?
The market value of the voting stock held by non-affiliates was $95,744,566 based on 1,007,837,535 shares held by non-affiliates. These computations are based upon the closing sales price of $0.095 per share of the Company on OTC Markets, Inc. on March 31, 2018.
Indicate the number of shares outstanding of each of the Registrant’s classes of common equity, as of the latest practicable date:
Class Outstanding as of January 10, 2019
Common Stock, $0.001 par value per share 1,947,980,092
TABLE OF CONTENTS
Item 1. Business 3
Item 1A. Risk Factors 8
Item 2. Properties 8
Item 3. Legal Proceedings 8
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 10
Item 6. Selected Financial Data 11
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 11
Item 7A. Quantitative and Qualitative Disclosures About Market Risk 14
Item 8. Financial Statements and Supplementary Data 15
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 31
Item 9A. Controls and Procedures 31
Item 9B. Other Information 32
Item 10. Directors, Executive Officers and Corporate Governance 33
Item 11. Executive Compensation 34
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 34
Item 14. Principal Accounting Fees and Services 35
Item 15. Financial Statements and Exhibits 35
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PART I
CAUTIONARY NOTE REGARDING FORWARD LOOKING STATEMENTS
In this Annual Report, references to “VoIP-Pal,” “VPLM,” the “Company,” “we,” “us,” and “our” refer to VoIP-Pal.Com Inc., the Registrant.
This Annual Report on Form 10-K (this “Annual Report” or this “Report”) contains certain forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act of 1934, as amended (the “Exchange Act”). All statements, other than statements of historical facts, included in this Annual report are forward looking statements, including, without limitation, statements regarding our strategy, future operations, financial position, estimated revenues and losses, projected costs, prospects, plans and objectives of management. These forward-looking statements may be, but are not always, identified by their use of terms and phrases such as “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “project,” “plan,” “will,” “shall,” “should,” “could” and “potential,” and similar terms and phrases, including when used in the negative. Although we believe that the expectations reflected in these forward-looking statements are reasonable, they do involve certain assumptions, risks and uncertainties. Actual results could differ materially from those anticipated in these forward-looking statements. You should consider carefully the risks described under the “Risk Factors” section of this Annual Report and other sections of this report, which describe factors that could cause our actual results to differ from those anticipated in the forward-looking statements. All forward-looking statements are expressly qualified in their entirety by the cautionary statements in this paragraph and elsewhere in this Annual Report. Other than as required under the securities laws, we do not assume a duty to update these forward-looking statements, whether because of new information, subsequent events or circumstances, changes in expectations or otherwise.
Item 1. Business.
The Company was incorporated in the state of Nevada in September 1997 as All American Casting International, Inc. and changed its name to VOIP MDU.com in 2004 and subsequently to VoIP-Pal.Com Inc. in 2006. Since March 2004, the Company has been in the development stage of becoming a Voice-over-Internet Protocol (“VoIP”) re-seller, a provider of a proprietary transactional billing platform tailored to the points and air mile business, and a provider of anti-virus applications for smartphones.
In 2013, Voip-Pal acquired Digifonica International (DIL) Limited (“Digifonica”), to fund and co-develop Digifonica’s patent suite. Digifonica had been founded in 2003 with the vision that the internet would be the future of all forms of telecommunications - a team of twenty top engineers with expertise in Linux and Internet telephony developed and wrote a software suite with applications that provided solutions for several core areas of internet connectivity. In order to properly test the applications, Digifonica built and operated three production nodes in Vancouver, Canada (Peer 1), London, UK (Teliasonera), and Denmark. Upon successfully developing the technology, Digifonica filed for patents with the United States Patent and Trademark Office (“USPTO”).
The Digifonica patents formed the basis for Voip-Pal’s current intellectual property, now a worldwide portfolio of issued and pending patents primarily designed for the broadband VoIP market.
The Issuer’s primary and secondary SIC Codes are 4813 and 4899.
The Issuer’s fiscal year end date is September 30.
Principal Products or Services
VoIP-PAL owns a worldwide portfolio of issued patents covering numerous inventions, including, but not limited to the following technology areas:
1. classification and routing of communications over different networks and over geographically distributed nodes;
2. lawful intercept of such communications;
3. enhanced emergency calling support (e.g., E911);
4. mobile gateways;
5. uninterrupted transmission during endpoint changes; and
6. metering and billing, including the reselling of “white label” telecommunication services.
VoIP-PAL has one or more continuation patent applications pending in each of its U.S. patent families.
VoIP-PAL is currently pursuing patent infringement lawsuits against several Fortune 500 companies that the Company believes are practicing its patented inventions. Two of VoIP-Pal’s patents (U.S. Patent Nos. 8,542,815 and 9,179,005) have undergone extensive review by the USPTO’s Patent Trial and Appeal Board (PTAB).
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VoIP-Pal’s Patent Portfolio
A brief summary of the Company’s patents is provided below, focusing primarily on patents which have been issued in the U.S. (the Company’s related pending U.S. patent applications and foreign patent assets are generally not discussed). The brief summaries below are provided for convenience only and without prejudice to the Company’s rights; it will be appreciated that the scope of the Company’s patents can only be discerned by conducting a full legal analysis under the applicable legal standards and is subject to Court decisions.
VoIP-PAL’s patent portfolio covers the following technologies:
1. Classification/routing of communications
? U.S. Patent Nos. 8,542,815; 9,179,005; 9,537,762; 9,813,330; 9,826,002; 9,935,872; 9,948,549; European Patent No. 2,084,868; and Indian Patent No. 287,412, all generally relate to classification/routing of communications.
? VoIP-PAL has asserted U.S. Patent Nos. 8,542,815 and 9,179,005 against Apple, AT&T, Verizon and Twitter (initially filed in U.S. District Court, Nevada; later transferred to U.S. District Court for the Northern District of California). These patents were subject to eight (8) Inter Partes Review (IPR) proceedings before the USPTO, which were decided in VoIP-Pal’s favor.
? VoIP-Pal has asserted U.S. Patent Nos. 9,537,762, 9,813,330, 9,826,002 and 9,948,549 against both Apple and Amazon (initially filed in U.S. District Court, Nevada; later transferred to U.S. District Court for the Northern District of California).
? Brief descriptions of each of these patents are provided below.
1.1 U.S. Patent No. 8,542,815, issued September 24, 2013, generally relates to, among other things, classifying a call as pertaining to a public network or a private network based on a match of one or more attributes associated with a caller and an identifier associated with a callee and network classification criteria.
The ‘815 Patent was the subject of four IPR challenges by Apple, Unified Patents, and AT&T Services, one of which was instituted and resulted in a final written decision confirming the patentability of all challenged claims. The ‘815 is currently being asserted against Apple, AT&T, Verizon and Twitter.
1.2 U.S. Patent No. 9,179,005, issued November 3, 2015, generally relates to, among other things, routing communications by producing a public or private routing message based on a classification criteria of one or more attributes associated with a caller and an identifier associated with a callee.
The ‘005 Patent was the subject of four IPR challenges by Apple and AT&T Services, one of which was instituted and resulted in a final written decision confirming the patentability of all challenged claims. The ‘005 is currently being asserted against Apple, AT&T, Verizon and Twitter.
1.3 U.S. Patent No. 9,537,762, issued January 3, 2017, generally relates to, among other things, classifying a communication as pertaining to a first or second network based on attributes associated with a first participant to the communication and classification criteria which may include whether a second participant to the communication is registered with the system.
The ‘762 Patent is currently being asserted against Apple and Amazon.
1.4 U.S. Patent No. 9,813,330, issued November 7, 2017, generally relates to, among other things, classifying a communication as a system communication or external network communication based at least in part on comparing attributes associated with a first participant in a communication with an identifier associated with a second participant.
The ‘330 Patent is currently being asserted against Apple and Amazon.
1.5 U.S. Patent No. 9,826,002, issued November 21, 2017, generally relates to, among other things, classifying a communication as a system communication or external network communication based at least in part on a new second participant identifier produced by processing a second participant identifier based on a first participant’s attributes.
The ‘002 Patent is currently being asserted against Apple and Amazon.
1.6 U.S. Patent No. 9,948,549, issued on April 17, 2018, generally relates to, among other things, classifying a communication as a system communication or external network communication and producing a routing message based at least in part on a new second participant identifier produced by processing a second participant identifier based on a first participant’s attributes.
The ‘549 Patent is currently being asserted against Apple and Amazon.
1.7 U.S. Patent No. 9,935,872, issued April 3, 2018, generally relates to, among other things, using at least one first participant attribute to determine whether a communication initiated from a first participant device to a second participant device is allowed to proceed, and if it is allowed to proceed, whether it should be routed to its destination via a first network element or a second network element.
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1.8 U.S. Patent App. No. 15/942,282 received a Notice of Allowance from the U.S. Patent & Trademark Office (USPTO) on November 13, 2018 and the Company has paid the final issue fee. This patent application relates to, among other things, processing at least one first participant attribute and a second participant identifier to determine whether a communication initiated from a first participant device to a second participant device in a packet switched or Internet Protocol (IP) based communication system can be routed using either a local cluster/node or a remote cluster/node.
1.9 European Patent No. 2,084,868, granted May 30, 2018, relates to, among other things, the classification/routing of communications and is similar to the counterpart U.S. patents directed to this subject matter (see descriptions of U.S. patents above).
1.10 Indian Patent No. 287,412, granted September 15, 2017, relates to, among other things, the classification/routing of communications and is similar to the counterpart U.S. patents directed to this subject matter (see descriptions of U.S. patents above).
2. Lawful intercept
? U.S. Patent Nos. 8,422,507; 9,143,608; 9,549,071; and 10,038,779 generally relate to, for example, lawfully intercepting Voice Over IP (VoIP) and other data communications (e.g., when required by law enforcement agencies).
? None of these patents are currently asserted in litigation.
2.1 U.S. Patent No. 8,422,507, issued April 16, 2013, applies, for example, to lawful intercept scenarios in which communications originating in an Internet Protocol (IP) network system from a subscriber to another party occur through a media relay, where information associated with the subscriber profile meets intercept criteria, such that a routing message is produced to cause the media relay to send a copy of the communications to a mediation device.
2.2 U.S. Patent No. 9,143,608, issued September 22, 2015, applies, for example, to lawful intercept scenarios in which communications originating in an Internet Protocol (IP) network system from a subscriber to another party occur through a media relay, and where a profile associated with the subscriber includes intercept determination information and destination information indicating where to send monitored communications. For example, when intercept criteria are met, at least some of the intercept determination information and the destination information are included in a routing message.
2.3 U.S. Patent No. 9,549,071, issued January 17, 2017, generally relates to, among other things, lawfully intercepting Internet Protocol (IP) communications between a first party and a second party, where a profile associated with the first or second party includes intercept determination information and destination information for one of the first or second party that is to be monitored, the destination information indicating where to send the monitored communications. For example, when an intercept criterion is met, at least some of the intercept determination information and the destination information is included in a routing message.
2.4 U.S. Patent No. 10,038,779, issued July 31, 2018, generally relates to lawfully intercepting VoIP or other data communications between a first party and a second party, based on an intercept request message that contains (a) an identification of at least one party whose communications are to be monitored, (b) intercept determination information, and (c) destination information indicating where copies of intercepted communications are to be sent. For example, when an intercept criterion is met, at least some intercept determination information and destination information is included in a routing message.
2.5 U.S. Application no. 15/861,572, allowed on August 8, 2018, also relates to lawfully intercepting VoIP or other data communications between parties.
3. Mobile gateway
? U.S. Patent No. 8,630,234 and Canadian Patent No. 2,732,148 generally relate to, among other things, methods for channeling communications into distributed VoIP gateways (e.g., to allow mobile phones to avoid or minimize long-distance charges while roaming in a geographical area serviced by another cellular provider).
? Neither of these patents are currently asserted in litigation.
3.1 U.S. Patent No. 8,630,234, issued January 14, 2014, generally relates to, among other things, a method of roaming with a mobile phone. For example, the mobile phone could receive an access code reply message from the access server that includes a temporary access code allowing the mobile phone to initiate a call to the callee using the access code. In this example, because the call is “local”, the mobile phone can avoid incurring long-distance roaming charges.
3.2 Canadian Patent No. 2,732,148, issued April 25, 2018, is directed to, among other things, subject-matter similar to the counterpart U.S. patent (see description above).
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4. Emergency assistance calling
? U.S. Pat. Nos. 8,537,805 and 9,565,307 generally relate to emergency assistance calling and are applicable, for example, to certain E911 scenarios.
? None of these patents are currently asserted in litigation.
4.1 U.S. Patent No. 8,537,805, issued September 17, 2013, relates to, among other things, handling emergency calls from a caller in a voice over IP (VoIP) system. The ‘805 Patent could apply, for example, when a routing request message is received and the contents of an emergency call identifier field of a profile match the callee identifier. In this example, if the caller identifier is not associated with a pre-associated identifier, a temporary identifier is associated with the caller. When the emergency call flag is active, for example, a routing message establishes a route between the caller and an emergency response center, the routing message including an emergency response center identifier from a profile associated with the caller and the DID identifier associated with the caller.
4.2 U.S. Patent No. 9,565,307, issued February 7, 2017, relates to, among other things, routing emergency communications. The ‘307 Patent could apply, for example, when a routing request includes the caller identifier and the callee identifier, and where the caller identifier identifies a profile associated with the caller that includes an emergency call identifier (e.g., “911”) and an emergency response center identifier. In this example, when the callee identifier matches the emergency call identifier, a routing message establishes the call, the routing message having a first portion including the emergency response center identifier and a second portion, which portion may include either a temporary or pre-assigned identifier associated with the caller, for example.
5. Allocating charges
? U.S. Patent Nos. 8,774,378 and 9,998,363 both generally relate to allocating charges for communication services.
? None of these patents are currently asserted in litigation.
5.1 U.S. Patent No. 8,774,378, issued July 8, 2014, could apply, for example, to scenarios where a communication system operator and a reseller of communication services allocate charges incurred by a user. In this example, the process for attributing charges may involve determining a user cost based on a chargeable time and free time associated with the user, where the chargeable time is based on communication session time and a pre-defined billing pattern—then account balances for the user, reseller and system operator are updated accordingly.
5.2 U.S. Patent No. 9,998,363, issued June 12, 2018, relates to, among other things, attributing charges for communications services provided in a communications system for a communication session between a user’s device and a destination device.
6. Determining a time for permitting a communication session
6.1 U.S. Patent No. 9,137,385, issued September 15, 2015, generally relates to, among other things, determining a time for permitting a communication session to be conducted (e.g., a time-to-live or TTL). This patent has not been asserted in litigation.
6.2 Canadian App. No. 2,916,217, which also relates to determining a time for permitting a communication session to be conducted (e.g., a time-to-live or TTL), received an indication of allowance August 27, 2018.
7. Uninterrupted transmission during endpoint changes
? U.S. Patent Nos. 8,675,566; 9,154,417; 10,021,729; European Patent No. 2478678; and Canadian Patent No. 2812174 all generally relate to, among other things, uninterrupted transmission during endpoint changes (e.g., station handoffs).
? None of these patents are currently asserted in litigation.
7.1 U.S. Patent No. 8,675,566, issued March 18, 2014, generally relates to, among other things, uninterrupted transmission of internet protocol (IP) transmissions during endpoint changes.
7.2 U.S. Patent No. 9,154,417, issued October 6, 2015, generally relates to, among other things, uninterrupted transmission, where in response to an IP transmission at a media relay, a session information record is processed in a certain manner.
7.3 U.S. Patent No. 10,021,729, issued July 10, 2018, generally relates to, among other things, facilitating an uninterrupted internet protocol (IP) communication session, involving internet protocol transmissions between a first entity and a second entity, during endpoint changes.
7.4 European Patent No. 2478678 and Canadian Patent No. 2812174 relate to subject matter similar to the aforesaid U.S. patents (see above descriptions).
NOTE BENE: While the above generalized descriptions of the Company’s patents have been provided for convenience, they are provided merely as a rough guide and are not intended to fully characterize the scope of the Company’s legal rights. Reviewers are therefore advised to conduct their own legal analysis of the Company’s patents and not merely to rely on the above cursory descriptions.
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Amount Spent on Research and Development
For the two years ended September 30, 2018, the Company has incurred no research and development expenses.
Employees
We have one full time employee. The Company utilizes various consultants and contractors for other services.
Emerging Growth Company Status
We are an “emerging growth company” as that term is used in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”) and, as such, have elected to comply with certain reduced public company reporting requirements for future filings.
In April 2012, the Jumpstart Our Business Startups Act (“JOBS Act”) was enacted into law. The JOBS Act provides, among other things:
– Exemptions for “emerging growth companies” from certain financial disclosure and governance requirements for up to five years and provides a new form of financing to small companies;
– Amendments to certain provisions of the federal securities laws to simplify the sale of securities and increase the threshold number of record holders required to trigger the reporting requirements of the Securities Exchange Act of 1934, as amended;
– Relaxation of the general solicitation and general advertising prohibition for Rule 506 offerings;
– Adoption of a new exemption for public offerings of securities in amounts not exceeding $50 million; and
– Exemption from registration by a non-reporting company of offers and sales of securities of up to $1,000,000 that comply with rules to be adopted by the SEC pursuant to Section 4(6) of the Securities Act and exemption of such sales from state law registration, documentation or offering requirements.
In general, under the JOBS Act a company is an “emerging growth company” if its initial public offering (“IPO”) of common equity securities was effected after December 8, 2011 and the company had less than $1 billion of total annual gross revenues during its last completed fiscal year. We will retain “emerging growth company” status until the earliest of:
(i) the completion of the fiscal year in which the company has total annual gross revenues of $1 billion or more,
(ii) the completion of the fiscal year of the fifth anniversary of the company’s IPO;
(iii) the company’s issuance of more than $1 billion in nonconvertible debt in the prior three-year period, or
(iv) the company becoming a “larger accelerated filer” as defined under the Securities Exchange Act of 1934, as amended.
The JOBS Act provides additional new guidelines and exemptions for non-reporting companies and for non-public offerings. Those exemptions that impact the Company are discussed below.
Financial Disclosure. The financial disclosure in a registration statement filed by an “emerging growth company” pursuant to the Securities Act of 1933, as amended, will differ from registration statements filed by other companies as follows:
(i) audited financial statements required for only two fiscal years (provided that “smaller reporting companies” such as the Company are only required to provide two years of financial statements);
(ii) selected financial data required for only the fiscal years that were audited (provided that “smaller reporting companies” such as the Company are not required to provide selected financial data as required by Item 301 of Regulation S-K); and
(iii) executive compensation only needs to be presented in the limited format now required for “smaller reporting companies”
However, the requirements for financial disclosure provided by Regulation S-K promulgated by the Rules and Regulations of the SEC already provide certain of these exemptions for smaller reporting companies. The Company is a smaller reporting company. Currently a smaller reporting company is not required to file as part of its registration statement selected financial data and only needs to include audited financial statements for its two most current fiscal years with no required tabular disclosure of contractual obligations.
The JOBS Act also exempts the Company’s independent registered public accounting firm from having to comply with any rules adopted by the Public Company Accounting Oversight Board (“PCAOB”) after the date of the JOBS Act’s enactment, except as otherwise required by SEC rule.
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The JOBS Act further exempts an “emerging growth company” from any requirement adopted by the PCAOB for mandatory rotation of the Company’s accounting firm or for a supplemental auditor report about the audit.
Internal Control Attestation. The JOBS Act also provides an exemption from the requirement of the Company’s independent registered public accounting firm to file a report on the Company’s internal control over financial reporting, although management of the Company is still required to file its report on the adequacy of the Company’s internal control over financial reporting. Section 102(a) of the JOBS Act exempts “emerging growth companies” from the requirements in §14A(e) of the Securities Exchange Act of 1934 for companies with a class of securities registered under the Securities Exchange Act of 1934, as amended, to hold shareholder votes for executive compensation and golden parachutes.
Other Items of the JOBS Act. The JOBS Act also provides that an “emerging growth company” can communicate with potential investors that are qualified institutional buyers or institutions that are accredited to determine interest in a contemplated offering either prior to or after the date of filing the respective registration statement. The JOBS Act also permits research reports by a broker or dealer about an “emerging growth company” regardless of whether such report provides sufficient information for an investment decision. In addition, the JOBS Act precludes the SEC and FINRA from adopting certain restrictive rules or regulations regarding brokers, dealers and potential investors, communications with management and distribution of research reports on the “emerging growth company’s” IPOs.
Section 106 of the JOBS Act permits “emerging growth companies” to submit registration statements under the Securities Act of 1933, as amended, on a confidential basis provided that the registration statement and all amendments thereto are publicly filed at least 21 days before the issuer conducts any road show. This is intended to allow “emerging growth companies” to explore the IPO option without disclosing to the market the fact that it is seeking to go public or disclosing the information contained in its registration statement until the company is ready to conduct a roadshow.
Election to Opt Out of Transition Period. Section 102(b)(1) of the JOBS Act exempts “emerging growth companies” from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act of 1933, as amended, registration statement declared effective or do not have a class of securities registered under the Securities Exchange Act of 1934, as amended) are required to comply with the new or revised financial accounting standard.
The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. The Company has elected not to opt out of the transition period. This may make comparison of the Company’s financial statements with any other public company which is not either an “emerging growth company” nor an “emerging growth company” which has opted out of using the extended transition period difficult or impossible as possible different or revised standards may be used.
For so long as we remain an “emerging growth company” as defined in the JOBS Act, we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies” as described above. We cannot predict if investors will find our common stock less attractive because we will rely on some or all of these exemptions. If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock and our stock price may be more volatile. If we avail ourselves of certain exemptions from various reporting requirements, as is currently our plan, our reduced disclosure may make it more difficult for investors and securities analysts to evaluate us and may result in less investor confidence.
Item 1A. Risk Factors.
The company qualifies as a smaller reporting company and is not required to provide the information required by this Item.
Item 2. Properties.
The Company does not lease any properties or facilities, other than the office space leased for administrative purposes through Regus Management Group LLC.
Item 3. Legal Proceedings.
The Company is party to the following legal proceedings:
i. Locksmith Financial Corporation, Inc. et al. v Voip-Pal.com Inc. (Case No A-15-717491-C) filed in Clark County District Court (the “State Case”). On March 24, 2014, the Company resolved to freeze 95,832,000 common shares that were issued to a company controlled by a former director (the “defendant”) in fiscal 2013 and accounted for at a cost of $1,443,000. The Company resolved to freeze the common shares as the Company believes that the shares were issued as settlement of a line of credit that the Company believes to have been legally unsupported. The defendant alleges that the freeze and the Company’s actions constituted fraud and a breach of securities laws. The Company denies any wrongdoing. Currently the State Case is entering the discovery phase of litigation and the outcome is undeterminable.
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ii. Voip-Pal.com Inc. v Richard Kipping, et al. (Case No. 2:15-cv-01258-JAD-VCF) filed in United States District Court (the “Federal Case”). On July 2, 2015, the Company filed a case against a former director, a shareholder and the company controlled by a former director. The Company alleges that the common shares issued in the State Case and an additional 7,200,000 common shares were fraudulently obtained and that the shares have been unlawfully transferred to other entities. The proceedings in the Federal Case have been stayed pending a final determination of the issues in the State Case. The outcome of this case is undeterminable.
iii. Voip-Pal.com Inc. v Apple, Inc. (Case No. 2:16-CV-00260) & Verizon Wireless Services, LLC, Verizon Communications Inc., AT&T Corp. (Case No. 2:16- VC-00271) in the United States District Court, District of Nevada. In February, 2016 the Company filed patent infringement lawsuits in the United States District Court, District of Nevada against Apple, Inc, (Case No. 2:16-CV-00260), Verizon Wireless Services, LLC, Verizon Communications Inc., and AT&T Corp. (Case No. 2:16- VC-00271). These cases are seeking a combined $7,024,377,876 in damages. On May 9, 2016, the lawsuits were officially served to these companies. The outcome of the cases is undeterminable. The proceedings in these cases were temporarily stayed, by agreement with the parties thereto, pending the resolution of several Inter Partes Reviews (“IPRs”), as described in the following section Inter Partes Reviews, and the cases were subsequently transferred to the U.S. District Court for the Northern District of California. The outcome of each of these legal actions is undeterminable.
iv. Voip-Pal.com Inc. v Twitter, Inc. (Case No. 2:16-CV-02338) in the United States District Court, District of Nevada. Subsequent to the year ended September 30, 2016, on October 6, 2016, the Company filed a lawsuit in the United States District Court, District of Nevada against Twitter, Inc, (Case No. 2:16- CV-02338) in which Voip-Pal.com alleges infringement of U.S. Patent No. 8,542,815 and its continuation patent, U.S. Patent No. 9,179,005, This case is seeking $3,200,000 in damages. On December 28, 2016, the lawsuit was officially served to Twitter, Inc. On February 28, 2018, Twitter filed a motion to transfer its case based on improper venue and the case was subsequently transferred to the U.S. District Court for the Northern District of California, where it remains pending. The outcome of this case is undeterminable.
v. Voip-Pal.com Inc. v. Amazon.com, Inc. et al. (Case No. 2:18-CV-01076) in the United States District Court, District of Nevada. During the year ended September 30, 2018, in June 2018, the Company filed a lawsuit in the United States District Court, District of Nevada, against Amazon.com, Inc. and certain related entities, alleging infringement of U.S. Patent Nos. 9,537,762, 9,813,330, 9,826,002 and 9,948,549. In November 2018, the case was transferred to the U.S. District Court for the Northern District of California, where it remains pending. The outcome of this case is undeterminable.
Inter Partes Reviews
In other legal actions related to Case No. 2:16-CV-00260 and Case No. 2:16- VC-00271 above, two of the Company’s patents are currently subject to several Inter Partes Review (“IPR”) petitions filed before the Patent Trial and Appeal Board (“PTAB”) of the United States Patent and Trademark Office (“USPTO”). An IPR is a post-grant patent review process allowing the PTAB to consider the validity of issued patents. There are no damages awarded, but a portion or all of a patent’s claims instituted for IPR may be invalidated as a result of the review.
More particularly, during the year ended September 30, 2018, a total of eight IPRs filed against Patent No. 8,542,815 and No. 9,179,005, were either in process before the PTAB or had been resolved, as follows:
– Unified Patents Inc. (Petitioner) vs. Voip-Pal.com Inc. (Patent Owner) IPR2016-01082, filed May 24, 2016, requesting inter partes review of US Patent No. 8,542,815. On November 18, 2016, the PTAB denied institution of this petition;
– Apple, Inc. (Petitioner) vs. Voip-Pal.com Inc. (Patent Owner) IPR2016-01198, reviewing Patent No. 9,179,005 and Voip-Pal.com Inc. (Patent Owner) IPR2016-01201, reviewing Patent No. 8,542,815, both instituted for IPR on November 21, 2016;
– AT&T Inc. (Petitioner) filed IPR2017-01382 against Voip-Pal’s Patent No. 8,542,815, IPR2017-01383 against Voip-Pal’s Patent No. 9,179,005, and IPR2017-01384 against Voip-Pal’s Patent No. 9,179,005 on May 8, 2017, each of which was subsequently denied institution; and
– Apple Inc. (Petitioner) filed IPR2017-01399 against Voip-Pal’s Patent No. 8,542,815, and IPR2017-01398 against Voip-Pal’s Patent No. 9,179,005, which were also both instituted for IPR by the PTAB on May 8, 2017.
During the year ended September 30, 2018, the PTAB considered the aforesaid IPRs, and on November 20, 2017, the PTAB issued its findings on the seven active IPRs being adjudicated, denying institution of the IPRs with respect to all claims challenged by the Petitioners (Apple Inc, and AT&T Inc.). Subsequent to that ruling, in December 2017, Apple filed a post-judgment motion in IPR2016-01198 and IPR2016-01201, seeking invalidation of the challenged claims as sanctions against the Company.
Subsequent to the year ended September 30, 2018, on December 21, 2018, a new panel of the PTAB ruled on Apple’s sanctions motion, declining to grant Apple’s request to invalidate the challenged claims and declining to grant Apple’s request for entirely new proceedings to replace the existing panel of judges with a new panel or with judges that would consider any request for rehearing by Apple as a sanction against VoIP-Pal. If Apple chooses to file a motion for rehearing, the outcome of the Petitioner’s motion is undeterminable.
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PART II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
Market
Our common stock is quoted on the OTCQB with the OTC Markets Group, Inc. under the symbol “VPLM”. The OTCQB is an inter-dealer quotation and trading system where market makers apply to quote securities. Accordingly, the OTCQB is not considered a market, and there is, therefore, no public market for our Common Stock.
Holders
We had approximately 459 holders of record of our common stock as of September 30, 2018 according to the books of our transfer agent. The number of our stockholders of record excludes any estimate by us of the number of beneficial owners of shares held in street name, the accuracy of which cannot be guaranteed.
Dividends
We have not declared a dividend on our common stock, and we do not anticipate the payment of dividends in the near future as we intend to reinvest our profits to grow our business. There are no restrictions in our articles of incorporation or bylaws that restrict us from declaring dividends. The Nevada Revised Statutes, however, does prohibit us from declaring dividends where, after giving effect to the distribution of the dividend:
? we would not be able to pay our debts as they become due in the usual course of business; or
? our total assets would be less than the sum of our total liabilities, plus the amount that would be needed to satisfy the rights of shareholders who have preferential rights superior to those receiving the distribution
Securities Authorized for Issuance Under Equity Compensation Plans
In order to provide incentive to its directors, officers, management, employees, consultants and others who provide services to the Company or any subsidiary (the “Service Providers”) to act in the best interests of the Company, and to retain such Service Providers, the Company has in place an incentive Stock Option Plan (the “Plan”). Under the Plan, the Company is authorized to issue up to 10% of its issued and outstanding share capital in options to purchase common shares of the Company. The maximum term of options granted under the Plan cannot exceed ten years, with vesting terms determined at the discretion of the Board of Directors.
During the year ended September 30, 2018, the Company granted options under the Plan to several of its consultants to purchase 18,500,000 common shares in the capital stock of the Company at an exercise price of $0.18 per common share for a period of five years from the date of grant. These 18,500,000 options were later cancelled during the year.
As at September 30, 2018, the Company has 39,850,000 stock options outstanding at an average exercise price of $0.056 per share, with a remaining contractual life of an average of 2.01 years, of which 39,350,000 are vested and exercisable.
Recent Sales of Unregistered Securities
The transactions described in this section were exempt from securities registration as provided by Section 4(a)(2) of the Securities Act for transactions not involving a public offering.
Securities Issued for Services Rendered
During the year ended September 30, 2015, the Company issued 7,126,868 shares of common stock at prices between $0.05 and $0.06 per share to various individuals or entities for services rendered.
During the year ended September 30, 2016, the Company issued 16,357,500 shares of common stock at prices between $0.03 and $0.05 per share to various individuals or entities for services rendered.
During the year ended September 30, 2017, the Company issued 12,084,167 shares of common stock at prices between $0.025 and $0.05 per common share to various individuals or entities for services valued at $331,901. 900,000 shares of this common stock priced at $0.05 per share were cancelled during the year.
During the year ended September 30, 2018, the Company issued 104,313,833 shares of common stock at prices between $0.02 and $0.06 per share to various individuals or entities for services valued at $4,461,789.
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Securities Issued for Convertible Debt or in Settlement of Debt
During the year ended September 30, 2015, the Company issued 26,030,930 shares of common stock at prices between $0.05 and $0.08 per share to various individuals or entities to settle $1,293,183 of convertible debt.
During the year ended September 30, 2016, the Company issued 8,873,333 shares of common stock priced between $0.03 and $0.05 per share to various individuals or entities to settle $326,000 of convertible debt.
During the year ended September 30, 2016, the Company issued 10,000,000 shares of common stock at $0.05 per share to a director of the Company in settlement of $500,000 of an account payable.
During the year ended September 30, 2017, the Company issued 1,400,000 shares of common stock at prices between $0.025 and $0.03 per common share to convert $32,500 of convertible debt.
During the year ended September 30, 2018, the Company issued 174,983,685 shares of common stock at a price of $0.038 per share pursuant to the anti-dilution clause of the Digifonica share purchase agreement dated June 25, 2013 for an aggregate value of $6,684,377.
Securities Issued for Cash Proceeds
During the year ended September 30, 2016, the Company issued 10,458,333 shares of common stock at $0.04 per share to various individuals or entities for cash proceeds of $381,000 from private placements.
During the year ended September 30, 2017, the Company issued:
– 11,566,666 shares of common stock at prices between $0.02 and $0.03 per common share to various individuals or entities for cash proceeds of $340,000 from private placements; and
– 61,500,500 units of common stock at between $0.02 and $0.025 per unit to various individuals or entities for cash proceeds of $1,250,010. Each unit consists of one common share and one common share purchase warrant. Each common share purchase warrant allows the holder to purchase one common share for $0.04 or $0.05 for a period of twelve months from the date of issuance.
During the year ended September 30, 2018, the Company issued:
– 108,147,749 shares of common stock at prices between $0.015 and $0.06 per common share to various individuals or entities for cash proceeds of $3,343,940 from the private placement of common shares;
– 6,306,000 units at prices between $0.0125 and $0.02 per unit to various individuals or entities for cash proceeds of $98,120 from the private placement of units of the Company’s common stock. Each unit consists of one common share and one common share purchase warrant. Each common share purchase warrant allows the holder to purchase one common share for $0.04 for a period of twelve months from the date of issuance; and
– 50,125,000 common shares at $0.04 per common share to various individuals or entities for cash proceeds of $2,005,000 on the exercise of 50,125,000 common share purchase warrants.
Item 6. Selected Financial Data.
As a smaller reporting company, we are not required to provide the information required by this Item.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The following management’s discussion and analysis (MD&A) should be read in conjunction with our audited consolidated financial statements for the year ended September 30, 2018 and notes thereto.
This MD&A for the year ending September 30, 2018 contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amending, and Section 21E of the Securities Exchange Act of 1934, as amending. Forward-looking statements may be identified by the use of forward-looking terminology, such as “may”, “shall”, “could”, “expect”, “estimate”, “anticipate”, “predict”, “probable”, “possible”, “should”, “continue”, or similar terms, variations of those terms or the negative of those terms. The forward-looking statements specified in the following information have been compiled by our management on the basis of assumptions made by management and are considered by management to be reasonable. Our future operating results, however, are impossible to predict and no representation, guaranty, or warranty is to be inferred from those forward-looking statements.
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The assumptions used for purposes of the forward-looking statements specified in the following information represent estimates of future events and are subject to uncertainty as to possible changes in economic, legislative, industry, and other circumstances. As a result, the identification and interpretation of data and other information and their use in developing and selecting assumptions from and among reasonable alternatives require the exercise of judgment. To the extent that the assumed events do not occur, the outcome may vary substantially from anticipated or projected results, and, accordingly, no opinion is expressed on the achievability of those forward-looking statements. No assurance can be given that any of the assumptions relating to the forward-looking statements specified in the following information are accurate, and we assume no obligation to update any such forward-looking statements
Overview
VOIP-PAL.com Inc. (“Voip-Pal”, the “Company”) was incorporated in the state of Nevada in September 1997 as All American Casting International, Inc. and changed its name to VOIP MDI.com in 2004 and subsequently to Voip-Pal.Com Inc. in 2006. Since March 2004, the Company has been in the development stage of becoming a VoIP re-seller, a provider of a proprietary transactional billing platform tailored to the points and air mile business, and a provider of anti-virus applications for smartphones. All business activities prior to March 2004 have been abandoned and written off to deficit.
In 2013, Voip-Pal acquired Digifonica International (DIL) Limited (“Digifonica”), to fund and co-develop Digifonica’s patent suite. Digifonica had been founded in 2003 with the vision that the internet would be the future of all forms of telecommunications - a team of twenty top engineers with expertise in Linux and Internet telephony developed and wrote a software suite with applications that provided solutions for several core areas of internet connectivity. In order to properly test the applications, Digifonica built and operated three production nodes in Vancouver, Canada (Peer 1), London, UK (Teliasonera), and Denmark. Upon successfully developing the technology, Digifonica filed for patents with the United States Patent and Trademark Office (“USPTO”).
The Digifonica patents formed the basis for Voip-Pal’s current intellectual property, now a worldwide portfolio of twenty-six issued and pending patents primarily designed for the broadband VoIP market.
Voip-Pal’s intellectual property value is derived from its issued and pending patents. Voip-Pal inventions described in these patents, among other things, provide the means to integrate VoIP services with legacy telecommunications systems such as the public switched telephone network (PSTN) to create a seamless service using either legacy telephone numbers or IP addresses, and enhance the performance and value of VoIP implementations worldwide.
VoIP has been and continues to be a green field for innovation that has spawned numerous inventions, greatly benefitting consumers large and small across the globe. VoIP is used in many places and by every modern telephony system vendor, network supplier, and retail and wholesale carrier.
Liquidity and capital resources
As of September 30, 2018, the Company had an accumulated deficit of $42,648,364 as compared to an accumulated deficit of 34,246,816 at September 30, 2017. As of September 30, 2018, the Company had a working capital surplus of $3,386,340 as compared to a working capital deficit of $192,375 at September 30, 2017. The increase in the Company’s working capital of $3,386,340 was primarily due to an increase in cash on hand resulting from increased cash receipts from financing completed during the year ending September 30, 2018 as compared to the prior year.
Net cash used by operations for the years ending September 30, 2018 and 2017 was $2,243,694 and $1,731,468, respectively. The increase in net cash used for operations for the year ending September 30, 2018 as compared to the year ending September 30, 2017 was primarily due to cash expenditures for patent-related professional fees, services and legal costs for the year ending September 30, 2018.
Net cash used in investing activities for the years ending September 30, 2018 and 2017 was $(Nil) and $(Nil). Net cash provided in financing activities for the year ending September 30, 2018 and 2017 was $5,407,060 and $1,622,510, respectively. The increase in net cash provided by financing activities of $5,407,060 was primarily due to an increase in proceeds from private placement of common shares and exercise of warrants during the year ending September 30, 2018.
Liquidity
The Company primarily finances its operations from cash received through the issuance of common stock and the exercise of warrants to investors and through the payment of stock-based compensation. The Company believes its resources are adequate to fund its operations for the next twelve months.
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Results of operations
The Company’s operating costs consist of expenses incurred to monetizing, selling and licensing its VoIP patents. Other operating costs include expenses for legal, accounting and other professional fees, financing costs, and other general and administrative expenses.
Comparison of Years Ending September 30, 2018 and 2017
Years ending
September 30 Increase /
2018 2017 (Decrease) Percent
Revenue $ — $ — $ — —
Cost of Revenue — — — —
Gross Margin — — — —
General and administrative expenses (8,263,348 ) (2,472,482 ) 5,790,866 234 %
Amortization of intangible assets (138,200 ) (138,191 ) 9 0.01 %
Net loss $ (8,401,548 ) $ (2,610,673 ) $ 5,790,877 222 %
Revenues, Cost of Revenues and Gross Margin
The Company had no revenues, cost of revenues or gross margin for the years ending September 30, 2018 and 2017.
General and Administrative Expenses
General and administrative expenses for the year ending September 30, 2018 totaled $8,263,348 compared to $2,472,482 during the same period in 2017. The increase in general and administrative expenses of 5,790,866, or 234% more than the previous year, was primarily due to an increase in patent-related professional fees, services, legal costs and stock-based compensation.
Amortization of Intangible Assets
Amortization of intellectual VoIP communications patent properties for the year ending September 30, 2018 totaled $138,200 compared to $138,191 during the same period in 2017. There was no material change in the amortization expenses for the current year as compared to the prior year.
The Company follows GAAP (FAS 142) and is amortizing its intangibles over the remaining patent life of approximately eleven (11) years. The Company evaluates its intangible assets annually and determines if the fair market value is less than its historical cost. If the fair market value is less, then impairment expense is recorded on the Company’s financial statements. The intangible assets on the financial statements of the Company relate primarily to the Company’s acquisition of Digifonica (International) Limited.
Interest Expense
The Company had no interest costs for the years ending September 30, 2018 and 2017.
Net Loss
The Company reported a net loss of $8,401,548 for the year ending September 30, 2018 compared to a net loss of $2,610,673 for the same period in 2017. The net loss increase of $5,790,877, or 222% over the same period in 2017 was due primarily to an increase in the amount of patent-related related professional fees, services, legal costs and stock based compensation.
Off-Balance Sheet Arrangements
During the year ended September 30, 2016, in February 2016, the board of directors authorized the Company to provide a performance bonus (the “Performance Bonus”) of up to 3% of the capital stock of the Company by way of the issuance of Common shares from its treasury to an as yet undetermined group of related and non-related parties upon the occurrence of a bonusable event, defined as the successful completion of a sale of the Company or substantially all its assets, or a major licensing transaction. In order to provide maximum flexibility to the Company with respect to determining what constitutes such a bonus able event, the level of Performance Bonus payable, and who may qualify to receive a pro-rata share of such a Performance Bonus, the Company authorized full discretion to the Board in making such determinations.
During the year ended September 30, 2018, the board of directors authorized the increase of the Performance Bonus to up to 10% of the capital stock of the Company.
13
As at September 30, 2018, no bonusable event had occurred and there was no Performance Bonus payable.
Subsequent to the year ended September 30, 2018, the board of directors resolved to reduce the Performance Bonus from 10% to 3.33% of the issued and outstanding capital stock of the Company. Concurrently, the board of directors authorized the payment of Common shares (“Bonus Shares”) in an equivalent percentage to the 6.67% reduction to the Performance Bonus to a group of related and non-related parties, which included members of management, a director and several consultants, who received an aggregate 127,000,000 Bonus Shares. The Bonus Shares are restricted from trading under Rule 144 and are also subject to voluntary lock-up agreements, pursuant to which they cannot be traded, pledged, hypothecated, transferred or sold by the holders until such time as the Company has met the requirements of the bonusable event as described above.
There are no other off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.
Impact of Inflation
We believe that inflation has not had a material impact on our results of operations for the year ending September 30, 2018. We cannot assure you that future inflation will not have an adverse impact on our operating results and financial condition.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk.
As a smaller reporting company we are not required to provide the information required by this Item.
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Item 8. Financial Statements and Supplementary Data.
VOIP-PAL.COM INC.
CONSOLIDATED FINANCIAL STATEMENTS
Fiscal Year ending September 30, 2018
CONSOLIDATED BALANCE SHEETS 17
CONSOLIDATED STATEMENTS OF LOSS AND COMPREHENSIVE LOSS 18
CONSOLIDATED STATEMENTS OF CASH FLOWS 19
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY 20
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 21
15
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and Directors of
Voip-Pal.com Inc.
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated balance sheets of Voip-Pal.com Inc. (the “Company”), as of September 30, 2018 and 2017, and the related consolidated statements of loss and comprehensive loss, changes in cash flows and stockholders’ equity for the years ended September 30, 2018 and 2017, and the related notes (collectively referred to as the “financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of Voip-Pal.com Inc. as of September 30, 2018 and 2017, and the results of its operations and its cash flows for the years ended September 30, 2018 and 2017, in conformity with accounting principles generally accepted in the United States of America.
Going Concern
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the consolidated financial statements, the Company has suffered recurring losses from operations and has a net capital deficiency that raise substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 1. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatements of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.
We have served as the Company’s auditor since 2015.
“DAVIDSON & COMPANY LLP”
Vancouver, Canada Chartered Professional Accountants
January 9, 2019
1200 - 609 Granville Street, P.O. Box 10372, Pacific Centre, Vancouver, B.C., Canada V7Y 1G6
Telephone (604) 687-0947 Davidson-co.com
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VOIP-PAL.COM INC.
CONSOLIDATED BALANCE SHEETS
As at
(Expressed in U.S. Dollars)
September 30,
2018 September 30,
2017
ASSETS
CURRENT
Cash $ 3,175,523 $ 12,157
Prepaid expense — 12,000
Legal retainer 323,752 100,000
3,499,275 124,157
NON-CURRENT
Intellectual VoIP communications patent properties, net (Note 5) 917,550 1,055,750
TOTAL ASSETS $ 4,416,825 $ 1,179,907
LIABILITIES
CURRENT
Accounts payable and accrued liabilities $ 112,935 $ 316,533
TOTAL LIABILITIES 112,935 316,533
STOCKHOLDERS’ EQUITY
SHARE CAPITAL (Note 8) 1,276,653 1,018,760
ADDITIONAL PAID-IN CAPITAL (Note 8) 45,198,281 33,028,389
SHARES TO BE ISSUED (Note 8) 477,320 1,063,041
DEFICIT (42,648,364 ) (34,246,816 )
4,303,890 863,374
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $ 4,416,825 $ 1,179,907
Nature and Continuance of Operations (Note 1)
Contingent Liabilities (Note 12)
Subsequent event (Note 13)
The accompanying notes are an integral part of these consolidated financial statements
17
VOIP-PAL.COM INC.
CONSOLIDATED STATEMENTS OF LOSS AND COMPREHENSIVE LOSS
For the Fiscal Years ending
(Expressed in U.S. Dollars)
September 30,
2018 September 30,
2017
EXPENSES
Amortization (Note 5) $ 138,200 $ 138,191
Officers and Directors fees (Note 6) 493,414 214,400
Legal fees (Note 6) 934,540 911,003
Office & general 359,446 291,988
Patent consulting fees 124,493 227,390
Professional fees & services (Note 6) 3,798,647 405,834
Stock option compensation (Note 9) 2,552,808 421,867
Total expenses 8,401,548 2,610,673
NET LOSS AND COMPREHENSIVE LOSS FOR THE YEAR $ (8,401,548 ) $ (2,610,673 )
Basic and diluted loss per common share $ (0.01 ) $ (0.00 )
Weighted-average number of common shares outstanding:
Basic and diluted 1,603,496,390 1,111,696,541
The accompanying notes are an integral part of these consolidated financial statements
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VOIP-PAL.COM INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Fiscal Years ended
(Expressed in U.S. Dollars)
September 30,
2018 September 30,
2017
Cash Flows from Operating Activities
Net loss $ (8,401,548 ) $ (2,610,673 )
Add items not affecting cash:
Stock option compensation 2,552,808 421,867
Shares issued for services 3,882,196 231,701
Amortization 138,200 138,191
Changes in non-cash working capital:
Legal retainer (223,752 ) —
Accounts payable and accrued liabilities (203,598 ) 73,196
Prepaid expense 12,000 14,250
Cash Flows Used in Operations (2,243,694 ) (1,731,468 )
Cash Flows from Financing Activities
Proceeds from convertible debentures — 32,500
Proceeds from private placement 3,402,060 1,590,010
Proceeds from warrant exercise 2,005,000 —
Cash Flows Provided by Financing Activities 5,407,060 1,622,510
Increase / (Decrease) in cash 3,163,366 (108,958 )
Cash, beginning of the year 12,157 121,115
Cash, end of the year $ 3,175,523 $ 12,157
Supplemental cash flow information (Note 7)
The accompanying notes are an integral part of these consolidated financial statements
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VOIP-PAL.COM INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(Expressed in U.S. dollars)
Shares to be Additional
Common Shares Issued Paid-in
Number Par Value Value Capital Deficit Total
Balance at September 30, 2016 1,056,474,201 $ 933,108 $ 1,063,041 $ 30,882,963 $ (31,636,143 ) $ 1,242,969
Shares issued for private placement 73,067,166 73,067 — 1,516,943 — 1,590,010
Shares issued as finder’s fees 4,336,667 4,337 — (4,337 ) — —
Shares issued for debt conversion 1,400,000 1,400 — 31,100 — 32,500
Shares issued for services 7,747,500 7,748 — 223,953 — 231,701
Shares cancelled on termination of services (900,000 ) (900 ) — (44,100 ) — (45,000 )
Shares to be issued for Anti-Dilution Clause
(Notes 4 & 8) — — — — — —
Share purchase options granted
(Note 9) — — — 421,867 — 421,867
Net loss for the year — — — — (2,610,673 ) (2,610,673 )
Balance at September 30, 2017 1,142,125,534 $ 1,018,760 $ 1,063,041 $ 33,028,389 $ (34,246,816 ) $ 863,374
Shares issued for private placement 113,453,749 113,454 — 3,288,606 — 3,402,060
Shares issued for warrant exercise 50,125,000 50,125 — 1,954,875 — 2,005,000
Shares issued for services 104,313,833 104,314 (585,721 ) 4,363,603 — 3,882,196
Shares issued for Anti-Dilution Clause
(Notes 4 & 8) 174,983,685 — — — — —
Shares to be issued for Anti-Dilution Clause
(Notes 4 & 8) — — — — — —
Share purchase options granted (Note 9) — — — 2,552,808 — 2,552,808
Shares returned (Note 8) (10,000,000 ) (10,000 ) — (21,542 ) — (31,542 )
Forgiveness of debt by related party (Note 8) — — — 31,542 — 31,542
Net loss for the year — — — — (8,401,548 ) (8,401,548 )
Balance at September 30, 2018 1,575,001,801 $ 1,276,653 $ 477,320 $ 45,198,281 $ (42,648,364 ) $ 4,303,890
The accompanying notes are an integral part of these consolidated financial statements
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NOTE 1. NATURE AND CONTINUANCE OF OPERATIONS
VOIP-PAL.com, Inc. (the “Company”) was incorporated in the state of Nevada in September, 1997 as All American Casting International, Inc. The Company’s registered office is located at 10900 NE 4th Street, Suite 2300, Bellevue, Washington in the United States of America.
Since March 2004, the Company has developed technology and patents related to Voice-over-Internet Protocol (VoIP) processes. All business activities prior to March 2004 have been abandoned and written off to deficit.
In December 2013, the Company completed the acquisition of Digifonica (International) Limited, a private company controlled by the CEO of the Company, whose assets included several patents and technology developed for the VoIP market.
These consolidated financial statements have been prepared on the basis of a going concern, which contemplates the realization of assets and discharge of liabilities in the normal course of business. The Company is in various stages of product development and continues to incur losses and, at September 30, 2018, had an accumulated deficit of $42,648,364 (September 30, 2017 - $34,246,816). The ability of the Company to continue operations as a going concern is dependent upon raising additional working capital, settling outstanding debts and generating profitable operations. These material uncertainties raise substantial doubt about the Company’s ability to continue as a going concern. Should the going concern assumption not continue to be appropriate, further adjustments to carrying values of assets and liabilities may be required. There can be no assurance that capital will be available as necessary to meet these continued developments and operating costs or, if the capital is available, that it will be on the terms acceptable to the Company. The issuances of additional stock by the Company may result in a significant dilution in the equity interests of its current shareholders. Obtaining commercial loans, assuming those loans would be available, will increase the Company’s liabilities and future cash commitments. If the Company is unable to obtain financing in the amounts and on terms deemed acceptable, its business and future success may be adversely affected.
Additionally, as the Company’s stated objective is to monetize its patent suite through the licensing or sale of its intellectual property (“IP”), the Company being forced to litigate or to defend its IP claims through litigation casts substantial doubt on its future to continue as a going concern. IP litigation is generally a costly process, and in the absence of revenue the Company must raise capital to continue its own defense and to validate its claims – in the event of a failure to defend its patent claims, either because of lack of funding, a court ruling against the Company or because of a protracted litigation process, there can be no assurance that the Company will be able to raise additional capital to pay for an appeals process or a lengthy trial. The outcome of any litigation process may have a significant adverse effect on the Company’s ability to continue as a going concern.
NOTE 2. BASIS OF PRESENTATION
The accompanying consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“US GAAP”).
NOTE 3. SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
These consolidated financial statements have been prepared on a consolidated basis and include the accounts of the Company and its wholly owned subsidiary Digifonica. All intercompany transactions and balances have been eliminated. As at September 30, 2018, Digifonica had no activities.
Use of Estimates
The preparation of these consolidated financial statements required management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Actual results could differ from these estimates. Where estimates have been used financial results as determined by actual events could differ from those estimates.
Cash
Cash consists of cash on hand and monies held in checking and savings accounts. The Company had $3,175,523 and $12,157 in cash on September 30, 2018 and September 30, 2017, respectively.
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NOTE 3. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
Intangible Assets
Intangible assets, consisting of VoIP communication patent intellectual properties (IP) are recorded at cost and amortized over the assets estimated life on a straight-line basis. Management considers factors such as remaining life of the patents, technological usefulness and other factors in estimating the life of the assets.
The carrying value of intangible assets are reviewed for impairment by management of the Company at least annually or upon the occurrence of an event which may indicate that the carrying amount may be less than its fair value. If impaired, the Company will write-down such impairment. In addition, the useful life of the intangible assets will be evaluated by management at least annually or upon the occurrence of an event which may indicate that the useful life may have changed.
Fair Value of Financial Instruments
FASB ASC 820, Fair Value Measurement, defines fair value as the price that would be received upon sale of an asset or paid upon transfer of a liability in an orderly transaction between market participants at the measurement date and in the principal or most advantageous market for that asset or liability. The fair value should be calculated based on assumptions that market participants would use in pricing the asset or liability, not on assumptions specific to the entity.
The Company classifies financial assets and liabilities as held-for-trading, available-for-sale, held-to-maturity, loans and receivables or other financial liabilities depending on their nature. Financial assets and financial liabilities are recognized at fair value on their initial recognition, except for those arising from certain related party transactions which are accounted for at the transferor’s carrying amount or exchange amount.
Financial assets and liabilities classified as held-for-trading are measured at fair value, with gains and losses recognized in net income. Financial assets classified as held-to-maturity, loans and receivables, and financial liabilities other than those classified as held-for-trading are measured at amortized cost, using the effective interest method of amortization. Financial assets classified as available-for-sale are measured at fair value, with unrealized gains and losses being recognized as other comprehensive income until realized, or if an unrealized loss is considered other than temporary, the unrealized loss is recorded in income.
U.S. GAAP establishes a framework for measuring fair value under generally accepted accounting principles and enhances disclosures about fair value measurements. Fair value is defined as the amount that would be received for an asset or paid to transfer a liability (i.e., an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value maximize the use of observable inputs and minimize the use of unobservable inputs. The standard describes the following fair value hierarchy based on three levels of inputs, of which the first two are considered observable and the last unobservable, that may be used to measure fair value:
Level 1: Quoted prices in active markets for identical assets and liabilities.
Level 2: Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
Level 3: Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.
The fair value of cash is classified as Level 1 at September 30, 2018 and September 30, 2017.
The Company classifies its financial instruments as follows: Cash is classified as held for trading, and is measured at fair value. Accounts payable and accrued expenses are classified as other financial liabilities, and have a fair value approximating their carrying value, due to their short-term nature.
Income Taxes
Deferred income taxes have been provided for temporary differences between financial statement and income tax reporting under the asset and liability method, using expected tax rates and laws that are expected to be in effect when the differences are expected to reverse. A valuation allowance is provided when realization is not considered more likely than not.
The Company’s policy is to classify income tax assessments, if any, for interest expense and for penalties in general and administrative expenses. The Company’s income tax returns are subject to examination by the IRS and corresponding states, generally for three years after they are filed.
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NOTE 3. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
Loss per Common Share
Basic loss per share is calculated using the weighted-average number of common shares outstanding during each period. Diluted income per share includes potentially dilutive securities such as outstanding options and warrants outstanding during each period. To calculate diluted loss per share the Company uses the treasury stock method and the If-converted method.
For the years ended September 30, 2018 and 2017 there were no potentially dilutive securities included in the calculation of weighted-average common shares outstanding.
Derivatives
We account for derivatives pursuant to ASC 815, Accounting for Derivative Instruments and Hedging Activities. All derivative instruments are recognized in the consolidated financial statements and measured at fair value regardless of the purpose or intent for holding them. We determine fair value of warrants and other option type instruments based on option pricing models. The changes in fair value of these instruments are recorded in income or expense.
Stock-based compensation
The Company recognizes compensation expense for all stock-based payments made to employees, directors and others based on the estimated fair values of its common stock on the date of issuance.
The Company determines the fair value of the share-based compensation payments granted as either the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable. If the fair value of the equity instruments issued is used, it is measured using the stock price and other measurement assumptions as of the earlier of either the date at which a commitment for performance to earn the equity instrument is reached or the date the performance is complete.
The Company recognizes compensation expense for stock awards with service conditions on a straight-line basis over the requisite service period, which is included in operations. Stock option expense is recognized over the option’s vesting period.
Concentrations of Credit Risk
The Company maintains cash at financial institutions, which at times, may be in excess of insured limits. The Company has not experienced any losses to date as a result of this policy and, in assessing its risk, the Company’s policy is to maintain cash only with reputable financial institutions. As of September 30, 2018, the Company’s bank operating account balances exceeded the Federal Deposit Insurance Corporation Insurance Limit of $250,000 by $2,925,523.
Recent Accounting Pronouncements
In November 2015, the FASB issued ASU 2015-17, Balance Sheet Classification of Deferred Taxes (“ASU 2015-17”). ASU 2015-17 requires companies to classify all deferred tax assets or liabilities as noncurrent on the balance sheet rather than separately disclosing deferred taxes as current and noncurrent. This standard is effective for the Company beginning on October 1, 2017 and can be applied either prospectively or retrospectively to all periods presented upon adoption. The standard did not have any impact on the Company’s financial statements.
In January 2016, FASB issued ASU 2016-01 to amend certain aspects of recognition, measurement, presentation, and disclosure of financial instruments. Most prominent among the amendments is the requirement for changes in fair value of equity investments, with certain exceptions, to be recognized through profit or loss rather than other comprehensive income. The new standard will be effective for the Company beginning October 1, 2018. The standard is not expected to have any impact on the Company’s financial statements.
In February 2016 FASB issued ASU No. 2016-02, Leases (Topic 842) which supersedes FASB ASC Topic 840, Leases (Topic 840) and provides principles for the recognition, measurement, presentation, and disclosure of leases for both lessees and the lessors. The new standard requires the lessees to apply a dual approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase by the lessee. The classification will determine whether lease expense is recognized based on an effective interest method or on a straight-line basis over the term of the lease, respectively. A lessee is also required to record a right-of-use asset and a lease liability for all leases with a term of greater than twelve months regardless of classification. Leases with a term of twelve months or less will be accounted for similar to existing guidance for operating leases. The standard is effective for annual and interim periods beginning after December 15, 2018, with early adoption permitted upon issuance. When adopted, the Company does not expect this guidance to have a material impact on its consolidated financial statements.
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NOTE 3. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
Recent Accounting Pronouncements (Cont’d)
In June 2016, the FASB issued ASU 2016-13 to replace the incurred loss impairment methodology in current U.S. GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss credit loss estimates. For trade and other receivables, loans and other financial instruments, the Company will be required to use a forward-looking expected loss model rather than the incurred loss model for recognizing credit losses which reflects losses that are probable. Credit losses relating to available for sale debt securities will also be recorded through an allowance for credit losses rather than as a reduction in the amortized cost basis of the securities. The new standard will be effective for the Company beginning October 1, 2020, with early adoption permitted. Application of the amendments is through a cumulative-effect adjustment to deficit as of the effective date. The Company is currently assessing the impact of the standard on its consolidated financial statements.
In August 2016, the FASB issued ASU No. 2016-15, “Statement of Cash Flows (Topic 230)”. The new guidance is intended to reduce diversity in practice in how certain transactions are classified in the statement of cash flows. ASU No. 2016-15 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017. Early adoption is permitted, provided that all of the amendments are adopted in the same period. The guidance requires application using a retrospective transition method. The Company is currently evaluating the impact of ASU No. 2016-15 on its financial position, results of operations and liquidity.
NOTE 4. PURCHASE OF DIGIFONICA
The Company acquired Digifonica in December 2013. Pursuant to the terms in the Share Purchase Agreement (the “SPA”) the Company acquired 100% of Digifonica from the seller, the CEO of the Company (the “Seller”), for a cash payment of $800,000 and 389,023,561 common shares of the Company. The assets acquired through the acquisition were VoIP-related patented technology, including patents for Lawful Intercept, routing, billing and rating, mobile gateway, advanced interoperability solutions, intercepting voice over IP communications, and uninterrupted transmission of internet protocol transmissions during endpoint changes.
The SPA included an anti-dilution clause (the “Anti-Dilution Clause”) that requires the Company to maintain the Seller’s percentage ownership of the Company at 40% by issuing the Seller a proportionate number of common shares of any future issuance of the Company’s common shares. Shares issued pursuant to the Anti-Dilution Clause are recorded as a share issuance cost within the Additional Paid-in Capital account (Notes 6 and 8).
NOTE 5. INTANGIBLE ASSETS
The Company acquired certain patents and technology from Digifonica in December 2013 (see Note 4). These assets have been recorded in the financial statements as intangible assets. These assets are being amortized over twelve (12) years on a straight-line basis. A summary of intangible assets as of September 30, 2018 and September 30, 2017 is as follows:
September 30,
2018
September 30,
2017
VoIP Intellectual property and patents $ 1,552,416 $ 1,552,416
Accumulated amortization (634,866 ) (496,666 )
Net book value $ 917,550 $ 1,055,750
There were no disposals of any intangible assets in the periods presented.
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NOTE 6. RELATED PARTY TRANSACTIONS
The Company compensates certain of its key management personnel to operate its business in the normal course. Key management includes the Company’s executive officers and members of its Board of Directors.
Compensation paid or accrued to key management during the year ended September 30, 2018 includes:
September 30,
2018
September 30,
2017
Management fees paid to the CEO $ 190,000 $ 90,000
Management fees paid to the CFO 86,000 86,400
Management fees paid to the President 164,000 38,000
Fees paid or accrued to Directors 323,000 76,400
$ 763,000 $ 290,800
During the year ended September 30, 2018 the Company issued 38,450,000 common shares for a value of $1,457,000, accrued 6,840,000 common shares to be issued valued at $216,000 and paid cash of $57,000 for current year key management compensation of $763,000 and the settlement of amounts due to key management of $967,000 incurred in prior periods.
At September 30, 2018 included in accounts payable and accrued liabilities is $11,000 (September 30, 2017 - $186,700) owed to current officers and directors. Amounts due to/from related parties are non-interest bearing, unsecured and have no fixed terms of repayment unless otherwise noted. 10,000,000 common shares were returned to the treasury from an officer of the Company at a per share price of $0.003 ($31,542) on the unwinding of a loan conversion transaction and the associated forgiveness of a loan to the Company provided by the officer dating from 2014.
As at September 30, 2018, included in shares to be issued is $416,000 (September 30, 2017 - $902,000) for unpaid Director fees and $Nil (September 30, 2017 - $80,000) for professional fees & services paid to a director for consulting services provided. As at September 30, 2018, 126,655,791 (September 30, 2017 – 57,826,653) common shares are accrued to the Seller of Digifonica for the Anti-Dilution Clause. Additionally, 174,983,685 (September 30, 2017 – nil) common shares were issued during the year ended September 30, 2018 to the Seller of Digifonica pursuant to the Anti-Dilution Clause (Notes 4 and 8).
NOTE 7. SUPPLEMENTAL CASH FLOW INFORMATION
During the year ended September 30, 2018, the Company paid $nil (September 30, 2017 - $nil) in interest or income taxes.
During the year ended September 30, 2018, the Company reclassified $585,721 (2017- $Nil) from Shares to be issued into Additional paid-in capital upon the issuance of 30,193,846 shares.
NOTE 8. SHARE CAPITAL
Capital Stock Authorized and Issued:
– 2,000,000,000 common voting shares authorized with a par value of $0.001 each, of which 1,575,001,801 (September 30, 2017 – 1,142,125,534) shares are issued.
– 1,000,000 convertible preferred shares authorized with a par value of $0.01 each, of which nil (2017 – nil) shares are issued.
During the year ended September 30, 2018, the board of directors of the Company authorized the increase of the Company’s capital stock to 2,000,000,000 (September 30, 2017 – 1,300,000) common voting shares with a par value of $0.001 per share.
Subsequent to the year ended September 30, 2018, the board of directors of the Company authorized the increase of the Company’s capital stock to up to 3,000,000,000 common voting shares with a par value of $0.001 per share.
Issues during the year ended September 30, 2018
During the year ended September 30, 2018, the Company issued 113,453,749 common shares for cash proceeds of $3,402,060 from private placements, as follows;
– 107,147,749 common shares priced between $0.015 and $0.06 per common share for cash proceeds of $3,303,940 from a private placement of common shares; and
– 6,306,000 units at between $0.013 and $0.02 per unit for cash proceeds of $98,120. Each unit consists of one common share and one common share purchase warrant. Each common share purchase warrant allows the holder to purchase one common share for $0.04 for a period of twelve months from the date of issuance;
During the year ended September 30, 2018, the Company issued 50,125,000 common shares at $0.04 per common share for cash proceeds of $2,005,000 on the exercise of 50,125,000 common share purchase warrants;
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NOTE 8. SHARE CAPITAL (CONT’D)
Issues during the year ended September 30, 2018 (cont’d)
During the year ended September 30, 2018, the Company issued:
– 104,313,833 common shares priced at between $0.02 and $0.06 per common share for services with an aggregate value of $4,467,917, of which $585,721 (September 30, 2017 - $Nil) was in settlement of Shares to be issued; and
– 174,983,685 common shares priced at $0.038 per common share pursuant to the Anti-Dilution Clause for a value of $6,649,380 (Notes 4 and 6).
During the year ended September 30, 2018, 10,000,000 common shares were returned to the treasury at $0.003 per share with an aggregate value of $31,542 (Note 6).
Issues during the year ended September 30, 2017
During the year ended September 30, 2017, the Company issued:
– 73,067,166 common shares for cash proceeds of $1,590,010 from private placements, as follows:
– 11,566,666 common shares priced between $0.02 and $0.03 per common share for cash proceeds of $340,000 from a private placement of common shares; and
– 61,500,500 units priced between $0.02 and $0.025 per unit for cash proceeds of $1,250,010. Each unit consists of one common share and one common share purchase warrant. Each common share purchase warrant allows the holder to purchase one common share for $0.04 or $0.05 for a period of twelve months from the date of issuance;
– 7,747,500 common shares priced between $0.025 and $0.05 per common share for services valued at $231,701;
– 4,336,667 common shares priced at $0.02 and $0.03 per common share as share issuance fees valued at $100,200; and
– 1,400,000 common shares priced between $0.025 and $0.03 per share to convert $32,500 of convertible debentures.
During the year ended September 30, 2017, 900,000 common shares priced at $0.05 per common share were cancelled. The shares had been issued as an advance payment for the provision of services under a contract which was terminated prior to fulfillment.
Subsequent Issues
Subsequent to the year ended September 30, 2018, the Company issued:
– 2,250,000 common shares at $0.04 per share for cash proceeds of $90,000 from private placements;
– 6,306,000 common shares at $0.04 per share for cash proceeds of $252,240 on the exercise of 6,306,000 common share purchase warrants;
– 400,000 common shares at $0.04 per share for services valued at $16,000;
– 11,837,500 common shares at between $0.02 and $0.04 per share for management compensation with an aggregate value of $273,500;
– 127,000,000 common shares at $0.003 per share in payment of Bonus Shares for a value of $317,500 (Note 12); and
– 225,184,791 common shares at between $0.003 and $0.04 per share pursuant to the Anti-Dilution Clause for aggregate value of $5,124,641 (Note 4).
Shares to be Issued
As at September 30, 2018, there are 12,817,523 (September 30, 2017 – 23,353,846) common shares to be issued that are accrued for services provided to the Company valued at $477,320 (September 30, 2017 – $1,058,320), of which 10,840,000 (September 30, 2017 – 21,281,903) valued at $416,000 (September 30, 2017 - $982,000) are accrued to management and related parties (see Note 6).
As at September 30, 2018, there are 126,655,791 (September 30, 2017 – 57,826,653) common shares to be issued that are accrued to the seller of Digifonica pursuant to the Anti-Dilution Clause (see Notes 4 and 6), valued at $4,812,920 (September 30, 2017 - $1,937,193).
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NOTE 8. SHARE CAPITAL (CONT’D)
Issues during the year ended September 30, 2018 (cont’d)
During the year ended September 30, 2018, the Company issued:
– 104,313,833 common shares priced at between $0.02 and $0.06 per common share for services with an aggregate value of $4,467,917; and
– 174,983,685 common shares priced at $0.038 per common share pursuant to the Anti-Dilution Clause for a value of $6,649,380.
During the year ended September 30, 2018, 10,000,000 common shares were returned to the treasury at $0.003 per share with an aggregate value of $31,542 (Note 6).
Warrants
During the year ended September 30, 2017, the Company issued 61,500,500 common share purchase warrants to purchase 61,500,500 common shares in the capital stock of the Company at a price of $0.04 or $0.05 per common share for a period of twelve months from their date of issue in private placements of units.
During the year ended September 30, 2018, the Company issued 6,306,000 common share purchase warrants to purchase 6,306,000 common shares in the capital stock of the Company at a price of $0.04 per common share for a period of twelve months from their date of issue in private placements of units.
The following table summarizes the Company’s share purchase warrant transactions:
Number of
warrants
Weighted average exercise price
Balance September 31, 2016 Nil $ N/A
Issued in unit private placement 61,500,500 0.04
Exercised Nil N/A
Expired Nil N/A
Balance September 31, 2017 61,500,500 0.04
Issued in unit private placement 6,306,000 0.04
Exercised (50,125,000 ) 0.04
Expired (11,375,500 ) 0.04
Balance September 30, 2018 6,306,000 $ 0.04
The following table summarizes the share purchase warrants outstanding at September 30, 2018:
Warrants
Outstanding Weighted Average
Exercise Price Weighted Average
Remaining Contractual Life
6,306,000 $0.04 0.09 years
As at September 30, 2018, the Company has 6,306,000 (September 30, 2017 – 61,500,500) common share purchase warrants outstanding to purchase 6,306,000 common shares at a weighted average price of $0.04 per share expiring on dates ranging from October 1, 2018 through December 2018.
Subsequent to the year ended September 30, 2018, 6,306,000 common share purchase warrants were exercised at a price of $0.04 per share for proceeds of $252,240, leaving a balance of nil warrants outstanding.
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NOTE 9. STOCK-BASED COMPENSATION
Stock Option Plan
In order to provide incentive to directors, officers, management, employees, consultants and others who provide services to the Company or any subsidiary (the “Service Providers”) to act in the best interests of the Company, and to retain such Service Providers, the Company has in place an incentive Stock Option Plan (the “Plan”) whereby the Company is authorized to issue up to 10% of its issued and outstanding share capital in options to purchase common shares of the Company. The maximum term of options granted under the Plan cannot exceed ten years, with vesting terms determined at the discretion of the Board of Directors.
The following table summarizes the Company’s stock option transactions:
Number of
options
Weighted average
exercise price
Balance September 30, 2016 28,000,000 $ 0.060
Granted 11,850,000 0.053
Balance September 30, 2017 39,850,000 $ 0.058
Granted 18,500,000 0.180
Cancelled (18,500,000 ) (0.180 )
Balance September 30, 2018 39,850,000 $ 0.058
The following table summarizes the stock options outstanding at September 30, 2018:
Options
Outstanding Exercise Price Remaining
Contractual Life (Yrs) Number of Options
Currently Exercisable
14,000,000 $ 0.06 2.73 14,000,000
14,000,000 0.06 2.94 14,000,000
3,450,000 0.06 3.07 3,450,000
8,400,000 0.05 3.55 8,400,000
39,850,000 $ 0.058 3.01 39,850,000
The following assumptions were used for the Black-Scholes valuation of stock options granted during the year ended September 30, 2018: risk-free rate of 1.62% (2017 – 1.25%), expected life of 5 years (2017 – 5 years), annualized historical volatility of 138.8% (2017 - 112.0%) and a dividend rate of 0% (2017 – 0%). Expected volatilities are based on historical volatility of the Company’s stock and other factors. The compensation cost that has been charged against income from options vested under the Plan was $nil for the year ended September 30, 2018.
The weighted-average grant-date fair value of options granted during the year ended September 30, 2018 was $0.16 (2017 - $0.06). The total intrinsic value of options exercised during the year ended September 30, 2018 was $nil (2017 - $nil).
NOTE 10. INCOME TAXES
The Company and its subsidiary file consolidated Federal and state income tax returns. The Company is registered in the State of Nevada which has no corporate income tax.
Certain tax years are subject to examination by the Internal Revenue Service and state taxing authorities. The Company does not believe there would be any material adjustments upon such examination.
As of September 30, 2018 and 2017, the Company had net operating loss carryforwards of approximately $33,311,000 and $24,857,000 respectively, to reduce Federal income tax liabilities through 2038.
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NOTE 10. INCOME TAXES (CONT’D)
A reconciliation of income taxes at statutory rates with the reported taxes is as follows:
2018 2017
Loss for the year $ (8,401,548 ) $ (2,610,673 )
Expected income tax (recovery) $ (2,121,000 ) $ (659,000 )
Change in statutory, foreign tax, foreign exchange rates and other 6,815,000 (1,030,000 )
Permanent Difference 536,000 143,000
Change in unrecognized deductible temporary differences (5,230,000 ) 1,546,000
Total income tax expense (recovery) $ — $ —
The significant components of the Company’s temporary differences, unused tax credits and unused tax losses that have not been included on the consolidated statement of financial position are as follows:
2018 Expiry Date Range 2017 Expiry Date Range
Temporary Differences
Intangible assets $ 23,080,000 No expiry date $ 25,356,000 No expiry date
Non-capital losses available for future period $ 33,311,000 2033 to 2038 $ 24,857,000 2033 to 2037
Tax attributes are subject to review, and potential adjustment, by tax authorities.
NOTE 11. SEGMENTED INFORMATION
The Company operates in one reportable segment being the acquisition and development of VoIP-related intellectual property including patents and technology. All intangible assets are located in the United States of America.
NOTE 12. CONTINGENT LIABILITIES
Litigation
The Company is party to pending litigation cases as follows:
i) Locksmith Financial Corporation, Inc. et al. v Voip-Pal.com Inc. (Case No A-15-717491-C) filed in Clark County District Court (the “State Case”)
On March 24, 2014, the Company resolved to freeze 95,832,000 common shares that were issued to a company controlled by a former director (the “defendant”) in fiscal 2013 and accounted for at a cost of $1,443,000. The Company resolved to freeze the common shares as the Company believes that the shares were issued as settlement of a line of credit that the Company believes to have been legally unsupported. The defendant alleges that the freeze and the Company’s actions constituted fraud and a breach of securities laws. The Company denies any wrongdoing. Currently the State Case is entering the discovery phase of litigation and the outcome is undeterminable.
ii) Voip-Pal.com Inc. v. Richard Kipping, et al. (Case No. 2:15-cv-01258-JAD-VCF) filed in United States District Court (the “Federal Case”)
On July 2, 2015, the Company filed a case against a former director, a shareholder and the company controlled by a former director. The Company alleges that the common shares issued in the State Case and an additional 7,200,000 common shares were fraudulently obtained and that the shares have been unlawfully transferred to other entities. The proceedings in the Federal Case have been stayed pending a final determination of the issues in the State Case. The outcome of the case is undeterminable.
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NOTE 12. CONTINGENT LIABILITIES (CONT’D)
Litigation (Cont’d)
iii) Voip-Pal.com Inc. v. Apple, Inc. (Case No. 2:16-CV-00260) & Verizon Wireless Services, LLC, Verizon Communications Inc., AT&T Corp. (Case No. 2:16- VC-00271) in the United States District Court, District of Nevada
In February 2016 the Company filed patent infringement lawsuits in the United States District Court, District of Nevada against Apple, Inc, (Case No. 2:16-CV-00260), Verizon Wireless Services, LLC, Verizon Communications Inc., and AT&T Corp. (Case No. 2:16- VC-00271). These cases are seeking a combined $7,024,377,876 in damages. On May 9, 2016, the lawsuits were officially served to these companies. The proceedings in these cases were temporarily stayed, by agreement with the parties thereto, pending the outcome of two Inter Partes Reviews (“IPRs”), as noted below, and the cases were subsequently transferred to the U.S. District Court for the Northern District of California. The outcome of each of these legal actions is undeterminable.
iv) Voip-Pal.com Inc. v. Twitter, Inc. (Case No. 2:16-CV-02338) in the United States District Court, District of Nevada
During the year ended September 30, 2017, on October 6, 2016, the Company filed a lawsuit in the United States District Court, District of Nevada against Twitter, Inc, (Case No. 2:16- CV-02338) in which Voip-Pal.com alleges infringement of U.S. Patent No. 8,542,815 and its continuation patent, U.S. Patent No. 9,179,005, This case is seeking $3,200,000 in damages. On December 28, 2016, the lawsuit was officially served to Twitter, Inc. On February 28, 2018, Twitter filed a motion to transfer its case based on improper venue and the case was subsequently transferred to the U.S. District Court for the Northern District of California, where it remains pending. The outcome of this case is undeterminable.
v) Voip-Pal.com Inc. v. Amazon.com, Inc. et al. (Case No. 2:18-CV-01076) in the United States District Court, District of Nevada
During the year ended September 30, 2018, in June 2018, the Company filed a lawsuit in the United States District Court, District of Nevada, against Amazon.com, Inc. and certain related entities, alleging infringement of U.S. Patent Nos. 9,537,762, 9,813,330, 9,826,002 and 9,948,549. In November 2018, the case was transferred to the U.S. District Court for the Northern District of California, where it remains pending. The outcome of this case is undeterminable.
Inter Partes Reviews
In additional legal actions related to Item iii above, two of the Company’s patents have been subject to challenge in several Inter Partes Review (“IPR”) petitions filed before the Patent Trial and Appeal Board (“PTAB”) of the United States Patent and Trademark Office (“USPTO”). An IPR is a post-grant patent review process allowing the PTAB to consider the validity of issued patents. There are no damages awarded, but a portion or all of a patent’s claims instituted for IPR may be invalidated as a result of the review.
More particularly, during the year ended September 30, 2018, a total of eight IPRs, filed against Patent No. 8,542,815 and No. 9,179,005, were either in process before the PTAB or had been resolved, as follows:
– Unified Patents Inc. (Petitioner) vs. Voip-Pal.com Inc. (Patent Owner), IPR2016-01082, filed May 24, 2016, requesting inter partes review of U.S. Patent No. 8,542,815. On November 18, 2016, the PTAB denied institution of this petition;
– Apple, Inc. (Petitioner) vs. Voip-Pal.com Inc. (Patent Owner), IPR2016-01198, reviewing Patent No. 9,179,005 and Voip-Pal.com Inc. (Patent Owner), IPR2016-01201, reviewing Patent No. 8,542,815, both instituted for IPR on November 21, 2016;
– AT&T Inc. (Petitioner) filed IPR2017-01382 against Voip-Pal’s Patent No. 8,542,815, IPR2017-01383 against Voip-Pal’s Patent No. 9,179,005, and IPR2017-01384 against Voip-Pal’s Patent No. 9,179,005 on May 8, 2017, each of which was subsequently denied institution; and
– Apple Inc. (Petitioner) filed IPR2017-01399 against Voip-Pal’s Patent No. 8,542,815, and IPR2017-01398 against Voip-Pal’s Patent No. 9,179,005 on May 9, 2017, each of which was subsequently denied institution.
During the year ended September 30, 2018, the PTAB considered the aforesaid IPRs, and on November 20, 2017, the PTAB issued its findings on the seven active IPRs being adjudicated, denying institution of the IPRs with respect to all claims challenged by the Petitioners (Apple Inc, and AT&T Inc.). Subsequent to that ruling, in December 2017, Apple filed a post-judgment motion in IPR2016-01198 and IPR2016-01201, seeking invalidation of the challenged claims as sanctions against the Company.
Subsequent to the year ended September 30, 2018, on December 21, 2018, a new panel of the PTAB ruled on Apple’s sanctions motion, declining to grant Apple’s request to invalidate the challenged claims, declining to grant Apple’s request for entirely new proceedings to replace the existing panel of judges with a new panel or judges that would consider any request for rehearing by Apple as a sanction against VoIP-Pal. If Apple chooses to file a motion for rehearing, the outcome of the Petitioner’s motion is undeterminable.
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NOTE 12. CONTINGENT LIABILITIES (CONT’D)
Performance Bonus Payable
In 2016, the board of directors authorized the Company to provide a performance bonus (the “Performance Bonus”) of up to 3% of the capital stock of the Company by way of the issuance of Common shares from its treasury to an as yet undetermined group of related and non-related parties upon the occurrence of a bonusable event, defined as the successful completion of a sale of the Company or substantially all its assets, or a major licensing transaction. In order to provide maximum flexibility to the Company with respect to determining what constitutes such a bonusable event, the level of Performance Bonus payable, and who may qualify to receive a pro-rata share of such a Performance Bonus, the Company authorized full discretion to the Board in making such determinations.
During the year ended September 30, 2018, the board of directors authorized the increase of the Performance Bonus to up to 10% of the capital stock of the Company.
As at September 30, 2018, no bonusable event had occurred and there was no Performance Bonus payable.
Subsequent to the year ended September 30, 2018, the board of directors resolved to reduce the Performance Bonus from 10% to 3.33% of the issued and outstanding capital stock of the Company. Concurrently, the board of directors authorized the payment of Common shares (“Bonus Shares”) in an equivalent percentage to the 6.67% reduction to the Performance Bonus to a group of related and non-related parties, which included members of management, a director and several consultants, who received an aggregate 127,000,000 Bonus Shares. The Bonus Shares are restricted from trading under Rule 144 and are also subject to voluntary lock-up agreements, pursuant to which they cannot be traded, pledged, hypothecated, transferred or sold by the holders until such time as the Company has met the requirements of the bonusable event as described above.
NOTE 13. SUBSEQUENT EVENT
Subsequent to the year ended September 30, 2018, the board of directors of the Company authorized the increase of the Company’s capital stock to up to 3,000,000,000 common voting shares with a par value of $0.001 per share.
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.
There have been no changes in or disagreements with accountants on accounting or financial disclosure matters.
Item 9A. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
Management conducted an evaluation of the effectiveness of the Company’s internal control over financial reporting as of September 30, 2018. In making this assessment, management used the criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission, or COSO. The COSO framework summarizes each of the components of a company’s internal control system, including (i) the control environment, (ii) risk assessment, (iii) control activities, (iv) information and communication, and (v) monitoring. In management’s assessment of the effectiveness of internal control over financial reporting (as defined in Exchange Act Rule 13a-15(f)) as required by Exchange Act Rule 13a-15(c), our management concluded as of the end of the fiscal period covered by this Quarterly Report on Form 10-Q that our internal control over financial reporting has not been effective. The company intends, prior to the next fiscal year as the company’s finances improve, to hire additional accounting staff and implement additional controls.
As defined by Auditing Standard No. 5, “An Audit of Internal Control Over Financial Reporting that is Integrated with an Audit of Financial Statements and Related Independence Rule and Conforming Amendments,” established by the Public Company Accounting Oversight Board (“PCAOB”), a material weakness is a deficiency or combination of deficiencies that results more than a remote likelihood that a material misstatement of annual or interim financial statements will not be prevented or detected. In connection with the assessment described above, management identified the following control deficiencies that represent material weaknesses as of September 30, 2018:
1) Lack of segregation of duties. Now, our resources and size prevent us from being able to employ sufficient resources to enable us to have adequate segregation of duties within our internal control system. Management will periodically reevaluate this situation.
2) Lack of an independent audit committee. Although the Board of Directors serves an audit committee it is not comprised solely of independent directors. We may establish an audit committee comprised solely of independent directors when we have sufficient capital resources and working capital to attract qualified independent directors and to maintain such a committee.
31
3) Insufficient number of independent directors. Now, our Board of Directors does not consist of a majority of independent directors, a factor that is counter to corporate governance practices as set forth by the rules of various stock exchanges.
Our management determined that these deficiencies constituted material weaknesses. Due to a lack of financial resources, we are not able to, and do not intend to, immediately take any action to remediate these material weaknesses. We will not be able to do so until we acquire sufficient financing to do so. We will implement further controls as circumstances, cash flow, and working capital permit. Notwithstanding the assessment that our ICFR was not effective and that there were material weaknesses as identified in this report, we believe that our financial statements fairly present our financial position, results of operations and cash flows for the years covered thereby in all material respects.
Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act are recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is accumulated and communicated to management, including our Chief Executive Officer, to allow timely decisions regarding required disclosure.
Limitations on the Effectiveness of Internal Controls
Our management does not expect that our disclosure controls and procedures or our internal control over financial reporting will necessarily prevent all fraud and material error. Our disclosure controls and procedures are designed to provide reasonable assurance of achieving our objectives and our Chief Executive Officer concluded that our disclosure controls and procedures are effective at that reasonable assurance level. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within our company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the internal control. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, control may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate.
Changes in Internal Control Over Financial Reporting
There have been no changes in our internal controls over financial reporting during the year ended September 30, 2018 that have materially affected or are reasonably likely to materially affect such controls.
Item 9B. Other Information.
Not Applicable.
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PART III
Item 10. Directors, Executive Officers and Corporate Governance.
The following table sets forth the names and ages of our current directors and executive officers, the principal offices and positions with us held by each person and the date of their appointment. Our executive officers were appointed by our Board of Directors. Our directors serve until the earlier occurrence of the election of his or her successor at the next meeting of stockholders, death, resignation or removal by the Board of Directors. There are no family relationships among our directors and executive officers.
Name Age Position Year Appointed
Dr. Colin Tucker 73 Director and Chairman 2013
Emil Malak 66 Director and Chief Executive Officer 2014
Dennis Chang(1) 70 Director and President 2009
Professor Edwin Candy 74 Independent Director 2013
Dr. Ryan L. Thomas(2) 64 Director 2015
D. Barry Lee(3) 62 Chief Financial Officer 2015
(1) Mr. Chang resigned his positions as a Director and as President in October 2018
(2) Dr. Thomas was appointed to the position of President in October 2018
(3) Mr. Lee was appointed to the Board of Directors in November 2018
Set forth below is a brief description of the background and recent business experience of each executive officer and director:
Dr. Colin Tucker was a founding member of Orange plc, a company he helped grow into a mobile network leader, generating billions in annual revenues and operating in six countries. Orange was sold to France Telecom for £25 billion (approximately $38 billion USD). Dr. Tucker has served as a Director and CEO of Hutchison 3G where in 2003, he oversaw the deployment of the first 3G mobile network in the UK. Under his leadership Hutchison later became one of the first mobile phone operators in the world to embrace VoIP, and offer mobile applications such as Skype, Facebook and eBay. Dr. Tucker has served on the boards of numerous companies over his distinguished career and was listed by Financial Times as one of the eight key people to know in the Telecommunications sector.
Emil Malak was the co-founder of Digifonica in 2003 and oversaw the development of the patents acquired by Voip-Pal in 2013. Mr. Malak also serves as Chairman of the Board for a biotech company currently conducting cancer research in Germany.
Dennis Chang has been the President of Voip-Pal.com Inc. since September 3, 2009. He was formerly a Sr. Business Management Consultant for Antares Corporation from January 2003 through November 2010.
Professor Edwin Candy was previously the Technology Director of Hutchison 3G until his retirement in 2009. At Hutchison, he was instrumental in the development of the most advanced 3G Networks operating across nine countries successfully introducing enterprise and I/P architectures into cellular networks to provide mobile internet access. Prior to this he held Technology or Technical director positions in Orange, Hutchison Personal Communications, and Philips spin-off companies in the UK and France as well as International Radio Systems Manager for Philips in the late 80’s. During his career he established a number of major technology and research programs including, the EU UMTs 3G program with twenty-five industrial partners that led to the creation of 3G mobile systems and the TETRA digital standard for public safety communications. He has held a number of key Industrial posts including Chairman of the UK Government DTI UMTS Technical Advisory Group, Chairman of the GSMA PCN group charged with the integration of DSC 1800 with the GSM standard, and Founder and Chairman of the UMTs Forum. He currently holds a number of non-executive positions in small wireless companies as well as operating his own technology consultancy business. He is a Fellow of the IET, a Senior Life Member of the IEEE, a Companion of the IREE Australia. He was a visiting Professor at Strathclyde University Scotland and Member of the University Court from 1995 until 2005.
Dr. Ryan L. Thomas is a licensed attorney in Utah and California, and has been in private practice since 1981. He is currently an Associate Provost and Dean of Undergraduate Studies at Weber State University. Dr. Thomas has served as in-house counsel for the past four years. He has been practicing law since 1979 and has over 35 years of experience as a litigator. Dr. Thomas has a strong technological and computer science background and has extensive experience in patent law.
D. Barry Lee is a senior management consultant with over 25 years of experience in all aspects of business, providing financial management, consulting and advisory services to private and public companies, primarily in the technology and energy sectors. He is the founder and CEO of Equity One Capital Corporation, a financial management and consulting services company since 1999 and is the co-founder and a partner at First Merit Group Inc, where he manages investments in energy, technology and biotechnology.
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Item 11. Executive Compensation.
Stock Awards
Name and
Principal Position
Year
Salary
($)
Bonus
($)
Shares Awarded
Price per Share
($)
Award
Value
($)
Option
Awards
($)
All Other Compensation ($)
Total ($)
Dr. Colin Tucker 2018 — — 975,000 (1) 0.037 36,000 — — 36,000
Chairman 2017 — — 1,600,000 (1) 0.023 36,000 — — 36,000
Emil Malak 2018 — — 2,432,432 0.037 90,000 — 100,000 (2) 190,000
CEO & Director 2017 — — 3,989,400 0.023 90,000 — — 90,000
Dennis Chang 2018 30,000 — 1,625,000 0.037 60,000 — 37,000 (2) 127,000
President / Director 2017 30,000 — 2,666,667 0.023 60,000 — — 90,000
Edwin Candy 2018 — — 975,000 (1) 0.037 36,000 — — 36,000
Director 2017 — — 1,600,000 (1) 0.023 36,000 — — 36,000
Ryan L. Thomas 2018 — — 1,625,000 0.037 60,000 — 47,000 (2) 107,000
Director 2017 — — 2,666,667 0.023 60,000 — — 60,000
D. Barry Lee 2018 26,400 — 1,625,000 0.037 60,000 — — 86,400
CFO 2017 26,400 — 2,666,667 0.023 60,000 66,789 — 153,189
(1) These stock awards were accrued and have not been issued
(2) This compensation was accrued in prior years but recognized and paid during the fiscal year ended September 30, 2018,
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
The following table sets forth certain ownership information with respect to our common stock for those persons who directly or indirectly own, control or hold with the power to vote five percent or more of our outstanding common stock, and all officers and directors, as a group.
Name and Address of Beneficial Owner Amount of Direct
Ownership Amount of Indirect
Ownership Percent of Class
Dr. Colin Tucker
The Old House Back Lane
Oxhill, Warwickshire, CV350QN, UK
6,000,000 Nil 0.38%
Emil Malak
Suite 41-42 Victoria House, 26 Main Street
Gibraltar, Gibraltar
Nil 528,449,746 (1) 33.55%
Dennis Chang
1120 South 25th Street, #95
Mount Vernon, WA 98274
14,026,520 Nil 0.80%
Professor Edwin Candy
Suite 41-42 Victoria House, 26 Main Street
Gibraltar, Gibraltar
Nil 5,000,000 (2) 0.31%
Dr. Ryan L. Thomas
2740 E 1700
N. Layton, UT 84040
5,988,000 Nil 0.38%
D. Barry Lee
Suite 283 - 1755 Robson Street
Vancouver, BC V6G 3B7 Canada
7,700,000 Nil 0.49%
(1) These shares are held in Digifonica Intellectual Properties (DIP) Ltd (“DIP Ltd”) in trust for Mr. Malak, who has sole voting power over DIP Ltd.
(2) These shares are held in DIP Ltd, over which Mr. Malak has sole control, in trust for Mr. Candy.
34
Item 13. Certain Relationships and Related Transactions.
Related Party Transactions
During the year ended September 30, 2018 the Company paid or accrued $190,000 (2017 - $90,000) to the CEO, $86,000 (2017 - $86,400) to the CFO, $127,000 (2017 - $90,000) to the President, $36,000 (2017 - $36,000) to the Chairman and $143,000 (2017 - $27,000) to other Directors. During the year ended September 30, 2017, the Company paid or accrued $Nil (2016 - $73,068) for professional fees and services and $Nil (2016 - $125,000) in legal fees paid or accrued to a Director in his capacity as legal counsel. The Company granted Nil (2017 – 1,625,000) stock options to the CFO of the Company, resulting in $Nil (2016 - $66,789) of stock-based compensation.
Included in Shares to be issued as at September 30, 2018 is $416,000 (2017 - $902,000) for unpaid Officer and Director fees and $Nil (2017 - $80,000) for professional fees & services paid to a director for consulting services provided. Additionally, $4,812,920 (2017 - $1,937,193) is accrued to the Seller of Digifonica for the Anti-Dilution Clause.
Director Independence
We are not subject to the listing requirements of any national securities exchange or national securities association and, as a result, we are not at this time required to have our Board comprised of a majority of “independent directors.” One of our five directors (see Item 6 above) is independent as defined under the Nasdaq Marketplace Rules.
Item 14. Principal Accounting Fees and Services.
Audit Fees and Services
For the fiscal year ended September 30, 2018 professional services were performed by Davidson & Company LLP, Chartered Professional Accountants. The aggregate fees billed by Davidson & Company LLP, Chartered Professional Accountants for the fiscal year ended September 30, 2018 were as follows:
2017 to 2018
Audit Fees $ 26,500
Audit-Related Fees $ 13,000
Tax Fees $ Nil
All Other Fees $ Nil
Audit Fees: Aggregate fees billed for professional services rendered for the audit of the Company’s annual financial statements.
Audit Related Fees: Aggregate fees billed for professional services rendered for assurance and related services that were reasonably related to the performance of the audit or review of our financial statements and are not reported under “Audit Fees” above.
All services listed were pre-approved by the Board of Directors, functioning as the Audit Committee in accordance with Section 2(a) 3 of the Sarbanes-Oxley Act of 2002.
The Board has considered whether the services described above are compatible with maintaining the independent accountant’s independence and has determined that such services have not adversely affected Davidson & Company LLP’s independence.
Item 15. Financial Statements and Exhibits.
(a) Financial Statements. Our financial statements begin on page 14 of this registration statement.
(b) Exhibits. The following are furnished as exhibit hereto:
Exhibit No. Description of Exhibits
3.1 Articles of Incorporation (Incorporated by reference to the Form 10 filed on April 22, 2016)
3.2 By-Laws (Incorporated by reference to the Form 10 filed on April 22, 2016)
10.1 Digifonica Share Purchase Agreement (Incorporated by reference to the Form 10 filed on June 14, 2016)
10.2 Incentive Stock Option Plan (Incorporated by reference to the Form 10 filed on January 12, 2018)
31.1 Certification of Chief Executive Officer pursuant to Securities Exchange Act Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002*
31.2 Certification of Chief Financial Officer pursuant to Securities Exchange Act Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002*
32.1 Certification by the Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*
* Filed herewith
35
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
VoIP-Pal.Com Inc.
Date: January 11, 2019
By: /s/ Emil Malak
Emil Malak
Chief Executive Officer
Date: January 11, 2019
By: /s/ Barry Lee
Barry Lee
Chief Financial Officer
36
VoIP-Pal.Com Inc. 10-K
Exhibit 31.1
Certification of Chief Executive Officer
Pursuant to Item 601(b) (31) of Regulation S-K
I, Emil Malak, certify that;
1. I have reviewed this annual report on Form 10-K for the year ended September 30, 2018 of VoIP-Pal.Com Inc. (the “registrant”);
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: January 11, 2019
/s/ Emil Malak
By: Emil Malak
Title: Chief Executive Officer
VoIP-Pal.Com Inc. 10-K
Exhibit 31.2
Certification of Chief Financial Officer
Pursuant to Item 601(b) (31) of Regulation S-K
I, Barry Lee, certify that;
1. I have reviewed this annual report on Form 10-K for the year ended September 30, 2018 of VoIP-Pal.Com Inc. (the “registrant”);
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: January 11, 2019
/s/ Barry Lee
By: Barry Lee
Title: Chief Financial Officer
VoIP-Pal.Com Inc. 10-K
Exhibit 32.1
Certification of Chief Executive Officer and Chief Financial Officer
Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned officers of VoIP-Pal.Com Inc. (the “Company”), do hereby certify, to the best of their knowledge and belief that:
(1) The Annual Report on Form 10-K for the year ended September 30, 2018 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Date: January 11, 2019 By: /s/ Emil Malak
Name: Emil Malak
Title: Chief Executive Officer
Date: January 11, 2019 By: /s/ Barry Lee
Name: Barry Lee
Title: Chief Financial Officer
(OTCMKTS:VPLM) Sellers Declined Their Shorts By 69.42% As Of Jan 12, 2019
Posted by Estela Ashley on January 12, 2019 at 4:32 pm
Voip-Pal.Com Inc. (OTCMKTS:VPLM) Corporate Logo
It was noted a decrease on VOIP-PAL.COM INC (OTCMKTS:VPLM)’s short interest with 69.42%. It was announced in January by FINRA the 8,500 short interest on VPLM. That’s 69.42% down from 27,800 shares.
VPLM is reaching $0.08 during the last trading session, after increased 0.63%.Voip-Pal.Com Inc. has volume of 388,779 shares. Since January 12, 2018 VPLM has 0.00% and is . VPLM by 0.00% the S&P500.
Voip-Pal.Com Inc. owns and develops a portfolio of broadband Voice-over-Internet Protocol services in the United States.The firm is worth $127.52 million. The firm offers VoIP-related patented technology comprising patents for lawful intercept, routing, billing, rating mobile gateway, advanced interoperability solutions, intercepting voice over IP communications and other data communications, and uninterrupted transmission of Internet protocol transmissions during endpoint changes, as well as enhanced 911, allocating charges for communication services, determining time to permit a communication session to be conducted, and RBR messaging continuation.Last it reported negative earnings. The Company’s products are used in various applications by telephony system vendors, network suppliers, and retail and wholesale carriers.
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BOTTOM LINE;..MICROSOFT.. EVENTUALLY TERMINATED AND ENDED THE SECTION CREATED FROM THE ENGINEERS HIRED AFTER THEY WERE LAID OFF FROM DIGI USA WHEN DIGI RAN OUT OFF PUBLIC COMPANY MONEY.
THE ENGINEERS REPRODUCED A 75% EXACT WORD FOR WORD COPY OF VPLM OR THEN DIGI GIBRALTAR'S PATENTS PENDING WHICH WAS REJECTED BY THE PATENT OFFICE BECAUSE IT WAS A DIGI GIBRALTAR / COPY AND ULTIMATELY RESULTED IN THE UNITS BEING DISBANDED WITH THE ENGINEERS RECEIVING VERY GOOD REFERENCES AND PAYOUT FROM MICROSOFT .
I DONT KNOW HOW MANY OF THE ENGINEERS WERE INVOLVED IN THE MOVE TO MICROSOFT.
HOW MANY WENT ON TO..MICROSOFT..TO.MAKE.THEIR.75% DIGI COPY THAT WAS THROWN OUT BY THE PATENT OFFICE BECAUSE OF VPLMS/ DIGI PATENT SUBMISSION?????
Zeroing in on Voip-Pal.com (VPLM)’s Pivots
Posted by PCN Staff Writer on January 9, 2019 at 3:29 am
A “pivot point” is a technical analysis indicator used to find the overall trend of the market over different time periods. A pivot point is simply the average of the high, low and closing prices from the previous trading day. The following day, any trading above the pivot point indicates bullish trends, and trading below the pivot point indicates a bearish trend. Pivot point analysis is used in alongside consideration of support and resistance levels. The first support and resistance levels are found by utilizing the width of the trading range between the pivot point and the high or the low prices of the day’s trading. Secondary support and resistance levels can be found using the full width between the high and low prices of the previous trading day.Pivot points are oft-used indicators for trading futures, commodities, and stocks. They are static, remaining at the same price level throughout the day. Five pivot point levels are generated by using data from the previous day’s trading range.
These are composed of a pivot point and two higher pivot point resistances called R1 and R2 and also two lower pivot point supports called as S1 and S2.
Voip-Pal.com (VPLM)’s Pivot Point is 0.0843.
Its 1st Resistance Point is 0.0886 and its 2nd Resistance Point is 0.0923. The 1st Support Point is 0.0806 while its 2nd Support Point is 0.0763.
Voip-Pal.com (VPLM)’s Raw Stochastic, which shows (on a range of 0%-100%) where the price closed in relation to its price range over the last nine days is 49.50%.
Their Stochastic %K, which indicates (on a range of 0%-100%) where the price closed in relation to its price range over the last nine days with a 3-period exponential moving average applied is 59.87%. Finally, their Stochastic %D, the indicator that shows (on a range of 0%-100%) where the price closed in relation to its price range over the last nine days with a 3-period exponential moving average applied, is 65.15%.
Known also as statistical volatility, Historical Volatility is the realized volatility of a financial instrument over a specified period of time. The measure is calculated by finding the average deviation from the average price of a commodity during a specified time period.
Standard deviation is the most common, though not only, way to calculate historical volatility. Voip-Pal.com (VPLM)’s 9-Day Historical Volatility is 117.13%, its 14-Day Historical Volatility is 136.10%, and looking back further, its 20-Day Historical Volatility is 117.92%.
Voip-Pal.com (VPLM)’s TrendSpotter Opinion, the signal from Trendspotter, a Barchart trend analysis system that uses wave theory, market momentum & volatility in an attempt to find a general trend, is Buy.
Barchart Opinions show investors what a variety of popular trading systems are suggesting. These Opinions take up to 2 years’ worth of historical data and runs the prices through thirteen technical indicators. After each calculation, a buy, sell or hold value for each study is assigned, depending on where the price is in reference to the interpretation of the study.
Today’s opinion, the overall signal based on where the price lies in reference to the common interpretation of all 13 studies, for Voip-Pal.com (VPLM) is 56% Buy.
Disclaimer: Nothing contained in this publication is intended to constitute legal, tax, securities, or investment advice, nor an opinion regarding the appropriateness of any investment, nor a solicitation of any type. The general information contained in this publication should not be acted upon without obtaining specific legal, tax, and investment advice from a licensed professional.
Author: PCN Staff Writer
UNITED STATES PATENT AND TRADEMARK OFFICE
BEFORE THE PATENT TRIAL AND APPEAL BOARD
APPLE INC.
Petitioner
v.
VOIP-PAL.COM, INC.
Patent Owner
Case No. IPR2016-01201
Patent 8,542,815
PETITIONER’S REQUEST FOR REHEARING
PURSUANT TO 37 C.F.R. § 42.71(d)
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TABLE OF CONTENTS
I. INTRODUCTION............................................................................................ 1
II. RESERVATION OF RIGHTS ....................................................................... 2
III. APPLICABLE STANDARDS ..................................................................... 3
IV. RELEVANT PROCEDURAL HISTORY.................................................. 3
V. ARGUMENT................................................................................................. 6
a. The Board Misapprehended the Nature of the Proposed Combination of
Prior Art References. .......................................................................................... 7
b. The Board Misapprehended the Proposed Combination’s Application to
the Step Ordering Required by the Challenged Claims. ................................. 9
c. The Board Overlooked the Motivations to Combine the Prior Art
References. ......................................................................................................... 14
VI. CONCLUSION............................................................................................ 17
1
I. INTRODUCTION
Apple Inc. (“Petitioner”) hereby respectfully requests that the Patent Trial and
Appeal Board (“Board”) reconsider its Final Written Decision (Paper 53) upholding
the patentability of claims 1, 7, 27-28, 34, 54, 72-74, 92-93, and 111 of U.S. Patent
No. 8,542,815 (Ex. 1001, “the ’815 Patent”).
The Final Written Decision (“FWD”), issued by the Replacement Panel, rests
on an erroneous understanding of the Proposed Combination that was advanced by
Patent Owner in its Preliminary Response. The Institution Decision (“ID”), issued
by the Original Panel, rejected the same arguments, noting that they were premised
on Patent Owner’s mischaracterization of the Proposed Combinations. The Original
Panel again rejected the very same arguments in response to Patent Owner’s Request
for Rehearing of the ID and again noted that they were premised on Patent Owner’s
mischaracterization of the Proposed Combinations. After being twice rejected,
Patent Owner largely abandoned the mischaracterizations in its Response.
The Replacement Panel, in the FWD, adopted Patent Owner’s pre-institution
mischaracterization of the Proposed Combination, which had been twice-rejected by
the Original Panel and largely abandoned by Patent Owner. In so doing, the
Replacement Panel did not cite or otherwise discuss a single paper submitted by
Petitioner post-institution correcting the Patent Owner’s mischaracterizations and
supporting the actual Proposed Combination. Petitioner had specifically reiterated
the nature and operation of the Proposed Combination in its Reply and again at the
2
oral argument. The Replacement Panel’s failure to even cite to Petitioner’s postinstitution briefs is telling. Had the Replacement Panel considered the full record, it
would not have misapprehended the Proposed Combinations and it would not have
overlooked the ample record evidence supporting the instituted grounds.
Accordingly, Petitioner respectfully requests that the Board reconsider the
Final Written Decision in view of the actual Proposed Combinations and the totality
of the record, including Petitioner’s arguments submitted post-institution.
This request is timely filed by January 8, 2019—the deadline set forth in the
Board’s Order, Granting-in-Part Petitioner’s Motion for Sanctions. Paper 70 at 16.
II. RESERVATION OF RIGHTS
By presenting the Request for Rehearing authorized by Paper 70, Petitioner
does not concede, expressly or by implication, the correctness of the Board’s Order
resolving Petitioner’s motion for sanctions. Patent Owner engaged in improper ex
parte communications that created at least the appearance of impropriety and
prejudiced Petitioner. Petitioner continues to maintain that, in addition to violating
the Board’s rules, this improper conduct violated both the Administrative Procedure
Act and the Due Process Clause. In the context of this proceeding, and given the
undisputed timing and nature of the events, Patent Owner’s violations, individually
or collectively, warrant a meaningful sanction to alleviate the prejudice to Petitioner.
The rehearing request authorized by Paper 70 is at most a partial remedy for Patent
Owner’s improper conduct.
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III. APPLICABLE STANDARDS
“A party dissatisfied with a decision may file a single request for rehearing.”
37 C.F.R. §42.71(d). “The request must specifically identify all matters the party
believes the Board misapprehended or overlooked, and the place where each matter
was previously addressed in a motion, an opposition, or a reply.” Id. The Board
reviews a decision for an abuse of discretion. 37 C.F.R. §42.71(c). “An abuse of
discretion may arise if a decision is based on an erroneous interpretation of law, if a
factual finding is not supported by substantial evidence, or if an unreasonable
judgment is made in weighing relevant factors.” IPR2013-00298, Paper 24, at 2
(Feb. 11, 2014) (citations omitted).
IV. RELEVANT PROCEDURAL HISTORY
Petitioner requested Inter Partes Review of claims 1, 7, 27-28, 34, 54, 72-74,
92-93, and 111 of the ’815 Patent (“the Challenged Claims”) on two grounds (“the
Proposed Combinations”), both of which rely on the same base reference—Chu
’684—and similar secondary references—Chu ’366 and Chen (“the Secondary
References”). Paper 1, Petition at 5, 12-20, 37-41. Each of the Proposed
Combinations relies on Chu ’684 for its infrastructure, call classifying, and call
routing teachings, and the Secondary References for their caller profile and dialed
digit reformatting teachings. Id. The Proposed Combinations each propose that Chu
’684 would benefit if its users could employ short form dialing—as is common for
local PSTN calls on a standard landline (e.g., 555-1234)—rather than being required
4
to use full E.164-compliant numbers (e.g., +1-202-555-1234) as contemplated by
Chu ’684. Id. The primary difference between the two Proposed Combinations is
that Chen provided an earlier date.
Patent Owner filed a Preliminary Response (“POPR”), arguing (1) that
Petitioner’s motivations to combine are insufficient and (2) that the Proposed
Combinations fail to properly account for the required ordering of certain limitations
of the Challenged Claims. Paper 5, POPR at 18-21, 39-42, 48-49, 59-62. In its ID,
the Original Panel rejected Patent Owner’s arguments, pointing out that Patent
Owner had mischaracterized the Proposed Combinations and ignored the Petition’s
reliance on the Secondary References for key teachings. Paper 6, ID at 19-24.
Patent Owner then filed a Request for Rehearing, again challenging the
adequacy of the Petitioner’s motivations to combine and the ordering issue. Paper 9,
Request for Rehearing at 2-3. The Original Panel once again rejected these
arguments, and again pointed out that Patent Owner had mischaracterized the
Proposed Combinations. Paper 11, Decision Denying Request for Rehearing at 3-6.
Patent Owner next filed its Response, which attempted to swear behind both
Chu ’366 and Chen, alleging that the Challenged Claims were actually reduced to
practice 17 months before filing. Paper 17, Response at 4-38. On the substance,
Patent Owner abandoned the mischaracterization of the Proposed Combinations it
had unsuccessfully advanced twice before. Instead, the Patent Owner introduced a
new theory that Chu ’684 allegedly did not contemplate E.164 dialing at all, and
5
instead requires that users “dial private numbers to place a call to the PBX private
network, or a PSTN access code (e.g., a prefix of ‘9’) followed by a PSTN number
based on local dialing conventions to call the PSTN.” Paper 17, Response at 46-57,
64-66. Patent Owner also advanced a new ordering theory, wholly different from its
original ordering argument, suggesting that the caller-specific profiles taught by the
Secondary References cannot (or would not) be incorporated into Chu ’684’s
infrastructure. Id. at 59-64.
Because Patent Owner had consistently mischaracterized the Proposed
Combinations in its early papers, Petitioner’s Reply reiterated the nature of the
Proposed Combinations set forth in the Petition and explained the ordering of the
combination. Paper 34, Reply at 15-16. Petitioner also addressed Patent Owner’s
new arguments. Id. at 16-24. And, finally, the Reply addressed Patent Owner’s
swear behind attempt. Id. at 1-15.
On June 7, 2017, the parties participated in a conference call with the Board
to discuss Patent Owner’s request for a sur-reply. Unbeknownst to Petitioner, the
Original Panel had been removed and new judges—Administrative Patent Judges
Josiah Cocks, Jennifer Meyer Chagnon, and John Hudalla (“Replacement Panel”)—
were appointed. This call was the first time Petitioner learned of the Replacement
Panel. Paper 37. There was no discussion or explanation for why the Replacement
Panel was appearing.
On November 20, 2017, the Replacement Panel issued its Final Written
6
Decision (“FWD”). See generally Paper 53, FWD. The two issues on which the
Replacement Panel found in favor of Patent Owner were (1) the original “ordering”
argument premised on the Patent Owner’s pre-Institution mischaracterizations of
the Proposed Combinations and (2) an alleged inadequate motivation to make the
mischaracterized Proposed Combinations. Id. at 18-24.
Petitioner subsequently moved for sanctions against Patent Owner after it
discovered that Patent Owner had engaged in an ex parte letter-writing campaign
with the Board and other officials. Paper 55.
On August 22, 2018, the Board issued an order assigning three new judges—
Deputy Chief Administrative Patent Judge Scott R. Boalick, Vice Chief
Administrative Patent Judge Jacqueline Wright Bonilla, and Vice Chief
Administrative Patent Judge Michael P. Tierney (“Third Panel”)—to this matter.
Paper 69. On December 21, 2018, the Third Panel found that Patent Owner engaged
in sanctionable conduct and granted-in-part Petitioner’s motion for sanctions. As a
remedy, the Board permitted Petitioner to file this rehearing request. Paper 70.
V. ARGUMENT
In the FWD, the Replacement Panel concluded that the Proposed
Combinations did not disclose the ordering of steps required by the Challenged
Claims, and that Petitioner had not met its burden to show a motivation to combine
the Proposed Combinations. In reaching these conclusions, the Panel
misapprehended the nature of the Proposed Combinations and failed to address
7
Petitioner’s Reply arguments.
a. The Board Misapprehended the Nature of the Proposed
Combination of Prior Art References.
The Replacement Panel did not understand the Proposed Combinations.
Because the Patent Owner had twice attempted to mischaracterize the Proposed
Combination, Petitioner began its Reply (the first opportunity it had to address
Patent Owner’s mischaracterization attempts) by explaining the Proposed
Combinations in a step-wise fashion:
1) First, a caller’s profile is accessed, which includes caller attributes
(e.g., IDD, NDD, area code, etc.). The Secondary References teach
accessing a caller profile. See, e.g., Paper 1, Petition at 22-23
(describing use of calling attributes from Secondary References); see
also, Ex. 2043, Houh Trans. at 18:5-22:24 (explaining that the Chu
‘366 “call origin profile” includes calling attributes and that Chu ‘684
includes the user-specific infrastructure to support accessing the userspecific profile from Chu ‘366); 33:24-35:3 (same explanation
regarding Chen).
2) Next, dialed digits are received by the caller pursuant to standard
public dialing conventions, e.g., 123-4567 for a local call. The number
reformatting taught by the Secondary References is performed, which
results in an E.164-compliant callee identifier, e.g., 1-202-123-4567.
See, e.g., Paper 1, Petition at 22-23.
3) Finally, Chu ‘684 uses the reformatted E.164 number to determine
whether the callee is on the private IP network or the public PSTN and
generates routing messages accordingly. See, e.g., id. at 23-24.
8
Paper 34, Reply at 15-16. As explained in the Petition, the Proposed Combinations
recognized that Chu ’684 required a user to dial a complete (long form) E.164
compatible number in order to reach a destination phone as was typical of such VoIP
systems. Paper 1, Petition at 17. By combining the Chu ’684 system with the
Secondary References’ short form dialing and reformatting teachings, a customer
would be able to enjoy the benefit of familiar short form dialing and the Chu ’684
system could continue to receive and process long form E.164 compatible numbers
as per its normal disclosed operation. See Paper 34, Reply at 21-23 (establishing that
Chu ’684 processes E.164 compatible numbers to route calls). Put simply, the
Secondary References provide for short form dialing to be reformatted into E.164
numbers that Chu ’684 may then process to route a call. The Replacement Panel did
not discuss these (or any other) portions of the Reply.
Multiple statements in the FWD suggest that the Replacement Panel did not
apprehend the Proposed Combinations. For example, the Replacement Panel stated:
Petitioner seems to advocate that Chu ’684, itself, contemplates a
“reformatted” callee identifier when determining the public or
private network affiliation of a call. [ ]
[I]f Chu ’684’s dialed digits are reformatted prior to determining the
local or non-local (i.e., PSTN) nature of a call, then it stands to reason
that they no longer constitute the dialed digits. Petitioner has not
explained adequately why or how Chu ’684’s step of assessing the
dialed digits is applicable to a number that has been reformatted
into a number that is no longer the dialed digits.
Paper 53, FWD at 22-23 (emphasis added). Petitioner never suggested that Chu ’684,
itself, contemplates a “reformatted” callee identifier. Chu ’684 contemplates
receiving long form E.164 compatible numbers. The Secondary References
contemplate receiving short form numbers and reformatting them to E.164
compatible numbers. Thus, in the Proposed Combinations, short form dialing may
be used and, after the reformatting contemplated by the Secondary References, Chu
’684 receives the same long form E.164 compatible numbers it expressly
contemplates.
In a similar misapprehension, the Replacement Panel criticizes Petitioner for
failing to explain how Chu ’684 can process a reformatted number. There was no
such failure. In the Proposed Combination, the reformatted number supplied to Chu
’684 is in the same E.164 compatible format that Chu ’684 expressly contemplates
using. The Replacement Panel should not have required an explanation for why or
how Chu ’684 would process the same format of dialed digits its disclosure expressly
contemplates using. Had the Replacement Panel considered, at a minimum, the
Reply’s reiterated explanation of the Proposed Combinations, the Replacement
Panel would have analyzed the actual operation of the Proposed Combinations.
b. The Board Misapprehended the Proposed Combination’s
Application to the Step Ordering Required by the
Challenged Claims.
The Replacement Panel’s misapprehension of the Proposed Combination and
apparent disregard of the Reply’s step-wise explanation of the Proposed
10
Combinations led to incorrect conclusions. Specifically, the Replacement Panel
incorrectly concluded that the Proposed Combinations failed to account for the “step
ordering that is required by the claims of the ’815 patent.” Paper 53, FWD at 23-24.
The Replacement Panel found that Petitioner relied on step 610 from Chu ’684 to
teach the caller dialing profile limitation and step 608 from Chu ’684 to teach the
limitation directed to evaluating caller attributes to produce public or private routing
messages. Id. at 23-24. With this misunderstanding of the Proposed Combination,
the Replacement Panel made the following finding:
That Petitioner relies on Chu ’684’s “step 610” for “locating a caller
dialing profile,” and then relies on Chu ’684’s prior “step 608” for the
subsequent steps of “determining a match” and “classifying the call” is
at odds, or is inconsistent, with the step ordering that is required by the
claims of the ’815 patent.
Id. at 24 (emphasis in original).
This precise argument was presented by Patent Owner twice—in its
Preliminary Response (Paper 5 at 18-21) and in its Request for Rehearing (Paper 9
at 3-7). In both instances, the Original Panel correctly rejected the argument as being
premised on a mischaracterization of the Proposed Combination set forth in the
Petition. See Paper 6, ID at 22-23 (noting “Petitioner does not rely exclusively on
Chu ’684 for teaching the [pertinent limitations]” and criticizing Patent Owner for
“address[ing] Chu ’684 and Chu ’366 individually, and does not consider the
combined teachings of the references”); Paper 11 at 3-5 (rejecting Patent Owner’s
11
argument “that the Board overlooked the argument that Petitioner’s obviousness
analysis fails to account for performing the ‘locating’ step before the ‘producing’
steps,” noting that “Patent Owner’s attempt to distinguish the single reference
Chu ’684 did not address Petitioner’s showing that the combination teaches the
claimed steps,” and pointing out that “Petitioner[] reli[es] on both Chu ’684 and
Chu ’366 for teaching the locating step, including Petitioner’s reliance on Chu
’366 for teaching call original profiles”) (emphasis added).
As recognized by the Original Panel and as described in the preceding section,
the Proposed Combinations do not rely on step 610 of Chu ’684 alone for the caller
profile limitation. Instead, the Secondary References provide the caller profile
comprising caller attributes that is then used to reformat dialed digits (callee
identifier) before the callee identifier is used in classification step 608 (to determine
whether public or private) and before routing step 610 to produce either a public or
private routing message. Petitioner explained this clearly in the above-referenced
step-wise description and further explained that:
Petitioner’s two proposed obviousness combinations . . . rely on Chu
‘684 as a base reference for its infrastructure, call classifying, and call
routing disclosures . . . [and] rely on their respective secondary
references . . . for their caller profile and dialed digit reformatting
disclosures.
Paper 34, Reply at 15 (emphasis added). Petitioner’s Reply similarly explained that
the Secondary References provide the user-specific caller profiles and that the
12
citations to Chu ’684 for the “locating” limitation establish that Chu ’684 includes
the infrastructure necessary to make use of the Secondary Reference caller profiles
and number reformatting, not that Chu ’684 itself is relied upon for locating a caller
profile:
[T]he combinations rely on the user-specific profiles taught by the
Secondary References. Indeed, this is the principle purpose of making
the combination in the first place. As Petitioner’s expert explained, Chu
‘684 discloses the infrastructure required to locate a caller-specific
dialing profile like those in the Secondary References. Namely, the
servers in Chu ‘684 necessarily maintain user-specific information in
order to effectively route calls. Accordingly, they are fully equipped to
perform caller-specific lookups as contemplated by the combination.
See Ex. 2043, Houh Trans. at 19:22-22:24.
Id. at 23-24 (emphasis added).
The Replacement Panel’s conclusions are premised on a mapping that is not
consistent with the Proposed Combinations set forth in the Petition and further
explained in the Reply. Further illustrating the Replacement Panel’s failure to
apprehend the full record, not even Patent Owner continued to pursue the
mischaracterization of Petitioner’s Proposed Combinations beyond its PreInstitution papers. For example, Patent Owner’s Response acknowledges that
Petitioner relies on the Secondary References for their dialed digit reformatting that
takes place before Chu ’684’s classification step 608:
Petitioner proposes modifying Chu ‘684 by inserting the public
13
number reformatting method of Chu ‘366 or Chen before the
classification step 608 in Chu ’684[.]
Paper 17, Response at 50 (emphasis added). Patent Owner’s Response recognized
that the Proposed Combinations rely on caller profiles from the Secondary
References and instead argued that the Petition included inadequate support:
Chu ‘684 discloses that an enterprise “dial plan” is shared by a group
of users. Chu ‘366 discloses user-specific “call origin location profiles”
and Chen discloses a user’s fixed dial plan. [] Ex. 2016 at ¶ 57. The
record is silent as to how to combine caller-specific individualized
profiles with an enterprise’s IP-PBX network-specific “dial plan.”
Id. at 63-64. Nonetheless, the Replacement Panel did not appreciate that the Patent
Owner had moved away from its Pre-Institution attempts to mischaracterize the
Proposed Combination. The Replacement Panel appears to have reverted to preInstitution arguments, twice rejected by the Original Panel, abandoned by the Patent
Owner, and fully addressed in Petitioner’s Reply.
In sum, by failing to consider the full record and accepting the flawed ordering
argument from Patent Owner’s pre-Institution papers, the Replacement Panel
misapprehended and overlooked the actual Proposed Combinations at issue in this
proceeding. The Replacement Panel’s error is particularly egregious in light of (1)
the Original Panel having twice rejected the same argument, (2) Petitioner having
repeatedly explained the nature of its Proposed Combinations, and (3) Patent Owner
having abandoned the argument in its Response.
14
c. The Board Overlooked the Motivations to Combine the Prior
Art References.
With a proper understanding of the Proposed Combinations, the motivations
to combine are straightforward—the benefit gained is to allow customers to dial
using the short form numbers (PSTN) they are used to using (using the reformatting
of the Secondary References) while employing IP call processing systems that rely
on E.164 compatible dialing (like Chu ’684). Here, the Replacement Panel
concluded that “Petitioner’s reasons for combining the teachings of Chu ’684 and
Chu ’366 [were] conclusory and insufficient to carry the burden of demonstrating
unpatentability by a preponderance of the evidence.” Paper 53, FWD at 21. In
reaching this conclusion, however, the Replacement Panel accepted Patent Owner’s
representation that the full extent of Petitioner’s motivations to combine are
described in two paragraphs of the Petition and the expert declaration paragraphs
cited therein. Compare Paper 53, FWD at 18-21 (analyzing only these portions of
the record) with Paper 5, POPR at 39-42 (characterizing Petitioner’s motivation to
combine as being entirely contained within these same portions of the record).
The Replacement Panel entirely overlooked the explanation of the motivation
to combine provided in the Petition. The Petition explains that Chu ’684 teaches a
“telecommunications system[] in which a VoIP subscriber can place a call to either
another VoIP subscriber on a private packet-based network or to a customer on the
public PSTN.” Paper 1, Petition at 12. The Petition then explains why it would have
been beneficial to combine the Chu ’684 VoIP system with the dialed digit
15
reformatting described in Chu ’366 based on the express disclosure of Chu ’366:
Chu ’366 explains why such comparison and reformatting is necessary
in a VoIP system. Namely, “E.164 [ ] provides a uniform means for
identifying any telephone number in the world to any telephony user in
the world. . . . When making telephone calls via a traditional PSTN,
a subscriber is able to enter abbreviated numbers for local and
national telephone calls. For example, for a local call in the United
States, a user may simply enter the seven digit telephone number
without an E.164 prefix, the country code or the area code. Local
and national calls are possible with PSTN systems because the fixedline phones from which such calls are made are hardwired directly to
the local PSTN center. By contrast, there is no such concept of local,
long distance or national calls when making a call via Internet
telephony. VoIP calls use the Internet, which is world-wide and not
tied to any single location.” Ex. 1003, Chu ’366 at 1:18-47. By using
caller attributes to reformat dialed digits into an E.164 compatible
number, “a user is able to enter telephone numbers for VoIP
telephone calls as they would according to a traditional telephone
numbering plan for land-line telephone calls.” Id. at 2:1-4. In other
words, both Chu ’366 and the ’815 Patent allow VoIP customers to
enter dialed digits as if they were calling from a standard PSTN
telephone, and the system then reformats the number using
attributes of the caller (e.g., national and area codes).
Id. at 17 (emphasis added); see also id. at 39 (same for Chen combination).
This benefit of allowing customers to use standard dialing formats that are
then reformatted into E.164 compatible numbers is the motivation to make the
16
Proposed Combination. The motivation is expressly provided by the Secondary
References themselves. This discussion appears to have been ignored by the
Replacement Panel. In fact, the Final Written Decision does not discuss the
motivations provided by the Secondary References at all. At the Oral Hearing,
Petitioner stressed again that the Secondary references themselves provided a
motivation to combine the prior art:
Patent Owner has argued that we failed to provide any particularized
reasoning for the motivation to combine. Let's start with the secondary
references themselves. They provide some of the best explanation
for a motivation to combine here.
Paper 52, Hearing Trans. at 21:17-21 (emphasis added). An extensive discussion of
the motivations to combine, including the motivations provided by the Secondary
References, was also provided in Petitioner’s Opposition to Patent Owner’s Motion
to Exclude. Paper 44, Opposition to Mtn. to Exclude at 7-11. This Opposition further
rebutted many of the critiques advanced in the FWD, but it was not cited or even
acknowledged by the Replacement Panel.
At no point in the Replacement Panel’s discussion of the motivations to
combine is there any recognition of these key motivations proposed in the Petition.
Namely, by ignoring the substantive discussion of the Proposed Combinations and
focusing only on the conclusion paragraphs, the Replacement Panel appears to have
entirely overlooked that the Petition proposed modifying Chu ’684 such that short
form dialing (e.g., 555-1234) could be supported as if callers were using a standard
17
PSTN phone. This is the “intuitive” and “user-friendly” modification of Chu ’684
that is the focus of the Proposed Combinations.
The Replacement Panel levies general criticisms at Petitioner, contending that
the Petition fails to establish that “one of ordinary skill in the art would have regarded
Chu ’684’s teachings as deficient.” However, the Replacement Panel did not
apprehend that Chu ’684 did not contemplate allowing short form dialing and that
the combination of Secondary References was necessary to supply that benefit. The
Replacement Panel did not appreciate the nature of the Proposed Combinations and
overlooked or failed to understand that the motivations to make the combinations
are expressly supplied by the Secondary References themselves.
VI. CONCLUSION
For the foregoing reasons, the New Board should reconsider the Final Written
Decision and enter a new decision cancelling all Challenged Claims.
Respectfully submitted,
Date: January 8, 2019 /s/ Adam P. Seitz
Adam P. Seitz, Reg. No. 52,206
Eric A. Buresh, Reg. No. 50,394
ERISE IP, P.A.
7015 College Blvd., Suite 700
Overland Park, KS 66211
(913) 777-5600 Phone
(913) 777-5601 Fax
eric.buresh@eriseip.com
adam.seitz@eriseip.com
Paul R. Hart, Reg. No. 59,646
ERISE IP, P.A.
5600 Greenwood Plaza Blvd., Suite 200
18
Greenwood Village, CO 80111
(913) 777-5600 Phone
(913) 777-5601 Fax
paul.hart@eriseip.com
ATTORNEYS FOR PETITIONER
19
CERTIFICATE OF SERVICE ON PATENT OWNER
Pursuant to 37 C.F.R. §§ 42.6(e), the undersigned certifies that on January 8,
2019, a true and correct copy of this PETITIONER’S REQUEST FOR
REHEARING UNDER 37 C.F.R. § 42.71(d) was served on the counsel for Patent
Owner by electronic means at the following addresses of record:
Kerry S. Taylor
John M. Carson
Knobbe, Martens, Olson & Bear, LLP
2040 Main Street, 14th Floor
Irvin, CA 92614
BoxDigifonica@knobbe.com
Kevin Malek
Malek Moss PLLC
340 Madison Avenue, FL19
New York, NY 10173
kevin.malek@malekmoss.com
Ryan Thomas (pro hac vice)
thomasattorney711@gmail.com
Stephen Melvin
Zytek Communication Corporation
114 W. Magnolia Street, Suite 400-113
Bellingham, WA 98225
melvin@zytek.com
Respectfully submitted,
BY: /s/ Paul R. Hart
Paul R. Hart, Reg. No. 59,646
ATTORNEY FOR PETITION
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WESTERNGECO LLC v. ION GEOPHYSICAL CORP.(Slip Opinion) OCTOBER TERM, 2017 1
Syllabus
NOTE: Where it is feasible, a syllabus (headnote) will be released, as is
being done in connection with this case, at the time the opinion is issued.
The syllabus constitutes no part of the opinion of the Court but has been
prepared by the Reporter of Decisions for the convenience of the reader.
See United States v. Detroit Timber & Lumber Co., 200 U. S. 321, 337.
SUPREME COURT OF THE UNITED STATES
Syllabus
WESTERNGECO LLC v. ION GEOPHYSICAL CORP.
CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR
THE FEDERAL CIRCUIT
No. 16–1011. Argued April 16, 2018—Decided June 22, 2018
Petitioner WesternGeco LLC owns patents for a system used to survey
the ocean floor. Respondent ION Geophysical Corp. began selling a
competing system that was built from components manufactured in
the United States, shipped to companies abroad, and assembled there
into a system indistinguishable from WesternGeco’s. WesternGeco
sued for patent infringement under 35 U. S. C. §§271(f)(1) and (f)(2).
The jury found ION liable and awarded WesternGeco damages in
royalties and lost profits under §284. ION moved to set aside the
verdict, arguing that WesternGeco could not recover damages for lost
profits because §271(f) does not apply extraterritorially. The District
Court denied the motion, but the Federal Circuit reversed. ION was
liable for infringement under §271(f)(2), the court reasoned, but
§271(f) does not allow patent owners to recover for lost foreign profits
On remand from this Court in light of Halo Electronics, Inc. v. Pulse
Electronics, Inc., 579 U. S. ____, the Federal Circuit reinstated the
portion of its decision regarding §271(f)’s extraterritoriality.
Held: WesternGeco’s award for lost profits was a permissible domestic
application of §284 of the Patent Act. Pp. 4–10.
(a) The presumption against extraterritoriality assumes that federal statutes “apply only within the territorial jurisdiction of the
United States.” Foley Bros., Inc. v. Filardo, 336 U. S. 281, 285. The
two-step framework for deciding extraterritoriality questions asks,
first, “whether the presumption . . . has been rebutted.” RJR
Nabisco, Inc. v. European Community, 579 U. S. ___, ___. If not, the
second step asks “whether the case involves a domestic application of
the statute.” Id., at ___. Courts make the second determination by
identifying “the statute’s ‘focus’ ” and then asking whether the conduct relevant to that focus occurred in United States territory. Ibid.
2 WESTERNGECO LLC v. ION GEOPHYSICAL CORP.
Syllabus
If so, the case involves a permissible domestic application of the statute. It is “usually . . . preferable” to begin with step one, but courts
have the discretion to begin with step two “in appropriate cases.” Id.,
at ___, n. 5. The Court exercises that discretion here. Pp. 4–5.
(b) When determining “the statute’s ‘focus’ ”—i.e., “the objec[t] of
[its] solicitude,” Morrison v. National Australia Bank Ltd., 561 U. S.
247, 267—the provision at issue is not analyzed in a vacuum. If it
works in tandem with other provisions, it must be assessed in concert
with those provisions. Section 284, the Patent Act’s general damages
provision, states that “the court shall award the claimant damages
adequate to compensate for the infringement.” The focus of that provision is “the infringement.” The “overriding purpose” of §284 is to
“affor[d] patent owners complete compensation” for infringements.
General Motors Corp. v. Devex Corp., 461 U. S. 648, 655. Section 271
identifies several ways that a patent can be infringed. Thus, to determine §284’s focus in a given case, the type of infringement that occurred must be identified. Here, §271(f)(2) was the basis for WesternGeco’s infringement claim and the lost-profits damages that it
received. That provision regulates the domestic act of “suppl[ying] in
or from the United States,” and this Court has acknowledged that it
vindicates domestic interests, see, e.g., Microsoft Corp. v. AT&T
Corp., 550 U. S. 437, 457. In sum, the focus of §284 in a case involving infringement under §271(f)(2) is on the act of exporting components from the United States. So the conduct in this case that is relevant to the statutory focus clearly occurred in the United States.
Pp. 5–8.
(c) ION’s contrary arguments are unpersuasive. The award of
damages is not the statutory focus here. The damages themselves
are merely the means by which the statute achieves its end of remedying infringements, and the overseas events giving rise to the lostprofit damages here were merely incidental to the infringement. In
asserting that damages awards for foreign injuries are always an extraterritorial application of a damages provision, ION misreads a
portion of RJR Nabisco that interpreted a substantive element of a
cause of action, not a remedial damages provision. See 579 U. S., at
___. Pp. 8–9.
837 F. 3d 1358, reversed and remanded.
THOMAS, J., delivered the opinion of the Court, in which ROBERTS,
C. J., and KENNEDY, GINSBURG, ALITO, SOTOMAYOR, and KAGAN, JJ.,
joined. GORSUCH, J., filed a dissenting opinion, in which, BREYER, J.,
joined.
_________________
_________________
Cite as: 585 U. S. ____ (2018) 1
Opinion of the Court
NOTICE: This opinion is subject to formal revision before publication in the
preliminary print of the United States Reports. Readers are requested to
notify the Reporter of Decisions, Supreme Court of the United States, Washington, D. C. 20543, of any typographical or other formal errors, in order
that corrections may be made before the preliminary print goes to press.
SUPREME COURT OF THE UNITED STATES
No. 16–1011
WESTERNGECO LLC, PETITIONER v.
ION GEOPHYSICAL CORPORATION
ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF
APPEALS FOR THE FEDERAL CIRCUIT
[June 22, 2018]
JUSTICE THOMAS delivered the opinion of the Court.
Under the Patent Act, a company can be liable for patent infringement if it ships components of a patented
invention overseas to be assembled there. See 35 U. S. C.
§271(f)(2). A patent owner who proves infringement
under this provision is entitled to recover damages. §284.
The question in this case is whether these statutes allow
the patent owner to recover for lost foreign profits. We
hold that they do.
I
The Patent Act gives patent owners a “civil action for
infringement.” §281. Section 271 outlines several types
of infringement. The general infringement provision,
§271(a), covers most infringements that occur “within the
United States.” The subsection at issue in this case,
§271(f), “expands the definition of infringement to include
supplying from the United States a patented invention’s
components.” Microsoft Corp. v. AT&T Corp., 550 U. S.
437, 444–445 (2007). It contains two provisions that
“work in tandem” by addressing “different scenarios.” Life
Technologies Corp. v. Promega Corp., 580 U. S. ___, ___
2 WESTERNGECO LLC v. ION GEOPHYSICAL CORP.
Opinion of the Court
(2017) (slip op., at 9). Section 271(f)(1) addresses the
act of exporting a substantial portion of an invention’s
components:
“Whoever without authority supplies or causes to be
supplied in or from the United States all or a substantial portion of the components of a patented invention,
where such components are uncombined in whole or
in part, in such manner as to actively induce the combination of such components outside of the United
States in a manner that would infringe the patent if
such combination occurred within the United States,
shall be liable as an infringer.”
Section 271(f)(2), the provision at issue here, addresses
the act of exporting components that are specially adapted
for an invention:
“Whoever without authority supplies or causes to be
supplied in or from the United States any component
of a patented invention that is especially made or especially adapted for use in the invention and not a
staple article or commodity of commerce suitable for
substantial noninfringing use, where such component
is uncombined in whole or in part, knowing that such
component is so made or adapted and intending that
such component will be combined outside of the United
States in a manner that would infringe the patent if
such combination occurred within the United States,
shall be liable as an infringer.”
Patent owners who prove infringement under §271 are
entitled to relief under §284, which authorizes “damages
adequate to compensate for the infringement, but in no
event less than a reasonable royalty for the use made of
the invention by the infringer.”
II
Petitioner WesternGeco LLC owns four patents relating
Cite as: 585 U. S. ____ (2018) 3
Opinion of the Court
to a system that it developed for surveying the ocean floor.
The system uses lateral-steering technology to produce
higher quality data than previous survey systems. WesternGeco does not sell its technology or license it to competitors. Instead, it uses the technology itself, performing
surveys for oil and gas companies. For several years,
WesternGeco was the only surveyor that used such
lateral-steering technology.
In late 2007, respondent ION Geophysical Corporation
began selling a competing system. It manufactured the
components for its competing system in the United States
and then shipped them to companies abroad. Those companies combined the components to create a surveying
system indistinguishable from WesternGeco’s and used
the system to compete with WesternGeco.
WesternGeco sued for patent infringement under
§§271(f)(1) and (f)(2). At trial, WesternGeco proved that it
had lost 10 specific survey contracts due to ION’s infringement. The jury found ION liable and awarded
WesternGeco damages of $12.5 million in royalties and
$93.4 million in lost profits. ION filed a post-trial motion
to set aside the verdict, arguing that WesternGeco could
not recover damages for lost profits because §271(f) does
not apply extraterritorially. The District Court denied the
motion. 953 F. Supp. 2d 731, 755–756 (SD Tex. 2013).
On appeal, the Court of Appeals for the Federal Circuit
reversed the award of lost-profits damages. WesternGeco
LLC v. ION Geophysical Corp., 791 F. 3d 1340, 1343
(2015).1 The Federal Circuit had previously held that
§271(a), the general infringement provision, does not allow
patent owners to recover for lost foreign sales. See id., at
1350–1351 (citing Power Integrations, Inc. v. Fairchild
——————
1The Federal Circuit held that ION was liable for infringement under
§271(f)(2). WesternGeco, 791 F. 3d, at 1347–1349. It did not address
whether ION was liable under §271(f)(1). Id., at 1348.
4 WESTERNGECO LLC v. ION GEOPHYSICAL CORP.
Opinion of the Court
Semiconductor Int’l, Inc., 711 F. 3d 1348 (CA Fed. 2013)).
Section 271(f) should be interpreted the same way, the
Federal Circuit reasoned, because it was “designed” to put
patent infringers “in a similar position.” WesternGeco, 791
F. 3d, at 1351. Judge Wallach dissented. See id., at 1354–
1364. WesternGeco petitioned for review in this Court.
We granted the petition, vacated the Federal Circuit’s
judgment, and remanded for further consideration in light
of our decision in Halo Electronics, Inc. v. Pulse Electronics, Inc., 579 U. S. ___ (2016). WesternGeco LLC v. ION
Geophysical Corp., 579 U. S. ___ (2016).
On remand, the panel majority reinstated the portion of
its decision regarding the extraterritoriality of §271(f).
837 F. 3d 1358, 1361, 1364 (CA Fed. 2016). Judge Wallach
dissented again, id., at 1364–1369, and we granted certiorari again, 583 U. S. ___ (2018). We now reverse.
III
Courts presume that federal statutes “apply only within
the territorial jurisdiction of the United States.” Foley
Bros., Inc. v. Filardo, 336 U. S. 281, 285 (1949). This
principle, commonly called the presumption against extraterritoriality, has deep roots. See A. Scalia & B. Garner,
Reading Law: The Interpretation of Legal Texts §43, p.
268 (2012) (tracing it to the medieval maxim Statuta suo
clauduntur territorio, nec ultra territorium disponunt);
e.g., United States v. Palmer, 3 Wheat. 610, 631 (1818)
(Marshall, C. J.) (“[G]eneral words must . . . be limited to
cases within the jurisdiction of the state”). The presumption rests on “the commonsense notion that Congress
generally legislates with domestic concerns in mind.”
Smith v. United States, 507 U. S. 197, 204, n. 5 (1993).
And it prevents “unintended clashes between our laws and
those of other nations which could result in international
discord.” EEOC v. Arabian American Oil Co., 499 U. S.
244, 248 (1991).
Cite as: 585 U. S. ____ (2018) 5
Opinion of the Court
This Court has established a two-step framework for
deciding questions of extraterritoriality. The first step
asks “whether the presumption against extraterritoriality
has been rebutted.” RJR Nabisco, Inc. v. European Community, 579 U. S. ___, ___ (2016) (slip op., at 9). It can be
rebutted only if the text provides a “clear indication of an
extraterritorial application.” Morrison v. National Australia Bank Ltd., 561 U. S. 247, 255 (2010). If the presumption against extraterritoriality has not been rebutted, the second step of our framework asks “whether the
case involves a domestic application of the statute.” RJR
Nabisco, 579 U. S., at ___ (slip op., at 9). Courts make this
determination by identifying “the statute’s ‘focus’” and
asking whether the conduct relevant to that focus occurred
in United States territory. Ibid. If it did, then the case
involves a permissible domestic application of the statute.
See ibid.
We resolve this case at step two. While “it will usually
be preferable” to begin with step one, courts have the
discretion to begin at step two “in appropriate cases.” See
id., at ___, n. 5 (slip op., at 10, n. 5) (citing Pearson v.
Callahan, 555 U. S. 223, 236–243 (2009)). One reason to
exercise that discretion is if addressing step one would
require resolving “difficult questions” that do not change
“the outcome of the case,” but could have far-reaching
effects in future cases. See id., at 236–237. That is true
here. WesternGeco argues that the presumption against
extraterritoriality should never apply to statutes, such as
§284, that merely provide a general damages remedy for
conduct that Congress has declared unlawful. Resolving
that question could implicate many other statutes besides
the Patent Act. We therefore exercise our discretion to
forgo the first step of our extraterritoriality framework.
A
Under the second step of our framework, we must iden-
6 WESTERNGECO LLC v. ION GEOPHYSICAL CORP.
Opinion of the Court
tify “the statute’s ‘focus.’” RJR Nabisco, supra, at ___ (slip
op., at 9). The focus of a statute is “the objec[t] of [its]
solicitude,” which can include the conduct it “seeks to
‘regulate,’” as well as the parties and interests it “seeks to
‘protec[t]’” or vindicate. Morrison, supra, at 267 (quoting
Superintendent of Ins. of N. Y. v. Bankers Life & Casualty
Co., 404 U. S. 6, 12, 10 (1971)). “If the conduct relevant to
the statute’s focus occurred in the United States, then the
case involves a permissible domestic application” of the
statute, “even if other conduct occurred abroad.” RJR
Nabisco, 579 U. S., at ___ (slip op., at 9). But if the relevant conduct occurred in another country, “then the case
involves an impermissible extraterritorial application
regardless of any other conduct that occurred in U. S.
territory.” Ibid.
When determining the focus of a statute, we do not
analyze the provision at issue in a vacuum. See Morrison,
supra, at 267–269. If the statutory provision at issue
works in tandem with other provisions, it must be assessed in concert with those other provisions. Otherwise,
it would be impossible to accurately determine whether
the application of the statute in the case is a “domestic
application.” RJR Nabisco, 579 U. S., at ___ (slip op., at
9). And determining how the statute has actually been
applied is the whole point of the focus test. See ibid.
Applying these principles here, we conclude that the
conduct relevant to the statutory focus in this case is
domestic. We begin with §284. It provides a general
damages remedy for the various types of patent infringement identified in the Patent Act. The portion of §284 at
issue here states that “the court shall award the claimant
damages adequate to compensate for the infringement.”
We conclude that “the infringement” is the focus of this
statute. As this Court has explained, the “overriding
purpose” of §284 is to “affor[d] patent owners complete
compensation” for infringements. General Motors Corp. v.
Cite as: 585 U. S. ____ (2018) 7
Opinion of the Court
Devex Corp., 461 U. S. 648, 655 (1983). “The question”
posed by the statute is “‘how much ha[s] the Patent Holder
. . . suffered by the infringement.’” Aro Mfg. Co. v. Convertible Top Replacement Co., 377 U. S. 476, 507 (1964).
Accordingly, the infringement is plainly the focus of §284.
But that observation does not fully resolve this case, as
the Patent Act identifies several ways that a patent can be
infringed. See §271. To determine the focus of §284 in a
given case, we must look to the type of infringement that
occurred. We thus turn to §271(f)(2), which was the basis
for WesternGeco’s infringement claim and the lost-profits
damages that it received.2
Section 271(f)(2) focuses on domestic conduct. It provides that a company “shall be liable as an infringer” if it
“supplies” certain components of a patented invention “in
or from the United States” with the intent that they “will
be combined outside of the United States in a manner that
would infringe the patent if such combination occurred
within the United States.” The conduct that §271(f)(2)
regulates—i.e., its focus—is the domestic act of
“suppl[ying] in or from the United States.” As this Court
has acknowledged, §271(f) vindicates domestic interests:
It “was a direct response to a gap in our patent law,”
Microsoft Corp., 550 U. S., at 457, and “reach[es] components that are manufactured in the United States but
assembled overseas,” Life Technologies, 580 U. S., at ___
(slip op., at 11). As the Federal Circuit explained,
§271(f)(2) protects against “domestic entities who export
components . . . from the United States.” 791 F. 3d, at
1351.
In sum, the focus of §284, in a case involving infringement under §271(f)(2), is on the act of exporting components from the United States. In other words, the domes-
——————
2Because the Federal Circuit did not address §271(f)(1), see n. 1,
supra, we limit our analysis to §271(f)(2).
8 WESTERNGECO LLC v. ION GEOPHYSICAL CORP.
Opinion of the Court
tic infringement is “the objec[t] of the statute’s solicitude”
in this context. Morrison, 561 U. S., at 267. The conduct
in this case that is relevant to that focus clearly occurred
in the United States, as it was ION’s domestic act of supplying the components that infringed WesternGeco’s patents. Thus, the lost-profits damages that were awarded
to WesternGeco were a domestic application of §284.
B
ION’s arguments to the contrary are not persuasive.
ION contends that the statutory focus here is “selfevidently on the award of damages.” Brief for Respondent
22. While §284 does authorize damages, what a statute
authorizes is not necessarily its focus. Rather, the focus is
“the objec[t] of the statute’s solicitude”—which can turn on
the “conduct,” “parties,” or interests that it regulates or
protects. Morrison, supra, at 267. Here, the damages
themselves are merely the means by which the statute
achieves its end of remedying infringements. Similarly,
ION is mistaken to assert that this case involves an extraterritorial application of §284 simply because “lost-profits
damages occurred extraterritorially, and foreign conduct
subsequent to [ION’s] infringement was necessary to give
rise to the injury.” Brief for Respondent 22. Those overseas events were merely incidental to the infringement.
In other words, they do not have “primacy” for purposes of
the extraterritoriality analysis. Morrison, supra, at 267.
ION also draws on the conclusion in RJR Nabisco that
“RICO damages claims” based “entirely on injury suffered
abroad” involve an extraterritorial application of 18
U. S. C. §1964(c). 579 U. S., at ___ (slip op., at 27). From
this principle, ION extrapolates a general rule that damages awards for foreign injuries are always an extraterritorial application of a damages provision. This argument
misreads RJR Nabisco. That portion of RJR Nabisco
interpreted a substantive element of a cause of action, not
Cite as: 585 U. S. ____ (2018) 9
Opinion of the Court
a remedial damages provision. See id., at ___ (slip op., at
18). It explained that a plaintiff could not bring a damages
claim under §1964(c) unless he could prove that he was
“‘injured in his business or property,’” which required
proof of “a domestic injury.” Ibid. Thus, RJR Nabisco was
applying the presumption against extraterritoriality to
interpret the scope of §1964(c)’s injury requirement; it did
not make any statements about damages—a separate
legal concept.
Two of our colleagues contend that the Patent Act does
not permit damages awards for lost foreign profits. Post,
at 1 (GORSUCH, J., joined by BREYER, J., dissenting).
Their position wrongly conflates legal injury with the
damages arising from that injury. See post, at 2–3. And it
is not the better reading of “the plain text of the Patent
Act.” Post, at 9. Taken together, §271(f)(2) and §284
allow the patent owner to recover for lost foreign profits.
Under §284, damages are “adequate” to compensate for
infringement when they “plac[e] [the patent owner] in as
good a position as he would have been in” if the patent had
not been infringed. General Motors Corp., supra, at 655.
Specifically, a patent owner is entitled to recover “‘the
difference between [its] pecuniary condition after the
infringement, and what [its] condition would have been if
the infringement had not occurred.’” Aro Mfg. Co., supra,
at 507. This recovery can include lost profits. See Yale
Lock Mfg. Co. v. Sargent, 117 U. S. 536, 552–553 (1886).
And, as we hold today, it can include lost foreign profits
when the patent owner proves infringement under
§271(f)(2).3
* * *
We hold that WesternGeco’s damages award for lost
——————
3 In reaching this holding, we do not address the extent to which other
doctrines, such as proximate cause, could limit or preclude damages in
particular cases.
10 WESTERNGECO LLC v. ION GEOPHYSICAL CORP.
Opinion of the Court
profits was a permissible domestic application of §284.
The judgment of the Federal Circuit is reversed, and the
case is remanded for further proceedings consistent with
this opinion.
It is so ordered.
Cite as: 585 U. S. ____ (2018) 1
Opinion of GORSUCH, J.
SUPREME COURT OF THE UNITED STATES _________________
No. 16–1011
_________________
WESTERNGECO LLC, PETITIONER v.
ION GEOPHYSICAL CORPORATION
ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF
APPEALS FOR THE FEDERAL CIRCUIT
[June 22, 2018]
JUSTICE GORSUCH, with whom JUSTICE BREYER joins,
dissenting.
The Court holds that WesternGeco’s lost profits claim
does not offend the judicially created presumption against
the extraterritorial application of statutes. With that
much, I agree. But I cannot subscribe to the Court’s further holding that the terms of the Patent Act permit
awards of this kind. In my view the Act’s terms prohibit
the lost profits sought in this case, whatever the general
presumption against extraterritoriality applicable to all
statutes might allow. So while the Federal Circuit may
have relied in part on a mistaken extraterritoriality analysis, I respectfully submit it reached the right result in
concluding that the Patent Act forecloses WesternGeco’s
claim for lost profits.
The reason is straightforward. A U. S. patent provides a
lawful monopoly over the manufacture, use, and sale of an
invention within this country only. Meanwhile, WesternGeco seeks lost profits for uses of its invention beyond our
borders. Specifically, the company complains that it lost
lucrative foreign surveying contracts because ION’s customers used its invention overseas to steal that business.
In measuring its damages, WesternGeco assumes it could
have charged monopoly rents abroad premised on a U. S.
patent that has no legal force there. Permitting damages
GORSUCH, J., dissenting
2 WESTERNGECO LLC v. ION GEOPHYSICAL CORP.
Opinion of GORSUCH, J.
of this sort would effectively allow U. S. patent owners to
use American courts to extend their monopolies to foreign
markets. That, in turn, would invite other countries to
use their own patent laws and courts to assert control over
our economy. Nothing in the terms of the Patent Act
supports that result and much militates against it.
Start with the key statutory language. Under the Patent Act, a patent owner enjoys “the right to exclude others from making, using, offering for sale, or selling the
invention throughout the United States.” 35 U. S. C.
§154(a)(1) (emphasis added). Emphasizing the point, the
Act proceeds to explain that to “infring[e] the patent”
someone must “without authority mak[e], us[e], offe[r] to
sell, or sel[l] [the] patented invention, within the United
States.” §271(a) (emphasis added). So making, using, or
selling a patented invention inside the United States
invites a claim for infringement. But those same acts
outside the United States do not infringe a U. S. patent
right.
These principles work their way into the statutory
measure of damages too. A patent owner who proves
infringement is entitled to receive “damages adequate to
compensate for the infringement.” §284 (emphasis added).
Because an infringement must occur within the United
States, that means a plaintiff can recover damages for the
making, using, or selling of its invention within the United
States, but not for the making, using, or selling of its
invention elsewhere.
What’s the upshot for our case? The jury was free to
award WesternGeco royalties for the infringing products
ION produced in this country; indeed, ION has not challenged that award either here or before the Federal Circuit. If ION’s infringement had cost WesternGeco sales in
this country, it could have recovered for that harm too. At
the same time, WesternGeco is not entitled to lost profits
caused by the use of its invention outside the United
GORSUCH, J., dissenting
Cite as: 585 U. S. ____ (2018) 3
Opinion of GORSUCH, J.
States. That foreign conduct isn’t “infringement” and so
under §284’s plain terms isn’t a proper basis for awarding
“compensat[ion].” No doubt WesternGeco thinks it unfair
that its invention was used to compete against it overseas.
But that’s simply not the kind of harm for which our patent laws provide compensation because a U. S. patent
does not protect its owner from competition beyond our
borders.
This Court’s precedents confirm what the statutory text
indicates. In Brown v. Duchesne, 19 How. 183 (1857), the
Court considered whether the use of an American invention on the high seas could support a damages claim under
the U. S. patent laws. It said no. The Court explained
that “the use of [an invention] outside of the jurisdiction of
the United States is not an infringement of [the patent
owner’s] rights,” and so the patent owner “has no claim to
any compensation for” that foreign use. Id., at 195–196. A
defendant must “compensate the patentee,” the Court
continued, only to the extent that it has “com[e] in competition with the [patent owner] where the [patent owner]
was entitled to the exclusive use” of his invention—
namely, within the United States. Id., at 196. What held
true there must hold true here. ION must compensate
WesternGeco for its intrusion on WesternGeco’s exclusive
right to make, use, and sell its invention in the United
States. But WesternGeco “has no claim to any compensation for” noninfringing uses of its invention “outside of the
jurisdiction of the United States.” Id., at 195–196.1
——————
1The Solicitor General disputes this reading of Duchesne. In his
view, the Court indicated that, if a defendant “committed domestic
infringement” by making the invention in the United States, the patent
owner would have been entitled to recover for any subsequent use of
the invention, including “‘the use of this improvement . . . on the high
seas.’” Brief for United States as Amicus Curiae 17 (quoting Duchesne,
19 How., at 196). I am unpersuaded. The Court proceeded to explain
that the “only use” of the invention that might require compensation
GORSUCH, J., dissenting
4 WESTERNGECO LLC v. ION GEOPHYSICAL CORP.
Opinion of GORSUCH, J.
Other precedents offer similar teachings. In Birdsall v.
Coolidge, 93 U. S. 64 (1876), the Court explained that
damages are supposed to compensate a patent owner for
“the unlawful acts of the defendant.” Ibid. To that end,
the Court held, damages “shall be precisely commensurate
with the injury suffered, neither more nor less.” Ibid.
(emphasis added). It’s undisputed that the only injury
WesternGeco suffered here came from ION’s infringing
activity within the United States. A damages award that
sweeps much more broadly to cover third parties’ noninfringing foreign uses can hardly be called “precisely commensurate” with that injury.
This Court’s leading case on lost profit damages points
the same way. In Yale Lock Mfg. Co. v. Sargent, 117 U. S.
536 (1886), the patent owner “availed himself of his exclusive right by keeping his patent a monopoly” and selling
the invention himself. Id., at 552. As damages for a competitor’s infringement of the patent, the patent owner
could recover “the difference between his pecuniary condition after the infringement, and what his condition would
have been if the infringement had not occurred.” Ibid.
And that difference, the Court held, “is to be measured” by
the additional profits the patent owner “would have realized from such sales if the infringement had not interfered
with such monopoly.” Id., at 552–553. So, again, the
Court tied the measure of damages to the degree of interference with the patent owner’s exclusive right to make,
use, and sell its invention. And, again, that much is missing here because foreign uses of WesternGeco’s invention
——————
was “in navigating the vessel into and out of [Boston] harbor, . . . while
she was within the jurisdiction of the United States.” Id., at 196 (emphasis added). With respect to uses outside the United States, the
Court made clear that “compensation” was unavailable. Id., at 195–
196. Tellingly, WesternGeco does not adopt the Solicitor General’s
reading of Duchesne—or even cite the case.
GORSUCH, J., dissenting
Cite as: 585 U. S. ____ (2018) 5
Opinion of GORSUCH, J.
could not have interfered with its U. S. patent monopoly.2
You might wonder whether §271(f)(2) calls for a special
exception to these general principles. WesternGeco certainly thinks it does. It’s true, too, that §271(f)(2) expressly
refers to foreign conduct. The statute says that someone who exports a specialized component, “intending that
[it] will be combined outside of the United States in a
manner that would infringe the patent if such combination
occurred within the United States, shall be liable as an
infringer.” From this language, you might wonder
whether §271(f)(2) seeks to protect patent owners from
the foreign conduct that occurred in this case.
It does not. Section 271(f)(2) modifies the circumstances
when the law will treat an invention as having been made
within the United States. It permits an infringement
claim—and the damages that come with it—not only when
someone produces the complete invention in this country
for export, but also when someone exports key components
of the invention for assembly aboard. A person who ships
components from the United States intending they be
assembled across the border is “liable” to the patent owner
for royalties and lost profits the same as if he made the
entire invention here. §271(f)(2). But none of this changes
——————
2WesternGeco claims this Court permitted recovery based on foreign
sales of an invention in Manufacturing Co. v. Cowing, 105 U. S. 253
(1882), but the Court never mentioned, much less decided, the issue. It
merely observed, in passing, that the only markets for the invention at
issue were “the oil-producing regions of Pennsylvania and Canada.”
Id., at 256. The Court did not even say whether the Canada-bound
products were actually sold in Canada (as opposed, say, to Canadian
buyers in the United States). Meanwhile, in Dowagiac Mfg. Co. v.
Minnesota Moline Plow Co., 235 U. S. 641 (1915), the Court rejected
“recovery of either profits or damages” for products sold in Canada. Id.,
at 650. And while it distinguished Cowing on the ground that the
defendants there had made the infringing articles in the United States,
that hardly elevated Cowing’s failure to address the foreign sales issue
into a reasoned decision on the question.
GORSUCH, J., dissenting
6 WESTERNGECO LLC v. ION GEOPHYSICAL CORP.
Opinion of GORSUCH, J.
the bedrock rule that foreign uses of an invention (even an
invention made in this country) do not infringe a U. S.
patent. Nor could it. For after §271(f)(2)’s adoption, as
before, patent rights exclude others from making, using,
and selling an invention only “throughout the United
States.” §154(a)(1).
The history of the statute underscores the point. In
Deepsouth Packing Co. v. Laitram Corp., 406 U. S. 518
(1972), the Court held that a defendant did not “make” an
invention within the United States when it produced the
invention’s components here but sold them to foreign
buyers for final assembly abroad. Id., at 527–528. The
Court recognized that, if the defendant had assembled the
parts in this country and then sold them to the foreign
buyers, it would have unlawfully made and sold the invention within the United States. Id., at 527. But because
what it made and sold in this country “fell short” of the
complete invention, the Court held, the patent laws did
not prohibit its conduct. Ibid. The dissent, by contrast,
argued that for all practical purposes the invention “was
made in the United States” since “everything was accomplished in this country except putting the pieces together.”
Id., at 533 (opinion of Blackmun, J.). Apparently Congress
agreed, for it then added §271(f)(2) and made clear that
someone who almost makes an invention in this country
may be held liable as if he made the complete invention in
this country. As the Solicitor General has explained, the
new statute “effectively treat[ed] the domestic supply of
the components of a patented invention for assembly
abroad as tantamount to the domestic manufacture of the
completed invention for export.” Brief for United States as
Amicus Curiae 22 (emphasis added). Section 271(f)(2)
thus expands what qualifies as making an invention in
this country but does nothing to suggest that U. S. patents
protect against—much less guarantee compensation for—
uses abroad.
Operative bit:
Voip-Pal is in the process of reviewing its current damages models in their patent infringement lawsuits and will adjust the projected damages wherever it is warranted.”
Translates:
1. We will now look at a new way to calculate damages that includes manufacturing parts and not just subscribership numbers or text numbers. This could be very big IF VPLM decides to take this beyond a veiled threat
2. Now Vplm is threatening to go the Qualcomm route which is to go to the ITC court to get injunctive relief. If a us part is assembled outside us and the device is infringing on Vplm patents then Apple and others could have the sales of their devices stopped.
VPLM Real-Time Best Bid & Ask: 10:27am 01/07/2019
VOIP PAL.com, Inc.
Common Stock
0.084
0.0009
1.08%
0.083 / 0.084 (20000 x 20000)
Real-Time Best Bid & Ask: 10:27am 01/07/2019
Delayed (15 Min) Trade Data: 10:27am 01/07/2019
Overview
Quote
Company Profile
Security Details
News
Financials
Disclosure
Research
OPEN
0.088
DAILY RANGE
0.083 - 0.088
VOLUME
71,474
DIVIDEND
N/A
PREV CLOSE
0.0831
52WK RANGE
0.035 - 0.245
AVERAGE VOL (30D)
887,620
NET DIVIDEND YIELD
N/A
BEST BID
0.083 x 20000
BEST ASK
0.084 x 20000
MARKET CAP
132,457,893
SHARES OUT
1,593,957,801
REAL-TIME LEVEL 2 QUOTE
MPID BID PRICE SIZE TIME
CANT 0.083 10,000 08:30
CDEL 0.083 10,000 10:19
ETRF 0.08 73,016 10:05
VNDM 0.0775 10,000 01/04
ALPS 0.075 10,000 01/04
CSTI 0.07 10,000 08:30
NITE 0.067 30,000 09:30
VERT 0.025 10,000 12/17
VFIN 0.0001 10,000 01/02
MAXM 0.0001 10,000 07:35
OTCX U 0 08:15
MPID ASK PRICE SIZE TIME
VNDM 0.084 20,000 10:27
ETRF 0.085 720,700 09:30
CDEL 0.088 98,140 10:19
ALPS 0.09 10,000 01/04
NITE 0.1103 12,900 09:30
VERT 0.15 5,000 12/24
CANT 0.15 5,000 08:30
VFIN 0.20 2,500 01/04
CSTI 0.384 2,500 08:30
MAXM 200.00 1 07:35
OTCX U 0 08:15
TRADE DATA
DATE TIMESTAMP PRICE VOLUME TICK DIRECTION CHANGE
01/07/2019 10:27:37 0.084 30,000 0.00
01/07/2019 10:19:23 0.083 6,000 -0.00
01/07/2019 10:11:12 0.084 2,386 0.00
01/07/2019 09:35:21 0.0838 2,000 0.00
01/07/2019 09:34:22 0.083 12,000 0.00
01/07/2019 09:34:22 0.083 3,000 -0.00
01/07/2019 09:30:09 0.085 6,600 0.00
01/07/2019 09:30:06 0.084 1,028 -0.00
01/07/2019 09:30:04 0.0855 6,600 -0.00
01/07/2019 09:30:01 0.088 1,860 0.00
Irregular/odd lot trades, which are not considered for the Open, High, Low or Closing prices, are not shown in trade data table.
SHORT INTEREST
DATE SHORT INTEREST % CHANGE AVG. DAILY SHARE VOL DAYS TO COVER SPLIT NEW ISSUE
11/15/2018 8,500 -69.44 666,692 1 No No
10/31/2018 27,813 -33.82 781,371 1 No No
10/15/2018 42,025 -90.07 909,086 1 No No
09/28/2018 423,283 477.08 2,353,127 1 No No
09/14/2018 73,349 46.21 1,459,366 1 No No
08/31/2018 50,166 428.06 1,429,943 1 No No
07/31/2018 8,500 -14.07 584,772 1 No No
07/13/2018 9,892 -27.86 1,613,366 1 No No
06/29/2018 13,713 100.00 1,607,686 1 No No
05/31/2018 70,471 -30.44 1,393,924 1 No No
Level 2 Quote Montage: MMID - OTC Link Inside Quote | MMID - OTC Link Quote | cMMID - Closed Quote | U - Unpriced Quote | MMIDu - Unsolicited Quote. All trade/quote prices in USD.
TIME.FLIES!!!!!.APPLES.PTAB.FILING.DEADLINE.DATE.IS.TOMORROW..