1 00:00:03,200 --> 00:00:08,000 Speaker 1: This is Bloomberg Law with June Brusso from Bloomberg Radio. 2 00:00:10,960 --> 00:00:14,480 Speaker 2: This is not about Donald Trump versus Michael Cohen. 3 00:00:14,560 --> 00:00:15,720 Speaker 3: Oh, Michael Cohen. 4 00:00:15,520 --> 00:00:16,640 Speaker 2: Versus Donald Trump. 5 00:00:16,800 --> 00:00:21,280 Speaker 1: This is about accountability. Michael Cohen, Donald Trump's one time 6 00:00:21,400 --> 00:00:24,680 Speaker 1: lawyer and fixer, came face to face with his ex 7 00:00:24,800 --> 00:00:27,560 Speaker 1: boss for the first time in five years in a 8 00:00:27,600 --> 00:00:31,760 Speaker 1: pac Manhattan courtroom today. He testified that the former president 9 00:00:31,880 --> 00:00:35,120 Speaker 1: instructed him to inflate his net worth by billions of 10 00:00:35,159 --> 00:00:38,880 Speaker 1: dollars to do banks and insurers backing the claims made 11 00:00:38,920 --> 00:00:41,480 Speaker 1: by New York State at its two hundred and fifty 12 00:00:41,520 --> 00:00:45,680 Speaker 1: million dollars civil frond trial. Before the testimony, Trump called 13 00:00:45,760 --> 00:00:47,600 Speaker 1: Cohen a felon and a liar. 14 00:00:47,920 --> 00:00:49,080 Speaker 2: He's a blumer liar. 15 00:00:49,479 --> 00:00:52,960 Speaker 3: You know, fellon served a lot of time a liar. 16 00:00:53,200 --> 00:00:56,560 Speaker 1: Joining me is Bloomberg Legal reporter Patricia Hurtado, who was 17 00:00:56,560 --> 00:00:59,600 Speaker 1: in the courtroom for Cohen's testimony. Patty, what was it 18 00:00:59,680 --> 00:01:02,600 Speaker 1: like in the courtroom when Cohen went to take the stand. 19 00:01:02,760 --> 00:01:06,000 Speaker 3: They had a stare down match. When it came time 20 00:01:06,440 --> 00:01:10,080 Speaker 3: for Cohen to take the stand, Trump his whole body 21 00:01:10,240 --> 00:01:13,800 Speaker 3: was pivoted with his seat turned to look at the witness. 22 00:01:13,520 --> 00:01:17,840 Speaker 1: Box Michael Cohen. They started him off with his past crimes. 23 00:01:18,240 --> 00:01:22,160 Speaker 3: He described what he played guilty to. Of course, he's 24 00:01:22,200 --> 00:01:25,440 Speaker 3: backtracked from what his actual crimes were, and you know, 25 00:01:25,840 --> 00:01:27,800 Speaker 3: sort of said that he didn't commit some of the 26 00:01:27,840 --> 00:01:30,840 Speaker 3: frauds that they assert that he committed. But the State 27 00:01:30,880 --> 00:01:35,720 Speaker 3: Attorney General's office was asking him basically to describe what 28 00:01:35,920 --> 00:01:39,240 Speaker 3: he was supposed to do for Donald Trump, and he 29 00:01:39,360 --> 00:01:44,560 Speaker 3: said between twenty twelve, each year until twenty fifteen, Trump 30 00:01:44,600 --> 00:01:47,360 Speaker 3: would ask him to come into his office along with 31 00:01:47,440 --> 00:01:50,480 Speaker 3: Ellen Weisseelberg and say, you know, basically asked him to 32 00:01:50,560 --> 00:01:54,760 Speaker 3: quote unquote re engineered the finances and ask him, you know, 33 00:01:54,880 --> 00:01:57,280 Speaker 3: how much do you think I'm worth? And then Trump 34 00:01:57,320 --> 00:02:01,360 Speaker 3: would say I'm actually not worth three point seven billion, 35 00:02:01,440 --> 00:02:04,400 Speaker 3: it should be eight billion, And he and Weisselberg would 36 00:02:04,400 --> 00:02:07,040 Speaker 3: have to go back and go through the numbers and 37 00:02:07,080 --> 00:02:10,320 Speaker 3: reevaluate all the properties and assets to come up with 38 00:02:10,320 --> 00:02:13,800 Speaker 3: a figure that Donald Trump had decided was his network. 39 00:02:14,200 --> 00:02:17,240 Speaker 1: So Donald Trump was just getting this figure, you know, 40 00:02:17,280 --> 00:02:18,000 Speaker 1: out of thin air. 41 00:02:18,680 --> 00:02:22,239 Speaker 3: Yeah, basically, Donald Trump wanted something, and so they would 42 00:02:22,320 --> 00:02:24,720 Speaker 3: go back and he and Weiselberg would put their heads 43 00:02:24,760 --> 00:02:27,760 Speaker 3: together and try to value assets, be it golf courses 44 00:02:27,840 --> 00:02:30,960 Speaker 3: or whatever, so that they would distinguish the number that 45 00:02:31,000 --> 00:02:31,800 Speaker 3: Trump named. 46 00:02:32,600 --> 00:02:37,359 Speaker 1: Did Weiselberg testify that he never met with Cohen about this? 47 00:02:38,040 --> 00:02:41,880 Speaker 3: Weiselberg was very cagy when he testified. He never described 48 00:02:42,040 --> 00:02:44,640 Speaker 3: This is the first time we've had an insider's look 49 00:02:44,680 --> 00:02:48,600 Speaker 3: about what these meetings were about. Weiseelberg, if you can remember, 50 00:02:48,800 --> 00:02:52,399 Speaker 3: is a descendant. He was sued by the State ag 51 00:02:52,800 --> 00:02:56,000 Speaker 3: in their lawsuits. So he, along with Donald Trump, our 52 00:02:56,120 --> 00:02:59,960 Speaker 3: descendants in this case. So he wasn't very forthcoming and helpful. 53 00:03:00,080 --> 00:03:02,600 Speaker 3: And so this is the first time we're getting descriptions 54 00:03:02,600 --> 00:03:06,600 Speaker 3: of the eating happening with Trump calling them in. He said, basically, 55 00:03:06,639 --> 00:03:09,359 Speaker 3: his boss called him in and told him what he wanted. 56 00:03:09,960 --> 00:03:12,760 Speaker 1: Anything else out of his direct examination that stood out 57 00:03:12,760 --> 00:03:14,280 Speaker 1: to you, Well, I. 58 00:03:14,240 --> 00:03:16,440 Speaker 3: Mean, it's just kind of shocking to see these things, 59 00:03:16,440 --> 00:03:18,760 Speaker 3: because then we were shown the actual statements of financial 60 00:03:18,800 --> 00:03:22,320 Speaker 3: condition and the statements about Trump's net worth, and they 61 00:03:22,360 --> 00:03:24,880 Speaker 3: would say like Trump is worthd eight billion dollars or 62 00:03:24,880 --> 00:03:27,239 Speaker 3: something like that, and they would say, oh, by the way, 63 00:03:27,240 --> 00:03:30,080 Speaker 3: we're adding the thirty percent premium to the fact that 64 00:03:30,160 --> 00:03:33,520 Speaker 3: this is a golf course that has been constructed in 65 00:03:33,600 --> 00:03:37,480 Speaker 3: good conditions, and so basically, you know, Trump is giving 66 00:03:37,600 --> 00:03:40,880 Speaker 3: credit for the brand because the building's complete and the 67 00:03:40,920 --> 00:03:44,240 Speaker 3: constructions is finished. You know, that's like saying my house 68 00:03:44,360 --> 00:03:47,360 Speaker 3: is worth thirty percent more because I keep the upkeep 69 00:03:47,560 --> 00:03:50,960 Speaker 3: nicely outside and I have a nice little window box outside. 70 00:03:51,200 --> 00:03:53,720 Speaker 3: You know. He said, I was tasked by mister Trump 71 00:03:54,160 --> 00:03:57,040 Speaker 3: to increase the total assets based upon a number he 72 00:03:57,280 --> 00:04:01,920 Speaker 3: arbitrarily selected, and my rough response ability, along with Alan Weisserberg, 73 00:04:02,080 --> 00:04:06,440 Speaker 3: predominantly was to reverse engineer the various different asset classes 74 00:04:06,600 --> 00:04:09,600 Speaker 3: and increase those assets in order to achieve the number 75 00:04:09,760 --> 00:04:12,360 Speaker 3: mister Trump had tasked us to do. That's the heart 76 00:04:12,440 --> 00:04:15,000 Speaker 3: of this case. I mean, Leticia James, the New York 77 00:04:15,040 --> 00:04:19,760 Speaker 3: Attorney General, asserts that Trump has inflated his assets. We 78 00:04:19,839 --> 00:04:24,440 Speaker 3: saw the Prissana something somewhat interesting where the argument was 79 00:04:24,440 --> 00:04:27,160 Speaker 3: and the Trump people as law. You know, there's all 80 00:04:27,200 --> 00:04:32,800 Speaker 3: these disavowals and declarations that basically warn the reader of 81 00:04:32,839 --> 00:04:35,440 Speaker 3: these documents to say, you know, we don't really stand 82 00:04:35,440 --> 00:04:39,120 Speaker 3: by these documents. They're just the number, right. And we 83 00:04:39,200 --> 00:04:43,320 Speaker 3: saw this document from twenty fourteen where Trump was trying 84 00:04:43,320 --> 00:04:46,680 Speaker 3: to buy the Buffalo Bill's football team, and he claimed 85 00:04:46,720 --> 00:04:50,200 Speaker 3: to be worth eight billion dollars, and that was a 86 00:04:50,200 --> 00:04:53,599 Speaker 3: big discussion that it's no fair. Trump's lawyers were saying, 87 00:04:53,640 --> 00:04:56,520 Speaker 3: no fair, you can't bring this in no evidence. This 88 00:04:56,720 --> 00:04:59,479 Speaker 3: claim of trying to buy the Buffalo bills was ever 89 00:04:59,680 --> 00:05:02,880 Speaker 3: made to anybody. And he didn't buy the Buffalo bills, 90 00:05:02,880 --> 00:05:06,320 Speaker 3: So what's the harm? No foul, right, And the judge 91 00:05:06,360 --> 00:05:10,640 Speaker 3: allowed it finally into evidence because the Age's office says, well, 92 00:05:10,720 --> 00:05:13,440 Speaker 3: you know what, he claimed that this was his net 93 00:05:13,560 --> 00:05:16,720 Speaker 3: worth and these are the documents that went to Morgan Stanley, 94 00:05:17,000 --> 00:05:20,720 Speaker 3: which was accepting bids. So Trump claimed he wanted to 95 00:05:20,760 --> 00:05:23,880 Speaker 3: put in a billion dollar bid to buy the Buffalo 96 00:05:23,920 --> 00:05:26,880 Speaker 3: bills in twenty fourteen, and he claimed to be worth 97 00:05:26,880 --> 00:05:30,640 Speaker 3: eight billion dollars, and he had Deutsche Bank banker's back 98 00:05:30,720 --> 00:05:33,320 Speaker 3: him with, you know, in a testing letter from Deutsche 99 00:05:33,360 --> 00:05:35,680 Speaker 3: Bank saying that he was valuable and they had seen 100 00:05:35,720 --> 00:05:38,960 Speaker 3: his net worth. When Michael Cohen is saying, hey, it's 101 00:05:39,000 --> 00:05:41,200 Speaker 3: all the house of cards built on nothing. 102 00:05:41,480 --> 00:05:45,200 Speaker 1: And was it Michael Cohen's testimony that got the ag 103 00:05:45,640 --> 00:05:47,559 Speaker 1: started investigating Trump. 104 00:05:47,760 --> 00:05:51,320 Speaker 3: Cohen's claims have basically triggered all sorts of investigations. He 105 00:05:51,520 --> 00:05:57,640 Speaker 3: testified about seven different congressional investigations. It prompted an investigation 106 00:05:57,960 --> 00:06:01,120 Speaker 3: of the you know, the Hush Funny case. It prompted 107 00:06:01,200 --> 00:06:04,920 Speaker 3: all kinds of investigations of Trump and his assets, and 108 00:06:04,960 --> 00:06:09,240 Speaker 3: it's basically predicated a whole bunch of investigations that now 109 00:06:09,279 --> 00:06:12,080 Speaker 3: we stand here. And I'm not saying that he's the 110 00:06:12,120 --> 00:06:15,760 Speaker 3: only whistleblower, but he was the insider that said this 111 00:06:15,800 --> 00:06:18,440 Speaker 3: is what Trump was doing, and it started everybody looking 112 00:06:18,480 --> 00:06:22,320 Speaker 3: at him. And certainly this case originated from Michael Cohen's complaint. 113 00:06:22,680 --> 00:06:27,279 Speaker 1: And I understand that the cross examination got nasty pretty quick. 114 00:06:28,279 --> 00:06:31,480 Speaker 3: Yeah, I mean, you know, Cohen's a lawyer, and he 115 00:06:31,560 --> 00:06:35,560 Speaker 3: got very offended when Alena Haba, who is Trump's lawyer, 116 00:06:36,080 --> 00:06:39,400 Speaker 3: started asking him questions about that he lied to a 117 00:06:39,440 --> 00:06:42,200 Speaker 3: federal judge, just like he lied to his wife on 118 00:06:42,279 --> 00:06:46,240 Speaker 3: his tax return. And Colen got very angry. And there 119 00:06:46,320 --> 00:06:49,039 Speaker 3: was a lot of back and forth, you know, asked 120 00:06:49,040 --> 00:06:53,000 Speaker 3: and answered. It was like a movie of watching people 121 00:06:53,200 --> 00:06:57,359 Speaker 3: arguing and bickering on the stand. Was like, Cohen is 122 00:06:57,400 --> 00:07:00,479 Speaker 3: a lawyer, and he objected, he goes objection, he is 123 00:07:00,520 --> 00:07:05,360 Speaker 3: a witness objected through Alena's question. Oh yeah, you don't 124 00:07:05,360 --> 00:07:06,400 Speaker 3: see that every day. 125 00:07:06,279 --> 00:07:09,320 Speaker 1: No, you don't. So had they gotten to the substance 126 00:07:09,360 --> 00:07:10,560 Speaker 1: of what he says. 127 00:07:10,320 --> 00:07:13,240 Speaker 3: Yet, Yeah, I mean they're starting to discuss it. And 128 00:07:13,480 --> 00:07:16,000 Speaker 3: you know, at one point Elena shot back, you're not 129 00:07:16,120 --> 00:07:19,840 Speaker 3: on Mayokopa, you're not on your podcast, you're not on CNN. 130 00:07:20,360 --> 00:07:23,239 Speaker 3: Answer my question. So you can see there's a little 131 00:07:23,240 --> 00:07:26,560 Speaker 3: bit of drama playing up on both sides. This is Cohen, 132 00:07:26,720 --> 00:07:29,840 Speaker 3: I'm objecting to your question. And at one point, probably 133 00:07:29,920 --> 00:07:32,280 Speaker 3: we've all heard, you know, when the judge will say 134 00:07:32,320 --> 00:07:35,080 Speaker 3: that question was asked and answered and that's an objection, 135 00:07:35,520 --> 00:07:38,960 Speaker 3: and Cohen said asked and answered because she kept repeating 136 00:07:39,000 --> 00:07:42,480 Speaker 3: about four times, did you lie to Judge Pauli, who 137 00:07:42,520 --> 00:07:45,440 Speaker 3: is the federal judge he pled guilty too, And then 138 00:07:45,560 --> 00:07:49,440 Speaker 3: subsequently Cohen claimed that he was forced to play guilty 139 00:07:49,480 --> 00:07:51,880 Speaker 3: by his lawyers and he hadn't really committed some of 140 00:07:51,920 --> 00:07:56,040 Speaker 3: the crimes that he pled guilty to originally in twenty eighteen. 141 00:07:56,960 --> 00:07:59,160 Speaker 1: And this is in front of a judge. So all 142 00:07:59,200 --> 00:07:59,680 Speaker 1: of this is. 143 00:07:59,720 --> 00:08:02,760 Speaker 3: Yeah, So this is like right, this is exactly right. 144 00:08:02,800 --> 00:08:05,600 Speaker 3: There's almost like two divergent trials going on at the 145 00:08:05,640 --> 00:08:08,760 Speaker 3: same time. There's the trial that's being held if you 146 00:08:08,920 --> 00:08:12,680 Speaker 3: had a jury, and the lawyers are being very dramatic, 147 00:08:12,960 --> 00:08:16,800 Speaker 3: and even I would say the witness to you know, like, oh, check, 148 00:08:17,240 --> 00:08:20,520 Speaker 3: and you're watching some kind of like reality TV show 149 00:08:20,640 --> 00:08:24,080 Speaker 3: someone playing a lawyer, and that's being played too as 150 00:08:24,120 --> 00:08:26,280 Speaker 3: if there were a jury, and that might be more 151 00:08:26,280 --> 00:08:28,800 Speaker 3: effective if there were a jury, but there isn't a jury. 152 00:08:29,280 --> 00:08:32,240 Speaker 3: And obviously it seems like some of the lawyers know 153 00:08:32,280 --> 00:08:34,320 Speaker 3: they have a very important client and his name is 154 00:08:34,360 --> 00:08:38,320 Speaker 3: Donald Trump, so they're basically asking questions to please him. 155 00:08:38,720 --> 00:08:41,720 Speaker 3: And then again you have the fun person who is 156 00:08:41,720 --> 00:08:44,640 Speaker 3: the jury of one, who is Judge and Gaurance, and 157 00:08:44,679 --> 00:08:47,719 Speaker 3: he's the guy who's supposed to be deciding this. So 158 00:08:47,840 --> 00:08:50,440 Speaker 3: that's what I said. It's like a parallel universe. There's 159 00:08:50,480 --> 00:08:55,280 Speaker 3: two parallel trials, the one that's being played out Bible 160 00:08:55,280 --> 00:08:57,959 Speaker 3: parties in the well as well as the one that's 161 00:08:58,000 --> 00:09:00,120 Speaker 3: actually going on before the judge. And he has to 162 00:09:00,200 --> 00:09:03,880 Speaker 3: keep reminding the lawyers, you know, actually there's no jury here. 163 00:09:04,200 --> 00:09:06,000 Speaker 3: You know, I'm the tryer of fact. 164 00:09:06,200 --> 00:09:11,040 Speaker 1: So did Trump react during Cohen's testimony that you could see, Oh. 165 00:09:11,000 --> 00:09:14,000 Speaker 3: He had his arms crossed and he was really and 166 00:09:14,200 --> 00:09:16,720 Speaker 3: he muttered something under his breath. I could not hear. 167 00:09:16,800 --> 00:09:19,800 Speaker 3: Someone else claimed they had heard him say something about 168 00:09:20,080 --> 00:09:24,280 Speaker 3: Cohen's credibility, but he was obviously very annoyed, and like 169 00:09:24,320 --> 00:09:27,520 Speaker 3: I said, he literally turned his entire chair around so 170 00:09:27,679 --> 00:09:31,840 Speaker 3: that his arms crossed to glare at Cohen. And then 171 00:09:32,080 --> 00:09:35,120 Speaker 3: when Holena Hapa, his lawyer, was starting up, you know, 172 00:09:35,320 --> 00:09:37,600 Speaker 3: to teal he's very thrilled. A couple of times you 173 00:09:37,600 --> 00:09:41,079 Speaker 3: could see him actually peering into the screen to look 174 00:09:41,160 --> 00:09:43,880 Speaker 3: at his statements of financial condition, and you could see 175 00:09:43,880 --> 00:09:46,160 Speaker 3: that he would be very proud of like, oh, I 176 00:09:46,160 --> 00:09:49,439 Speaker 3: have a billion dollar company. See how great my golf 177 00:09:49,480 --> 00:09:52,240 Speaker 3: courses are. So I mean, you can see that he's 178 00:09:52,360 --> 00:09:55,440 Speaker 3: very proud of that. Also, we had some interesting people 179 00:09:55,480 --> 00:09:59,559 Speaker 3: in the audience. Todd Blanche, one of his criminal defense lawyers. 180 00:10:00,000 --> 00:10:02,960 Speaker 3: He's a former Southern District federal prosecutor in New York. 181 00:10:03,080 --> 00:10:06,400 Speaker 3: So Todd Blanche was watching this cross go down. A 182 00:10:06,440 --> 00:10:11,880 Speaker 3: couple of Alvin Bragg's prosecutorial teams that prosecuted the Trump 183 00:10:12,040 --> 00:10:15,400 Speaker 3: Or case in the fall, and they also indicted Trump 184 00:10:15,920 --> 00:10:18,520 Speaker 3: in the hush money case. They were watching Kwan too, 185 00:10:18,960 --> 00:10:22,360 Speaker 3: So Susan Hoffinger, one of the lead prosecutors was in 186 00:10:22,400 --> 00:10:25,000 Speaker 3: the courtroom for this, So it's kind of like if 187 00:10:25,040 --> 00:10:27,600 Speaker 3: you were bored with the testimony, you could look around 188 00:10:27,679 --> 00:10:29,439 Speaker 3: and see who else is there, and it's kind of 189 00:10:29,480 --> 00:10:34,200 Speaker 3: like a Michael Cohen, Donald Trump, who's who of people 190 00:10:34,440 --> 00:10:35,920 Speaker 3: in the courtroom watching. 191 00:10:35,720 --> 00:10:39,640 Speaker 1: And Patty It seems like the judges having a lot 192 00:10:39,679 --> 00:10:42,120 Speaker 1: of trouble with the defense lawyers. Did he put a 193 00:10:42,160 --> 00:10:43,839 Speaker 1: timer on them at some point? 194 00:10:44,000 --> 00:10:46,440 Speaker 3: Well, at one point he said that he was limiting 195 00:10:46,480 --> 00:10:49,240 Speaker 3: them because at one point he said, and it did 196 00:10:49,280 --> 00:10:52,920 Speaker 3: seem to some spectators, including me, that the lawyers were 197 00:10:52,920 --> 00:10:56,320 Speaker 3: repeating their questions were over and over again, just rephrasing 198 00:10:56,360 --> 00:10:59,120 Speaker 3: them in the same way. You did this, didn't you? 199 00:10:59,120 --> 00:10:59,520 Speaker 2: You did this? 200 00:10:59,679 --> 00:11:02,000 Speaker 3: Didn't you did this? Didn't you? And they're trying to 201 00:11:02,040 --> 00:11:06,160 Speaker 3: make like composite, compound questions building on the same questions 202 00:11:06,200 --> 00:11:09,200 Speaker 3: which had already been answered. So at one point Michael 203 00:11:09,280 --> 00:11:13,000 Speaker 3: Cohen snapped at Elina Habba, asked an answered. You know. 204 00:11:13,520 --> 00:11:17,720 Speaker 3: Also at one point Christopher Kaise, who is another Trump lawyer, 205 00:11:17,840 --> 00:11:21,000 Speaker 3: jumped up and started yelling to the judge that the 206 00:11:21,040 --> 00:11:25,120 Speaker 3: witness is out of control, complaining about Cohen. You know, 207 00:11:25,200 --> 00:11:27,600 Speaker 3: there was a little bit of a sparring yelling match 208 00:11:27,640 --> 00:11:30,920 Speaker 3: going on. Everybody was talking over everybody, and Kiss complained 209 00:11:30,960 --> 00:11:32,760 Speaker 3: that the witness is out of control. 210 00:11:33,240 --> 00:11:37,160 Speaker 1: If this had happened on TV, I'd be saying that 211 00:11:37,200 --> 00:11:41,080 Speaker 1: doesn't happen in real life. I know it sounds like 212 00:11:41,120 --> 00:11:45,280 Speaker 1: a really unique cross examination and it will continue tomorrow. 213 00:11:45,400 --> 00:11:49,040 Speaker 1: Thanks so much, Patty. That's Bloomberg Legal reporter Patricia Hurtado. 214 00:11:49,600 --> 00:11:52,520 Speaker 1: I'm Ju and Grosso and you're listening to Bloomberg. Is 215 00:11:52,600 --> 00:11:56,520 Speaker 1: Lee Rothschild among the most prolific inventors of his generation 216 00:11:56,880 --> 00:12:00,239 Speaker 1: as he sees himself, or is he a patent troll 217 00:12:00,280 --> 00:12:03,560 Speaker 1: as his critics see him. Rothschild is listed as the 218 00:12:03,640 --> 00:12:06,680 Speaker 1: sole inventor of more than one hundred and thirty patents, 219 00:12:07,040 --> 00:12:10,960 Speaker 1: but his network of companies don't make any products. He 220 00:12:11,040 --> 00:12:15,480 Speaker 1: readily admits his entire business model is built around monetizing 221 00:12:15,520 --> 00:12:20,600 Speaker 1: his intellectual property through litigation and licensing, and there appears 222 00:12:20,640 --> 00:12:25,559 Speaker 1: to be more litigation than licensing. Joining me is Laurel Culkins, 223 00:12:25,559 --> 00:12:30,080 Speaker 1: Bloomberg law reporter who's interviewed and written about Rothschild. Laurel 224 00:12:30,160 --> 00:12:32,800 Speaker 1: tell us what Lee Rothschild has invented? 225 00:12:33,320 --> 00:12:35,280 Speaker 4: Well, first of all, you have to understand that Lee 226 00:12:35,400 --> 00:12:40,559 Speaker 4: Rothschild is in a handful of unique individuals in the country, 227 00:12:40,600 --> 00:12:43,480 Speaker 4: and that he's both a bona fide inventor and a 228 00:12:43,520 --> 00:12:47,080 Speaker 4: patent troll. And if you don't know what patent troll means, 229 00:12:47,080 --> 00:12:52,080 Speaker 4: it's a derogatory flur that high tech companies slap ontolitiicants 230 00:12:52,080 --> 00:12:56,080 Speaker 4: who show up in court with sometimes basic patents for 231 00:12:56,679 --> 00:12:59,959 Speaker 4: generic technology and then they try to extract a new 232 00:13:00,040 --> 00:13:01,960 Speaker 4: to the settlement that's cheaper than the cost of going 233 00:13:01,960 --> 00:13:05,240 Speaker 4: to trial. Well, Ross's child's in a different camp. He 234 00:13:05,360 --> 00:13:07,480 Speaker 4: is an actual inventor. He has one hundred and thirty 235 00:13:07,520 --> 00:13:11,000 Speaker 4: patents solely in his name. He started when he was 236 00:13:11,040 --> 00:13:15,000 Speaker 4: twenty he's now seventy one, and he's invented some wild things. 237 00:13:15,040 --> 00:13:17,520 Speaker 4: His very first invention when he was in his teens 238 00:13:17,520 --> 00:13:20,959 Speaker 4: with quadrophonic stereo if you remember back that far. And 239 00:13:21,160 --> 00:13:24,400 Speaker 4: the things he's got patents on now are like virtual 240 00:13:24,480 --> 00:13:29,440 Speaker 4: reality exercise machines QR codes connected to the Internet. He 241 00:13:29,480 --> 00:13:31,559 Speaker 4: had a public company for a while in the nineties 242 00:13:31,559 --> 00:13:34,240 Speaker 4: that was all about barcodes. He was a pioneer in 243 00:13:34,320 --> 00:13:38,040 Speaker 4: barcode technology. So he actually has a legit patent portfolio 244 00:13:38,480 --> 00:13:40,400 Speaker 4: which puts him in a different camp, and that's why 245 00:13:40,400 --> 00:13:43,120 Speaker 4: he has this kind of love hate relationship with the 246 00:13:43,200 --> 00:13:47,000 Speaker 4: term patent troll. He says, Yeah, classic patent troll is 247 00:13:47,040 --> 00:13:49,760 Speaker 4: somebody who takes a crappy patent and goes and files 248 00:13:49,760 --> 00:13:52,680 Speaker 4: a newsance lawsuit, you know, to extract a settlement. He goes, 249 00:13:52,720 --> 00:13:54,800 Speaker 4: But if you want to put me in the camp 250 00:13:54,880 --> 00:13:58,400 Speaker 4: of legit inventors like the Wright brothers and Alexander Graham, 251 00:13:58,400 --> 00:14:02,680 Speaker 4: Bell and Thomas who had groundbreaking inventions but had to 252 00:14:02,679 --> 00:14:05,360 Speaker 4: go to court to defend them with supporting evidence, he goes, yeah, 253 00:14:05,400 --> 00:14:06,920 Speaker 4: if you want to put me in that camp, I'm 254 00:14:06,960 --> 00:14:07,640 Speaker 4: a patent troll. 255 00:14:07,880 --> 00:14:10,560 Speaker 1: Can you explain in a little more depth what makes 256 00:14:10,679 --> 00:14:12,160 Speaker 1: a patent troll? 257 00:14:12,200 --> 00:14:14,880 Speaker 4: Like I said, it's a derogatory slur that high tech 258 00:14:14,920 --> 00:14:19,600 Speaker 4: companies apply to people who own a patent and go 259 00:14:19,680 --> 00:14:21,520 Speaker 4: to defend it in court and say, you're using my 260 00:14:21,560 --> 00:14:24,520 Speaker 4: technology without taking a license, so you've copied my idea 261 00:14:24,520 --> 00:14:26,880 Speaker 4: and you owe me money for it. Well, the problem 262 00:14:26,920 --> 00:14:29,600 Speaker 4: is most patent trolls actually don't have any operations or 263 00:14:29,600 --> 00:14:33,640 Speaker 4: what's called nonpracticing entities, and all they do is litigation. 264 00:14:33,720 --> 00:14:35,920 Speaker 4: They just go around sue people, and sometimes their patents 265 00:14:35,960 --> 00:14:39,600 Speaker 4: are so generic that they're laughable. And that's what's kind 266 00:14:39,640 --> 00:14:42,240 Speaker 4: of funny is Lee Rothschild has some on each side. 267 00:14:42,280 --> 00:14:45,840 Speaker 4: He has some that are very serious, groundbreaking inventions, and 268 00:14:45,880 --> 00:14:47,920 Speaker 4: then he has a couple that have been named soup 269 00:14:47,960 --> 00:14:51,240 Speaker 4: and Patent of the Months by the Electronic Frontier Foundation, 270 00:14:51,760 --> 00:14:53,720 Speaker 4: which mocks him relentlessly. 271 00:14:54,320 --> 00:14:58,000 Speaker 1: He's got a sue and settle model in place. 272 00:14:58,760 --> 00:15:02,120 Speaker 4: Yes, he's very upfront. His business model is all about 273 00:15:02,520 --> 00:15:06,120 Speaker 4: licensing litigation. He would rather that if a company is 274 00:15:06,240 --> 00:15:10,160 Speaker 4: utilizing one of his protected ideas, a patented idea, that 275 00:15:10,160 --> 00:15:12,280 Speaker 4: they simply come to him and license it or even 276 00:15:12,320 --> 00:15:15,200 Speaker 4: buy the patent. The company that owns Instacart bought one 277 00:15:15,240 --> 00:15:17,880 Speaker 4: of his patents several years ago to improve their user 278 00:15:18,360 --> 00:15:22,120 Speaker 4: experience on their app, and he says he's licensed that one. 279 00:15:22,160 --> 00:15:24,000 Speaker 4: That it was called stupid patent of the Monk. He 280 00:15:24,040 --> 00:15:28,040 Speaker 4: said he's licensed at at least fifty times to major companies, 281 00:15:28,080 --> 00:15:30,720 Speaker 4: so it clearly has some merit somewhere. The thing is, 282 00:15:30,800 --> 00:15:34,240 Speaker 4: most patent trolls, and he follows this model is they 283 00:15:34,280 --> 00:15:37,600 Speaker 4: file a lawsuit and they want damages for past and 284 00:15:37,720 --> 00:15:40,560 Speaker 4: future infringement. They want a royalty whatever something like that. 285 00:15:40,960 --> 00:15:43,320 Speaker 4: But then they almost immediately send an offer over to 286 00:15:43,400 --> 00:15:46,600 Speaker 4: their target and say, oh, we'll settle for what looks 287 00:15:46,600 --> 00:15:49,240 Speaker 4: like couch money because it's much less than the cost 288 00:15:49,280 --> 00:15:51,640 Speaker 4: of litigation, and yet it's more than enough to pay 289 00:15:52,040 --> 00:15:55,840 Speaker 4: the troll's expenses. We found a couple in Rothschild's name 290 00:15:55,880 --> 00:15:58,680 Speaker 4: and the names of several of his business entities, one 291 00:15:58,720 --> 00:16:02,440 Speaker 4: in particular, where he's said, well, this lawsuit, you know, 292 00:16:02,720 --> 00:16:04,920 Speaker 4: will drop it if you give us seventy five thousand 293 00:16:04,920 --> 00:16:08,200 Speaker 4: dollars and the company said, no, we think you should 294 00:16:08,240 --> 00:16:10,840 Speaker 4: pay our attorneys fees because we don't think you were 295 00:16:10,960 --> 00:16:14,800 Speaker 4: acting properly. And the trial juds looked at that and said, well, 296 00:16:14,840 --> 00:16:17,880 Speaker 4: you know, they didn't exactly defile the temple of justice, 297 00:16:17,880 --> 00:16:19,440 Speaker 4: so I'm not going to make them pay your fees. 298 00:16:19,480 --> 00:16:21,960 Speaker 4: But I'm also not going to make you pay them either. 299 00:16:22,680 --> 00:16:26,800 Speaker 1: But the Federal Circuit Court of Appeals, which handles patent cases, 300 00:16:27,480 --> 00:16:29,360 Speaker 1: had something different to say about him. 301 00:16:30,000 --> 00:16:34,600 Speaker 4: In a particular case involving the ADS Home Security System company. 302 00:16:34,760 --> 00:16:38,040 Speaker 4: They brought forward enough evidence that Roschaud said, Okay, I'm 303 00:16:38,040 --> 00:16:40,320 Speaker 4: going to drop my complaint because I don't think I 304 00:16:40,320 --> 00:16:43,880 Speaker 4: can win an infringement action against you. So ADS got 305 00:16:43,880 --> 00:16:45,920 Speaker 4: real aggressive and said, no, we're going to counter see 306 00:16:45,920 --> 00:16:48,960 Speaker 4: you for our attorney s fees, and he refused to pay, 307 00:16:49,000 --> 00:16:52,440 Speaker 4: and the trial jende said well, now let's just call 308 00:16:52,480 --> 00:16:54,840 Speaker 4: it to day. Nobody pays anybody. And then it went 309 00:16:54,920 --> 00:16:57,920 Speaker 4: up on appeal and the appellate court got real aggressive 310 00:16:58,000 --> 00:17:01,680 Speaker 4: and said, this is a frivolous lawsuit. It's frivolous on 311 00:17:01,720 --> 00:17:04,920 Speaker 4: a face, it never should have been filed, and we're 312 00:17:04,920 --> 00:17:08,760 Speaker 4: going to require the rothschild entity to pay ADS. It's 313 00:17:08,760 --> 00:17:12,679 Speaker 4: attorneys seasons respite forty three thousand dollars. So there's clearly 314 00:17:12,680 --> 00:17:14,760 Speaker 4: a camp of detractors out there that don't like this 315 00:17:14,840 --> 00:17:15,560 Speaker 4: kind of litigation. 316 00:17:16,119 --> 00:17:21,159 Speaker 1: Are the people he's suing deliberately infringing his patents or 317 00:17:21,280 --> 00:17:24,960 Speaker 1: are they working under other patents and so have good 318 00:17:25,000 --> 00:17:26,919 Speaker 1: grounds for fighting these lawsuits? 319 00:17:26,920 --> 00:17:28,760 Speaker 3: He brings it's both. 320 00:17:28,960 --> 00:17:31,840 Speaker 4: Sometimes the companies are actually stealing your idea. I mean, 321 00:17:32,160 --> 00:17:36,080 Speaker 4: I certainly am not familiar with his entire portfolio, not 322 00:17:36,160 --> 00:17:38,719 Speaker 4: even close, but I know that I cover patents all 323 00:17:38,720 --> 00:17:42,639 Speaker 4: the time, and there are legitimate cases where large technology 324 00:17:42,680 --> 00:17:46,080 Speaker 4: companies have simply taken an idea that they like they've 325 00:17:46,400 --> 00:17:48,879 Speaker 4: held licensing talks. The talks went nowhere. They took the 326 00:17:48,920 --> 00:17:52,560 Speaker 4: idea and ran with it. So that happens, and inventors 327 00:17:52,600 --> 00:17:57,200 Speaker 4: have legitimate rights to defend themselves. He's filed literally thousands 328 00:17:57,240 --> 00:18:00,520 Speaker 4: of these patent claims, and he's gone after Big, He's 329 00:18:00,560 --> 00:18:04,800 Speaker 4: to Google, he's the Roku, Apple, Samsung. I mean, you 330 00:18:04,800 --> 00:18:07,160 Speaker 4: look up any high tech company and he's probably filed 331 00:18:07,160 --> 00:18:08,679 Speaker 4: an action against them. I mean, that may be a 332 00:18:08,680 --> 00:18:12,920 Speaker 4: bit too broad, but it's pretty clear. And sometimes patents 333 00:18:12,920 --> 00:18:16,080 Speaker 4: are in addition to an idea, so it becomes kind 334 00:18:16,080 --> 00:18:18,479 Speaker 4: of a gray zone as to what would fly in 335 00:18:18,480 --> 00:18:20,800 Speaker 4: in front of a jury and what wouldn't. And he 336 00:18:20,880 --> 00:18:25,600 Speaker 4: tends to file his cases in patent friendly jurisdictions. There's 337 00:18:25,600 --> 00:18:28,960 Speaker 4: two primary patent courts in Texas and he files in 338 00:18:29,080 --> 00:18:32,800 Speaker 4: both of them, and they're both notorious for having juries 339 00:18:32,840 --> 00:18:37,199 Speaker 4: that return whopper awards in favor of the plaintiffs. So 340 00:18:37,240 --> 00:18:40,040 Speaker 4: he's kind of got the choice of courthouse on his 341 00:18:40,160 --> 00:18:41,160 Speaker 4: side when he files. 342 00:18:42,040 --> 00:18:44,399 Speaker 1: You talk to a professor who said, it's an urban 343 00:18:44,520 --> 00:18:47,679 Speaker 1: myth that Texas is a haven for patent trolls, but 344 00:18:48,080 --> 00:18:50,320 Speaker 1: that's what I've always heard. There have been plenty of 345 00:18:50,359 --> 00:18:52,880 Speaker 1: stories about patent suits in Texas. 346 00:18:53,480 --> 00:18:58,080 Speaker 4: Well, Yeah, I think that. I think Texas, the two 347 00:18:58,080 --> 00:19:01,720 Speaker 4: particular Texas courts in Waco and in Marshall, which is 348 00:19:01,720 --> 00:19:05,439 Speaker 4: in Deep East Texas, they deserve their reputations as patent 349 00:19:05,600 --> 00:19:09,600 Speaker 4: havens troll haven's for two reasons. First of all, the 350 00:19:09,720 --> 00:19:13,680 Speaker 4: judges are former patent attorneys. They understand patent law very 351 00:19:13,760 --> 00:19:17,639 Speaker 4: very well. The other thing is they get so many 352 00:19:17,720 --> 00:19:20,800 Speaker 4: patent cases that it simply becomes a numbers game. Most 353 00:19:21,040 --> 00:19:24,200 Speaker 4: litigation in the United States patent cases included subtle and 354 00:19:24,240 --> 00:19:27,000 Speaker 4: they never go to trial. But if you've got thousands 355 00:19:27,040 --> 00:19:30,440 Speaker 4: and thousands more cases being filed in your court, odds 356 00:19:30,440 --> 00:19:31,960 Speaker 4: are a few of them are going to go to trial. 357 00:19:32,560 --> 00:19:36,000 Speaker 4: And Texas jury's are sort of notorious for punishing people 358 00:19:36,040 --> 00:19:39,240 Speaker 4: who steal from little guys. So if an inventor can 359 00:19:39,240 --> 00:19:40,920 Speaker 4: get their story in front of a jury that you 360 00:19:41,000 --> 00:19:43,480 Speaker 4: stold my idea and it's David versus Goliath and you 361 00:19:43,560 --> 00:19:45,920 Speaker 4: owe me a lot of times, the Texas jury will 362 00:19:45,920 --> 00:19:49,560 Speaker 4: reward that story. But what's really interesting about Rothschild is 363 00:19:49,560 --> 00:19:53,080 Speaker 4: he's never gone to trial ever. He's filed thousands of 364 00:19:53,119 --> 00:19:55,720 Speaker 4: these lawsuits. In fact, I think we counted. He has 365 00:19:56,680 --> 00:19:59,480 Speaker 4: eighty filed since twenty twenty one alone in the US. 366 00:20:00,760 --> 00:20:03,400 Speaker 4: He's never gone to trial. He settles or drops every 367 00:20:03,440 --> 00:20:05,560 Speaker 4: single one of them. And I find that amazing. 368 00:20:06,040 --> 00:20:11,720 Speaker 1: And he's got a team to support his litigation efforts absolutely. 369 00:20:11,760 --> 00:20:15,679 Speaker 4: His business model is that he works with two different 370 00:20:15,680 --> 00:20:19,080 Speaker 4: groups of people. He has a team of patent researchers 371 00:20:19,200 --> 00:20:22,960 Speaker 4: who are based in India and they are very familiar 372 00:20:23,160 --> 00:20:27,200 Speaker 4: with the patents in the Rothschild into these portfolios and 373 00:20:27,240 --> 00:20:30,399 Speaker 4: they actively go out and search for potential infringers that 374 00:20:30,440 --> 00:20:33,040 Speaker 4: they can bring actions against in courts. They do it 375 00:20:33,040 --> 00:20:35,040 Speaker 4: in other parts of the world. I just only following 376 00:20:35,040 --> 00:20:38,520 Speaker 4: the United States. But the researchers bring potential candidates forward 377 00:20:38,600 --> 00:20:42,120 Speaker 4: and then a team of lawyers that ross Child employees 378 00:20:42,119 --> 00:20:45,119 Speaker 4: look them over and say that's so potential winner, that 379 00:20:45,160 --> 00:20:47,120 Speaker 4: one's a no go, and they make their choices there. 380 00:20:47,680 --> 00:20:49,960 Speaker 4: Then he has another side, on the invention side. He 381 00:20:50,000 --> 00:20:53,960 Speaker 4: employs a team of patent attorneys in Florida, where he 382 00:20:54,000 --> 00:20:57,359 Speaker 4: lives that also work with some in London where he 383 00:20:57,440 --> 00:21:00,280 Speaker 4: bounces his ideas off of these lawyers and say, I've 384 00:21:00,280 --> 00:21:03,000 Speaker 4: come up with this idea, I've got this invention, should 385 00:21:03,040 --> 00:21:05,639 Speaker 4: we patent that? And they research it to see if 386 00:21:05,640 --> 00:21:08,920 Speaker 4: somebody else has already patented the idea, and then they 387 00:21:08,920 --> 00:21:11,160 Speaker 4: go forward with that. So he has lawyers on both 388 00:21:11,160 --> 00:21:14,600 Speaker 4: sides helping him patent his inventions and helping him prosecute 389 00:21:14,720 --> 00:21:17,520 Speaker 4: potential infringers of his inventions. He told me he has 390 00:21:17,600 --> 00:21:22,639 Speaker 4: right now at least two hundred ideas patent applications in 391 00:21:22,760 --> 00:21:26,399 Speaker 4: process backlogged within his own invention team that they just 392 00:21:26,440 --> 00:21:28,840 Speaker 4: haven't had time to fully finish out and send over 393 00:21:28,880 --> 00:21:31,800 Speaker 4: to the patent office. He says he has dozens pending 394 00:21:31,800 --> 00:21:35,199 Speaker 4: at the patent office waiting to be approved. So this 395 00:21:35,200 --> 00:21:35,840 Speaker 4: guy's busy. 396 00:21:36,119 --> 00:21:39,200 Speaker 1: So why isn't he the greatest inventor of all? Timothy 397 00:21:39,280 --> 00:21:41,800 Speaker 1: has all these ideas and all these patents. Why aren't 398 00:21:41,840 --> 00:21:44,359 Speaker 1: people licensing them or buying them? 399 00:21:45,000 --> 00:21:47,560 Speaker 4: That's a good question. I don't really have an answer 400 00:21:47,600 --> 00:21:50,440 Speaker 4: for you. I know that he says he negotiated more 401 00:21:50,440 --> 00:21:53,200 Speaker 4: than a thousand licenses. The thing about patents is it's 402 00:21:53,200 --> 00:21:56,080 Speaker 4: not always the light bulb or the record player or 403 00:21:56,119 --> 00:21:59,240 Speaker 4: the telephone. Sometimes it's an integrated circuit. Sometimes it's a 404 00:22:00,000 --> 00:22:02,640 Speaker 4: it's a way of connecting things together in a series, 405 00:22:03,440 --> 00:22:07,640 Speaker 4: so the idea is integral to the ultimate consumer product, 406 00:22:08,480 --> 00:22:11,159 Speaker 4: but the patent itself may not be the consumer product. 407 00:22:11,280 --> 00:22:14,160 Speaker 4: So he may actually be in a number of products. 408 00:22:14,160 --> 00:22:16,800 Speaker 4: That's what he claimed, that he's in a number of products. 409 00:22:16,840 --> 00:22:19,639 Speaker 4: The patent that was mocked as being a stupid patent 410 00:22:19,640 --> 00:22:22,320 Speaker 4: of the month, he claims that that's the forerunner of 411 00:22:22,359 --> 00:22:25,400 Speaker 4: the Internet of things, where all these devices are connected 412 00:22:25,440 --> 00:22:27,159 Speaker 4: to the Internet. So he may be in a lot 413 00:22:27,200 --> 00:22:28,320 Speaker 4: of things that we just don't know about. 414 00:22:28,680 --> 00:22:30,800 Speaker 1: And there's no way to really check it because he 415 00:22:30,920 --> 00:22:33,880 Speaker 1: tells you that it's confidential. 416 00:22:33,240 --> 00:22:36,720 Speaker 4: Right exactly. He's a private company. He doesn't have to 417 00:22:36,760 --> 00:22:39,840 Speaker 4: disclose any of this. We went into the patent records 418 00:22:39,920 --> 00:22:43,760 Speaker 4: at the patent office, and the abstracts are somewhat hard 419 00:22:43,840 --> 00:22:47,560 Speaker 4: to understand sometimes, and they don't always record licensing, you know, 420 00:22:47,640 --> 00:22:50,000 Speaker 4: Licensing agreements don't have to be recorded anywhere that I'm 421 00:22:50,000 --> 00:22:52,400 Speaker 4: aware of. So, yeah, you can't verify what he has 422 00:22:52,440 --> 00:22:54,679 Speaker 4: to say. But I also know that he would not 423 00:22:54,800 --> 00:22:58,960 Speaker 4: be doing this if it wasn't profitable. And I trip 424 00:22:59,000 --> 00:23:01,480 Speaker 4: over him all the time in the courthouse. I mean 425 00:23:01,520 --> 00:23:04,720 Speaker 4: I look at the filings every day. In a couple 426 00:23:04,720 --> 00:23:08,720 Speaker 4: of these major Texas courthouses, and it's rarely a week 427 00:23:08,760 --> 00:23:10,440 Speaker 4: that goes by that I don't see one or two 428 00:23:10,480 --> 00:23:12,800 Speaker 4: actions from him, or action on one or two of 429 00:23:12,840 --> 00:23:13,880 Speaker 4: his existing cases. 430 00:23:14,720 --> 00:23:18,200 Speaker 1: And yet he says that litigation was not his primary goal, 431 00:23:19,480 --> 00:23:21,440 Speaker 1: but it sure seems like he's made a business out 432 00:23:21,440 --> 00:23:22,840 Speaker 1: of it, right. 433 00:23:22,920 --> 00:23:26,320 Speaker 4: It's because it works, he said, His dearest love is inventing. 434 00:23:26,880 --> 00:23:29,280 Speaker 4: He really likes to invent, and he sort of leaves 435 00:23:29,280 --> 00:23:32,000 Speaker 4: the mechanics of the litigation to others, but he's a 436 00:23:32,080 --> 00:23:36,400 Speaker 4: very strong defender of inventors' rights to protect their ideas. 437 00:23:37,000 --> 00:23:39,879 Speaker 4: So he sort of places himself as a crusader. He 438 00:23:39,920 --> 00:23:44,560 Speaker 4: spends his time personally inventing and thinking things up, and 439 00:23:44,640 --> 00:23:47,640 Speaker 4: then he sort of turns things over to the other 440 00:23:47,680 --> 00:23:50,639 Speaker 4: teams to execute them in terms of protecting the idea 441 00:23:50,720 --> 00:23:54,040 Speaker 4: and licensing the idea. But he said he would love 442 00:23:54,080 --> 00:23:57,639 Speaker 4: nothing more than to see somebody buy one of his 443 00:23:58,160 --> 00:24:00,879 Speaker 4: patents and turn it into a full scale product, just 444 00:24:00,960 --> 00:24:02,840 Speaker 4: right there in front of him. He would love that, 445 00:24:02,920 --> 00:24:03,440 Speaker 4: so he said. 446 00:24:04,480 --> 00:24:08,360 Speaker 1: And in your story, you quoted patent Muffo, who's represented 447 00:24:08,359 --> 00:24:12,160 Speaker 1: clients on both sides of patent disputes, and he compared 448 00:24:12,240 --> 00:24:16,400 Speaker 1: rothschild to a schoolyard bully. The best way to fight 449 00:24:16,480 --> 00:24:20,040 Speaker 1: back isn't to continue to give the bully your lunch money. 450 00:24:20,160 --> 00:24:22,320 Speaker 1: It's to stand up to the bully and show them 451 00:24:22,320 --> 00:24:25,000 Speaker 1: that it's going to be a lot of work. But 452 00:24:25,080 --> 00:24:27,520 Speaker 1: the problem is a lot of work and a lot 453 00:24:27,600 --> 00:24:29,160 Speaker 1: of money right to fight. 454 00:24:29,000 --> 00:24:34,479 Speaker 4: These absolutely, And that's the secret to patentrol litigation is 455 00:24:34,520 --> 00:24:38,639 Speaker 4: that a true patent troll will simply say, I'm going 456 00:24:38,680 --> 00:24:40,359 Speaker 4: to sue you, and you know what it's going to 457 00:24:40,440 --> 00:24:42,840 Speaker 4: cost you to defend this, because it's going to take 458 00:24:42,840 --> 00:24:44,119 Speaker 4: a while, and there's going to be a lot of 459 00:24:44,440 --> 00:24:46,800 Speaker 4: turns of the screw at the courthouse with documents to 460 00:24:46,840 --> 00:24:49,800 Speaker 4: be filed, And wouldn't you rather just pay me x 461 00:24:49,960 --> 00:24:52,600 Speaker 4: which is chump change compared to that other some and 462 00:24:53,000 --> 00:24:54,760 Speaker 4: we'll just call it a day. 463 00:24:54,920 --> 00:24:58,919 Speaker 1: We've been talking about and hearing about patent trolls for 464 00:24:59,200 --> 00:25:03,000 Speaker 1: I don't know decades. Have they tried to do anything 465 00:25:03,119 --> 00:25:05,080 Speaker 1: to stop this or to curtail this. 466 00:25:06,840 --> 00:25:09,760 Speaker 4: Yes, certain states have come out with laws to try 467 00:25:09,760 --> 00:25:12,760 Speaker 4: to make these kinds of lawsuits more difficult to bring. 468 00:25:13,480 --> 00:25:16,119 Speaker 4: I believe we mentioned in the story a state in 469 00:25:16,119 --> 00:25:19,440 Speaker 4: the Pacific Northwest that has its own, you know, sort 470 00:25:19,440 --> 00:25:23,680 Speaker 4: of patent trol Prevention Act, and one of the high 471 00:25:23,680 --> 00:25:26,960 Speaker 4: tech companies out there that was being threatened with litigation 472 00:25:27,320 --> 00:25:30,359 Speaker 4: by one of the rothschildentities counter suit him as a 473 00:25:30,359 --> 00:25:33,080 Speaker 4: preemptive strike and said you're violating the Patent Trol Act. 474 00:25:33,960 --> 00:25:38,480 Speaker 4: And it didn't stop them, a different Rothschild than anyone 475 00:25:38,520 --> 00:25:41,920 Speaker 4: ahead ensued under the patent anyway. So you know, it's 476 00:25:41,960 --> 00:25:44,800 Speaker 4: continuing on both tracks. But there are efforts in Congress too, 477 00:25:45,280 --> 00:25:47,880 Speaker 4: I think for last year they introduced it and then 478 00:25:47,920 --> 00:25:50,119 Speaker 4: this year has been introduced again, but nothing's acted on 479 00:25:50,160 --> 00:25:54,640 Speaker 4: it about ways to narrow patent eligibility so that it's 480 00:25:54,720 --> 00:25:56,800 Speaker 4: not as easy to sue on some of these patents 481 00:25:56,840 --> 00:25:59,760 Speaker 4: that are so broad they're almost laughable, like you know, 482 00:26:00,160 --> 00:26:02,760 Speaker 4: connecting two things together in a circuit. I mean, clearly 483 00:26:02,800 --> 00:26:05,359 Speaker 4: that's not it, but you know it's just some stuff 484 00:26:05,440 --> 00:26:08,679 Speaker 4: is so basic, like really that's a patentable idea. So 485 00:26:08,760 --> 00:26:11,399 Speaker 4: Congress has again proposed that I think in June, but 486 00:26:11,880 --> 00:26:13,960 Speaker 4: given the chaos in Congress, nothing's. 487 00:26:13,600 --> 00:26:16,000 Speaker 1: Happened, and this seems like it will certainly be on 488 00:26:16,080 --> 00:26:19,359 Speaker 1: the back burner when Congress does get up and running again, 489 00:26:19,480 --> 00:26:23,520 Speaker 1: thanks so much, Laurel. That's Bloomberg Law reporter Laurel Culkins 490 00:26:24,040 --> 00:26:27,440 Speaker 1: coming up. When you can't escape your debts by filing 491 00:26:27,480 --> 00:26:30,760 Speaker 1: for bankruptcy. I'm Jim Grosso and you're listening to Bloomberg. 492 00:26:31,359 --> 00:26:36,080 Speaker 1: Rapper Cardi B and conspiracy theorist Alex Jones came out 493 00:26:36,080 --> 00:26:40,399 Speaker 1: on opposite ends of defamation verdicts, with Cardi B winning 494 00:26:40,400 --> 00:26:44,720 Speaker 1: a defamation case against a blogger and Alex Jones losing 495 00:26:44,800 --> 00:26:48,960 Speaker 1: defamation cases to the parents of Sandy Hook victims. The 496 00:26:49,080 --> 00:26:52,920 Speaker 1: question is whether Jones and the blogger filing for bankruptcy 497 00:26:53,320 --> 00:26:57,240 Speaker 1: affects their payment of those defamation verdicts. Joining me is 498 00:26:57,320 --> 00:27:01,880 Speaker 1: James Nonny, bankruptcy correspondent for Bloomberg Long. There's an idea 499 00:27:02,200 --> 00:27:05,159 Speaker 1: in people's minds about bankruptcy that it allows you to 500 00:27:05,240 --> 00:27:08,280 Speaker 1: walk away from all your debts, but that's not always 501 00:27:08,359 --> 00:27:10,879 Speaker 1: the case. Tell us why no, it's not. 502 00:27:11,560 --> 00:27:14,600 Speaker 2: You know, the Bankruptcy Code had quite a few exceptions 503 00:27:14,680 --> 00:27:18,480 Speaker 2: to what they call discharge, which is basically forgiveness in 504 00:27:18,560 --> 00:27:22,480 Speaker 2: the Bankruptcy Code, and for individuals, there are a lot 505 00:27:22,520 --> 00:27:26,640 Speaker 2: of exceptions to what you can essentially toss away in bankruptcy. 506 00:27:26,960 --> 00:27:29,159 Speaker 2: There's quite a few under the code, and one of 507 00:27:29,200 --> 00:27:33,119 Speaker 2: them is for anything that falls under willful and malicious injury. 508 00:27:33,440 --> 00:27:37,160 Speaker 1: These two cases that you write about the defendants are 509 00:27:37,240 --> 00:27:41,520 Speaker 1: very different, but both cases involve a finding of defamation. 510 00:27:42,400 --> 00:27:46,320 Speaker 1: Let's start with Alex Jones. He was ordered to pay 511 00:27:46,400 --> 00:27:50,120 Speaker 1: a jury verdict of one point four billion dollars for 512 00:27:50,200 --> 00:27:53,879 Speaker 1: defaming the Sandy Hook family. So tell us what happened there. 513 00:27:54,359 --> 00:27:57,600 Speaker 2: There were two different state court cases, both in Connecticut 514 00:27:57,880 --> 00:28:02,720 Speaker 2: and in taxes. Alex Jones was sued by families of 515 00:28:02,800 --> 00:28:06,720 Speaker 2: Sandy Hook mastacre victims for basically airing live about them 516 00:28:06,920 --> 00:28:10,800 Speaker 2: on his shelf. Alex Jones lost both of those state 517 00:28:10,840 --> 00:28:14,120 Speaker 2: court cases, and in total it was roughly about one 518 00:28:14,160 --> 00:28:17,160 Speaker 2: point four billion dollars between the two state court cases. 519 00:28:17,440 --> 00:28:22,000 Speaker 2: Alex Jones filed for personal bankruptcy. His business also filed 520 00:28:22,040 --> 00:28:25,240 Speaker 2: for banks and so basically there was a question once 521 00:28:25,280 --> 00:28:29,639 Speaker 2: he got into bankruptcy court, which is through these a 522 00:28:29,760 --> 00:28:32,679 Speaker 2: judgments that he had against him in Texas and Connecticut 523 00:28:32,960 --> 00:28:36,720 Speaker 2: count under the Bankruptcy Code as a willful and malicious 524 00:28:36,760 --> 00:28:40,000 Speaker 2: injury and therefore he can't toss them or have them 525 00:28:40,040 --> 00:28:41,200 Speaker 2: forgiven in bankruptcy. 526 00:28:41,360 --> 00:28:43,640 Speaker 1: Did the bankruptcy judge make a decision on that. 527 00:28:44,120 --> 00:28:47,000 Speaker 2: Yes he did. As just a little bit of background, basically, 528 00:28:47,480 --> 00:28:51,080 Speaker 2: the Sandy Hook massacre victims had to file new cases 529 00:28:51,360 --> 00:28:55,560 Speaker 2: against Jones once he entered personal bankruptcy, basically saying hey, listen, 530 00:28:55,600 --> 00:28:58,200 Speaker 2: you can't do that. You can't forgive these massive debts 531 00:28:58,200 --> 00:29:00,760 Speaker 2: that you have to us in bankruptcy. There was basically 532 00:29:00,760 --> 00:29:03,320 Speaker 2: a hearing on it, and then the bankruptcy judge from 533 00:29:03,360 --> 00:29:06,800 Speaker 2: the Southern District of Texas, Judge Lopez, last week made 534 00:29:06,880 --> 00:29:09,480 Speaker 2: rulings in both of these cases for the most part, 535 00:29:09,840 --> 00:29:12,680 Speaker 2: saying that Jones can't discharge and can't toss most of 536 00:29:12,720 --> 00:29:15,440 Speaker 2: these debts and adds up to about one point one 537 00:29:15,520 --> 00:29:20,680 Speaker 2: billion dollars that he can't discharge via bankruptcy. There's still 538 00:29:20,720 --> 00:29:23,480 Speaker 2: a couple hundred millions that the judge said, there is 539 00:29:23,480 --> 00:29:27,000 Speaker 2: still a question about it, but most of the debt 540 00:29:27,120 --> 00:29:31,120 Speaker 2: he cannot discharge in bankruptcy and of course subject to appeals, 541 00:29:31,480 --> 00:29:32,160 Speaker 2: and he. 542 00:29:32,560 --> 00:29:36,040 Speaker 1: Is expected to appeal this right. He appeals everything. 543 00:29:37,320 --> 00:29:40,560 Speaker 2: Yes, I reached out to Jones's camp, they didn't respond, 544 00:29:40,600 --> 00:29:45,000 Speaker 2: but the next day after the bankruptcy judge ruled, he 545 00:29:45,080 --> 00:29:48,520 Speaker 2: went onto his info Wars show, and he said that 546 00:29:48,680 --> 00:29:50,560 Speaker 2: he still plans on appealing. 547 00:29:51,000 --> 00:29:54,720 Speaker 1: So now Cardi B is a different story. She actually 548 00:29:54,760 --> 00:29:59,120 Speaker 1: started garnishing wages. Tell us about her case. 549 00:30:00,080 --> 00:30:06,240 Speaker 2: Sure, Cardi B. The rapper basically won a judgment against 550 00:30:06,280 --> 00:30:12,040 Speaker 2: a YouTube channel blogger whose name is Latasha Keby, also 551 00:30:12,080 --> 00:30:17,920 Speaker 2: for defamation. Keb filed for bankruptcy, and Cardi B, a 552 00:30:18,000 --> 00:30:21,000 Speaker 2: kind of similar to the Sandy Hook families, filed a 553 00:30:21,080 --> 00:30:25,040 Speaker 2: suit against her in bankruptcy, saying you can't discharge these 554 00:30:25,040 --> 00:30:28,800 Speaker 2: steps because they're for defamation. Defamation, she argued, is the 555 00:30:28,880 --> 00:30:32,120 Speaker 2: type of willful and malicious injury. Therefore you can't wipe 556 00:30:32,120 --> 00:30:36,240 Speaker 2: it down in bankruptcy. And a couple of weeks ago, basically, 557 00:30:36,520 --> 00:30:41,680 Speaker 2: Kevy's attorneys essentially said that's mostly true. There's still about 558 00:30:41,720 --> 00:30:44,480 Speaker 2: five hundred thousand dollars in question, but for the most 559 00:30:44,480 --> 00:30:47,400 Speaker 2: part about three point four million dollars. It looks like 560 00:30:47,440 --> 00:30:50,920 Speaker 2: Cardi B will be able to essentially continue to go 561 00:30:50,960 --> 00:30:53,720 Speaker 2: after against her, So tell me. 562 00:30:53,880 --> 00:30:58,560 Speaker 1: The defendant's attorneys agreed with Cardi B that that much 563 00:30:58,600 --> 00:31:02,280 Speaker 1: of the judgment was up for grabs. 564 00:31:02,520 --> 00:31:06,840 Speaker 2: Yeah, Essentially, Chevy's attorneys agreed not to contest all but 565 00:31:06,920 --> 00:31:10,280 Speaker 2: about five hundred thousand dollars of the state court judgment 566 00:31:10,280 --> 00:31:13,800 Speaker 2: that Cardi B won and basically means that Cardi B 567 00:31:13,920 --> 00:31:18,600 Speaker 2: can pursue Keavy for about two million dollars in compensatory 568 00:31:18,640 --> 00:31:22,360 Speaker 2: intunative damages, a little over one million dollars a little 569 00:31:22,520 --> 00:31:26,640 Speaker 2: litigation expenses, and another forty thousand dollars with post judgment interest. 570 00:31:26,880 --> 00:31:30,520 Speaker 2: So remaining like five hundred thousand dollars were judgments against 571 00:31:30,560 --> 00:31:33,600 Speaker 2: both Kevy and her business. So there's still kind of 572 00:31:33,640 --> 00:31:36,360 Speaker 2: a question over there of whether sheel she will have 573 00:31:36,400 --> 00:31:39,520 Speaker 2: to owe this money to Cardi B or whether it's 574 00:31:39,600 --> 00:31:41,120 Speaker 2: kind of the business's obligation. 575 00:31:42,280 --> 00:31:44,000 Speaker 1: Tell us about the timeline here. 576 00:31:45,040 --> 00:31:48,040 Speaker 2: After Party B won her judgment, there were appeals, she 577 00:31:48,120 --> 00:31:52,440 Speaker 2: started garnishing some ofer for wages, and afterward Keevy filed 578 00:31:52,480 --> 00:31:55,600 Speaker 2: for bankruptcy, and bankruptcy has one of the things that 579 00:31:55,680 --> 00:31:58,680 Speaker 2: you get out of bankruptcy filing is that it immediately 580 00:31:58,800 --> 00:32:03,440 Speaker 2: stopped all collection efforts. So once you file your petition 581 00:32:03,520 --> 00:32:06,640 Speaker 2: for bankruptcy, all collection efforts to stop, and it also 582 00:32:06,680 --> 00:32:10,800 Speaker 2: stops ongoing lawsuits as well, so it provides what many 583 00:32:10,800 --> 00:32:13,719 Speaker 2: people call kind of some breathing room in order to 584 00:32:13,760 --> 00:32:15,640 Speaker 2: try to figure out how to pay your creditors. 585 00:32:16,040 --> 00:32:19,120 Speaker 1: I have to say I find it a little surprising 586 00:32:19,320 --> 00:32:24,160 Speaker 1: that her attorneys didn't challenge that this was wilful and malicious. 587 00:32:25,000 --> 00:32:26,600 Speaker 2: I would say that, you know, when you get a 588 00:32:26,640 --> 00:32:30,400 Speaker 2: defamation judgment against you and then you enter bankruptcy, and 589 00:32:30,440 --> 00:32:34,640 Speaker 2: then oftentimes you'll see that there is this question of 590 00:32:34,680 --> 00:32:38,520 Speaker 2: whether the testimation falls under wilful and malicious injury, and 591 00:32:39,120 --> 00:32:41,720 Speaker 2: oftentimes it does. It's not a short thing, and it 592 00:32:41,800 --> 00:32:44,800 Speaker 2: kind of depends on you know, when you file for bankruptcy, 593 00:32:45,040 --> 00:32:48,000 Speaker 2: if you got a judgment against you in a stakehourt 594 00:32:48,120 --> 00:32:50,240 Speaker 2: or some other type of court, you kind of look 595 00:32:50,320 --> 00:32:52,560 Speaker 2: to what the jury said or what the judge said, 596 00:32:52,600 --> 00:32:54,400 Speaker 2: and what the ruling was, and you kind of look 597 00:32:54,440 --> 00:32:56,760 Speaker 2: at the elements of that. Once you get into bankruptcy, 598 00:32:56,800 --> 00:33:00,840 Speaker 2: becomes this fairly complex analysis by a judge of whether 599 00:33:01,440 --> 00:33:04,680 Speaker 2: it actually falls under But you know, apparently, and Kevy's case, 600 00:33:04,760 --> 00:33:08,440 Speaker 2: her attorneys and she felt that it wasn't worth putting 601 00:33:08,480 --> 00:33:11,360 Speaker 2: out the fight except for this additional five hundred thousand dollars. 602 00:33:11,640 --> 00:33:14,960 Speaker 1: I'm curious, does she have enough money to satisfy this judgment? 603 00:33:15,440 --> 00:33:18,640 Speaker 2: Well? So, in bankruptcy One of the things creditors like 604 00:33:18,680 --> 00:33:20,680 Speaker 2: about it is that it's kind of a fishbowl. You're 605 00:33:20,720 --> 00:33:24,200 Speaker 2: supposed to go into bankruptcy and basically open up your 606 00:33:24,200 --> 00:33:26,840 Speaker 2: books and tell everyone how much money you have. You know, 607 00:33:26,880 --> 00:33:31,160 Speaker 2: so Kevy did that, and she has filed schedules basically 608 00:33:31,200 --> 00:33:33,120 Speaker 2: saying how much money she has, and it does not 609 00:33:33,160 --> 00:33:36,600 Speaker 2: appear that she has that three point four million right now. 610 00:33:37,120 --> 00:33:40,000 Speaker 2: But you know, the bankruptcy did give her some breathing rooms, 611 00:33:40,200 --> 00:33:42,560 Speaker 2: and it does give her kind of a venue and 612 00:33:42,640 --> 00:33:46,880 Speaker 2: opportunity to continue to negotiate with Cardi b in her 613 00:33:47,120 --> 00:33:49,800 Speaker 2: camp to maybe come up with a plan of how 614 00:33:49,840 --> 00:33:52,000 Speaker 2: she can't take what she can pay. You know, you 615 00:33:52,120 --> 00:33:54,440 Speaker 2: might not be able to pay off that full amount, 616 00:33:55,080 --> 00:33:57,360 Speaker 2: but maybe they can come to some kind of agreement 617 00:33:57,400 --> 00:34:00,520 Speaker 2: about the money that she already had and the assets 618 00:34:00,520 --> 00:34:02,440 Speaker 2: that she already has, and how that can be paid 619 00:34:02,440 --> 00:34:04,719 Speaker 2: off in some kind of regular manner. It's unclear at 620 00:34:04,720 --> 00:34:06,760 Speaker 2: this point. The bankruptcy cases on going. 621 00:34:06,920 --> 00:34:11,799 Speaker 1: Thanks James. That's James Nnny, bankruptcy correspondent for Bloomberg Law, 622 00:34:11,920 --> 00:34:14,239 Speaker 1: and that's it for this edition of The Bloomberg Law Show. 623 00:34:14,600 --> 00:34:16,920 Speaker 1: Remember you can always get the latest legal news on 624 00:34:17,000 --> 00:34:21,279 Speaker 1: our Bloomberg Law Podcast. You can find them on Apple Podcasts, Spotify, 625 00:34:21,440 --> 00:34:26,479 Speaker 1: and at www dot bloomberg dot com, slash podcast, slash Law, 626 00:34:26,880 --> 00:34:29,480 Speaker 1: and remember to tune into The Bloomberg Law Show every 627 00:34:29,520 --> 00:34:33,440 Speaker 1: weeknight at ten pm Wall Street Time. I'm June Grosso 628 00:34:33,560 --> 00:34:35,160 Speaker 1: and you're listening to Bloomberg