A former senior in-house intellectual property counsel for Hunter Douglas was sentenced Wednesday to nearly six years in federal prison for his role in a fraudulent billing scheme involving fake patent searches. The former patent attorney pleaded guilty in April to federal felony charges of tax evasion and mail fraud arising from his theft of about $5 million from his employer.
As we first reported in our post (here), Jason Throne worked for Hunter Douglas since 2001 as “Intellectual Property General Counsel.” As its sole in-house dedicated patent counsel, Mr. Throne was an important and high-ranking member of the company’s legal department. Part of his responsibilities included overseeing routine patent searches, including “state of the art” patent searches, patent infringement searches, and patent validity searches.
In 1999, Throne and his wife created a company called Patent Services Group Inc. (PSG), a purported patent search firm allegedly based in Maine. PSG was a ruse; it did no work and performed no services. Nevertheless, using his position within Hunter Douglas, Mr. Throne had PSG bill Hunter Douglas for monthly patent search services that were never performed.
Between 2000 and 2014, PSG billed Hunter Douglas on average between $30,000 and $40,000 per month. The Thrones would fax invoices addressed to Mr. Throne at Hunter Douglas purporting to be from PSG. After Mr. Throne received the PSG invoices, he would approve the invoices and submit them to accounting for payment.
For 14 years, the scam worked. In 2013, a patent engineer at Hunter Douglas started asking questions about the “astronomical” charges from PSG. The engineer said she had never heard of the company but was assured by Mr. Throne that it was a legitimate business which he had used for years. Eventually, Hunter Douglas figured out what was really happening, and in 2014 it fired Mr. Throne.
The brazenness of the alleged conduct was apparantly enabled by the failure of the company to maintain any type of institutional oversight over Mr. Throne. Simply put, there were no checks or balances put in place, and Mr. Throne was given unfettered discretion to approve payments to PSG.
In 2015, the USPTO accepted Mr. Throne’s resignation from the Patent Bar and ordered his exclusion on consent. See In re Jason T. Throne, No. D2015-19 (USPTO Dir. April 22, 2015) (final order).
In addition to the 71-month prison term, Throne was ordered to pay $4.84 million in restitution to Hunter Douglas.