Cloudflare Explains What It Takes To Slay A Patent Troll

from the stand-strong dept

A couple years back we wrote about the patent trolling operation Blackbird Technologies, which was a law firm that pretended it wasn't a law firm, and seemed to focus on buying up patents to shake down companies for cash. It had threatened many and sued a few, but definitely picked the wrong target when it decided to go after Cloudflare. Like Newegg before it, the team at Cloudflare decided that even if it was cheaper to settle, it would set a bad precedent and would likely lead to more trollish threats landing on its doorstep. So, instead, Cloudflare decided to fight back. And it went a step or two beyond Newegg, who would just fight the trolls in court. Cloudflare decided to not just fight in court, but then to seek to destroy Blackbird Technologies entirely. It launched a crowdsourced contest to search out prior art not just on the patent at issue in its own case, but on all Blackbird patents. It also went after the lawyers at Blackbird, filing bar complaints against the company for violating attorney ethics rules (mainly in holding itself out as not a law firm, but then acting as a law firm). There was also the issue of the firm appearing to purchase the bare right to sue, the same issue that brought down copyright trolling operation Righthaven. The issue there is that if you purchase the rights to a patent or a copyright, you have to actually purchase all of the associated rights, not do a convoluted thing where you pretend to buy the rights, but the original copyright or patent holder gets some of the proceeds of your trolling.

The legal strategy went swimmingly well. Cloudflare got an easy win at the district court, and then a super quick and easy win on appeal at CAFC, the Court of Appeals for the Federal Circuit. Cloudflare was so obviously on the right side of things that the CAFC panel didn't ask its lawyers a single question (which is very rare), issued a decision mere days after the hearing (incredibly rare) and found Cloudflare's arguments so correct that it didn't even explain its decision, but just issued a judgment that said "Affirmed" (even more rare). As we noted at the time, even though it was an "easy" win for Cloudflare, it still involved two years of legal wrangling, involving over 1,500 pages of legal briefings on both sides (900 from Cloudflare alone). That's expensive, time-consuming and distracting.

Earlier this week, Cloudflare released an update about the rest of its efforts to hit back at Blackbird (now that Blackbird chose not to request the Supreme Court review the CAFC decision). All in all, the effort to clip Blackbird's wings appears to have been a pretty good success overall, even if the company is still operating. The crowdsourcing (and funding) campaign to find prior art against a bunch of Blackbird patents was definitely a success:

A high-level breakdown of the submissions:

• We received 275 total unique submissions from 155 individuals on 49 separate patents, and we received multiple submissions on 26 patents.
• 40.1% of the total submissions related to the ’335 patent asserted against Cloudflare.
• The second highest concentration of prior art submissions (14.9% of total) relate to PUB20140200078 titled “Video Game Including User Determined Location Information.” The vast majority of these submissions note the similarity between the patent’s claims and the Niantic game Ingress.

It certainly appears that Blackbird's prospects have diminished thanks to this team effort:

In the one-year period immediately preceding Project Jengo, (Q2’16-Q2’17) Blackbird filed more than 65 cases. Since Project Jengo launched more than 2.5 years ago, the number of cases Blackbird has filed has fallen to an average rate of 10 per year.  

Not only are they filing fewer cases, but Blackbird as an organization seems to be operating with fewer resources than they did at their peak. When we launched Project Jengo in May 2017, the Blackbird website identified a total team of 12: six lawyers, including two co-founders, four litigation counsel, as well as a patent analysis group of 6. Today, based on a review of the website and LinkedIn, it appears only three staff remain: one co-founder, one litigation counsel, and one member of the patent analysis group.  

As for the ethics complaints, the company notes that the proceedings there are confidential, so there's not much to report, but also notes that they only filed these complaints in two states, Massachusetts and Illinois. At the very least, this should hopefully scare off others from mimicking Blackbird's sham agreements:

We based our complaints on the assignment agreement we found filed with the USPTO, where Blackbird purchased the ’335 patent from an inventor in October 2016 for $1. It seemed apparent that the actual but undisclosed compensation between the parties was considerably more than $1, so Blackbird may have simply acquired the cause of action or the agreement involved an arrangement where Blackbird would split a portion of any recovered fees with the inventor. Such agreements are generally prohibited by the ethical rules.

In public statements, Blackbird’s defense to these allegations was that it (i) was not a law firm (despite the fact it is led exclusively by lawyers who are actively engaged in the litigation it pursues) and (ii) does not use contingency fee arrangements for the patents it acquires, but does use something “similar.” Both defenses were rather surprising to us. Isn’t an organization led and staffed exclusively by lawyers who are drafting complaints, filing papers with courts, and arguing before judges amount to a “law firm”? In fact, we found pleadings in other Blackbird cases where the Blackbird leadership asked to be treated as lawyers so they could have access to sensitive technical evidence in those cases that is usually off-limits to anyone but the lawyers. And what does it mean for an agreement to be merely “similar” to a contingency agreement?

The successful campaign against Righthaven seemed to have prevented similar operations forming in the copyright trolling space, and hopefully this effort against Blackbird will do the same in the patent trolling space. At the very least, though, this, again, demonstrates the value of standing up to a patent troll, even if it would be a hell of a lot cheaper and easier to just settle.

Filed Under: crowdsourcing, patent trolling, patent trolls, patents, prior art
Companies: blackbird technologies, cloudflare

Appeals Court Takes No Time At All In Rejecting Patent Troll's Ridiculous Lawsuit Against Cloudflare

from the buh-bye-now dept

You may recall that back in May of 2017, a patent trolling operation called Blackbird Technologies picked on the wrong internet company to troll. Having built up some success blasting frivolous lawsuits at other internet companies, it chose to go after Cloudflare. That was a mistake. Cloudflare didn't just hit back, it promised to destroy the patent trolling firm, Blackbird Technologies. It opened up a campaign to crowdsource prior art not just on the patent at issue in its lawsuit but on every patent that Blackbird Technology claimed to hold.

Almost exactly a year ago, Cloudflare won its case with the court invalidating the patent. It was such an easy decision that it took US District Court Judge Vince Chhabria barely over a page explaining why the patent was so clearly invalid and the case was dismissed.

Blackbird, for reasons that escape me, decided to appeal to the Federal Circuit. Now, we've spent the better part of two decades mocking the Federal Circuit and its history of nutty decisions, but there are some cases so obviously bad that even the CAFC can't fuck them up. This is one. A CAFC panel heard the case last week and found the situation so utterly stupid that it only took a few days for it to affirm the lower court ruling. Indeed, its ruling is even shorter than the district court's ruling. The CAFC opinion doesn't even say anything other than: "Affirmed."

Ouch.

According to Cloudflare's General Counsel, Doug Kramer, in a blog post on Cloudflare's site, the CAFC panel didn't have a single question for the company's lawyers (which is nearly unheard of), leaving him with tons of extra time:

A panel of three judges from that court heard arguments on the appeal last Friday, but didn’t ask our attorney a single question about the substance of our argument on the abstractness of the patent. He sat down with almost half of his 15 minutes of argument time left because there was nothing more to say. Yesterday, just three business days after that hearing, the court affirmed the lower court’s decision in summary fashion, which means they didn’t even write about the claims or arguments, they just said “Affirmed” (see below).

Of course, as Kramer further notes in the post, even "easy victories" take a ton of time and resources, not to mention other kinds of costs that can impact a business in lots of ways:

Blackbird filed this case in March 16, 2017. For nearly two years, anyone doing due diligence on Cloudflare might have had questions about whether there was a cloud over our rights to our technology. And we had to go through a lot of briefing, and the related legal expenses, to get to this point. Blackbird’s combined legal filings at the district court and appellate court amounted to more than 650 pages, our responsive briefs were more than 900 pages.

The two courts spent less than two pages describing a result that was obvious to them, but it took us two years of uncertainty and cost to get there. Federal court litigation doesn’t make anything easy. Even if Blackbird had won the case, it is not clear they would have been able to collect significant damages. Our allegedly infringing use was not a product or feature that we charged for or made money from – it was essentially posting interstitial messages for various errors. Even though we were able to win this case early in the legal process and keep our costs as low as possible, it’s possible we spent more money resolving this matter than Blackbird would have been able to collect from us after trial.

This is why trolling works. This is why so many plaintiffs use the judicial system as a weapon, even when their lawsuits clearly have no merit. Even to get an "easy win" you can lose, big time.

Filed Under: cafc, patent trolling, patents
Companies: blackbird technologies, cloudflare

Cloudflare Gets An Easy, Quick And Complete Win Over Patent Troll

from the good-news dept

Last year, we wrote about how a relatively new patent trolling operation had pretty clearly picked the wrong target in suing internet infrastructure provider Cloudflare with a sketchy patent (US Patent 6,453,335 on "providing an internet third party data channel.") Cloudflare decided not only to fight the case, but to fight all of Blackbird's patents, crowdsourcing and funding searches into prior art on any patent held by Blackbird Technologies, and arguing that the company was engaging in questionable legal practices -- acting both as a patent holding company and a law firm, while sometimes pretending not to be a law firm (despite employing mostly lawyers) to avoid some serious ethics questions.

On Monday, Cloudflare received a fairly complete victory, with the judge easily dismissing the case and pointing out that the '335 patent was clearly invalid:

Abstract ideas are not patentable. The '335 patent is directed to the abstract idea of monitoring a data stream and modifying that data when a specific condition is identified.... The limitations in representative claims 1 and 18 "recite generic computer, network and Internet components, none of which is inventive by itself." ... Both claims describe a "processing device" that monitors a preexisting data stream between a server and a client for a specific condition and modifies that stream when that condition is present. But the patent makes clear the processing device can be generic hardware, such as a filter, router, or proxy, or generic software.

Dependent claims 8 and 24 identify a specific condition for the processing device to monitor: a data transmission rate below a set threshold. Identifying a specific condition narrows the scope of these claims. But this additional limitation is not inventive; it is simply a conventional application of the broader idea.... A patent that uses generic components can contain an inventive concept if those generic pieces are arranged in a "non-conventional and non-generic" way.... But the '335 patent does not attempt to patent a discrete and non-conventional means of monitoring and modifying a data stream. In fact, the claims make clear the processing device used to monitor and modify data can be nearly anything and can be placed nearly anywhere, so long as the processing device is not the server that originates the data stream. In other words, the patent attempts to monopolize the abstract idea of monitoring a preexisting data stream between a server and a client for a specific condition and modifying that stream when that condition is present.

Patent cases -- even ones that should be easy -- are pretty famous for forcing the defendant to go through a long and expensive process to conclude. Normally there are extensive back and forth and filings and hearings between the parties as the court determines just what the patents cover and what the defendants are alleged to have done. Here, however, Cloudflare made an early motion to dismiss based on the claim that the patent itself is clearly invalid under the Supreme Court's Alice ruling that abstract ideas are not patentable. The court found this so persuasive that it tossed the case and the patent at this early stage (and did so in just two quick pages).

Blackbird may appeal, but it's difficult to see any appeal getting very far either. And, given how Cloudflare is still asking for prior art on all of Blackbird's other patents, the company may be interested in getting as far away as possible from Cloudflare as quickly as possible. But, then again, no one said that the people who run patent trolling operations are very smart.

Either way, kudos to Cloudflare for hitting back hard and getting an early victory against patent troll Blackbird.

Filed Under: alice v. cls bank, patent troll, patents
Companies: blackbird technologies, cloudflare

Cloudflare Ups The Ante In Search Of Prior Art To Invalidate ALL Patents From Patent Troll Blackbird Tech

from the can't-stop,-won't-stop dept

A few weeks ago, we wrote about Cloudflare's decision to punch back hard against a patent troll, Blackbird Technologies, that had sued the company over a questionable patent (US Patent 6,453,335). Beyond just challenging the claim of infringement, the company also filed ethics complaints against the lawyers who run Blackbird, noting that the company appeared to be a law firm masquerading as a company, and breaking a number of local rules about law firms and "buying" a proprietary interest in a lawsuit. At the same time, Cloudflare set up a $50,000 fund to offer prizes to people who could find prior art not just to invalidate the patent that Cloudflare was sued over but also every other patent held by Blackbird Technologies.

Apparently, the company has now received a ton of submissions -- many of which it claims are quite thorough. And it's upping the ante. An anonymous donor has agreed to match the $50,000 fund, and so now Cloudflare is offering $100,000 for prior art to invalidate Blackbird Tech patents. The company says that it's received 140 separate prior art submissions so far, targeting 18 of the 38 patents and applications it knows about, but wants to go after the rest as well.

We’ve been impressed with the exceptionally high quality of the submissions. The Cloudflare community of users and readers of our blog are an accomplished bunch, so we have a number of searches that were done by expert engineers and programmers. In one case that stood out to us, someone wrote in about a project they personally had worked on as an engineer back in 1993, which they are convinced is conclusive prior art to a Blackbird Tech patent. We will continue to collect and review these submissions.

The submissions so far relate to 18 of the 38 Blackbird Tech patents and applications. You can see a summary of the number of submissions per patent here (PDF). You'll see there are still 20 Blackbird Tech patents and applications we’ve yet to receive a submission for.

We’re looking for prior art on 100% of the Blackbird Tech patents. If you are interested in helping, take some time to look into those patents where we don’t have anything yet. We’ll update the chart as we review the submissions with additional information about the number we receive, and their quality, to help focus the search. After the initial review, we’ll start to color code the patents (i.e., red/yellow/green) to demonstrate the number and quality of submissions we’ve received on each patent.

Also, Cloudflare is nothing if not thorough in going after any and every argument made by Blackbird Technologies. In response to Cloudflare's ethics complaints against Blackbird as violating rules for lawyers and law firms, the company insists it's not a law firm, to which Cloudflare now claims "oh really?"

And Ms. Verlander’s unequivocal assertion that Blackbird Tech is not a law firm can be contrasted with sworn statements submitted by Blackbird Tech attorneys to courts last May asserting how much they operate like a law firm. In Blackbird Tech v. Service Lighting and Electrical Supplies, Blackbird Tech CEO Wendy Verlander, Blackbird Tech co-founder Chris Freeman, and Blackbird Tech employee Sean Thompson, each filed declarations in opposition to a proposed protective order.

Protective orders are important in patent litigation. Often, discovery in those cases involves companies handing over highly confidential information about their most important trade secrets or the history of how they developed valuable intellectual property. In most cases, courts limit access to such materials only to outside counsel, as opposed to the parties’ employees and in-house counsel. In-house counsel generally serve a number of functions at a business that include competitive decision-making, either directly or indirectly. Because in-house counsel may benefit from the additional perspective and insight gained by exposure to sensitive trade secrets of a competitor, and are unable to simply wipe their memories clean, courts in patent litigation cases often limit their review of particularly sensitive documents. In such cases, documents classified as “HIGHLY CONFIDENTIAL—ATTORNEY EYES ONLY” are limited to review by outside counsel, who are less likely to face the same sort of business decisions in the future.

When it served their purposes in opposition to a proposed protective order, the Blackbird Tech attorneys were quick to point out how much they operated only like a law firm and distance themselves from their business roles. Their sworn declarations specifically asserted:

• “Although the structure of Blackbird is unique, the realities of patent litigation at Blackbird are very much the same as patent litigation on behalf of clients at law firms.” (Verlander at ¶13, Freeman at ¶14)

• “Thus, in many ways, my role at Blackbird as a member of the Litigation Group is identical to my previous role as outside counsel at a law firm.” (Verlander at ¶13, Freeman at ¶14)(emphasis added)

• “Blackbird’s Litigation Group operates almost identically to outside law firm counsel. Blackbird’s litigators are presented with patents and possible infringers, just as clients bring to law firms. The Blackbird litigators then bring their litigation expertise to bear and thoroughly analyze the patent and the potential infringement case, ultimately deciding whether to move forward with litigation — just as a law firm would evaluate a case. If the Blackbird litigation team identifies a strong infringement case, the litigators draft Complaints and conduct litigation, acting in the same role as outside counsel.” (Verlander at ¶14, Freeman at ¶15)(emphasis added).

• “On a day-to-day basis, what I do at Blackbird is the same as what I did when practicing at a firm.” (Thompson at ¶2).

This inconsistency points out once again how Blackbird is attempting to gain an advantage by turning traditional roles on their head. If they were a typical company, that was looking to make products using the patents they own, then we’d be able to seek discovery on their products and operations. Instead, they function as a law firm with no business operations that would be subject to the same sort of scrutiny they will apply to a company like Cloudflare.

Also, while we noted the ethics complaints that Cloudflare has filed, it appears that politicians are paying attention and at least one is looking to make Blackbird Technologies' style of patent trolling explicitly illegal:

On May 23, 2017, Rep. Keith Wheeler of Illinois introduced a bill (the “Ethics in Patent Litigation Act”) that would make it the public policy of the State of Illinois that attorneys in the state, like Blackbird co-founder Chris Freeman (LinkedIn), should not be able to buy patents themselves for the purpose of suing on them if they are not in the business of any other productive activity.

Cloudflare is very much building on the Newegg strategy of making sure that if you try to patent troll against it, it's going to hit back hard -- which should discourage other patent trolls from trying (in Newegg's case, this has been amazingly successful, even if it took a few years). But, again, the idea that our system allows this to happen in the first place is the real travesty. Companies shouldn't have to fight back hard to discourage being attacked by patent trolls. The very existence of trolls is the problem. Bad patents, broadly granted, combined with a ridiculous patent litigation process that makes this system ripe for abuse. It's great that Cloudflare is fighting back. It's frustrating that it's even necessary.

Filed Under: patent trolls, patents, prior art
Companies: blackbird technologies, cloudflare

Patent Trolling Lawyers May Have Picked With The Wrong Company To Shake Down: Cloudflare Hits Back

from the bam dept

Earlier this year, we wrote a story about a fairly nutty patent troll, Blackbird Technologies, who had sued a bunch of companies over a patent it claimed covered letting users download content to consume offline (even though the actual patent was for a CD-ROM burning system). Blackbird has been suing a ton of companies over the last few years, and one of its recent targets was CDN provider Cloudflare (note: we're a customer of Cloudflare). The lawsuit is over US Patent 6,453,335 on "providing an internet third party data channel." The patent itself seems questionable. The application of the patent to Cloudflare's technology seems questionable -- but rather than dig into all of that, instead, let's focus on Cloudflare's response to all of this. First, it's pushing back on the lawsuit (of course), but it's going much, much further than that. As detailed in a new blog post, it's directly going after the lawyers behind Blackbird.

You see, it's fairly typical for patent trolling operations to be pretty secretive about how they operate. They are often formed by former patent lawyers who then try to lay low while they know they're abusing the system. In this case, Cloudflare is first calling out the patent lawyers behind Blackbird:

Blackbird was formed three years ago by two attorneys who left law firms where they had been engaged in patent defense work — Wendy Verlander (@bbirdtech_CEO; LinkedIn) at WilmerHale, and Chris Freeman (LinkedIn) at Kirkland & Ellis. Notably, both of those firms promote themselves as ready to protect companies from patent trolls. Kirkland trumpets that its IP practice group scored a victory against the “original patent troll,” while WilmerHale has a Patent Troll Initiative that aims to help businesses deal comprehensively with patent trolls.

Having gained valuable experience and training by working for clients who paid their firms handsomely to fight suits brought by patent trolls, Verlander and Freeman were well aware of the harm done to their clients by patent trolls. Yet, Verlander and Freeman decided to cast their lot with the other side and formed a patent troll for themselves.

But it goes way beyond them just flipping to the dark side. As Cloudflare details, it believes that Blackbird and the two lawyers who run it may have violated legal ethics rules. Many of them. First, Cloudflare makes the case that Blackbird Technologies is really just a law firm, rather than a tech company:

As made clear in this blog post, Blackbird’s founders made the decision to leave law firms that were engaged in the defense of clients who were faced with patent lawsuits, and formed a new law firm focused on bringing law suits as a patent troll. The only services promoted on its website (http://www.blackbird-tech.com/) are legal services; the website notes that Blackbird represents a “new model” which provides the benefits of “top law firm experience” offering clients the ability to “litigate at reduced costs.”

Of 12 total employees listed on the Blackbird website, 7 are attorneys. The remaining 5 are very junior employees described as “analysts” (3 are current undergraduate students and 2 received Bachelor's degrees last May). As far as we can determine, Blackbird produces no products or services which it makes available to the public. Rather, it offers litigation services and is in the business of filing lawsuits. And its output in that regard is prolific, as it has filed a total of 107 lawsuits since September 2014.

As final confirmation that Blackbird is a law firm marketing legal services, its own website includes a disclaimer about “Attorney Advertising,” which states explicitly “[p]lease note that this website may contain attorney advertising.”

Blackbird’s “new model” seems to be only that its operations set out to distort the traditional Attorney-Client relationship. Blackbird’s website makes a direct pitch of its legal services to recruit clients with potential claims and then, instead of taking them on as a client, purchases their claims and provides additional consideration that likely gives the client an ongoing interest in the resulting litigation. In doing so, Blackbird is flouting its ethical obligations meant to protect clients and distorting the judicial process by obfuscating and limiting potential counterclaims against the real party in interest.

And thus, the company is subject to certain rules. Many of which Cloudflare argues it is not following.

1. Blackbird may have acquired a proprietary interest in the subject matter of the litigation in violation of Rule 1.8(i) — Attorneys have a near monopoly of representing clients in the judicial system. Rule of Professional Conduct 1.8(i) explicitly prohibits an attorney from “acquir[ing] a proprietary interest in a cause of action or subject matter of litigation.” But that is exactly what Blackbird does. Blackbird’s website contains a pitch to recruit clients with potential legal claims under their patents, but then buys those claims and brings them on their own behalf. Wouldn’t that be a violation of Rule 1.8(i)? Doesn’t Blackbird’s attempt to pitch this as a “new model” of being a patent troll ignore the fact that the only non-law firm activity in which they are engaged (buying patents to bring lawsuits) is the exact thing prohibited by Rule 1.8(i)? They shouldn’t be able to use creative contractual or corporate structures to avoid its responsibility under the rules.

2. Blackbird may be sharing fees or firm equity with non-lawyers in violation of Rule 5.4(a) or 5.4(d) — In order to preserve the integrity of the Attorney-Client relationship, Rule of Professional Conduct 5.4(a) prohibits attorneys from splitting legal fees in individual matters with non-lawyers, and Rule 5.4(d) prohibits providing an equity interest in a firm to non-lawyers. We think Blackbird may be violating both provisions. Although he no longer owns the patent and is not a party to the case, the assignment agreement’s terms (specifying payment of only $1) makes it possible that Mr. Kaufman has a contingency interest in the lawsuit. If that is the case, wouldn’t Blackbird be in violation of Rule 5.4(a)? Similarly, Blackbird has moved very quickly since its founding to file lawsuits against a great number of companies — 107 complaints since September 2014. So far, none of those cases have gone to trial. We intend to examine whether they have used financial support from non-lawyers to fund the very fast start to their operations in exchange for an impermissible equity interest, or have shared an equity interest with patent holders like Mr. Kaufmann, either of which would be in violation of Rule 5.4(d).

Yeah. So, that might make things slightly more interesting for Blackbird. Rather than just having to fight off the claims of non-infringement or attempts to invalidate the patents, if Cloudflare's arguments here get anywhere, it could put the founders of Blackbird into serious trouble. In some ways, based on Cloudflare's description of how Blackbird operates, it reminds me of Righthaven. As you may recall, that was a copyright trolling operation that effectively "bought" the bare right to sue from newspapers. They pretended they bought the copyright (since you can't just buy a right to sue), but the transfer agreement left all the actual power with the newspapers, and courts eventually realized that all Righthaven really obtained was the right to sue. That resulted in the collapse of Righthaven. This isn't exactly analogous, but there are some clear similarities, in having a "company," rather than a law firm (but still run completely by lawyers), "purchase" patents or copyrights solely for the purpose of suing, while setting up arrangements to share the proceeds with the previous holder of those copyrights or patents. It's a pretty sleazy business no matter what -- and with Righthaven it proved to be its undoing. Blackbird may face a similar challenge.

Cloudflare claims they're taking such an extreme step with the bar complaints to ward off other patent trolls from evolving into this type of model, that will only encourage more bogus lawsuits. And, that's not all the company is doing in going after Blackbird. The company is also crowdfunding up to $50,0000 for prior art discoveries not just on the patent being asserted against Cloudflare but on any patent held by Blackbird Technologies.

The first bounty (up to $20,000) is for prior art which reads on the patent Blackbird is using to sue Cloudflare, the ‘335 patent. $10,000 is guaranteed and will be divided among prior art submissions that raise substantive questions on the ‘335 patent. The remaining $10,000 will be used to compensate prior art submissions that Cloudflare uses as evidence in an invalidation procedure at the USPTO or invalidation at trial. The latest date of prior art on the ‘335 patent would be July 20, 1998.

The larger bounty (up to $30,000) will be spread among those submitting substantial prior art which reads on any of the 34 other outstanding Blackbird patents or their 3 in-flight patent applications and could lead to the invalidation of these dubious patents. Cloudflare will pay the second bounty to people who submit relevant and substantive prior art which, in Cloudflare’s opinion, reads on any other Blackbird patent. The money will be distributed based on the quality of the prior art, the perceived value of the patent, and the extent to which the evidence is used in a proceeding to invalidate one of the Blackbird patents.

We will maintain a list of all the Blackbird patents at cloudflare.com/blackbirdpatents/. The list will provide the number of each patent, the relevant latest date of prior art, and will list germane already-identified prior art. We will update the list periodically as we get new information submitted.

In other words, if Blackbird Technologies wants to go after Cloudflare in court, Cloudflare is going to hit back hard and make sure that Blackbird can't just run away. In many ways, this reminds me of Newegg's scorched earth approach to any patent trolls that sue them. Once a troll initiates a lawsuit, Newegg goes to war to make sure that other patent trolls don't even think of trying to go after Newegg again (and that strategy seems to mostly be working, as trolls now know to steer clear of the company).

Kudos to Cloudflare for hitting back against patent trolling that serves no purpose whatsoever, other than to shake down innovative companies and stifle their services. But, really, the true travesty here is that the company needs to do this at all. Our patent (and copyright) systems seem almost perfectly designed for this kind of shakedown game, having nothing whatsoever to do witht the stated purpose of supporting actual innovators and creators. Instead, it's become a paper game abused by lawyers to enrich themselves at the expense of actual innovators and creators.

Filed Under: bar complaints, bounty, chris freeman, lawsuits, patent trolls, patents, prior art, wendy verlander
Companies: blackbird technologies, cloudflare, kirkland & ellis, wilmerhale

Patent Troll Sues Netflix, Soundcloud, Vimeo And More For Allowing Offline Viewing

from the but-the-patent-system-encourage-innovation,-right? dept

Joe Mullin over at Ars Technica has the story of a patent troll, Blackbird Technologies, which was founded by (of course) two patent attorneys to buy up patents and shakedown companies with legal threats. Blackbird Technologies has now sued Netflix, Soundcloud, Vimeo and a variety of other companies over US Patent 7,174,362, issued in 2007 (filed for in 2000) on a "method and system for supplying products from pre-stored digital data in response to demands transmitted via computer network."

Specifically, the lawsuits are targeting various "download to consume offline" features on various content websites. Netflix, of course, just famously launched that long-requested feature, which is useful in cases where people have slow or no internet access (e.g., taking your laptop on an airplane without internet access). If anyone thinks that this kind of feature was developed because of this patent, they're being delusional. And that's especially true because the patent itself isn't even about downloading content from the network for offline viewing. Instead, it's actually about someone ordering some content over the internet, having that content automatically burned to a CD-ROM and having that CD-R shipped off to the person. As Mullin notes, the true irony here, is that the guy who got the patent in the first place, Sungil Lee, may have been inspired by Netflix, which already had a very popular business shipping DVD's ordered online to customers:

Context is important when looking at Lee's patent. It's extremely unlikely an inventor writing up the idea of a web-based system for creating and shipping CD-Rs, in the year 2000, was not acutely aware of Netflix—whose DVDs-in-the-mail business had begun blowing up. If there was any copying at all, it was Lee copying Netflix's idea. But in the upside-down world of patent trolls, it's Blackbird who gets to claim the mantle of defending innovation, while it accuses Netflix of being the copycat.

And the thing is, even the idea of having content written automatically to CD-Rs was hardly new in 2000. This patent never should have been granted. I remember back in 1998, when I was working for a company that did electronic distribution of software being pitched by multiple companies that were working on similar solutions, and even seeing a demonstration of one such company at COMDEX in the fall of 1998 (if I remember correctly, to demonstrate how it worked they burned me a copy of Internet Explorer 5) which had just been released. So this patent never should have been granted in the first place. On top of that, to sue companies for doing the obvious thing of offering downloads for offline viewing is a clear abuse of the patent system.

The lawsuits were filed in Delaware, which has become the "new East Texas" in recent years due to a series of patent troll friendly rulings. Every time we hear stories about how patent trolling is on the decline, we see stories like this, suggesting patent trolling is still a huge problem and still a huge cost on innovation, rather than a boon to innovation.

Filed Under: downloads, offline viewing, patent trolls, patents, streaming
Companies: blackbird technologies, netflix, soundcloud, vimeo