Rackspace Helps Kill A Patent Troll: Rotating Your Smartphone Is No Longer Infringing

from the bogus-patents dept

Over the last few years it’s been great to see companies like Newegg and Rackspace decide that they’re not going to give in to bogus patent troll lawsuits. As we’ve discussed, it’s almost always easier, faster and cheaper to just settle and pay up whatever the troll is asking for. That’s part of why trolling works. Fighting a patent lawsuit — even a totally bogus one (i.e., not infrigning) — on a clearly invalid patent will still cost many hundreds of thousands, if not millions, of dollars. If the troll is offering to settle for tens of thousands of dollars, many, many companies will do the obvious short-term cost-benefit analysis and settle. It’s hard to directly fault them for this — but it only makes the problem worse for everyone else. Not only does it fund the patent trolls to keep suing others, often they’ll use some of that money to buy more bogus patents and shake down companies over that new ones as well. On top of that, settling patent threats just puts a big “sucker” sign on your company, meaning that more trolls will start circling. Making a stand and saying that you will not compromise or deal with trolls actually helps in the long run by scaring off some trolls. Both Newegg and Rackspace have been getting a lot of publicity (and goodwill) for their anti-troll efforts.

Rackspace has successfully defeated a patent troll called Rotatable Technologies by having its patent (US Patent 6,326,978) invalidated:

Rotatable owned a patent that it claimed covers the screen rotation technology that comes standard in just about every smartphone. You know, when you flip your device sideways and the screen shifts orientation from portrait mode to landscape mode? Like nearly all the apps in the Apple and Android app stores, Rackspace uses standard functionality provided by Apple?s libraries and Android open source software to provide this display feature in our mobile cloud applications.

Rotatable sued us and immediately asked for $75,000 to go away. We refused. And we fought. It?s Rackspace policy to not pay off patent trolls, even if it costs us more to fight. Eventually Rotatable offered to just walk away ? but we refused again. Just as we promised last year, we challenged the patent and the USPTO invalidated it.

As Rackspace says, the company is now “an ex-patent troll.” Kudos to Rackspace for fighting and winning, rather than giving in to the troll.

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Companies: newegg, rackspace

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Comments on “Rackspace Helps Kill A Patent Troll: Rotating Your Smartphone Is No Longer Infringing”

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36 Comments
That One Guy (profile) says:

Rotatable sued us and immediately asked for $75,000 to go away. We refused. And we fought. It’s Rackspace policy to not pay off patent trolls, even if it costs us more to fight. Eventually Rotatable offered to just walk away – but we refused again. Just as we promised last year, we challenged the patent and the USPTO invalidated it.

Nice to see this actually work for once, more often than not when a patent/copyright troll finds themselves facing actual opposition they just walk off and try again elsewhere, this time at least it seems they didn’t manage to get away so easily.

While it would be nice if there was some way to actually punish extortionists using the legal system to shake people down, this at least is a small step towards that.

That One Guy (profile) says:

Re: Re:

Exactly so. Paying up may be cheaper for a company in the short term, but it also throws up a huge ‘EASY MONEY HERE!’ flag for other parasites, dooming a company to be shaken down again and again as others come in for ‘their’ cut.

The only real way to stop that from happening is to state up-front that you’ll make it more trouble than it’s worth, and fight back when someone puts that claim to the test. Unfortunately, as the article notes, fighting back can be insanely expensive, so smaller companies often don’t have any choice, they either pay up or be driven under trying to fight back.

PaulT (profile) says:

Re: Re:

This is true, but the sad reality is that it’s often far less expensive to just pay up than it is to fight. In fact, the entire patent troll business model is based on this fact.

Kudos to Rackspace in this instance, but it doesn’t address any of the underlying problems that makes the entire scam possible in the first place. Depending on victims to fight expensive court battles despite having done nothing wrong is not the way this should work.

This is the correct result, but the existence of this kind of case, combined with the fact that it’s so notable that a company has actually fought back, is evidence that the system needs to be fixed.

David says:

Re: Re: Re:

This is the correct result,

No, it isn’t. Rackspace had to take both a large risk and a large investment.

It is a disgrace that in the U.S.A., you have to pay for your rights. This is exacerbated by a court system heavily favoring clueless juries which leads to charisma being the most important qualification for a lawyer, leading to legal processes that are more like “Iustitia has talent” shows than focused about actual merit, and with rockstar pricing.

Naturally, big corporations just love a system where justice takes second place to money and where you can just price the small fry out of the game.

You don’t see the really big corporations go after patent trolls. They are not interested in disturbing the system that is a net win for them.

That One Guy (profile) says:

Re: Re: Re: Re:

The bigger companies have a sort of twisted, symbiotic relationship to patent trolls, where they’ll funnel money to them as ‘licensing fees’, and in exchange the troll will target smaller companies that, left unchecked, might be able to present competition to the larger companies.

It’s a win-win for both troll and large company, and meanwhile, everyone else gets screwed over because of it.

Whatever (profile) says:

Re: Re: Re: Re:

No, it isn’t. Rackspace had to take both a large risk and a large investment.

I agree with you completely. Rackspace of course is a little bit lucky that the patent in question was perhaps a little easier to strike down. However, it’s the fact that they fought and won that is an investment in the future. Other companies who are trolling for a fast payday may think twice about hit them.

You are also correct that big companies don’t want to disturb the patent universe too much, and they are much more likely to pay off a marginal patent holder than fight, because they may be on the other side next time around.

Anonymous Coward says:

Re: Re: Re:3 Re:

I have mixed feelings when it comes to things like pharmaceutical patents (which may require years and years to get through FDA approval, and while I agree that drug safety is important there is much debate over the extent the FDA protects us vs the extent they harm us by delaying or preventing better products from entering the market). When it comes to tech patents 20 years seems way too long.

PaulT (profile) says:

Re: Re: Re: Re:

“No, it isn’t. Rackspace had to take both a large risk and a large investment.”

Of course, which is why I said correct result, not correct system or procedure.

That Rackspace prevailed is the correct result. That they had to fight the battle in the first place is where attention should be directed. It’s a battle won, but the war continues.

“You don’t see the really big corporations go after patent trolls. They are not interested in disturbing the system that is a net win for them.”

Sort of true. There’s been some pushback, but patent portfolios and the like are greatly beneficial to those companies. Their actions tend to be involved with fighting specific claims against them, rather than attacking the patent or patent process itself. They might be beneficial allies in getting rid of certain trolls, but they’re not as interested in correcting the system as smaller players.

Ehud Gavron (profile) says:

Kudos to rackspace! They're not like those EV1 troll-paying bitches

Rackspace and Newegg and everyone who fights the trolls does a service in more ways than one. At the very least they don’t give the trolls cash to fund attacking more victims.

Rackspace follows a great example set by Newegg and others.

Unlike, of course EV1 that paid up at the first sign of “hey here’s where you can pay”
http://news.netcraft.com/archives/2004/03/01/ev1servers_pays_license_fee_to_sco.html

History judges weak troll-feeders harshly.

nerdbert (profile) says:

Re: Kudos to rackspace! They're not like those EV1 troll-paying bitches

That brings up the SCO affair, and how unwise they were in going after IBM. I could have told them how that would wind up — going after a company that takes in more than $1B/yr in patent money is never a wise thing.

But add IBM to the list of people not to go after a patent for. I remember when one very large, well regarded semiconductor company came after IBM for allegedly violating one of their patents. By the time we finished with them, they were owing IBM a nice, steady stream of income. (I was on the technical side of the team, answering the questions of the lawyers, and I have to say you don’t want to fight IBM’s lawyers, they’re really good.)

staff says:

more dissembling by masnick

Ooh, this makes me so mad! I’m going to paste a few paragraphs I wrote in my diary just for such a naughty occasion. First I’m going to lead off with a few nastily written words in your direction.

Finally I’m going to end off with a few blatant hyperlinks so you peons can click them to read what I say and believe is fact!

That One Guy (profile) says:

Re: What if the loser had to pay the court costs?

I believe theoretically judges can award legal fees in cases like this, but the bar to do so is very high, and most successful extortionists are quite skilled at making sure to keep their actions just under that threshold, making recovering legal fees for those that fight back a risky gambit.

That One Guy (profile) says:

Re: Re: Re: What if the loser had to pay the court costs?

That was due to Rackspace taking the patent up with the USPTO though, I doubt the judge in the case(assuming it even got that far, trolls tend to be extremely allergic to cross examination in any court room not located in East Texas)had anything to do with it, given the following line:

‘…we challenged the patent and the USPTO invalidated it.

While losing the patent is nice, Rackspace is still on the hook for any legal costs they may have incurred(don’t need to go to court for that to start adding up after all), which is one of the reasons such extortion schemes are so effective: Even if you win, you can still have spend an obscene amount of money defending yourself, and both sides know it.

If however the judges awarded legal fees in such cases more often, the risk for patent trolls would be much higher, and they’d be much less likely to try and shake down anyone and everyone who looked like an easy payday. As well, if those on the receiving end of the shakedown letters knew that if they won they’d get reimbursed on their legal fees, they’d be much more likely to risk fighting.

BernardoVerda says:

Re: Re: Re:2 What if the loser had to pay the court costs?

Well (as NTP vs RIM (Blackbery) showed — to the tune of over $600 million, no less) successfully invalidating the bogus patents once the legal actions are under way, provides no guarantee that the troll will be defeated, or that the victim will get away relatively unscathed.

Call me Al says:

Reward such behaviour

I think an important consideration where a company does fight back against the trolls is to see how their behaviour can be rewarded.

I do hope that those who may need the kind of services Rackspace offers add this to their list of considerations when choosing their provider and perhaps let Rackspace know it was on that list if they do choose to use them. A bit of positive reinforcement wouldn’t hurt.

Of course it could be that they are rubbish at everything else, which would be a shame.

That One Guy (profile) says:

Re: Re: Reward such behaviour

Indeed they have, here’s one where a particularly greedy parasite went after the employees of various companies, demanding that they be paid $1,000 per employee for companies that had scanners that they believed ‘violated’ their patent.

Vermont’s Case Against Notorious Scanner Patent Troll Moves Forward
https://www.techdirt.com/articles/20140816/06025528232/vermonts-case-against-notorious-scanner-patent-troll-moves-forward.shtml

Maurice Michael Ross (profile) says:

Patent Trolls

Most patents are not invalid. Further, what many forget is that so-called “trolls” usually represent the little guy–individual inventors who refused to play the corporate game and develop valuable technologies that benefit all of us. The only way for the small guy to get paid is to license his invention (because the small guy doesn’t have the millions that it takes to bring a product to market). The so-called trolls sue when big corporate America refuses to pay a reasonable license fee to the small guy and instead, try to steal the invention. Further, the lawyers who represent the small inventor/patent-owner often take the risk of losing the case and front the money for costs and expenses which can be hundreds of thousands of dollars. There needs to be some balance in the thinking here—anti-troll hysteria really amounts to anti-patent philosophy. But if you believe there is a place for patents in our system to reward innovation by the little guy, then the trolls and their lawyers actually perform an important public service. There is no other way for the individual inventor to compete without getting sucked up into the worst of corporate America.

Richard Falk (profile) says:

More Common Is Non-Infringement

The more common situation is where the patent is valid but there is no infringement. That is a more expensive situation to win because one cannot stay the case and invalidate the patent at the USPTO and one cannot use Section 101 arguments to end the case early. Instead, one must go through at least core discovery and pay experts as well as lawyers and this is all very expensive. You can try for summary judgement, but if in the East District of Texas that is rarely granted or even considered.

https://www.eff.org/deeplinks/2014/07/why-do-patent-trolls-go-texas-its-not-bbq

So you are most likely required to go to trial which is always risky even if the facts are in your favor, especially for more technical patents. And then even if you win you would not normally be able to get fees shifted nor obtain sanctions absent litigation misconduct.

http://sites.google.com/site/271patentblog/Home/DiagnosticSystemsvSymantec.pdf?attredirects=0

Later cases (e.g. Marctec, Higmark, Raylon) would uphold §285 fee shifting or Rule 11 sanctions but the shell company subsidiaries of the PAEs would simply go bust since they had no revenues and the only asset was the patent being asserted. Even legislation proposing joining the real parties of interest will be circumvented by setting up foreign subsidiaries creating a jurisdictional corporate veil.

The only truly effective method to stopping abuse is to hold the attorneys jointly and severally liable. Attorneys are the entrée into the legal system and should be held responsible for their conduct. As stated in Eon-Net v. Flagstar Bancorp, “But an attorney, in addition to his obligation to his client, also has an obligation to the court and should not blindly follow the client’s interests if not supported by law and facts.”

This is much more than a patent litigation abuse issue, but is a problem with civil litigation abuse in general. Read the following where trial lawyers admit this abuse:

http://www.abajournal.com/files/Survey_Press_Release_Final.pdf

If one narrowly tries to fix this problem for patents only, then like the game of Whac-A-Mole® the problem will simply pop up somewhere else:

http://mcsmith.blogs.com/eastern_district_of_texas/files/IP.pdf
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1878966

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