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.

Filed Under: patent troll, patents, rotatable screens
Companies: newegg, rackspace


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  • icon
    That One Guy (profile), 24 Sep 2014 @ 7:04pm

    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.

    reply to this | link to this | view in chronology ]

  • icon
    Whatever (profile), 24 Sep 2014 @ 9:22pm

    This is the way to deal with it. Push it to the very end, and not only don't pay them, but effectively put them out of business.

    I doubt that anyone else looking for a quick payday will knock on Rackspace's door any time soon.

    reply to this | link to this | view in chronology ]

    • icon
      That One Guy (profile), 25 Sep 2014 @ 12:15am

      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.

      reply to this | link to this | view in chronology ]

      • identicon
        Anonymous Coward, 26 Sep 2014 @ 5:00am

        Re: Re:

        And who knows what costs Rackspace prevented by hanging this troll out to dry. It may have saved tons of money that they can't quantify because others haven't bothered to try and shake them down.

        reply to this | link to this | view in chronology ]

    • icon
      PaulT (profile), 25 Sep 2014 @ 12:50am

      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.

      reply to this | link to this | view in chronology ]

      • identicon
        David, 25 Sep 2014 @ 1:21am

        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.

        reply to this | link to this | view in chronology ]

        • icon
          That One Guy (profile), 25 Sep 2014 @ 1:34am

          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.

          reply to this | link to this | view in chronology ]

        • icon
          Whatever (profile), 25 Sep 2014 @ 2:29am

          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.

          reply to this | link to this | view in chronology ]

          • identicon
            Anonymous Coward, 25 Sep 2014 @ 4:15am

            Re: Re: Re: Re:

            Especially when some large companies have the patents in stock like nuclear powers had warheads during the cold war.
            I mean, patents make sense and should exist, but there has to be a better way!

            reply to this | link to this | view in chronology ]

            • identicon
              Anonymous Coward, 25 Sep 2014 @ 8:23am

              Re: Re: Re: Re: 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.

              reply to this | link to this | view in chronology ]

        • icon
          PaulT (profile), 25 Sep 2014 @ 4:21am

          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.

          reply to this | link to this | view in chronology ]

    • icon
      Ninja (profile), 25 Sep 2014 @ 4:47am

      Re:

      Fully agreed. Now we need to reform the patent system to prevent such practices and save money to the big companies and prevent such trolls from ruining startups that can't afford a court battle.

      reply to this | link to this | view in chronology ]

    • identicon
      Just Another Anonymous Troll, 25 Sep 2014 @ 4:51am

      Re:

      Whatever is not spreading troll vitriol, and instead voices his agreement on the article?
      *black hole forms and consumes the planet*

      reply to this | link to this | view in chronology ]

  • icon
    Ehud Gavron (profile), 24 Sep 2014 @ 9:36pm

    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.

    reply to this | link to this | view in chronology ]

    • identicon
      Anonymous Coward, 24 Sep 2014 @ 11:46pm

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

      Perhaps you should refer to them as the company formerly known as "EV1 Servers".

      reply to this | link to this | view in chronology ]

    • identicon
      nerdbert, 25 Sep 2014 @ 1:39pm

      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.)

      reply to this | link to this | view in chronology ]

  • identicon
    staff, 24 Sep 2014 @ 10:43pm

    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!

    reply to this | link to this | view in chronology ]

  • icon
    DaveW. (profile), 24 Sep 2014 @ 11:49pm

    What if the loser had to pay the court costs?

    That would make the trolls think twice...

    reply to this | link to this | view in chronology ]

    • icon
      That One Guy (profile), 25 Sep 2014 @ 12:19am

      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.

      reply to this | link to this | view in chronology ]

      • identicon
        Anonymous Coward, 25 Sep 2014 @ 4:05am

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

        Isn't having your patent invalidated, after you tried to back off so it didn't get that far, over said bar?

        reply to this | link to this | view in chronology ]

        • icon
          That One Guy (profile), 25 Sep 2014 @ 4:27am

          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.

          reply to this | link to this | view in chronology ]

          • icon
            BernardoVerda (profile), 25 Sep 2014 @ 8:38pm

            Re: Re: Re: Re: 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.

            reply to this | link to this | view in chronology ]

    • identicon
      Anonymous Coward, 25 Sep 2014 @ 5:20am

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

      That is why we have no patent trolling problem in the UK (that and the fact that software patents are not valid).

      reply to this | link to this | view in chronology ]

    • identicon
      Anonymous Coward, 25 Sep 2014 @ 8:40am

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

      Presumably if you have a patent it's supposed to be a good one. The problem is the USPTO granted bad patents to begin with.

      reply to this | link to this | view in chronology ]

  • identicon
    Call me Al, 25 Sep 2014 @ 3:58am

    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.

    reply to this | link to this | view in chronology ]

  • icon
    Jeremy Lyman (profile), 25 Sep 2014 @ 4:24am

    Where is the tip jar?

    reply to this | link to this | view in chronology ]

  • icon
    Maurice Michael Ross (profile), 25 Sep 2014 @ 10:19am

    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.

    reply to this | link to this | view in chronology ]

  • icon
    tomaszmur (profile), 1 Oct 2014 @ 3:39am

    świetney news

    reply to this | link to this | view in chronology ]

  • identicon
    Richard Falk, 7 Nov 2014 @ 12:01pm

    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?attredirec ts=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/pape rs.cfm?abstract_id=1878966

    reply to this | link to this | view in chronology ]


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