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


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  • icon
    That One Guy (profile), 8 Nov 2019 @ 3:47pm

    Nothing spoils a bully's day like fighting back

    Good to see another company taking the fight back to the legal extortionists, making them dearly regret their choice in attempted victims and doing so in a way to reduce the allure of going after more people in the future lest another target fights back and costs them even more.

    While unfortunately not everyone can afford to fight back like this if everyone that could did then copyright/patent extortion would become a lot less attractive a way to get easy money, as the would-be extortionist could never know when a case would turn around and start costing them, so here's hoping more companies follow suit.

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

  • identicon
    Anonymous Coward, 8 Nov 2019 @ 3:57pm

    Good on all of them for going beyond mere defense and taking a strong stand against a trolling operation in an effective manner. Pretty stunning when your facts and arguments up front are so good that the courts don't even need to question them or send anything back.

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

  • identicon
    Anonymous Coward, 8 Nov 2019 @ 7:17pm

    That sound you hear is Hamilton losing so much shit it formed an independent territory of excrement.

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

  • identicon
    Pixelation, 8 Nov 2019 @ 7:29pm

    4 and 20 Blackbirds baked in a humble pie.

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

  • This comment has been flagged by the community. Click here to show it
    identicon
    Anonymous Coward, 8 Nov 2019 @ 8:32pm

    So they'll go after a patent troll but will deplatform anyone whose speech somebody screams is hateful.

    Guess that means they have half of a spine instead of a complete one.

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

  • identicon
    Federico, 9 Nov 2019 @ 12:51am

    How to replicate and destroy more trolls?

    The EFF wrote in the early 2010s on https://trollingeffects.org/index9203.html?q=faq that "the average cost of defending a patent case all the way through trial approaches $2 million or more", is that figure an accurate estimate of the work involved in this case?

    What kind of legal standing do you need to fight back? Cloudflare didn't try do invalidate the patents but only to make them easy to defend from with a database of prior art, right? https://www.cloudflare.com/blackbirdpatents/jengo/

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

    • identicon
      Anonymous Coward, 11 Nov 2019 @ 10:34am

      Re: How to replicate and destroy more trolls?

      The correct answer to your question is “wrong”. Cloudfare secured dismissal by a federal court in SF on the basis that the patent was not valid under 35 USC 101. The dismissal was subsequently affirmed by a panel of the CAFC. It is not known if Blackbird is pursuing either an en banc hearing by the CAFC or petitioning for Cert from the USSC.

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

      • icon
        Mike Masnick (profile), 11 Nov 2019 @ 11:40am

        Re: Re: How to replicate and destroy more trolls?

        It is not known if Blackbird is pursuing either an en banc hearing by the CAFC or petitioning for Cert from the USSC.

        The time in which it could do either has passed. The case is over.

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

  • identicon
    Anonymous Coward, 9 Nov 2019 @ 3:27am

    So far cloudflare seems like a pretty good actor imo. They are a company that seems to not want to build giant intrusive databases of everyone and so far have tried to protect their customers/partners rights.

    I hope they become profitable/sustainable quickly.

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

  • identicon
    Anonymous Coward, 9 Nov 2019 @ 6:30pm

    Next up, hopefully Cloudflare goes to pierce the corporate veil and go after those peoples own assets, since the company was 'patently' [pun intended] a front just to illegally extort money.

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

  • identicon
    Anonymous Coward, 11 Nov 2019 @ 3:23am

    Yes, well done Cloudflare. But, all that has done is taught the trolls to not sue big companies.

    A better strategy may have been to get in touch with a few other large companies and set up a non-profit legal firm with collected funds from the agreeing companies and for that non-profit to assist generally with patent troll destruction. And, the funds donated would have been tax deductible.

    They could still do this.

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

  • icon
    Wyrm (profile), 12 Nov 2019 @ 8:29am

    naming

    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”?

    There was a case where people debated semantics like here.
    The judge went something like this:

    Judge: If you call a tail "a leg", how many legs does a horse have?
    Lawyer: Five?
    Judge: No, four. It doesn't matter what you call something, but how they are defined.

    So they can play on words, but if they match the legal definition of a law firm, judges will treat them as such.

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


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