9 ms·

Blackbird's Patent Troll Suit Against Cloudflare Gets Patent Invalidated

261 points by eldridgea 9y ago

Eridrus 9y ago
This makes me wonder: is there any downside to enacting laws to make patent invalidation due to them being overbroad applicable retroactively and forcing Blackbird to return the money it extorted? It might be challenging to enforce due to limited liability, but I don't see any obvious downsides to trying? It seems like it could provide an incentive for companies to not attempt to create over-broad patents.
- chrsstrm 9y ago
  Why? If it is ruled invalid today then it was also invalid the day it was issued. I would imagine any company who paid for a license under threat of suit would now be telling their legal department to file a suit to reclaim the fee paid plus interest plus any provable damages. So we already have a remedy for this situation, no need to complicate the statutes.
  - Canada 9y ago
    Victims would have waived that right when they settled with the patent troll.
    - danmaz74 9y ago
      These waivers should be rendered null by law. I don't see any other way to fix the problem.
      - Canada 9y ago
        Yeah, I wish there were a special place in hell reserved for patent trolls, but undermining contracts retroactively is not something to be taken lightly.
        AnthonyMouse 9y ago
        It's not retroactive if you know about it ahead of time. It would be known when the contract is made that the money would by law have to be returned in the event the patent is invalidated. The consequence would obviously be that all the licensees of a patent that has any chance of being invalid would subsequently try to get it invalidated so they can get their money back, but isn't that the intended result?
        toss1 9y ago
        Not sure that it would be undermining contracts retroactively. IANAL, but the approach I'd consider is fraud/breach of contract. The previous victims settled and paid a royalty to use a patentable technology. It turns out that it was not what was represented. Ergo, refund. How it plays out surely depends a lot on regional courts, precedents, etc.
        stordoff 9y ago
        I wonder how air-tight you can make that reasoning. I suspect you could structure the settlement as paying to use the underlying technology _including_ the patents etc., rather than licensing the patent per se (so the fees paid are not directly predicated on the existence of a patent). Be interesting to see how the courts would react to that though, and if they see it as a sign you are negotiating in bad faith.
  - Eridrus 9y ago
    IANAL, but I don't think this is how the law works today.
  - CodeWriter23 9y ago
    We have a concept in US Law called “ex post facto” which means you are not liable after the fact if laws are changed.
    - dragonwriter 9y ago
      > We have a concept in US Law called “ex post facto” which means you are not liable after the fact if laws are changed. That's not what ex post facto means. An ex post facto law is a law criminalizing an act or increasing criminal penalties after an offense occurred. It does not prevent retroactive civil liability. The more applicable concepts here are the binding nature of contracts (which settlements are) and res judicata (which means that, in short, once a court judgement has been entered and made final, a party cannot relitigate it to get a better outcome.)
      - CodeWriter23 9y ago
        https://en.wikipedia.org/wiki/Ex_post_facto_law https://en.wikipedia.org/wiki/Ex_post_facto_law
- rhino369 9y ago
  There is benefit to making settlements and final judgments final. Otherwise you are incentivizing constant re-litigation of the same issues. It would also make trolls less likely to settle in the first place. You can put such terms inside your own settlement agreements. One common way is to use a running royalty rather than a lump sum royalty. If the patent is ever invalidated, you can stop paying.
- Retric 9y ago
  Patent trolls are separate companies with ~zero assets outside of the patent. Think sock-puppet internet accounts. They can just pay out any income as soon as it shows up so there is nothing to recover if their patent is invalidated. PS: The only way to make this work is if you pierced the corporate veil when their patents where invalidated, and that would make patents even more useless to small companies.
  - Eridrus 9y ago
    I don't think piercing the corporate veil is the only possible solution, you could legislate that revenue from unlitigated patents couldn't be taken out as profit. Again, that might not be enough and the exact wording would need work, but I think that making it possible is the first step to making it practical. Personally I think we should just abolish the entire patent system, since I really don't see much benefit in it for anyone but large companies, but basically everyone agrees on stopping patent trolls with garbage patents
peteforde 9y ago
Thank you, Cloudflare, for fighting the good fight. Someone should start a collective fund for smaller companies to help with legal support so that more troll claims can be fought instead of settled. Anyhow, I'd be genuinely curious how much it cost to get to this point, and how much you think it would have cost if you'd had a protracted battle.
- jimktrains2 9y ago
  > Someone should start a collective fund for smaller companies to help with legal support so that more troll claims can be fought instead of settled. You mean the eff? Probably not exactly what you had in mind, but pretty close I think?
  - AnthonyMouse 9y ago
    > You mean the eff? Probably not exactly what you had in mind, but pretty close I think? Well, of course, that requires people to put money in the fund. https://supporters.eff.org/donate https://supporters.eff.org/donate
    - y03a 9y ago
      Also, EFF is on option for smile.amazon.com. I've generated $9 for them so far, would have been more if I had remembered to use smile more often. Amazon is nice enough to remind me once in a while to use it, I wish it would just be automatic when I'm logged in, I refuse to install a plug in for that feature.
      - programbreeding 9y ago
        I had the same issue until I discovered there were plugins for Chrome[1] and Firefox[2] that will automatically redirect you to smile.amazon.com anytime you are on amazon.com. I have seen issues with the Firefox one when you aren't actually logged in to Amazon at the time, but the Chrome one works great. [1] https://chrome.google.com/webstore/detail/smile-always/jgpmhnmjbhgkhpbgelalfpplebgfjmbf?hl=en https://chrome.google.com/webstore/detail/smile-always/jgpmh... [2] https://addons.mozilla.org/en-US/firefox/addon/amazon-smile/ https://addons.mozilla.org/en-US/firefox/addon/amazon-smile/
x0x0 9y ago
fastly appears to have paid up http://ipwire.com/stories/blackbird-technologies-settles-patent-infringement-case-web-content-delivery-company/ http://ipwire.com/stories/blackbird-technologies-settles-pat...
- jlgaddis 9y ago
  Yep, same patent too. I'm curious how much Fastly paid. It's too bad that they didn't hold out for a weeks longer. Maybe they'll fight next time.
- dna_polymerase 9y ago
  I guess they are not as well funded as cloudflare and therefore couldn't take the risk of loosing in court.
- willyyr 9y ago
  If the patent got invalidated now, wouldn't they be able to get their "fees" back?
  - chii 9y ago
    retroactively applying a law is not very conducive to making predictions about legal matters, and therefore, it's very rarely done (if at all?). Plus, even if blackbird has to pay back their collected fees, they can "just" bankrupt - after all, the money is gone (unless you are implying that any dividends/payment to employees etc, are clawed back...)
    - AnthonyMouse 9y ago
      > Plus, even if blackbird has to pay back their collected fees, they can "just" bankrupt - after all, the money is gone (unless you are implying that any dividends/payment to employees etc, are clawed back...) Money that was already paid is gone, but if you had some settlement where you pay some amount per device, you could stop paying them going forward. It would also be effective against the use of invalid patents by large companies that wouldn't be bankrupted, which would reduce their incentive to lobby for their continued granting.
erikrothoff 9y ago
This is so cool. Obviously it's a big financial risk to take this route, but it's great to have a large company actually fighting the good fight. Mad props to Cloudflare, Newegg, EFF, and all others in this battle.
b6 9y ago
Is there any feedback mechanism to prevent the patent office from issuing more bogus patents?
- bleuarff 9y ago
  There's a Stack Exchange site for that: https://patents.stackexchange.com/ https://patents.stackexchange.com/
- brlewis 9y ago
  You're asking for something impossible. Software patents exactly analagous to Benson, Flook and Diehr are de-facto allowed. Software is such a broad and fast-moving field that you can't expect any patent office to be able to fairly judge novelty and non-obviousness. If there's any hope for the patent office it involves an act of congress explicitly making software non-statutory material for patents.
  - d0lph 9y ago
    Honestly, it seems patents discourage competition, and in my opinion are therefore anti-Capitalism. I would not miss them, at least for software. It's almost a bit arrogant too, how long would it really take for someone else to come to the same realizations?
    - moate 9y ago
      They do discourage competition. Here's why that's important: Amazon has more money than god. For whatever reason, they decide that your thing is valuable to them, and is extremely easy to create but also extremely novel in its inception (nobody thought of this before). It took you years of work to create, and you're now unable to monetize that work because Amazon/Google/Apple/Walmart/Whoever is able to create it faster using there tens of billions of dollars of muscle to stomp you out. Because they're better positioned to produce, your years of work is now financially useless. The idea of "how long would it take for someone else to realize the same thing" is silly. They didn't. You did. innovation is a large part of what makes software valuable. Anyone can type code if you gave them a sheet of paper that would make the machine do what you need it to. The only reason software has any value is because it took someone time to figure out what code to type in the first place.
S_A_P 9y ago
Is it possible that a nonprofit could troll the patent trolls and start proactively suing them to get their patents invalidated? It seems to me that a consortium of above board companies could fund such a thing and come out way ahead of fighting litigation targeted at their business.
- pzxc 9y ago
  That would be prohibitively expensive. The number of overly broad patents that patent trolls own is way too large to be able to challenge them in a cost effective way. If you want to play offense rather than defense, your money is better spent lobbying to get the law changed so that overly broad patents are more difficult to acquire in the first place.
- dpark 9y ago
  In addition to the cost of doing this, you have to have legal standing to pursue the suit. You cannot sue to invalidate arbitrary patents unless you can prove harm to yourself. If you cannot demonstrate legal standing, the courts will not hear your case.
  - S_A_P 9y ago
    True, and I could see this becoming a tool of oppression by "big evilcorps" if it were possible to do. I guess its a fun thought experiment though. I generally like the patent idea, if someone comes up with something innovative then they should see the upside. I wonder if a time window would improve matters. Get a patent and you have X number of years to produce something sale-able or publicly available for consumption.
    - mafuy 9y ago
      Not sure if I misunderstood, but patents do have a time window.
      - dpark 9y ago
        I think the wish there is for a “use it or lose it” window.
jaredhansen 9y ago
This is great news. Regarding the several comments along the lines of "there should be a way to pool resources across many companies to fight trolls", there are in fact several such orgs (beyond EFF, already mentioned below). The three I'm most familiar with (and of which we are members) are: 1) RPX, which is basically just troll insurance. http://www.rpxcorp.com/ http://www.rpxcorp.com/ 2) LOT Network (LOT=License on Transfer): http://lotnet.com/ http://lotnet.com/ 3) My favorite: Unified Patents, which actively files IPRs against NPEs: https://www.unifiedpatents.com/ https://www.unifiedpatents.com/ There may be others and I'd be glad to hear about them. I recommend every startup join at least these three - the annual fees are modest (free in some cases) and potential benefit is enormous.
- apeace 9y ago
  In this specific case, Cloudflare crowdsourced prior art research on Blackbird's patents: https://blog.cloudflare.com/project-jengo/ https://blog.cloudflare.com/project-jengo/ Not exactly the same as a generic pool, but still a neat way to fight back against these trolls.
AceJohnny2 9y ago
While this is nice, it's still a game of whack-a-mole. How much were the legal costs for CloudFlare to invalidate this one patent? I'm glad they did this and they've certainly gained some goodwill from me for this altruistic move. Was that part of CloudFlare's motivation, use it as PR? Because otherwise, the economics still appear to be in favor of the trolls. This battle is won, but how goes the war?
molyss 9y ago
For sure, the result is a good news, but it highlight what I believe is a major flaw in the modern court systems : the tax payer and the defender ends up footing the bill for what is essentially abuse of the system and pure incompetency. Is there any follow up on the body that approved a patent that should never have been granted ? Not per the court order. Is there any punitive damage awarded to the defender against the filer ? Not per the court order. Having been personally frivolously sued in the past, I can tell you, it's not fun and it's expensive. And even if you win, you have to sue back to pretend to any kind of financial compensation. If you have a settlement saying the opposing party is supposed to give you X amount of money, you have to sue to recover that money. And they can appeal. And even if you have an agreement saying that the winning party is entitled to have their legal fees paid by the opposing party, apparently no judge ever grants the real legal fees. There's a major amount of work to be done in how we deal with abusive lawsuits and who pays the bill for the shared public legal system.

261 points by eldridgea 9y ago

This makes me wonder: is there any downside to enacting laws to make patent invalidation due to them being overbroad applicable retroactively and forcing Blackbird to return the money it extorted? It might be challenging to enforce due to limited liability, but I don't see any obvious downsides to trying? It seems like it could provide an incentive for companies to not attempt to create over-broad patents.

chrsstrm 9y ago
Why? If it is ruled invalid today then it was also invalid the day it was issued. I would imagine any company who paid for a license under threat of suit would now be telling their legal department to file a suit to reclaim the fee paid plus interest plus any provable damages. So we already have a remedy for this situation, no need to complicate the statutes.
- Canada 9y ago
  Victims would have waived that right when they settled with the patent troll.
  - danmaz74 9y ago
    These waivers should be rendered null by law. I don't see any other way to fix the problem.
    - Canada 9y ago
      Yeah, I wish there were a special place in hell reserved for patent trolls, but undermining contracts retroactively is not something to be taken lightly.
      - AnthonyMouse 9y ago
        It's not retroactive if you know about it ahead of time. It would be known when the contract is made that the money would by law have to be returned in the event the patent is invalidated. The consequence would obviously be that all the licensees of a patent that has any chance of being invalid would subsequently try to get it invalidated so they can get their money back, but isn't that the intended result?
      - toss1 9y ago
        Not sure that it would be undermining contracts retroactively. IANAL, but the approach I'd consider is fraud/breach of contract. The previous victims settled and paid a royalty to use a patentable technology. It turns out that it was not what was represented. Ergo, refund. How it plays out surely depends a lot on regional courts, precedents, etc.
        stordoff 9y ago
        I wonder how air-tight you can make that reasoning. I suspect you could structure the settlement as paying to use the underlying technology _including_ the patents etc., rather than licensing the patent per se (so the fees paid are not directly predicated on the existence of a patent). Be interesting to see how the courts would react to that though, and if they see it as a sign you are negotiating in bad faith.
- Eridrus 9y ago
  IANAL, but I don't think this is how the law works today.
- CodeWriter23 9y ago
  We have a concept in US Law called “ex post facto” which means you are not liable after the fact if laws are changed.
  - dragonwriter 9y ago
    > We have a concept in US Law called “ex post facto” which means you are not liable after the fact if laws are changed. That's not what ex post facto means. An ex post facto law is a law criminalizing an act or increasing criminal penalties after an offense occurred. It does not prevent retroactive civil liability. The more applicable concepts here are the binding nature of contracts (which settlements are) and res judicata (which means that, in short, once a court judgement has been entered and made final, a party cannot relitigate it to get a better outcome.)
    - CodeWriter23 9y ago
      https://en.wikipedia.org/wiki/Ex_post_facto_law https://en.wikipedia.org/wiki/Ex_post_facto_law
rhino369 9y ago
There is benefit to making settlements and final judgments final. Otherwise you are incentivizing constant re-litigation of the same issues. It would also make trolls less likely to settle in the first place. You can put such terms inside your own settlement agreements. One common way is to use a running royalty rather than a lump sum royalty. If the patent is ever invalidated, you can stop paying.
Retric 9y ago
Patent trolls are separate companies with ~zero assets outside of the patent. Think sock-puppet internet accounts. They can just pay out any income as soon as it shows up so there is nothing to recover if their patent is invalidated. PS: The only way to make this work is if you pierced the corporate veil when their patents where invalidated, and that would make patents even more useless to small companies.
- Eridrus 9y ago
  I don't think piercing the corporate veil is the only possible solution, you could legislate that revenue from unlitigated patents couldn't be taken out as profit. Again, that might not be enough and the exact wording would need work, but I think that making it possible is the first step to making it practical. Personally I think we should just abolish the entire patent system, since I really don't see much benefit in it for anyone but large companies, but basically everyone agrees on stopping patent trolls with garbage patents

peteforde 9y ago

Thank you, Cloudflare, for fighting the good fight. Someone should start a collective fund for smaller companies to help with legal support so that more troll claims can be fought instead of settled. Anyhow, I'd be genuinely curious how much it cost to get to this point, and how much you think it would have cost if you'd had a protracted battle.

jimktrains2 9y ago
> Someone should start a collective fund for smaller companies to help with legal support so that more troll claims can be fought instead of settled. You mean the eff? Probably not exactly what you had in mind, but pretty close I think?
- AnthonyMouse 9y ago
  > You mean the eff? Probably not exactly what you had in mind, but pretty close I think? Well, of course, that requires people to put money in the fund. https://supporters.eff.org/donate https://supporters.eff.org/donate
  - y03a 9y ago
    Also, EFF is on option for smile.amazon.com. I've generated $9 for them so far, would have been more if I had remembered to use smile more often. Amazon is nice enough to remind me once in a while to use it, I wish it would just be automatic when I'm logged in, I refuse to install a plug in for that feature.
    - programbreeding 9y ago
      I had the same issue until I discovered there were plugins for Chrome[1] and Firefox[2] that will automatically redirect you to smile.amazon.com anytime you are on amazon.com. I have seen issues with the Firefox one when you aren't actually logged in to Amazon at the time, but the Chrome one works great. [1] https://chrome.google.com/webstore/detail/smile-always/jgpmhnmjbhgkhpbgelalfpplebgfjmbf?hl=en https://chrome.google.com/webstore/detail/smile-always/jgpmh... [2] https://addons.mozilla.org/en-US/firefox/addon/amazon-smile/ https://addons.mozilla.org/en-US/firefox/addon/amazon-smile/

x0x0 9y ago

fastly appears to have paid up http://ipwire.com/stories/blackbird-technologies-settles-patent-infringement-case-web-content-delivery-company/ http://ipwire.com/stories/blackbird-technologies-settles-pat...

jlgaddis 9y ago
Yep, same patent too. I'm curious how much Fastly paid. It's too bad that they didn't hold out for a weeks longer. Maybe they'll fight next time.
dna_polymerase 9y ago
I guess they are not as well funded as cloudflare and therefore couldn't take the risk of loosing in court.
willyyr 9y ago
If the patent got invalidated now, wouldn't they be able to get their "fees" back?
- chii 9y ago
  retroactively applying a law is not very conducive to making predictions about legal matters, and therefore, it's very rarely done (if at all?). Plus, even if blackbird has to pay back their collected fees, they can "just" bankrupt - after all, the money is gone (unless you are implying that any dividends/payment to employees etc, are clawed back...)
  - AnthonyMouse 9y ago
    > Plus, even if blackbird has to pay back their collected fees, they can "just" bankrupt - after all, the money is gone (unless you are implying that any dividends/payment to employees etc, are clawed back...) Money that was already paid is gone, but if you had some settlement where you pay some amount per device, you could stop paying them going forward. It would also be effective against the use of invalid patents by large companies that wouldn't be bankrupted, which would reduce their incentive to lobby for their continued granting.

erikrothoff 9y ago

This is so cool. Obviously it's a big financial risk to take this route, but it's great to have a large company actually fighting the good fight. Mad props to Cloudflare, Newegg, EFF, and all others in this battle.

b6 9y ago

Is there any feedback mechanism to prevent the patent office from issuing more bogus patents?

bleuarff 9y ago
There's a Stack Exchange site for that: https://patents.stackexchange.com/ https://patents.stackexchange.com/
brlewis 9y ago
You're asking for something impossible. Software patents exactly analagous to Benson, Flook and Diehr are de-facto allowed. Software is such a broad and fast-moving field that you can't expect any patent office to be able to fairly judge novelty and non-obviousness. If there's any hope for the patent office it involves an act of congress explicitly making software non-statutory material for patents.
- d0lph 9y ago
  Honestly, it seems patents discourage competition, and in my opinion are therefore anti-Capitalism. I would not miss them, at least for software. It's almost a bit arrogant too, how long would it really take for someone else to come to the same realizations?
  - moate 9y ago
    They do discourage competition. Here's why that's important: Amazon has more money than god. For whatever reason, they decide that your thing is valuable to them, and is extremely easy to create but also extremely novel in its inception (nobody thought of this before). It took you years of work to create, and you're now unable to monetize that work because Amazon/Google/Apple/Walmart/Whoever is able to create it faster using there tens of billions of dollars of muscle to stomp you out. Because they're better positioned to produce, your years of work is now financially useless. The idea of "how long would it take for someone else to realize the same thing" is silly. They didn't. You did. innovation is a large part of what makes software valuable. Anyone can type code if you gave them a sheet of paper that would make the machine do what you need it to. The only reason software has any value is because it took someone time to figure out what code to type in the first place.

S_A_P 9y ago

Is it possible that a nonprofit could troll the patent trolls and start proactively suing them to get their patents invalidated? It seems to me that a consortium of above board companies could fund such a thing and come out way ahead of fighting litigation targeted at their business.

pzxc 9y ago
That would be prohibitively expensive. The number of overly broad patents that patent trolls own is way too large to be able to challenge them in a cost effective way. If you want to play offense rather than defense, your money is better spent lobbying to get the law changed so that overly broad patents are more difficult to acquire in the first place.
dpark 9y ago
In addition to the cost of doing this, you have to have legal standing to pursue the suit. You cannot sue to invalidate arbitrary patents unless you can prove harm to yourself. If you cannot demonstrate legal standing, the courts will not hear your case.
- S_A_P 9y ago
  True, and I could see this becoming a tool of oppression by "big evilcorps" if it were possible to do. I guess its a fun thought experiment though. I generally like the patent idea, if someone comes up with something innovative then they should see the upside. I wonder if a time window would improve matters. Get a patent and you have X number of years to produce something sale-able or publicly available for consumption.
  - mafuy 9y ago
    Not sure if I misunderstood, but patents do have a time window.
    - dpark 9y ago
      I think the wish there is for a “use it or lose it” window.

jaredhansen 9y ago

This is great news. Regarding the several comments along the lines of "there should be a way to pool resources across many companies to fight trolls", there are in fact several such orgs (beyond EFF, already mentioned below). The three I'm most familiar with (and of which we are members) are: 1) RPX, which is basically just troll insurance. http://www.rpxcorp.com/ http://www.rpxcorp.com/ 2) LOT Network (LOT=License on Transfer): http://lotnet.com/ http://lotnet.com/ 3) My favorite: Unified Patents, which actively files IPRs against NPEs: https://www.unifiedpatents.com/ https://www.unifiedpatents.com/ There may be others and I'd be glad to hear about them. I recommend every startup join at least these three - the annual fees are modest (free in some cases) and potential benefit is enormous.

apeace 9y ago
In this specific case, Cloudflare crowdsourced prior art research on Blackbird's patents: https://blog.cloudflare.com/project-jengo/ https://blog.cloudflare.com/project-jengo/ Not exactly the same as a generic pool, but still a neat way to fight back against these trolls.

AceJohnny2 9y ago

While this is nice, it's still a game of whack-a-mole. How much were the legal costs for CloudFlare to invalidate this one patent? I'm glad they did this and they've certainly gained some goodwill from me for this altruistic move. Was that part of CloudFlare's motivation, use it as PR? Because otherwise, the economics still appear to be in favor of the trolls. This battle is won, but how goes the war?

molyss 9y ago

For sure, the result is a good news, but it highlight what I believe is a major flaw in the modern court systems : the tax payer and the defender ends up footing the bill for what is essentially abuse of the system and pure incompetency. Is there any follow up on the body that approved a patent that should never have been granted ? Not per the court order. Is there any punitive damage awarded to the defender against the filer ? Not per the court order. Having been personally frivolously sued in the past, I can tell you, it's not fun and it's expensive. And even if you win, you have to sue back to pretend to any kind of financial compensation. If you have a settlement saying the opposing party is supposed to give you X amount of money, you have to sue to recover that money. And they can appeal. And even if you have an agreement saying that the winning party is entitled to have their legal fees paid by the opposing party, apparently no judge ever grants the real legal fees. There's a major amount of work to be done in how we deal with abusive lawsuits and who pays the bill for the shared public legal system.