21 ms·

Why Rackspace Is Suing The Most Notorious Patent Troll In America

622 points by grimey27 14y ago

codesuela 14y ago
It is awesome to see a company put their money where their mouth is, the good will with the dev community they are building with this will easily exceed the costs of fighting a troll in court.
- deleted 14y ago
  [deleted]
- mcherm 14y ago
  This builds up LOTS of good will with me. But still, I'm not sure you are right. The cost of fighting a troll in court can be shockingly large. If it were worth MORE in public relations than it cost in legal fees then it would obviously be an investment they should make, just to become more profitable. I doubt that... I think it is worth a lot in public relations, but less than the same amount of cash would buy in advertising. Nevertheless, it is worth it for two reasons: (1) because it scares patent trolls off of Rackspace in the future, and (2) because it's good for the world, even if it isn't profitable. Sometimes you just have to do things that aren't profitable.
  - krichman 14y ago
    I feel obliged to do business with Newegg and now Rackspace whenever I am looking for something they provide. Maybe their prices are higher than some other companies. If that's the cost of defending against patent trolls, well it's minuscule compared to the benefit. Also Newegg and Rackspace are incredibly cheap so I haven't found anyone that beats their prices anyway. In fact, unless I miscalculated, after I switch from Amazon to Rackspace next week my monthly bill will be lower. This is above and beyond the "do no evil" motto that Google pretends to uphold. This is actively fighting to improve society.
danielpal 14y ago
Can anyone explain if it's possible for this patents to just go from one company to another? Like what's is stopping IP Nav and Parallel Iron from just creating a new corporation and transferring their IP if Rackspace succeeds in this lawsuit? Seems like they can just start shell companies in order to avoid being counter-sued.
- jstalin 14y ago
  Not exactly sure what you're going for, but you sue based on facts as they were at a particular point in time. Transferring a patent or doing a hide the ball move doesn't work so well in court, particularly federal court. Res judicata is the concept that once a party in a suit has facts determined of a particular situation in one court, that party can't then go into another court and argue the opposite.
- jtchang 14y ago
  Courts may seem antiquated but a reasonable judge will see right through these games.
- mitchellhislop 14y ago
  Rackspace's goal is to kill the patents. The people can move on, but the would need new IP.
rayiner 14y ago
> In actuality, it is a bit more complicated. Our dealings with this particular troll reach back to December 2010 when IP Navigation Group (IP Nav), as agent for a supposedly secret patent owner, now known as Parallel Iron, accused Rackspace of patent infringement. IP Nav told us that they could not divulge the details of their infringement claims – not even the patent numbers or the patent owner – unless we entered into a “forbearance agreement” – basically, an agreement that we would not sue them. IP Nav was worried that as soon as we found out what their patents and claims actually were, Rackspace would sue to invalidate their patents or for a declaration that Rackspace does not infringe. We were unwilling to enter into such a one-sided agreement, so we negotiated a mutual forbearance agreement that required either party to give 30 days’ notice before bringing suit. That's some shady shit right there.
- notahacker 14y ago
  I can't understand why anyone would sign away their right to counter-sue in order to obtain information on something which can't possibly damage them until the information is disclosed anyway (IANAL)
  - rayiner 14y ago
    It might be the plaintiffs way of identifying targets that don't have the will or money to litigate. A larger company isn't going to sign one of these--it doesn't buy you barely anything.
    - chatmasta 14y ago
      So does it by you a lot of something, or nothing?
  - will_brown 14y ago
    Maybe b/c they do not believe that such an agreement is enforceable. The majority of States have "anti-slapp" laws that in limited circumstances protect the Freedom of speech over agreements/contracts (generally one has the right to contract confidentiality which is enforceable). For example I had a case where I represented a plaintiff suing over breach of a confidential settlement, b/c I attached the confidential settlement as an exhibit the defendant counter-sued for disclosing the confidential settlement. I got their counter-suit dismissed as a matter of law b/c the anti-slapp protected the freedom of speech to disclose the confidential agreement to the court for the purpose of enforcement. At this time the Federal Government does not have a anti-slapp equivalent, and most IP cases are federal; therefore, it might be actionable to disclose confidential information in Federal Court for enforcement, maybe under seal...if a Federal practitioner happens to have experience with this issue, please shed some light.
austenallred 14y ago
It would be awesome to see this trend continue; I wouldn't mind seeing big companies suing patent trolls for every possible misstep available.
- rainkinz 14y ago
  Definitely! Until this do nothing congress gets its act together, it's the only hope we have.
ChuckMcM 14y ago
Interesting, patent trolls have reached the level of public relations foil. I think its great that Rackspace is suing these guys but I found the press release made me feel like I do when somebody is trying to impress me with all of the charities they've donated money to. Mutual forbearance agreement? Seriously? Why not sue them right then and there when they foisted that bit of "strategy" on you and charged them with criminal extortion? My reasoning is like this, either you infringe or you don't. So the patent holder can say "We believe you infringe claims x, y, and z on patents q, r, and s." Or they can't. So if someone tells you infringe but they won't tell you the patent or the claims, and they are threatening to sue anyway, that is a protection racket and actionable under the RICO statutes as far as I can tell.
- themgt 14y ago
  Why not sue them right then and there when they foisted that bit of "strategy" on you and charged them with criminal extortion? Presumably because if given a choice, Rackspace would rather spend its time and energy on hosting servers than in court.
  - joering2 14y ago
    Shortsighted assumption. Rackspace is bit bigger than one guy answering phone calls, replying to tickets, administering racks, configuring new ones, procuring bills and mopping the floor.
- kodablah 14y ago
  "Why not sue them right then and there" From what I read, it seems like the suit may be mostly predicated on the agreement that required IP Nav to wait 30 days. I don't believe they could have just sued for "patent extortion" originally. It is nice that they are asking for a declaratory saying they are not infringing, but I believe they only could have done this on the defensive originally whereas now they can be on the offensive.
- jbigelow76 14y ago
  "Why not sue them right then and there" If I read it correctly Rackspace probably wanted to see if they could be legitimately (in the eyes of the law) at fault. The way I read that mind bogglingly stupid forbearance dance was as if a bill collector calls me up and says I have a bill to pay, but they won't tell me what it's for unless I promise not to dispute it. I'm not going sue then and there because maybe I really do have a bill outstanding, so I play their stupid game and agree neither side will do anything for 30 days, now show me the damn bill.
saraid216 14y ago
Somewhat OT, but I'd love to see the term "patent troll" entered as official legal jargon.
- Atropos 14y ago
  It already is, at least IP lawyers should be aquainted with the term, even some scholarly articles at ssrn.com use it. But it probably wouldn't be a prominent term in judgements, because it is too broad and doesn't describe "what the troll did and why it is bad", so it isn't really useful in that sense. I guess the standard formulations would be more like "abusive conduct" etc. (My own jurisdiction isn't angloamerican)
rdl 14y ago
I was hoping it was Intellectual Ventures.
- tomjen3 14y ago
  No such thing. It is vultures, as it correctly describes what they are.
gesman 14y ago
+1 for Rackspace.
kevinalexbrown 14y ago
Whenever I see several different groups behaving in a manner I find obnoxious, I wonder incentives encourage this kind of behavior, and how those incentives might be reduced. One such way is countersuit, which Rackspace is doing. If everyone (successfully) countersued, the incentive to be a patent troll would diminish. There might be other ways. Is there some common property patent trolls depend on that might be penalized or forbidden? I've noticed that patent trolls rarely seem to produce anything. Perhaps some sort of "use it or lose it" clause, in which patent holders have a certain amount of time to effectively license their technology to some degree of effectiveness before they can't enforce infringements. It works in other areas. For instance, in my home state, many people would love to live in the country extremely cheaply, so there's an incentive to set up dubious Christmas tree farms to get nice tax rates. To combat this, you have a certain number of years to turn a profit, and if you don't, you lose the farm credit. (here's an example of why they do this: http://www.huntingnet.com/forum/wildlife-management-food-plots/9023-tax-breaks-starting-tree-farm.html http://www.huntingnet.com/forum/wildlife-management-food-plo...)
- ROFISH 14y ago
  I always wondered what would happen if a neutral party (EFF?) got a lot of money to essentially defend and countersue all patent troll claims, regardless of if they'd win or not. Hopefully this "scorched earth" plan would get the notice of judges and lawmakers to change the law.
- hkmurakami 14y ago
  >One such way is countersuit, which Rackspace is doing. If everyone (successfully) countersued, the incentive to be a patent troll would diminish. I was under the impression that these patent troll shell companies are set up so that they have virtually no assets under them. Does countersuing even hurt these shell companies significantly? The only thing I can see countersuits costing patent trolls is time in court (maybe that costs the parent of the shell company money if they operate on a scale where they're hiring lawyers to go sue companies?)
  - TallGuyShort 14y ago
at-fates-hands 14y ago
I'm curious why more smaller and medium sized businesses haven't banded together to form some kind of larger entity to combat these trolls. There's security in numbers. If I was a patent troll and knew if I was going to sue a company like RackSpace and knew they had 25-50 companies standing behind them with a large pool of legal and financial resources, I'd be more apt to try and find an easier target.
- mcherm 14y ago
  > why more smaller and medium sized businesses haven't banded together to form some kind of larger entity to combat these trolls Well, one reason is that it may be illegal. We have antitrust laws that prohibit companies that make up a large percentage of an industry from coordinating in certain ways... this is an edge case but might be a problem. But the main reason is just that it is prohibitively expensive. It's really, really expensive to fight a patent troll, and if you win then they turn out to be a shell company with no assets so you can't be reimbursed for your costs (and probably wouldn't be eligible for that anyway in the US). So for small companies, flying under the radar and hoping they won't notice you seems to be the way to go.
  - camus 14y ago
    yet US has no problem with one company owning the majority of a market ( MS , Google ... ) so much for anti trust ... Small Companies could fund a non profit to help them against trolls, would it be illegal ?
    - mcherm 14y ago
      I'm not saying that the antitrust laws are written the way I would write them if I were king, but they are rational, if you understand where they are coming from. They prohibit independent actors from colluding to form a monopoly, but they do not prohibit a company from being successful enough in the marketplace to become an effective monopoly. However, if a company IS that successful, then the laws restrict what the company with monopoly power can do (for instance, they cannot leverage that monopoly to increase their power and market share in a different area of business). My guess is that funding a nonprofit, something like the EFF or the ACLU but focused specifically on providing legal representation to those sued by patent trolls, would probably be allowed under the law as long as the nonprofit assisted ANY company attacked by a patent troll, not only contributors. If it assisted only contributors, perhaps it could work as some sort of legal insurance policy?
A1kmm 14y ago
I'd love to see a patent troll lose a case, but their breach of contract case seems a bit weak (without seeing the actual contract, since they didn't include 'Exhibit B' in the PDF). As I understand it: * Parallel Iron owns IPNav. * IPNav and Rackspace signed a contract saying that IPNav won't sue Rackspace without giving 30 days notice first. * Parallel Iron sues Rackspace without giving notice first. * Rackspace sues Parallel Iron and IPNav for breach of contract. But IPNav and Parallel Iron are separate legal entities, and so unless Rackspace can argue that they can 'pierce the corporate veil' (which might be difficult if they followed appropriate standards to separate the companies, which I presume lawyer heavy patent trolls would be careful to do) and treat them as the same legal entity, IPNav isn't responsible for Parallel Iron filing the suit, and Parallel Iron isn't subject to the contract entered into by IPNav. Disclaimer: IANAL
- coldpie 14y ago
  Judges aren't stupid. I'd expect a judge to ignore the letter of the contract in such a brazenly obvious case of abuse.
ceautery 14y ago
I like the use of "duck test" in this. Just like the notorious Interplay manager decreed for the queen animations in Battle Chess... we should get rid of the duck.
51Cards 14y ago
I host at Rackspace. I'm glad (sincerely) that they are using some of my money for things like this. This makes me happy.
ropman76 14y ago
Is there a nice legal term for "I hope Rackspace gives them hell"?
- chris_wot 14y ago
  Yes. "Litigation".
eykanal 14y ago
Question for someone who knows something about patent law: does Rackspace have a chance of actually making any money here? Simply based on seeing other stories like this, it seems that all these trolls operate through shell companies, which can simply declare bankruptcy without (1) every paying any actual fees and (2) without hurting the parent. Is that true here as well?
recloop 14y ago
The most notorious patent troll in America is Intellectual Ventures. It's just that because of their clout and their team, they don't get called out.
dannowatts 14y ago
scream it from the mountains: "GET 'EM RACKSPACE!!!"
yoster 14y ago
Patent trolls are useless. These people do not innovate at all. They purchase, or file for useless patents, and turn around and sue everyone for the almighty dollar. There has to be a stop, and I applaud Rackspace!
ams6110 14y ago
I'm all in favor of fighting groundless patent infringement claims, but a bit surprised to see so much commentary from Rackspace about a pending legal matter. The normal lawyer response would be "we don't comment on pending litigation."
- reeses 14y ago
  It's definitely out of the norm. Especially when the VP of IP (I'm guessing also general counsel) participates in a forum discussion on the topic. Then again, he's the one who can, and is supposed to, speak on such matters for the company. It could also be an attempt to get Google juice for anyone else looking for info on these jokers.
  - malbiniak 14y ago
    > It could also be an attempt to get Google juice for anyone else looking for info on these jokers. It's not that. Schoenbaum (who is General Counsel) has been largely focused on this for Rackspace in DC for a while, and vocal on it over the last year. http://www.rackspace.com/blog/author-post-list/?articlesbyauthor=alan.schoenbaum http://www.rackspace.com/blog/author-post-list/?articlesbyau...
robomartin 14y ago
I've said this here before more than once. The solution is for tech companies to fund a massive entity who's only purpose in life is to mercilessly sue patent trolls. Destroy them. Go after their patents. Invalidate them. Make it so costly to even attempt to enforce a bullshit patent that they will only dare take that step if they have a really good solid patent. If the top 100 companies in tech donated just ten million dollars a year to this effort you would instantly have a one billion dollar "kill the trolls" fund. If the fund is not fully consumed during the first year it could become three or four billion in five to seven years. How many trolls are going to be willing to go up against any company with that kind of a war chest to protect it? Small entities would contribute less. The way I see it, in the US alone, this kind of protection is easily worth $50K to $100K per year for a small entity. Yes, we are at a point where you might have to consider paying a membership fee to a troll protection association that is equivalent to the salary of a full-time employee. Sad. The US government ought to also provide a sizable chunk of money to this fund as well as tax-exempt status. Say, a billion dollars a year. Considering the economic damage being done this is chump change. Now you have a kill-the-trolls association that, through public and private funding, could end-up with nearly ten billion dollars in five to seven years. Scary enough? I am not one for government getting involved in private matters, much less blowing money like they did in Solyndra and others. However, this is a government-sponsored monopoly that they crated. You and I did not create this. This mess is 100% on government hands. And, like most things government does, it eventually went off the rails. It's an absolute mess. They have a responsibility to fix it. The first step is to grant a sizable amount of money to a private entity that will shield entrepreneurs from trolls. They should hand over the money and get out of the way. Consider it reparations for running such a fucked-up patent office. Then they can go off and take ten years to reform the system. Oh, yes, they should also make the patent invalidation process 100% free. In other words, anyone should be able to file a patent invalidation action and it should be 100% free. Then we could crowd-source patent invalidation runs on all the patents held by trolls. Form crowd-sourced teams that target trolls and file away. Seriously folks, this is war. And in war you have to have more powerful weapons than your enemy. The enemy has the power of the monopoly they were granted by the US government. What they don't have is unlimited and massive capital. An association of practicing entities --no trolls allowed-- with billions of dollars available to mount a shield and defend members would be massively intimidating. The association's mission statement should state that all engagements will have, as a goal, the invalidation of the patents in question. In other words, if you screw with us we will go directly to rip those patents out of your hands. No middle ground. No deals. No mercy. Attacking us means you, as the attacker, risk it all and you better have a real patent. How many trolls are going to risk that? How many will do it after one, two or several are absolutely decimated in court and their patents invalidated. One more thing. If a non practicing entity has a patent invalidated they are also put through a bankruptcy style procedure whereby a trustee takes a look at what moneys were derived from licensing the invalid patents. The idea is to refund ill-gotten funds to those who paid the fees. In other words, hit them with a nuke. EDIT: Also, on the subject of patent invalidation. This should be ripped out of the hands of the government and run just like a trial. I don't know exactly how it works today, but this is what I have in mind: A judge is appointed to oversee the process. A jury of people well-qualified in the patent's subject matter is assembled. Both parties present their case. The jury deliberates and decides. Fast, efficient and 100% in private hands with the blessings of the US government. Rough strokes.
kislayverma 14y ago
GO RACKSPACE!!!
jarmitage 14y ago
Where's the petition against patent trolls, America? (Or has this been tried already / would it fail?)
avaku 14y ago
Respect Rackspace! Maybe I should switch to you from AWS :)

622 points by grimey27 14y ago

It is awesome to see a company put their money where their mouth is, the good will with the dev community they are building with this will easily exceed the costs of fighting a troll in court.

deleted 14y ago
[deleted]
mcherm 14y ago
This builds up LOTS of good will with me. But still, I'm not sure you are right. The cost of fighting a troll in court can be shockingly large. If it were worth MORE in public relations than it cost in legal fees then it would obviously be an investment they should make, just to become more profitable. I doubt that... I think it is worth a lot in public relations, but less than the same amount of cash would buy in advertising. Nevertheless, it is worth it for two reasons: (1) because it scares patent trolls off of Rackspace in the future, and (2) because it's good for the world, even if it isn't profitable. Sometimes you just have to do things that aren't profitable.
- krichman 14y ago
  I feel obliged to do business with Newegg and now Rackspace whenever I am looking for something they provide. Maybe their prices are higher than some other companies. If that's the cost of defending against patent trolls, well it's minuscule compared to the benefit. Also Newegg and Rackspace are incredibly cheap so I haven't found anyone that beats their prices anyway. In fact, unless I miscalculated, after I switch from Amazon to Rackspace next week my monthly bill will be lower. This is above and beyond the "do no evil" motto that Google pretends to uphold. This is actively fighting to improve society.

danielpal 14y ago

Can anyone explain if it's possible for this patents to just go from one company to another? Like what's is stopping IP Nav and Parallel Iron from just creating a new corporation and transferring their IP if Rackspace succeeds in this lawsuit? Seems like they can just start shell companies in order to avoid being counter-sued.

jstalin 14y ago
Not exactly sure what you're going for, but you sue based on facts as they were at a particular point in time. Transferring a patent or doing a hide the ball move doesn't work so well in court, particularly federal court. Res judicata is the concept that once a party in a suit has facts determined of a particular situation in one court, that party can't then go into another court and argue the opposite.
jtchang 14y ago
Courts may seem antiquated but a reasonable judge will see right through these games.
mitchellhislop 14y ago
Rackspace's goal is to kill the patents. The people can move on, but the would need new IP.

rayiner 14y ago

> In actuality, it is a bit more complicated. Our dealings with this particular troll reach back to December 2010 when IP Navigation Group (IP Nav), as agent for a supposedly secret patent owner, now known as Parallel Iron, accused Rackspace of patent infringement. IP Nav told us that they could not divulge the details of their infringement claims – not even the patent numbers or the patent owner – unless we entered into a “forbearance agreement” – basically, an agreement that we would not sue them. IP Nav was worried that as soon as we found out what their patents and claims actually were, Rackspace would sue to invalidate their patents or for a declaration that Rackspace does not infringe. We were unwilling to enter into such a one-sided agreement, so we negotiated a mutual forbearance agreement that required either party to give 30 days’ notice before bringing suit. That's some shady shit right there.

notahacker 14y ago
I can't understand why anyone would sign away their right to counter-sue in order to obtain information on something which can't possibly damage them until the information is disclosed anyway (IANAL)
- rayiner 14y ago
  It might be the plaintiffs way of identifying targets that don't have the will or money to litigate. A larger company isn't going to sign one of these--it doesn't buy you barely anything.
  - chatmasta 14y ago
    So does it by you a lot of something, or nothing?
- will_brown 14y ago
  Maybe b/c they do not believe that such an agreement is enforceable. The majority of States have "anti-slapp" laws that in limited circumstances protect the Freedom of speech over agreements/contracts (generally one has the right to contract confidentiality which is enforceable). For example I had a case where I represented a plaintiff suing over breach of a confidential settlement, b/c I attached the confidential settlement as an exhibit the defendant counter-sued for disclosing the confidential settlement. I got their counter-suit dismissed as a matter of law b/c the anti-slapp protected the freedom of speech to disclose the confidential agreement to the court for the purpose of enforcement. At this time the Federal Government does not have a anti-slapp equivalent, and most IP cases are federal; therefore, it might be actionable to disclose confidential information in Federal Court for enforcement, maybe under seal...if a Federal practitioner happens to have experience with this issue, please shed some light.

austenallred 14y ago

It would be awesome to see this trend continue; I wouldn't mind seeing big companies suing patent trolls for every possible misstep available.

rainkinz 14y ago
Definitely! Until this do nothing congress gets its act together, it's the only hope we have.

ChuckMcM 14y ago

Interesting, patent trolls have reached the level of public relations foil. I think its great that Rackspace is suing these guys but I found the press release made me feel like I do when somebody is trying to impress me with all of the charities they've donated money to. Mutual forbearance agreement? Seriously? Why not sue them right then and there when they foisted that bit of "strategy" on you and charged them with criminal extortion? My reasoning is like this, either you infringe or you don't. So the patent holder can say "We believe you infringe claims x, y, and z on patents q, r, and s." Or they can't. So if someone tells you infringe but they won't tell you the patent or the claims, and they are threatening to sue anyway, that is a protection racket and actionable under the RICO statutes as far as I can tell.

themgt 14y ago
Why not sue them right then and there when they foisted that bit of "strategy" on you and charged them with criminal extortion? Presumably because if given a choice, Rackspace would rather spend its time and energy on hosting servers than in court.
- joering2 14y ago
  Shortsighted assumption. Rackspace is bit bigger than one guy answering phone calls, replying to tickets, administering racks, configuring new ones, procuring bills and mopping the floor.
kodablah 14y ago
"Why not sue them right then and there" From what I read, it seems like the suit may be mostly predicated on the agreement that required IP Nav to wait 30 days. I don't believe they could have just sued for "patent extortion" originally. It is nice that they are asking for a declaratory saying they are not infringing, but I believe they only could have done this on the defensive originally whereas now they can be on the offensive.
jbigelow76 14y ago
"Why not sue them right then and there" If I read it correctly Rackspace probably wanted to see if they could be legitimately (in the eyes of the law) at fault. The way I read that mind bogglingly stupid forbearance dance was as if a bill collector calls me up and says I have a bill to pay, but they won't tell me what it's for unless I promise not to dispute it. I'm not going sue then and there because maybe I really do have a bill outstanding, so I play their stupid game and agree neither side will do anything for 30 days, now show me the damn bill.

saraid216 14y ago

Somewhat OT, but I'd love to see the term "patent troll" entered as official legal jargon.

Atropos 14y ago
It already is, at least IP lawyers should be aquainted with the term, even some scholarly articles at ssrn.com use it. But it probably wouldn't be a prominent term in judgements, because it is too broad and doesn't describe "what the troll did and why it is bad", so it isn't really useful in that sense. I guess the standard formulations would be more like "abusive conduct" etc. (My own jurisdiction isn't angloamerican)

rdl 14y ago

I was hoping it was Intellectual Ventures.

tomjen3 14y ago
No such thing. It is vultures, as it correctly describes what they are.

gesman 14y ago

+1 for Rackspace.

kevinalexbrown 14y ago

Whenever I see several different groups behaving in a manner I find obnoxious, I wonder incentives encourage this kind of behavior, and how those incentives might be reduced. One such way is countersuit, which Rackspace is doing. If everyone (successfully) countersued, the incentive to be a patent troll would diminish. There might be other ways. Is there some common property patent trolls depend on that might be penalized or forbidden? I've noticed that patent trolls rarely seem to produce anything. Perhaps some sort of "use it or lose it" clause, in which patent holders have a certain amount of time to effectively license their technology to some degree of effectiveness before they can't enforce infringements. It works in other areas. For instance, in my home state, many people would love to live in the country extremely cheaply, so there's an incentive to set up dubious Christmas tree farms to get nice tax rates. To combat this, you have a certain number of years to turn a profit, and if you don't, you lose the farm credit. (here's an example of why they do this: http://www.huntingnet.com/forum/wildlife-management-food-plots/9023-tax-breaks-starting-tree-farm.html http://www.huntingnet.com/forum/wildlife-management-food-plo...)

ROFISH 14y ago
I always wondered what would happen if a neutral party (EFF?) got a lot of money to essentially defend and countersue all patent troll claims, regardless of if they'd win or not. Hopefully this "scorched earth" plan would get the notice of judges and lawmakers to change the law.
hkmurakami 14y ago
>One such way is countersuit, which Rackspace is doing. If everyone (successfully) countersued, the incentive to be a patent troll would diminish. I was under the impression that these patent troll shell companies are set up so that they have virtually no assets under them. Does countersuing even hurt these shell companies significantly? The only thing I can see countersuits costing patent trolls is time in court (maybe that costs the parent of the shell company money if they operate on a scale where they're hiring lawyers to go sue companies?)
- TallGuyShort 14y ago

at-fates-hands 14y ago

I'm curious why more smaller and medium sized businesses haven't banded together to form some kind of larger entity to combat these trolls. There's security in numbers. If I was a patent troll and knew if I was going to sue a company like RackSpace and knew they had 25-50 companies standing behind them with a large pool of legal and financial resources, I'd be more apt to try and find an easier target.

mcherm 14y ago
> why more smaller and medium sized businesses haven't banded together to form some kind of larger entity to combat these trolls Well, one reason is that it may be illegal. We have antitrust laws that prohibit companies that make up a large percentage of an industry from coordinating in certain ways... this is an edge case but might be a problem. But the main reason is just that it is prohibitively expensive. It's really, really expensive to fight a patent troll, and if you win then they turn out to be a shell company with no assets so you can't be reimbursed for your costs (and probably wouldn't be eligible for that anyway in the US). So for small companies, flying under the radar and hoping they won't notice you seems to be the way to go.
- camus 14y ago
  yet US has no problem with one company owning the majority of a market ( MS , Google ... ) so much for anti trust ... Small Companies could fund a non profit to help them against trolls, would it be illegal ?
  - mcherm 14y ago
    I'm not saying that the antitrust laws are written the way I would write them if I were king, but they are rational, if you understand where they are coming from. They prohibit independent actors from colluding to form a monopoly, but they do not prohibit a company from being successful enough in the marketplace to become an effective monopoly. However, if a company IS that successful, then the laws restrict what the company with monopoly power can do (for instance, they cannot leverage that monopoly to increase their power and market share in a different area of business). My guess is that funding a nonprofit, something like the EFF or the ACLU but focused specifically on providing legal representation to those sued by patent trolls, would probably be allowed under the law as long as the nonprofit assisted ANY company attacked by a patent troll, not only contributors. If it assisted only contributors, perhaps it could work as some sort of legal insurance policy?

A1kmm 14y ago

I'd love to see a patent troll lose a case, but their breach of contract case seems a bit weak (without seeing the actual contract, since they didn't include 'Exhibit B' in the PDF). As I understand it: * Parallel Iron owns IPNav. * IPNav and Rackspace signed a contract saying that IPNav won't sue Rackspace without giving 30 days notice first. * Parallel Iron sues Rackspace without giving notice first. * Rackspace sues Parallel Iron and IPNav for breach of contract. But IPNav and Parallel Iron are separate legal entities, and so unless Rackspace can argue that they can 'pierce the corporate veil' (which might be difficult if they followed appropriate standards to separate the companies, which I presume lawyer heavy patent trolls would be careful to do) and treat them as the same legal entity, IPNav isn't responsible for Parallel Iron filing the suit, and Parallel Iron isn't subject to the contract entered into by IPNav. Disclaimer: IANAL

coldpie 14y ago
Judges aren't stupid. I'd expect a judge to ignore the letter of the contract in such a brazenly obvious case of abuse.

ceautery 14y ago

I like the use of "duck test" in this. Just like the notorious Interplay manager decreed for the queen animations in Battle Chess... we should get rid of the duck.

51Cards 14y ago

I host at Rackspace. I'm glad (sincerely) that they are using some of my money for things like this. This makes me happy.

ropman76 14y ago

Is there a nice legal term for "I hope Rackspace gives them hell"?

chris_wot 14y ago
Yes. "Litigation".

eykanal 14y ago

Question for someone who knows something about patent law: does Rackspace have a chance of actually making any money here? Simply based on seeing other stories like this, it seems that all these trolls operate through shell companies, which can simply declare bankruptcy without (1) every paying any actual fees and (2) without hurting the parent. Is that true here as well?

recloop 14y ago

The most notorious patent troll in America is Intellectual Ventures. It's just that because of their clout and their team, they don't get called out.

dannowatts 14y ago

scream it from the mountains: "GET 'EM RACKSPACE!!!"

yoster 14y ago

Patent trolls are useless. These people do not innovate at all. They purchase, or file for useless patents, and turn around and sue everyone for the almighty dollar. There has to be a stop, and I applaud Rackspace!

ams6110 14y ago

I'm all in favor of fighting groundless patent infringement claims, but a bit surprised to see so much commentary from Rackspace about a pending legal matter. The normal lawyer response would be "we don't comment on pending litigation."

reeses 14y ago
It's definitely out of the norm. Especially when the VP of IP (I'm guessing also general counsel) participates in a forum discussion on the topic. Then again, he's the one who can, and is supposed to, speak on such matters for the company. It could also be an attempt to get Google juice for anyone else looking for info on these jokers.
- malbiniak 14y ago
  > It could also be an attempt to get Google juice for anyone else looking for info on these jokers. It's not that. Schoenbaum (who is General Counsel) has been largely focused on this for Rackspace in DC for a while, and vocal on it over the last year. http://www.rackspace.com/blog/author-post-list/?articlesbyauthor=alan.schoenbaum http://www.rackspace.com/blog/author-post-list/?articlesbyau...

robomartin 14y ago

I've said this here before more than once. The solution is for tech companies to fund a massive entity who's only purpose in life is to mercilessly sue patent trolls. Destroy them. Go after their patents. Invalidate them. Make it so costly to even attempt to enforce a bullshit patent that they will only dare take that step if they have a really good solid patent. If the top 100 companies in tech donated just ten million dollars a year to this effort you would instantly have a one billion dollar "kill the trolls" fund. If the fund is not fully consumed during the first year it could become three or four billion in five to seven years. How many trolls are going to be willing to go up against any company with that kind of a war chest to protect it? Small entities would contribute less. The way I see it, in the US alone, this kind of protection is easily worth $50K to $100K per year for a small entity. Yes, we are at a point where you might have to consider paying a membership fee to a troll protection association that is equivalent to the salary of a full-time employee. Sad. The US government ought to also provide a sizable chunk of money to this fund as well as tax-exempt status. Say, a billion dollars a year. Considering the economic damage being done this is chump change. Now you have a kill-the-trolls association that, through public and private funding, could end-up with nearly ten billion dollars in five to seven years. Scary enough? I am not one for government getting involved in private matters, much less blowing money like they did in Solyndra and others. However, this is a government-sponsored monopoly that they crated. You and I did not create this. This mess is 100% on government hands. And, like most things government does, it eventually went off the rails. It's an absolute mess. They have a responsibility to fix it. The first step is to grant a sizable amount of money to a private entity that will shield entrepreneurs from trolls. They should hand over the money and get out of the way. Consider it reparations for running such a fucked-up patent office. Then they can go off and take ten years to reform the system. Oh, yes, they should also make the patent invalidation process 100% free. In other words, anyone should be able to file a patent invalidation action and it should be 100% free. Then we could crowd-source patent invalidation runs on all the patents held by trolls. Form crowd-sourced teams that target trolls and file away. Seriously folks, this is war. And in war you have to have more powerful weapons than your enemy. The enemy has the power of the monopoly they were granted by the US government. What they don't have is unlimited and massive capital. An association of practicing entities --no trolls allowed-- with billions of dollars available to mount a shield and defend members would be massively intimidating. The association's mission statement should state that all engagements will have, as a goal, the invalidation of the patents in question. In other words, if you screw with us we will go directly to rip those patents out of your hands. No middle ground. No deals. No mercy. Attacking us means you, as the attacker, risk it all and you better have a real patent. How many trolls are going to risk that? How many will do it after one, two or several are absolutely decimated in court and their patents invalidated. One more thing. If a non practicing entity has a patent invalidated they are also put through a bankruptcy style procedure whereby a trustee takes a look at what moneys were derived from licensing the invalid patents. The idea is to refund ill-gotten funds to those who paid the fees. In other words, hit them with a nuke. EDIT: Also, on the subject of patent invalidation. This should be ripped out of the hands of the government and run just like a trial. I don't know exactly how it works today, but this is what I have in mind: A judge is appointed to oversee the process. A jury of people well-qualified in the patent's subject matter is assembled. Both parties present their case. The jury deliberates and decides. Fast, efficient and 100% in private hands with the blessings of the US government. Rough strokes.

kislayverma 14y ago

GO RACKSPACE!!!

jarmitage 14y ago

Where's the petition against patent trolls, America? (Or has this been tried already / would it fail?)

avaku 14y ago

Respect Rackspace! Maybe I should switch to you from AWS :)