Cloudflare, sued by its first “patent troll,” hits back hard

Cloudflare, the Internet security company and content delivery network, was founded more than seven years ago but miraculously hadn't ever been hit with a patent infringement lawsuit from a non-practicing entity (commonly referred to as a "patent troll") until this March.

Rather than pay a nuisance settlement, Cloudflare is going all-out to fight Blackbird Technologies LLC, a company founded by two former big-firm lawyers that has amassed dozens of patents and filed more than 100 lawsuits. Cloudflare CEO Matthew Prince says Blackbird is a classic "patent troll," albeit one with a new, and potentially dangerous, twist on its business model.

In addition to filing its responsive papers in court today, Cloudflare also has sent letters to state bar regulatory committees in Massachusetts and Illinois, asking them to investigate Blackbird further.

In an extensive blog post this morning, Prince says that in addition to beating a patent he views as invalid, he intends to look into Blackbird's operations further "and expose how patent trolls really operate." By Cloudflare's count, Blackbird has filed 107 cases since 2014, making it "one of the most prolific trolls in the United States."

Ars reported on Blackbird's lawsuit against Netflix in February, in which the company asserted a patent on sending CD-R discs through the postal system. The company also has acquired and sued over patents on physical items like a bicycle pet carrier, a buttock lift support, and a sports bra.

"This claim is a nuisance for us," wrote Prince. "The lawsuit will take our time, distract us from our work, and it will cost us money to fight." He continues:

There’s no social value here. There’s no support for a maligned inventor. There’s no competing business or product. There’s no validation of an incentive structure that supports innovation. This is a shakedown where a patent troll, Blackbird Tech, creates as much nuisance as it can so its attorney-principals can try to grab some cash.

Cloudflare does not intend to play along.

Prince goes on to say that "Cloudflare will not settle this case and doesn’t plan to settle any patent troll case, ever." In addition, Cloudflare will spend $50,000 to crowdsource prior art that could invalidate Blackbird's patents. By issuing the prior art "bounty," Cloudflare seeks not just to invalidate the patent asserted against Cloudflare, but of any of the 37 other patents and applications owned by Blackbird.

Contacted by Ars, Blackbird founder Wendy Verlander declined to comment on any ongoing litigation but said in an e-mail that she is "quite confident we are not violating any ethics rules in any of our cases."

“A new model”

Blackbird's lawsuit (PDF) against Cloudflare accuses the company of violating US Patent No. 6,453,335, which describes providing a "third party data channel" online. The invention claims it can incorporate third-party data into an existing Internet connection "in a convenient and flexible way." Blackbird also filed a nearly identical lawsuit against the cloud platform Fastly, which was founded in 2011.

The '335 patent was filed in 1998 and until recently was owned by inventor Oliver Kaufmann, apparently the head of a group of small IT companies in Germany. Patent office records show the patent was purchased by Blackbird for $1 plus "other good and valuable consideration."

That puts Blackbird squarely in the much-criticized business model sometimes derided as "patent trolling"—buying a patent, holding it in a shell company, filing a batch of lawsuits, and then (presumably) splitting the settlement revenue with the inventor.

There's a new twist, though. Blackbird Technologies LLC is now the patent holder and also appears to be directly owned by the attorneys who are litigating the case—Verlander and her cofounder, Chris Freeman.

US Patent No. 6,425,349 describes a "bicycle pet carrier." The patent was purchased by Blackbird Technologies and used to sue Amazon in September 2014. The parties reached a settlement about five months later.

US Patent No. 6,425,349 describes a "bicycle pet carrier." The patent was purchased by Blackbird Technologies and used to sue Amazon in September 2014. The parties reached a settlement about five months later.

In a lawsuit filed in March 2017, Blackbird Technologies claims that ACTi Corp. infringes US Patent No. 6,816,085, which describes a "Method for Managing a Parking Lot." ACTi sells IP video cameras, including an "end-to-end parking lot surveillance solution." The litigation is ongoing.

In a lawsuit filed in March 2017, Blackbird Technologies claims that ACTi Corp. infringes US Patent No. 6,816,085, which describes a "Method for Managing a Parking Lot." ACTi sells IP video cameras, including an "end-to-end parking lot surveillance solution." The litigation is ongoing.

US Patent No. 6,425,349 describes a "bicycle pet carrier." The patent was purchased by Blackbird Technologies and used to sue Amazon in September 2014. The parties reached a settlement about five months later.

In a lawsuit filed in March 2017, Blackbird Technologies claims that ACTi Corp. infringes US Patent No. 6,816,085, which describes a "Method for Managing a Parking Lot." ACTi sells IP video cameras, including an "end-to-end parking lot surveillance solution." The litigation is ongoing.

US Patent No. 7,081,036 describes a "buttock lift support." The patent was acquired by Blackbird Technologies and was used to sue Amazon in 2014, alleging that sales of Spanx "Booty-Booster Short" and Leonisa's "Thigh Slimming Shaper Short with Butt Lifter" infringe the patent. The case settled in 2016.

US Patent No. 7,081,036 describes a "buttock lift support." The patent was acquired by Blackbird Technologies and was used to sue Amazon in 2014, alleging that sales of Spanx "Booty-Booster Short" and Leonisa's "Thigh Slimming Shaper Short with Butt Lifter" infringe the patent. The case settled in 2016.

Blackbird Technologies acquired US Patent No. 7,867,058, describing a sports bra, and used it to sue Asics in 2015. The case settled about five months later.

Blackbird Technologies acquired US Patent No. 7,867,058, describing a sports bra, and used it to sue Asics in 2015. The case settled about five months later.

US Patent No. 7,081,036 describes a "buttock lift support." The patent was acquired by Blackbird Technologies and was used to sue Amazon in 2014, alleging that sales of Spanx "Booty-Booster Short" and Leonisa's "Thigh Slimming Shaper Short with Butt Lifter" infringe the patent. The case settled in 2016.

Blackbird Technologies acquired US Patent No. 7,867,058, describing a sports bra, and used it to sue Asics in 2015. The case settled about five months later.

In Prince's view, Blackbird is really a law firm and so shouldn't be allowed to act as its own client. "As far as we can determine, Blackbird produces no products or services which it makes available to the public," writes Prince. "Rather, it offers litigation services and is in the business of filing lawsuits."

Blackbird's vaunted "new model" is "to distort the traditional Attorney-Client relationship," according to Prince, simply buying a client's claims rather than actually taking the person on as a client.

In an interview with Ars, Prince said that by lowering costs in this way, the Blackbird model could prove even more threatening to the tech industry.

"This is a new kind of 'enhanced' patent troll, that is able to act as both invention-holder and attorney," said Prince in an interview. "If that becomes the dominant model, it will significantly increase the damage that patent trolls can do."

As for the patent claims, Blackbird says the '335 patent monitors client-server communications and then "modifies or replaces the original data communication in response to third party data." The patent-holding company accuses Cloudflare of infringing the patent when it does things like insert error messages into communications when there's a problem.

Nothing from 1998, including this patent, "comes close" to describing Cloudflare's product, says Prince. If the '335 patent is read as being broad enough to cover Cloudflare, then it's essentially a patent on any system that examines, and then filters or modifies, an electronic communication.

The suggestion that intercepting and modifying electronic communications is a 1998 "invention" is a preposterous one. By World War I, numerous state governments had systems in place to censor and edit telegraph and telephone conversations.