Internet infrastructure company Cloudflare, which went public in September, has detailed how it knocked down a patent lawsuit filed by US law firm Blackbird Technologies in 2016 by offering rewards to anyone who could provide examples of prior art on patents leveled against it.
By some accounts, Blackbird Technologies was in 2016 among the top 10 of active US 'patent trolls' – the colloquial term for companies that buy patents but don't actively produce services or products, otherwise known as non-practicing entities (NPEs).
As reported by ArsTechnica at the time, Blackbird Technologies in 2017 also sued Netflix, Soundcloud, and Vimeo over patents for an idea to let a consumer buy something online, and automatically customize and ship a CD with data on it. Netflix was targeted because it let consumers download content and watch it offline.
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The law firm in 2016 acquired what Cloudflare, a content-delivery network provider, says was an "incredibly broad" patent titled 'Providing an internet third-party data channel'. The company bought patent '335 for $1 and then sued Cloudflare in March 2017.
As per TechDirt, in February a US Appeals Court for the Federal Circuit quickly rejected Blackbird's case after Cloudflare a year earlier successfully had the patent invalidated in a lower court.
Blackbird had the right to seek a review of the decision by the US Supreme Court, but that option expired this summer, meaning Cloudflare is now in the clear.
Key to Cloudflare's legal victory was the company's Project Jengo, an effort to level the playing field between patent trolls and tech companies. Companies often choose to settle opportunistic patent claims because it's cheaper than multi-year litigation.
The overall goal of Project Jengo was to put a dent in the patent-troll business model and make it more expensive for similar NPEs to file patent claims on operating companies.
Cloudflare vowed to fight Blackbird's patent claim and set up a bounty to offer "awards for crowdsourced prior art that could be used to invalidate any of Blackbird's patents, not just the one asserted against Cloudflare".
It also filed complaints to bar associations because it believed Blackbird only paid $1 for the patent on paper but intended to share any gains from litigation with the seller. That practice was unethical, according to Cloudflare.
In 2018, a judge at the District Court for the Northern District of California held that abstract ideas are not patentable.
Key to its success were examples of prior art that Cloudflare supporters submitted for rewards, which were aimed at wrecking the value of the law firm's patent portfolio.
"The existence of an organized and accessible library of prior art would diminish the overall value of the Blackbird patent portfolio," explained Cloudflare lawyer Alex Krivit.
"That sort of risk to the patent portfolio was the kind of thing that would nudge the incentive structure in the other direction. Although the financial incentives made possible by the US legal system may support patent trolls, we knew our secret weapon was a very smart, very motivated community that loathed the extortionary activities of patent trolls and wanted to fight back."
In total, Cloudflare received 275 unique submissions from 155 people regarding 49 patents, and it received multiple submissions regarding 26 patents.
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Just over 40% of submissions related to the '335 patent asserted against Cloudflare, while nearly 15% concerned claims that could affect the Niantic game Ingress.
Cloudflare paid out over $50,000 in cash awards to 18 people who submitted prior art for Project Jengo, half of which was for submissions related to the '335 patent. Additionally, Cloudflare awarded more than $30,000 to submitters who helped invalidate other patents in Blackbird's portfolio.
So did Project Jengo actually work to destroy Blackbird's business model? Looking at patent assertions filed by the company, it appears to have.
"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," wrote Krivit.