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Abolish The Patent, Vanquish The Troll

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We’ve been vocal in our opposition of patent trolls and their attempts to extort settlements from businesses that actually create value. And we’ve done more than talk—in the past month, we fought a troll in court, and won, and we turned the tables on another, suing them in Federal Court.

It is sad, but true, that Rackspace is just one of many companies dealing with endless suits over dubious patents. It’s a never-ending game of whack-a-troll. What is different, though, is that we have decided to break the silence and shine a bright light on these patent-powered parasites.

Recently, we were sued by a Patent Assertion Entity (PAE) called Rotatable Technologies. Rotatable owns a patent that it claims covers the screen rotation technology standard in just about every smartphone. You know, when you flip your device sideways and the screen shifts orientation from portrait mode to landscape mode? Like nearly all the apps in the Apple and Android app stores, Rackspace uses standard functionality provided by Apple’s libraries and Android open source software to provide this display feature in one of our mobile cloud applications.

Rotatable provides a textbook case of patent extortion. One court identified how to spot patent extortion: a patent troll will file a series of “nearly identical patent infringement complaints against a plethora of diverse defendants.” (Eon-Net, 653 F.3d 1314.) Trolls do this to cast as wide a net as possible. They purposefully include companies that aren’t prepared to engage in patent litigation.

Rotatable didn’t just sue us; they’ve sued a number of companies including Apple, Netflix, Electronic Arts, Target and Whole Foods Market.

Patent trolls then follow each filing with a settlement demand “at a price far lower than the cost to defend the litigation.” (Id. at 1326.) This allows trolls to use the high cost of litigation as a club against operating companies. Patent litigation typically costs defendants between $1 million and $5 million just to stay in the fight.

When Rackspace contacted Rotatable to ask for a routine extension of time to answer their complaint, Rotatable admitted their trollish motives. Unprompted, they told us they had been instructed by their client to offer a settlement of $75,000 to anyone who contacts them asking for an extension of time. And that the number was negotiable.

As patent settlements go, that is very cheap. We also believe it is completely unacceptable.

Rackspace has decided to stick up for ourselves, the open source community, app developers and every other company in the mobile applications world. Today we filed a challenge to Rotatable’s patent in the patent office (see the petition here). It’s called an IPR, or Inter Partes Review. It’s a new proceeding made available under the America Invents Act. It gives us a chance to show why the patent is invalid and should not have been issued in the first place. Once we file the IPR, the patent holder can file a response. From there, a board of patent reviewers has a year to decide whether the patent in question is valid.

When it comes to fighting this particular troll, we believe an IPR is our best option to have this patent abolished at its source – eliminate the root, destroy the weed. We are optimistic that the patent office will agree with our petition and invalidate the patent, stopping Rotatable from attacking businesses in hopes of pilfering their hard-earned money and hindering app developers and the open source community from bringing their best every day.

IPRs can be risky and costly. We know this IPR will cost us more than the $75,000 that Rotatable wanted to extort from us. But we are not just fighting for us; we are fighting for all the app developers who are also in the line of fire. As the noted software engineer and blogger Joel Spolsky wrote, “Life is a bit hard sometimes, and sometimes you have to step up and fight fights that you never signed up for.”

About the Author

This is a post written and contributed by Alan Schoenbaum.

Alan Schoenbaum is Special Counsel for Rackspace.

Prior to joining Rackspace in 2005, he was a partner at Akin Gump Strauss Hauer & Feld LLP in San Antonio, Texas. Alan has more than 25 years of experience in corporate and securities law and mergers and acquisitions. Throughout his legal career he has represented public and private growth companies, venture capital funds and their portfolio companies. Alan received his B.A. in English and his law degree from the University of Texas at Austin.


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41 Comments

Good for you, Alan @ Rackspace, you are an inspiration, hopefully this will start a trend.

avatar Greg Popovitch on April 12, 2013 | Reply

You should set up a patent defense fund that I can donate to. I would definitely donate some amount of money to you guys.

avatar Noah Callaway on April 12, 2013 | Reply

I second that idea.

avatar Brent Farwick on April 12, 2013

I agree. They should start a patent fighting fund that you can voluntarily contribute to*.

*I hate the term donate when it comes to for-profit entities or individuals.

avatar Rallias on April 12, 2013

Thankfully an organization that is battling the lunacy that is our current patent system. Patent litigation stifles inovation and provided monetary compensation to troll companies whose sole business model litigation extortion.

avatar Chris Johnson on April 12, 2013 | Reply

Even if it’s nothing but positive publicity… The fact that patent trolling leaves such a bad taste in peoples mouths, that is is positive publicity… Is pretty despicable.

avatar Hoeppner on April 13, 2013

Bull. What you’re doing here is engaging in propaganda to try and market your business… you’re not taking a principled stand.

The reality is, patents provide a positive benefit to society- rather than keeping inventions secret, patents make them public so that all companies can benefit, by starting with the patent and then innovating further (rather than having to reinvent the wheel.)

What you and google and all the other patent bashers do is trump up a downside and ignore the upside.

In google’s case, the reason they want patents abolished is because they ripped off a decade of original work done by Apple and want to get away with it.

Apple is a company that creates value. By definition if they didn’t then there would have been nothing worth google stealing.

You don’t see people ripping off rackspace inventions because you are not an innovative company.

You want to see patents abolished because you want to be able to take others inventions without compensating them… and you lie when you call people who create these inventions “trolls” and claim that they don’t “create value”.

If they weren’t creating value you wouldn’t be copying them, and thus there’d be no reason for them to sue you. If they are suing you for obvious things, then the suits will go nowhere.

Of course, we have a culture of entitlement where people ideologically want to live on the work of others– and you are playing to this crowd here.

Shame on you!

avatar Engineer on April 12, 2013 | Reply

So screen rotation should be patentable? How about arithmetic? Or logic gates?

avatar David Sanders on April 12, 2013

Engineer, you write “The reality is, patents provide a positive benefit to society…” and while I agree with the notion that patents can *potentially* provide a positive benefit to society, I think you should try to open your mind to the alternative notion that they can possibly also do great harm to society.

If you can be convinced that there might be other perspectives than your own that also have some validity, then the first place I would suggest you look for convincing evidence is to Kirby Ferguson’s Everything Is A Remix 4-part indie movie series at http://www.everythingisaremix.info/watch-the-series/

If you’re not convinced by Kirby that patents have the potential to do great harm to society, then the next place you should consider looking for evidence is http://www.thisamericanlife.org/radio-archives/episode/441/when-patents-attack

And if you’re still not convinced, then maybe read Ranganath Sudarshan, Nuisance-Value Patent Suits: An Economic Model and Proposal, 25 Santa Clara Computer & High Tech. L.J. 159 (2008). PDF available at http://digitalcommons.law.scu.edu/cgi/viewcontent.cgi?article=1479&context=chtlj

If you’re still not convinced, then it would seem that no amount of evidence can convince you that there are other possibilities than the one you describe where “patents [always] provide a positive benefit to society.”

avatar CopyrightX on April 12, 2013

This guy haha. Rackspace started openstack which is by far one of the greatest innovations to date. what’s apple has to with anything here.

Shame on you!

avatar Ben on April 12, 2013

The vast majority of patent use is to suppress competition: directly via the courts, or indirectly via threats.

It is impossible to develop something non-trivial without infringing one or more patents. So patents inhibit innovation, rather than prompts it.

Also most patents are written in a way that is practically impossible to be useful to learn useful new techniques. Look at the number of patents for obvious computer uses and programming techniques.

avatar Gavin Flower on April 13, 2013

Engineer,

Are you serious, or are you paid to write this stuff?

avatar ShaggyDan on April 13, 2013

Guys, cool it. He’s not a real “Engineer”, as we’ve learned over his few posts. His arguments are always the same- straw men followed by slander (or libel, in this case). I’m not saying he’s an agent of any particular non-practicing entity. Far be it from me to conclude that he’s nothing but a sniveling sycophant beholden to parasitic vermin.

Nobody has called for the abolition of patents. What we are calling for is an allied defense against your assault on life, liberty, and the pursuit of wealth generation. What you and your co-conspirators do is attempt to steal what someone else created. What’s particularly insidious about it is how you do so- by using the very tools designed to protect inventors, to go after themselves, their families, and their livlihoods.

Not to put too fine a point on it, “Engineer”, but they say the world changes one funeral at a time. For the good of the rest of us, please… get on that sooner rather than later.

avatar Doubting Thomas on April 14, 2013

Can I send you money to help?

avatar Gman on April 12, 2013 | Reply

Thanks guys!

avatar pacus on April 12, 2013 | Reply

If you start a patent defense fund, i will donate. You can count me in!

avatar Anuj Agarwal on April 12, 2013 | Reply

I (and many others) would like to chip in to help with the cost of some of this litigation, since it’s on behalf of everyone. would you accept assistance as an entity, or maybe through e.g. EFF? how can we help?

avatar jd on April 12, 2013 | Reply

I could also donate if you create one. You’ve big-ed yourself up.

avatar Nik T on April 12, 2013 | Reply

Great article on abolishing patents! It’s a shame many corporations (and patent trolls) would rather litigate than innovate.

avatar Ben Francom on April 12, 2013 | Reply

Patent and copyright laws are both in serious need of radical reform in the US and globally. Thank you Rackspace for not caving in to the patent trolls, but as you wrote, it has become a never-ending game of “whack-a-troll”.

That’s because with existing legislation, the patent troll business model is financially very sound if also inherently corrosive to society as a whole. “The dynamics of local vs. global optimization” is jargon from the team-building and process-design communities that applies here: a successful business strategy for the patent trolls is a huge failure for the community as a whole. This could also be considered a perverse incentive http://en.wikipedia.org/wiki/Perverse_incentive

There are perverse incentives in both copyright and patent law that undermine the original Constitutional goals of “promot[ing] the Progress of Science and useful Arts…” that are especially powerful in our age of ever-increasing innovation where digital computers and The Internet have created a radically different “landscape” than that which existed when the first such laws were drafted.

Ideally, thoughtful legislative reforms would prevent such perverse incentives in the future so that both copyright and patent law would once again be aligned to serve the common good rather than the good of a few.

Large and democratic communities full of good questions and answers could go a long way towards helping to craft such thoughtful legislative reforms. See Ask Patents http://patents.stackexchange.com for such a community on patents, and http://goo.gl/5YDHa for such a proposed community on copyright.

Anyone who feels strongly about these issues, please go get involved by “Follow”ing the proposed CopyrightX community and submitting 5 Example Questions. With enough voting and other participation, the CopyrightX community proposal can graduate to an actual community like Ask Patents.

And with two vibrant communities full of good questions and answers related to IP law, perhaps future legislation will be free of perverse incentives, and we can once again rely on our laws to serve ALL of our best interests.

In the interim, thanks again Rackspace for being willing to continue the costly game of “whack-a-troll” on behalf of all of us.

avatar CopyrightX on April 12, 2013 | Reply

Keep this up and you have earned a customer for life. I’ll be spending as much money as I can with Rackspace.

avatar David Pratt on April 12, 2013 | Reply

I, too, would donate to such a fund.

Thank you for having the guys to do what’s right.

avatar Disk Space on April 12, 2013 | Reply

Thank you so much for your generous expressions of support. If you want to join the fight against patent trolls consider contributing to the Electronic Frontier Foundation. The EFF is fighting hard for our cause. Their website is https://www.eff.org/. Also, if you could write or call your two US Senators and your Congressman, that will actually help the cause.

avatar Alan Schoenbaum [Racker] on April 12, 2013

Great news! Glad to see you guys fighting the trolls.

Why does the IPR cost so much?

avatar Derry Bryson on April 12, 2013 | Reply

Rackspace, you have earned my respect. I hope you guys will stomp these shitty trolls and inspire other companies to step up their game.

avatar Sourav Chakraborty on April 12, 2013 | Reply

This is why I am, and always will be, a Rackspace customer.

avatar Mike Gioia on April 12, 2013 | Reply

+1 for starting a fund. Rackspace: the hosting provider with the balls to talk the talk and walk the walk.

avatar Steven on April 12, 2013 | Reply

Mazel Tov and well written. Thank you for standing up for the common good!

avatar Andy Slezak on April 12, 2013 | Reply

Makes me want to very much look for ways to become a customer of yours – such a strong feeling that I’ve never had with any advertisement I’ve ever seen!

In practice, that is unlikely, but certainly Rackspace is now in my mind as a company I would love to support…

avatar Gavin Flower on April 13, 2013 | Reply

Appreciate the effort.

avatar Rajan on April 13, 2013 | Reply

Thank you Rackspace. Everyone else always folds to these extortionists. Thank you for having the guts to stand and fight!

avatar Raahul Kumar on April 13, 2013 | Reply

These patents would never affect me. But your actions just makes me proud of hosting my stuff with you. Thanks for being awesome!

avatar Jose Muanis on April 13, 2013 | Reply

But they do affect you. The cost of paying off these trolls is built into the cost of the services and devices you use every day. It’s an invisible tax, and everyone pays it.

avatar Mark Jaquith on April 15, 2013

As a Rackspace customer, I whole-heartedly approve of these actions!

Fight the good fight, Rackspace.

avatar John Pasden on April 13, 2013 | Reply

Dane-Geld
=========

It is always a temptation to an armed and agile nation
To call upon a neighbour and to say: —
“We invaded you last night–we are quite prepared to fight,
Unless you pay us cash to go away.”

And that is called asking for Dane-geld,
And the people who ask it explain
That you’ve only to pay ‘em the Dane-geld
And then you’ll get rid of the Dane!

It is always a temptation for a rich and lazy nation,
To puff and look important and to say: —
“Though we know we should defeat you, we have not the time to meet you.
We will therefore pay you cash to go away.”

And that is called paying the Dane-geld;
But we’ve proved it again and again,
That if once you have paid him the Dane-geld
You never get rid of the Dane.

It is wrong to put temptation in the path of any nation,
For fear they should succumb and go astray;
So when you are requested to pay up or be molested,
You will find it better policy to say: —

“We never pay any-one Dane-geld,
No matter how trifling the cost;
For the end of that game is oppression and shame,
And the nation that pays it is lost!”

-Rudyard Kipling

avatar Gavin Flower on April 13, 2013 | Reply

“Engineer”, so should rotation be patentable or not? Or are you just ignoring the actual issue?

avatar Mikel on April 13, 2013 | Reply

Hmmm, mixed feelings. I can see where patent trolls are poisoning the industry in order to make a quick buck.

However, I will soon graduate with my PhD in computer science and I would like to work for one of the companies that likes to create and patent new technology.

The key difference is that they want me to create new science. Where exactly is the distinction between say Qualcomm and a patent troll? Cisco? Even Apple holds many patents, are the trolls?

Clearly patenting rotating screens is ridiculous. These people are just trying to make a fast buck. I think that their patent should not have been issued at all and will probably fall apart once you get them in court.

But, if there were no patents then I would create the new science, and the companies would just use it without paying. We would have to keep the science secret so that others could not steal it. Patents clearly have their place in technology.

avatar D4N13L on April 14, 2013 | Reply

I am the founder of a tech company that has been harassed by these types of trolls for years now. Recently, we did the same as rackspace…we told the trolls we would see them in court. The extortion had to end. The troll spent well over $100K fighting us. We spent over 150K. Could have settled for $25K. They decided to go away and pick a fight elsewhere. The patent office should and our elected officials could solve this…stop issuing stupid patents on things that are clearly obvious and not truly unique, new, or novel in design. It’s no wonder most tech companies have moved their HQ off-shore. Here’s another fix. Stop allowing attorneys to take cases on contingency. Ever wonder why there are far less lawsuits in other developed nations? You can’t just sue someone on the hope of making money…you have to believe in the case by knowing you don’t have a huge payday coming just because of stupid laws and stupid patents.

avatar KIRON on April 16, 2013 | Reply

The completely idiotic and ridiculous “legal” system we have stopped being a place where justice could be had many years ago. What really needs to happen is these fools on the bench need to start throwing these ridiculous things out before they get expensive and corrosive. Of course our court system is a joke at this point.

avatar Mike Hatcher on April 17, 2013 | Reply

This is why I like Rackspace so much. It is one thing for a company to do right by the shareholders (which in this case would probably have been to settle for the cheaper amount) it is another, and a great thing, when a company will go the extra step to defend it’s users and that is what filing this IPR does. Yes, it will help to mitigate the actions against Rackspace but it will also help mitigate actions against everyone. These trolls need to be shone that they can’t get away with this for ever. I would actually like to see Rackspace team up with other big companies and lobby congress for a perm fix to patent trolling.

avatar Matthew on May 23, 2013 | Reply

was just listening to This American Life on NPR and heard Rackspace mentioned as settling in a lawsuit with Oasis having to do with cloud based storage…found it interesting that the patent was invalidated by a court, hope yall tried recouperating the settlement….

http://www.thisamericanlife.org/radio-archives/episode/496/when-patents-attackpart-two

avatar Lisa on June 1, 2013 | Reply

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