April 10

Trolls and Thieves

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Rackspace has been creating a stir on the internet. It made a bold claim in its blog:

"Today we drove a stake into the ground in our dogged fight against patent trolls – we sued one of the most notorious patent trolls in America."

Someone suing a “patent troll?”  Why, that’s a “man bites dog” story, so the tech media has gleefully joined in, with the story covered by CNET, ZDNet, ars technica, and Wired, among others. We’re flattered Rackspace finds us so “notorious.”

But why is there a story here at all?  Rackspace is violating three of our client’s patents.  Rackspace doesn’t want to pay to use that valuable intellectual property – they prefer to yell “troll” and fight in court.  IPNav has been negotiating with Rackspace since 2010—at some point, if no agreement can be reached, can the property owner assert its rights or does it just need to let Rackspace continue to use its property free of charge? 

Rackspace leaves out some important facts in their tirade against Parallel Iron and IPNav.  Rackspace stated

Parallel Iron is the latest in a string of shell companies created to do nothing more than assert patent-infringement claims as part of a typical patent troll scheme of pressuring companies to pay up or else face crippling litigation costs.

If you look at one of the patents being asserted – US Patent 7,958,388 – you will see that the original assignee is none other than Parallel Iron. The principals of Parallel Iron are none other than the inventors of this same patent.  It’s not a shell company formed to buy up patents.  It’s a company owned by inventors. 

Rackspace also wrote that IPNav’s claim to “give the little guy a chance” is laughable.  Why would it be laughable?  In this case, Parallel Iron IS the little guy – a group of inventors who don’t have the resources on their own to protect their intellectual property from big billion dollar sharks like Rackspace.  Isn’t it laughable that Rackspace’s incompetent counsel makes ludicrous statements and files a lawsuit with no basis?   Or is it OK to file a baseless lawsuit as long as you are a billion dollar public company in the tech space, but not if you are a small company owned by inventors?

Rackspace presumably supports the ill-conceived “SHIELD Act,” which aims to stop patent trolls.  In this case, the SHIELD Act wouldn’t even apply because the entity enforcing the patent – Parallel Iron – is the original assignee.

What’s Rackspace’s bold move against the notorious troll?  In a 14-page long complaint against our client, they added

IPNav—in addition to Parallel Iron—is liable on the Forbearance Agreement because it was the agent to an unidentified principal. The Forbearance Agreement did not contain any language releasing IPNav from liability

That’s it.  At least when Cisco sued a “patent troll,” it made a bold move (a foolish move, one immediately put down by the court) that Innovatio IP Ventures was guilty of racketeering and should be held liable under RICO.

Maybe Rackspace’s lack of respect for intellectual property is because it doesn’t have any.  With a market cap of $6.5 billion and annual revenues of over a billion dollars a year, Rackspace only has two patents.

Rackspace is simply using this lawsuit as an excuse to further its objective of using other people’s intellectual property for free.  The company’s real attitude toward intellectual property was laid out by its general counsel, Alan Schoenbaum, in an October, 2012 interview with ars technica: “We'd love to get rid of software patents altogether.”

Rackspace wants to use other people’s property without paying for it.  That’s the definition of a thief.

 

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