Here we go again.
On March 15, Cloudflare was sued by a patent troll called Sable Networks — a company that doesn’t appear to have operated a real business in nearly ten years — relying on patents that don’t come close to the nature of our business or the services we provide. This is the second time we’ve faced a patent troll lawsuit.
As readers of the blog (or followers of tech press such as ZDNet and TechCrunch) will remember, back in 2017 Cloudflare responded aggressively to our first encounter with a patent troll, Blackbird Technologies, making clear we wouldn’t simply go along and agree to a nuisance settlement as part of what we considered an unfair, unjust, and inefficient system that throttled innovation and threatened emerging companies. If you don’t want to read all of our previous blog posts on the issue, you can watch the scathing criticisms of patent trolling provided by John Oliver or the writers of Silicon Valley.
We committed to fighting back against patent trolls in a way that would turn the normal incentive structure on its head. In addition to defending the case aggressively in the courts, we also founded Project Jengo — a crowdsourced effort to find evidence of prior art to invalidate all of Blackbird’s patents, not only the one asserted against Cloudflare. It was a great success — we won the lawsuit, invalidated one of the patent troll’s other patents, and published prior art on 31 of Blackbird’s patents that anyone could use to challenge those patents or to make it easier to defend against overbroad assertion of those patents. And most importantly, Blackbird Technologies went from being one of the most prolific patent trolls in the United States to shrinking its staff and filing many fewer cases.
We’re going to do it again. And we need your help.
Turning the Tables — A $100,000 Bounty for Prior Art
Sable Networks and its lawsuit fit neatly within the same troubling trends we were trying to address the first time we launched Project Jengo. Sable is taking ancient, 20-year-old patents and trying to stretch those patents lightyears beyond what they were meant to cover. It has already sued over a dozen technology companies targeting a wide range of different products and services, and by extending its claims to a company like Cloudflare suggests it may next try to stretch its claims to people that merely use routers … namely, anyone that uses the Internet.
We think Sable’s choice to bring these lawsuits on such a tenuous basis should come with some risk related to the underlying merits of its patents and its arguments, so we are sponsoring another prior-art contest seeking submissions to identify prior art for all of Sable’s active patents. We are seeking the help of the Cloudflare community to identify prior art — i.e., evidence that the patented technology was already in use or known before the patent application was filed — that can be used to invalidate Sable’s patents. And we will make it worth your while, by offering $100,000 to be shared by the winners who are successful in finding such prior art.
Again this time, we are committing $100,000 to be split among entrants who provide what we determine to be the most useful prior-art references that can be used in challenging the validity of Sable’s patents. You can submit prior-art references as long as Sable’s case is pending against us (Sable Networks, Inc. v. Cloudflare, Inc., No. 6:21-cv-00261-ADA (W.D. Tex.)), which means until Sable drops the case fully (and with prejudice — meaning Sable can’t re-file later), there’s a settlement, or the case has been resolved by the court and all appeal rights are exhausted.
Every three months for two years or until the case ends, whichever comes first, we will select winners from the submissions to date, and give out a portion of the $100,000 as awards. Once the case ends, we will select final winners from all submissions and award the remaining funds. We will also make all relevant submissions available to the public.
Here are the four Sable patents asserted against us:
|U.S. Patent No.||Title||Earliest Potential Priority Date|
|6,954,431||Micro-flow management||Apr. 19, 2000|
|6,977,932||System and method for network tunneling utilizing micro-flow state information||Jan. 16, 2002|
|7,012,919||Micro-flow label switching||Apr. 19, 2000|
|8,243,593||Mechanism for identifying and penalizing misbehaving flows in a network||Dec. 22, 2004|
And here are the six remaining Sable patents:
|U.S. Patent No.||Title||Earliest Potential Priority Date|
|6,854,117||Parallel network processor array||Oct., 31, 2000|
|7,428,209||Network failure recovery mechanism||June 12, 2001|
|7,630,358||Mechanism for implementing multiple logical routers within a single physical router||July 9, 2001|
|8,085,775||Identifying flows based on behavior characteristics and applying user-defined actions||July 31, 2006|
|8,817,790||Identifying flows based on behavior characteristics and applying user-defined actions||July 31, 2006|
|9,774,501||System and method for ensuring subscriber fairness using outlier detection||May 14, 2012|
In addition to helping with our case, we hope that making prior art public on all of Sable’s patents will provide a head start and decrease the costs for others who want to fight back against Sable’s patent trolling. The significant decrease we saw in Blackbird’s staff and filings after publishing prior art on Blackbird’s patents suggests this approach can be an effective way to undermine the threat posed by those patents.
Last time, we received 275 submissions from 155 different people on 49 of the Blackbird patents. In the end, we made payments to 18 participants. We were heartened by how many members of the Cloudflare community not only participated in this effort, but expressed great gusto and appreciation for the opportunity to be involved:
Over the years I've been disappointed and angered by a number of patent cases where I feel that the patent system has been abused by so-called ‘patent trolls’ in order to stifle innovation and profit from litigation. With Jengo in particular, I was a fan of what Cloudflare had done previously with Universal SSL. When the opportunity arose to potentially make a difference with a real patent troll case, I was happy to try and help.
— Adam, Security Engineer
I'm pretty excited, I've never won a single thing in my life before. And to do it in service of taking down evil patent trolls? This is one of the best days of my life, no joke. I submitted because software patents are garbage and clearly designed to extort money from productive innovators for vague and obvious claims. Also, I was homeless at the time I submitted and was spending all day at the library anyway.
— Garrett, San Francisco
Resurrecting Project Jengo
To understand why we are asking again for your help fighting back, it’s worth taking a closer look at this case and the fundamental problems it represents.
Sable Networks and the “case” against Cloudflare
The patents at issue in this case started with Caspian Networks, a company that tried to commercialize what it called a “flow-based router” in the early 2000s. Caspian was originally founded as Packetcom in 1998, and revealed to the public its flow-based router named Apeiro in 2003. A press story from that time explained that Apeiro routers worked like traditional routers already in existence, but with additional memory and logic for handling packets from the same “flow.” A 2003 slide deck from Caspian distinguished its “flow-based” router from the already existing conventional routers in the following way:
Despite its attempts to tout the benefits of its router, Caspian went out of business in 2006.
That’s when Sable Networks, the company that is suing Cloudflare, enters the picture. Though it doesn’t appear to be much of an entrance. As best we can tell, Sable briefly picked up where Caspian left off and tried to commercialize Caspian’s flow-based routing technology. Sable was equally unsuccessful in doing so, and the last activity of any sort that we could find was from 2011. After a long period of apparent inactivity, Sable’s focus shifted last year to trying to extract money by filing lawsuits through broad application of patents filed on Caspian’s flow-based router technology twenty years ago. In other words, Sable became a patent troll.
In the first round of litigation, Sable filed, and later promptly settled, eight lawsuits asserting infringement of Sable’s router patents. The defendants in those cases (including Cisco and Juniper Networks) provide a range of Internet services, but they all at least manufacture and sell network equipment.
Interestingly, all of those cases were settled just before Sable would have had to do two things that would have actually put its legal claims to the test: (1) respond to an administrative proceeding before the US Patent & Trademark Office (“USPTO”) challenging the validity of its patents; and (2) attend a hearing before the district court where the judge would have determined the proper interpretation and scope of the patent claims. So Sable filed cookie-cutter cases against eight defendants, waited for the defendants to respond, then settled the cases before meaningfully litigating its claims or facing a binding court or administrative ruling, which may have addressed, or likely undermined, Sable’s overly-broad assertion of those patents.
Shortly after settling the original eight cases earlier this year, Sable turned around and filed six new lawsuits against a new batch of technology companies, this time including Cloudflare. Unlike the earlier named defendants, Cloudflare is not in the business of making or selling routers or switches. Sable’s infringement claim therefore is not a close one, and now it’s picked a defendant that is eager to fight back.
This case is a good illustration of how patent trolls operate. All four patents asserted by Sable against Cloudflare were filed between 2000 and 2004, when dial-up Internet access was still common, and are based on Caspian’s “flow-based routing” technology, which is nothing like the technology Cloudflare’s products and services employ. To take one example, one of the patents Sable asserts is U.S. Patent No. 6,954,431, entitled “Micro-Flow Management.” This patent is from April 19, 2000 — almost exactly 21 years ago. Just like Caspian’s Apeiro routers from 2003, the ’431 patent discloses a router that puts a label on the packets for a given flow, and forwards all the packets in that same flow based on the label:
It claims to teach a “[n]ew switching technology [that] relies upon state information for providing a previously unavailable degree of quality of service” — presumably, Caspian’s flow-based routing technology featured in its 2003 Apeiro, which the market rejected over a decade ago.
Sable is now trying to stretch the patents way beyond what they were ever meant to cover. Many of Sable’s infringement claims appear to extend to basic routing and switching functionality known long before any alleged invention date. For the ’431 patent, Sable’s interpretation of the patent appears to stretch the scope so broadly as to cover any kind of packet processing, possibly even the “conventional routers” from the 2000s that routed each packet independently.
Having made this leap, Sable has demonstrated an intent to apply its patents far afield. It’s now a small step for Sable to assert claims against any person or business using a firewall or even a router. On the basis of its logic, any person using a WiFi router in their home may be in Sable’s cross-hairs. And Sable has already claimed that its patents cover firewalls — including firewall software and firewall devices. Again, its wildly broad interpretation threatens not just large companies; anyone trying to protect their networks from outside threats is potentially at risk.
If you think you or your small business are safe because you haven’t really done anything wrong, and no court would ever hold you liable, then you haven’t been paying attention to the current state of patent litigation where small businesses are sued for using copy machines. Without some of us fighting back, the incentives for patent trolls won’t change.
A broken incentive structure….still broken
Patent trolls like Sable proliferate because of a distorted incentive structure fueled by the astronomical costs associated with defending against even bogus patent claims. According to the 2019 Report of the Economic Survey by the American Intellectual Property Law Association, the median litigation cost for defending claims of patent infringement brought by a non-practicing entity through trial and appeal was staggering \$4,500,000 for big cases (i.e., cases with more than \$25 million at risk). Even for small cases that had less than $1 million at stake, the median defense cost was \$750,000.
Knowing that most defendants will settle at a percentage of their expected litigation costs long before infringement claims see the inside of a courtroom, patent trolls see only upside from each additional lawsuit they file. Their business model is built around filing as many lawsuits as possible regardless of the strength of their legal claims, because they know most defendants will pay to settle before the merits of their case are put to the test. They therefore take vague technology patents issued years ago and apply them as broadly as imaginable to new technologies and new companies. Most of these trolls are non-practicing entities who don’t have their own products in the marketplace but merely exist to extract a tax on other companies.
After declining in numbers for a few years, patent lawsuits were up last year about 12% over 2019, and increased activity by non-practicing entities buying patents suggested even further growth among such lawsuits in the future. The Electronic Frontier Foundation observed similar increases in patent troll filings in 2020, highlighted a case where one patent troll decided that the middle of a pandemic was a good time to sue a company that makes COVID-19 tests, and noted that “some patent owners actually saw the rise of the COVID-19 health emergency as a business opportunity.” This trend is showing no signs of slowing down — according to a recent report, there was a 43.3% increase in patent litigation in Q1 of 2021 compared to the same period a year ago, and non-practicing entities had their busiest Q1 since 2015, fueled by the litigation finance industry that is flush with capital.
To reaffirm what we’ve always said: Cloudflare is a strong supporter of the patent system. The 160+ patents we’ve been issued to date give us the ability to run our business with confidence by marketing and providing our services around the world, innovating on our existing products, and developing new products. But patent trolls live in a world where they allege fictional potential uses of their patents without having to make the investment to hire and pay employees or identify and satisfy the demands of the marketplace. Project Jengo is intended to address this distorted incentive structure by imposing real costs on the filing of meritless patent lawsuits. With your help, we can again send the message that by filing the wrong case, patent trolls risk losing not just a single lawsuit but a whole lot more.
We hope you’re all rested and ready to begin again the hunt for prior art!