Original URL: http://www.theregister.co.uk/2013/04/05/rackspace_sues_patent_troll/

Rackspace sues 'the most notorious patent troll in America'

Sounds like a job for SHIELD

By Iain Thomson

Posted in Law, 5th April 2013 00:25 GMT

Texan hosting firm Rackspace is going on the offensive with a legal challenge to non-producing entity (or patent troll, as they are more commonly known) Parallel Iron – a firm Rackspace describes as "the most notorious patent troll in America."

Rackspace is still feeling cocky after its victory last week in the Eastern District of Texas, when a judge ruled that fellow NPE Uniloc couldn't try to enforce a patent on a mathematical formula – a rare case of logic from the notoriously patent plaintiff-friendly court. Flushed with success, Rackspace is now taking the fight to a new target.

"We have to be aggressive with these people, because they are the aggressors," Rackspace general counsel Alan Schoenbaum told The Register. "The public, and politicians in Congress, needs to see what damage these kinds of lawsuits are doing to the industry. They are strangling startups and killing the potential for innovation."

Over the last three years, Rackspace's legal bills from patent-troll cases have risen 500 per cent, the company claims, and Schoenbaum made it clear that the company has decided to try to put a halt to trolling with a legal Billy Goats Gruff approach that puts trolls in their place.

According to this latest legal case filing, Parallel Iron's representative IP Nav – one of the more notorious NPE enforcers – contacted Rackspace claiming that it was representing a patent holder and making an infringement claim to elements of the open source Hadoop Distributed File System (HDFS).

Rackspace general counsel Alan Schoenbaum

Rackspace's Alan Schoenbaum plans
to get tough on trolls

But IP Nav wouldn't actually name the patents involved, nor detail how they are being infringed, until Rackspace agreed not to counter-sue via a "forbearance agreement". This didn't sit well with the Texans, who agreed only to sign a deal giving each side 30 days' notice of any legal action.

IP Nav promptly broke that agreement by suing Rackspace without any notice whatsoever, and so the hosting firm has begun legal action against the trolls, and is also asking the judge to summarily dismiss the patent claims covering Hadoop.

"The Hadoop patent claim is rubbish," Schoenbaum said. "But there's a lot bigger issue here and that's going to take time to fix."

He praised the recently proposed Saving High-tech Innovators from Egregious Legal Disputes (SHIELD) Act, but said it isn't a magic bullet and more needs to be done.

Firstly Congress needs to put some kind of protection under law for end-users of a patented technology, he explained. At present, trolls are sending out patent infringement claims to companies that own a fax machine or Wi-Fi network, and many pay up rather than going to court over the issue.

Looking further afield, Schoenbaum said that there was really no need for software companies to patent their code at all. "Software patents are the relics of a bygone age," he said, suggesting that the money is in services, not software protection.

In recent FCC testimony, IP Nav representatives said that they would not support the SHIELD law since it would impose a "biased and lopsided fee-shifting" by making NPE's pay a deposit before filing patent claims, although companies that actually make and sell a product would be exempt.

"It seems a little odd that this question even needs addressing. What makes patent monetization as an industry worthy of such special consideration?" IP Nav said.

"Do the DOJ and FTC consider whether soft drink manufacturers are a good thing? Video game manufacturers? Dairy farms? Tobacco companies? In the American system, consumers determine which businesses are worthwhile – by voting with their dollars."

House of IP Nav founder

The home of IP Nav's founder – this troll doesn't live under a bridge

Those dollars are certainly accruing with IP Nav. The 14,139 square foot home of IP Nav's founder and CEO Erich Spangenberg was this year rated as the 62nd most expensive home in Dallas – it's valued at $9,293,990. Business is good, it seems, although Rackspace seems set to put a brake on things with this latest suit. ®