How Cloudflare’s fight with a ‘patent troll’ could alter the game

Matthew Prince knew what was coming. The CEO of Cloudflare, an internet security company and content delivery network in San Francisco, was behind his desk when the emails began to trickle in, slowly at first, then in bursts. College classmates-turned-defense attorneys, including from the University of Chicago, where Prince had nabbed his law degree years earlier, were reaching out to say hello and to ask: did Prince perhaps need help to fight a lawsuit they’d seen filed against Cloudflare in Delaware?

The paperwork would itself arrive shortly after from a registered agent in a thick white envelope. The claim: patent infringement. The firm going after Cloudflare: Blackbird Technologies, a three-year-old, Boston- and Chicago-based firm founded by two former attorneys with white-shoe law firms who’d previously litigated intellectual property cases on behalf of some of the largest tech companies in the world.

Blackbird has since amassed a portfolio of roughly 37 broad-seeming patents that it has so far used to file more than 100 lawsuits, including against Asics, New Balance and Lululemon over a sports bra, and Amazon, PetSmart and Walmart over a bicycle pet carrier.

Blackbird’s specific lawsuit against Cloudflare accuses it of violating U.S. Patent No. 6,453,335, a patent filed 18 years ago by the owner of a Web hosting company in Germany that describes providing a “third party data channel” online and whose original owner, Oliver Kaufmann, doesn’t seem to have tried using it to create anything.

Kaufmann hasn’t responded to a request for comment for this story, but a patent record shows he sold the patent last October for $1 plus “other good and valuable consideration” to Blackbird, which is also using the patent to sue another startup called Fastly.

The Cloudflare suit is fairly typical. So-called non-practicing entities — or holders of a patent for a process or product that they don’t plan to develop — often use them to sue companies that would sooner settle rather than pay what can add up to $1 million by the time a case reaches a courtroom. Prince calls Blackbird uniquely dangerous because its founders’ law backgrounds make it even easier for the outfit to sue companies like Cloudflare; they needn’t pay an attorney to represent their interests.

Even more unusual, however, and potentially more meaningful for other companies, is Cloudflare’s response to the suit. Indeed, when Prince was handed that envelope on a sunny March afternoon, he saw it as a moment he’d been waiting for since co-founding Cloudflare seven years earlier. As far as he was concerned, this was war, and he was ready for it.