Cloudflare Faces New Patent Challenge, Again Seeks Community Assistance

Almost four years ago, we detailed a legal dispute involving Cloudflare, the San Francisco-based internet security and performance provider, and Blackbird Technologies. Blackbird had rapidly accumulated a substantial portfolio of patents and subsequently initiated numerous patent infringement lawsuits, with Cloudflare as one of the targets.

This particular lawsuit distinguished itself not through its specifics, but through Cloudflare’s response. Rather than settling, as many companies do in similar situations, Cloudflare actively solicited public assistance in identifying prior art. The goal was to invalidate not only the patent being used against them, but also to challenge the validity of Blackbird’s entire patent collection.

A Recurring Pattern of Litigation

One might have expected such a public confrontation to deter other similar entities. However, last month, Cloudflare found itself facing another lawsuit, this time from Sable Networks. According to Doug Kramer, Cloudflare’s general counsel, Sable Networks is a company that “hasn’t demonstrably operated a genuine business for nearly a decade, relying on patents that bear little resemblance to our business or the services we offer.”

Cloudflare intends to vigorously defend itself against this new legal action. This morning, following the public disclosure of the lawsuit, the company extended an invitation to the engineering community to once more “reverse the situation” with patent trolls. They are requesting participation in a collaborative effort to uncover evidence of prior art that would invalidate Sable’s “outdated, 20-year-old patents,” which Cloudflare asserts Sable is attempting to apply “far beyond their original intended scope.”

Crowdsourced Defense and a Substantial Bounty

Cloudflare is offering a $100,000 reward, distributed among contributors who submit the most valuable prior-art references. This evidence will be used to challenge the validity of Sable’s entire patent portfolio, extending beyond the patents currently asserted against Cloudflare. The objective is to inflict a significant setback on Sable, preventing future lawsuits against other organizations.

“We are grateful that we didn’t encounter such cases earlier in our company’s history, when they could have significantly altered our trajectory,” Kramer explained to TechCrunch. “Blackbird’s lawsuit occurred when we had established a degree of stability.” With Cloudflare now even more robust, the company is well-positioned to “compel [Sable] to substantiate their claims and establish a precedent for others, especially smaller companies that may follow. We aim to subject [Sable’s] entire patent portfolio to rigorous examination.

Widespread Targeting by Sable Networks

Cloudflare is not the sole target of Sable Networks’ legal actions. A search reveals that Sable has also filed lawsuits against cybersecurity firm Fortinet, data platform Splunk, and networking leaders Juniper Networks and Cisco Systems, alongside approximately a dozen other companies.

Eight of these cases – including those involving Juniper and Cisco – have already been settled. Many companies view lawsuits from non-practicing entities like Sable as a nuisance best resolved quickly, as the cost of litigation often equals or exceeds the expense of settlement, and represents a distraction from core business activities.

The Venue Problem and the Rise of Waco

Companies frequently lose these cases. However, a 2017 Supreme Court ruling unanimously established that patent holders cannot strategically choose favorable courts. Previously, the Eastern District of Texas was a popular venue, handling 2,500 cases in 2015 alone, with 95% initiated by entities like Sable. Despite this ruling, business remains strong in Texas, where legal teams generate substantial revenue and often successfully persuade local juries.

A report from the Houston Chronicle last year indicated that 747 patent complaints were filed in Texas during the first half of 2020 – double the previous year’s number and twice as many as any other state. Patent infringement lawsuits nationwide increased by 16% during that period, while new disputes in Texas surged by 96%.

While some cases are filed in the Eastern District of Texas (and particularly in Marshall, Texas, population 23,000), the Southern District, covering Houston, also saw a 43% increase in new patent violation cases last year.

Waco, in the Western District of Texas, has emerged as the new focal point for patent infringement litigation. This is largely due to the district encompassing Austin, a hub for technology companies, and a key aspect of the 2017 Supreme Court ruling limiting filings to venues where defendants have actual operations.

The Influence of Judge Albright

Patent trolls have also seemingly found an ally in U.S. District Judge Alan Albright, a former trial attorney appointed to the federal bench in Waco in 2018 by former President Donald Trump. Within two years of his Senate confirmation, Judge Albright became the presiding judge in the nation’s most popular court for intellectual property disputes, with a remarkably high percentage of plaintiffs prevailing in their cases.

This environment encourages entities like Sable Networks to continue pursuing their legal strategies. Early settlement agreements can be highly profitable, and the continued success fuels the growth of litigation finance funds.

Cloudflare’s Increased Profile

Cloudflare represents a significantly larger target now than it did during the Blackbird lawsuit. While previously considered an up-and-coming startup, Cloudflare went public in 2019 and currently has a market capitalization of $26 billion.

Kramer acknowledges the challenges ahead. Despite the company’s resources, Cloudflare is once again seeking public assistance. “I don’t want to sound self-serving, but we have a dedicated group of engineers and professionals in this field who regularly read [our] blog,” Kramer stated regarding the detailed post he published this morning about the case. “I also believe this resonates with many because they are deeply concerned by” the practice of patent infringement lawsuits.

Kramer emphasizes the significant impact of the engineering community in Cloudflare’s fight against Blackbird. “It wasn’t simply individuals seeking financial gain; there was little irrelevant material in [the submissions]. Instead, we received contributions from people saying, ‘I worked on this in the ’90s when I was at this company, and it’s absurd that they’re claiming to have invented it,’ accompanied by articles they had authored.”

“People conducted research in libraries and others who had industry experience stated, ‘I worked on this three years before they even obtained that patent; there’s no way they should be able to create this [problem] based on something I did,’” Kramer continued.

Whether Cloudflare can once again mobilize its community – and “also attract the right individuals, who are motivated and possess deep knowledge in this area,” according to Kramer – remains to be seen. However, the company is actively “hoping to reassemble the team.”

Considering the scope of its ambitions, Cloudflare could certainly benefit from the support.