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.
In the end, a jury determined that Newegg needed pay only .5 million in damages.
Already, Cloudflare has created a $50,000 prior art bounty — one matched by an anonymous donor who has pitched in an additional $50,000 — that it will begin paying out in several weeks, says Prince.
He suggests that Cloudflare has so far amassed prior art for half of Blackbird’s patents.
When it asked Newegg for $34 million in damages, it might have imagined extracting some amount of money from the company easily. Not only might the amount have destroyed the company, which is now 16 years old, Newegg, which viewed Soverain as an extortionist, opted against settling for fear the decision would invite future patent suits.
Newegg began its fight against Soverain alongside seven other retailers that were sued using the same patent. It went to court and it argued that its shopping cart did not infringe on the patent of Soverain — which has itself never made a sale.
The paperwork would itself arrive shortly after from a registered agent in a thick white envelope. 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, Pet Smart and Walmart over a bicycle pet carrier. 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.
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?
Instead, Newegg famously appealed that decision, and not only did it win — the award was vacated — but using prior art, which is evidence that an invention was already known to the public before a patent was awarded, Newegg convinced a three-judge panel to invalidate Soverain’s shopping cart patent claims, preventing Soverain from using them against potentially dozens of other e-tailers.
Sitting in a Cloudflare conference room on a bright Friday afternoon recently, Prince seems to relish the battle that Blackbird has brought to Cloudflare.
(One of its most recent complaints was filed against Apple.) Back in 2007, Soverain had alleged that Newegg was infringing on patents that included an online shopping cart.