Cloud computing company Rackspace has sued two companies it describes as 'patent trolls' for breach of contract, and asked a federal court for a declaratory judgment that it did not infringe three patents owned by one of the companies, Parallel Iron.
In a separate development also with implications for patent trolls, which are firms that mainly own or manage patents and use them to make money from licensing and litigation, Brocade Communications Systems said it defeated yet another patent troll after an appeal by Chrimar Systems was turned down Thursday by the U.S Court of Appeals for the Federal Circuit.
"Today we drove a stake into the ground in our dogged fight against patent trolls -- we sued one of the most notorious patent trolls in America," wrote Alan Schoenbaum, Rackspace's senior vice president, and general counsel in a blog post on Thursday.
In December 2010, IP Navigation Group (IPNav) accused Rackspace of patent infringement as agent for a secret patent owner, now known as Parallel Iron, according to court records. It alleged that its patents on storage-area-network (SAN) and network-attached-storage (NAS) equipment also covered the open-source Hadoop distributed-file system (HDFS) used by Rackspace.
But IPNav declined to disclose information on the patent claims, or even the patent numbers and the patent owner, unless Rackspace entered into a "forbearance agreement," which Schoenbaum describes as "basically, an agreement that we would not sue them."
"IP Nav was worried that as soon as we found out what their patents and claims actually were, Rackspace would sue to invalidate their patents or for a declaration that Rackspace does not infringe," Schoenbaum wrote.
Parallel Iron however sued Rackspace and 11 others in Delaware last month without providing any notice, breaking the agreement they insisted upon, according to Rackspace.
"We aren't going to take it," said Schoenbaum, which is the reason the company sued IPNav and Parallel Iron on Thursday in the U.S. District Court for the Western District of Texas, San Antonio division. Rackspace has asked the court to enter a judgment declaring that Rackspace does not infringe three related patents owned by Parallel Iron. These are U.S. Patent Nos. 7,197,662, 7,543,177 and 7,958,388.
Rackspace also alleged in the court that Parallel Iron and IPNav breached their agreement not to sue Rackspace for patent infringement without first providing a written notice that settlement discussions had ended.
The Delaware Action is only the latest in a series of 23 lawsuits Parallel Iron has filed in Delaware on the patents-in-suit since June of last year, after Parallel Iron was forced to dismiss an earlier set of lawsuits on another patent that it could not enforce, Rackspace said in its complaint.
In the win for Brocade, the U.S Court of Appeals for the Federal Circuit affirmed an order by a district court which ruled in favor of Foundry Networks, a company Brocade acquired in 2008.
Judge Avern Cohn of the U.S. District Court for the Eastern District of Michigan, Southern Division earlier declared invalid claims 14 and 17 of U.S. patent 5,406,260 concerned with a network security system for detection of removal of electronic equipment.
Patent trolls are costing companies a lot of expense in legal fees, driving technology companies often to an early settlement. Rackspace has seen a 500 percent spike in its legal expenses combating trolls.
"Our goal with this lawsuit is to highlight the tactics that IP Nav uses to divert hard-earned profits and precious capital from American businesses," wrote Schoenbaum. "This time, the patent troll should pay us."
Earlier this year, the U.S. District Court for the Eastern District of Texas, Tyler division dismissed a patent infringement suit filed against Rackspace by Uniloc, another patent firm, for failure to allege infringement of a patentable claim.
IPNav, Parallel Iron, and Chrimar Systems could not be immediately reached for comment. IPNav claims on its website that its "integrated, end-to-end solution turns idle IP assets into revenue streams."