The digital age has opened countless new opportunities for businesses, but also new possibilities for fraud and for companies to make a profit from dubious business practices. Lawsuits are becoming prevalent in which one company opens a business litigation case against another due to nothing more than patent infringement. Patent assertion entities (PAEs), also known as “patent trolls,” are companies that take licensing fees from other businesses, without actually making products from their patents.
A Texas-based cloud service provider, Rackspace, is taking action against what they call one of the country’s most notorious patent trolls. They’ve filed a lawsuit against the PAE IP Nav and Parallel Iron, citing breach of contract over a forbearance agreement that they signed with IP Nav.
IP Nav, on behalf of Parallel Iron, accused Rackspace of patent infringement in 2010. Rackspace says Parallel Iron has sued 11 other companies, alleging patent infringements for the use of the open-source Hadoop distributed file system. They’ve also sued at least 23 additional companies since June, including Facebook and Amazon.
IP Nav wouldn’t let Rackspace in on any details regarding the alleged patent infringement until they’d signed the forbearance agreement not to file a lawsuit without 30 days’ notice. However, Parallel Iron then sued Rackspace without giving any notice. Rackspace countered with their own lawsuit, wanting a declaratory judgment that they don’t infringe on patents, in addition to their breach of contract claim.
Rackspace says the tactics of PAEs “suffocate innovation” and harm both large and small businesses alike. The outcome of this lawsuit may make an impact on future business disputes between new technology and the companies known as patent trolls.
Source: CNET, “Rackspace fights back with suit against ‘notorious’ patent troll,” Steven Musil, April 4, 2013