New Patent Assertion Entity Flying Above the Radar: Blackbird

Perhaps there are other entities like this, but if so they haven’t made the boom that this one has.  Blackbird Technologies was founded by former big-firm (WilmerHale, Kirkland Ellis) patent litigators. It buys (or somehow obtains rights to assert) patents and asserts them with its own in-house staff of litigators.  Its “news” page reports a number of suits — at least 100 in its short life — and reports that it settled many.

It came onto my radar because of an interesting case involving a prosecution bar.  A defendant pointed out that because Blackbird’s business is buying patents to assert, no lawyer at it should see the defendant’s highly confidential information because those lawyers could then go acquire patents that covered the defendant’s planned products.  The court resolved the issue by requiring the company to covenant not to sue with respect to future products, an interesting resolution of the problem.  A pertinent part of the order in Blackbird Tech LLC v. Service Lighting and Electrical Supplies, Inc., et al., C.A. No. 15-53-RGA (D. Del. May 18, 2016) (Andrew, J.) provides:

the Court will require that Blackbird agree to a covenant not to sue any of these Defendants for infringement of patents involving lighting technology that are acquired during the time between the entry of the protective order and one year after the conclusion of the litigation. To be clear, if Blackbird acquires a patent on any lighting technology6 during the restricted time period, it may never assert that specific patent against these Defendants.

(As an aside, I would love to see how it acquires patents, since some interesting ethical issues could arise from its acquisition practices, since it’s a corporation but it’s practicing law, it seems.  There are some very odd issues that arise sometimes.)

Then I read that Blackbird has sued Cloudflare (Blackbird Tech LLC v. Cloudflare, Inc., which it seems is an Internet security company.  In response, Cloudfare put a “bounty” on every Blackbird patent.  That story is reported widely, including here and here, for example.

Blackbird states that it is designed to help small inventors overcome the obstacles of patent litigation, including the obstinate, more powerful defendant.  I am know that small inventors, and small companies, sometimes face the 800 pound gorilla defendant who refuses to deal fairly, and so the benefit that something like Blackbird can bring is real.  It will be interesting, however, to see if that is what Blackbird is, or if it is going to bring a bunch of nuisance suits, which Cloudflare believes it has done, as it has stated here.

2 thoughts on “New Patent Assertion Entity Flying Above the Radar: Blackbird

  1. Thanks for this post, David.

    There is definitely a need for the kind of services offered by Blackbird. Independent inventors and small to medium sized businesses have been priced out of the patent system over the last 10 years. However, I agree that the Blackbird business model potentially raises some thorny ethical issues. For example:

    1. When acquiring patents, I suppose Blackbird takes the position that it can contact patent owners directly because it is acting as a corporation, not a law firm. However, I suspect that the arrangements Blackbird sets up with patent owners give the patent owners some portion of the recovery from enforcement efforts. In those circumstances, it could be argued that Blackbird is “representing” the patent owners’ interests much the same as a law firm represents the interests of its clients. Perhaps this can be addressed in the written contractual arrangement with the patent owners. It would also help, I believe, to make sure the patent owners are represented by independent counsel, at least with respect to the initial patent acquisition and other contractual arrangements.

    2. Another interesting question is what duties does Blackbird owe to the patent owners? The duties a lawyer owes to a client are well known and established. Does Blackbird owe a duty of loyalty to the patent owners? What about confidentiality? If Blackbird contends it does not owe such duties to the patent owners, have they been advised of that?

    3. To the extent Blackbird contends it is a corporation and not a law firm, is it practicing law without a license? This would appear to be the same kind of issue faced by LegalZoom and other such pseudo-law firms. If LegalZoom can get away with what it does, it seems Blackbird should be able to as well.

    I, for one, will be interested to see how this one plays out.

    1. Great questions.

      Here is another: if Blackbird is hauled into one of the post grant review mechanisms before the USPTO, and the “state” of a granted patent is taken, does Blackbird act as its own counsel or do they hire separate counsel?

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