The Troll-Haunted World

It takes some pretty big news to jump ahead of an acquisition in terms of priority and urgency, so it was obvious that something significant was afoot.

I presume by now that you’ve read, Trolled: How Sandvine wound up on the ‘rocket docket’, by Craig Daniels…?

(in the unlikely event that you haven’t, you should go read it before continuing, because I’m gonna take for granted that you’re familiar with the contents)

As avid readers know, until recently – and for a total of thirteen years – I worked at Sandvine. I found Daniels’ article quite interesting, as it provided additional information beyond what I’d gained by observing and experiencing the case as just another employee, by contributing tangentially to the defence, and through direct conversation with several of the folks involved (both during the process and after the outcome).

By sharing my own observations, experiences, and (limited) knowledge, I hope to augment what you already know. I also use this post to pose some questions to the folks involved, so perhaps in the future we’ll get even more insight.

Edit/Update: Dave Caputo and Don Bowman have kindly provided answers to the questions I posed, in the comments section below the post, so check that out for additional insight.

In The Beginning…

In February 2016, when what Daniels characterized as “the shot across the bow” arrived, I was in Zurich with our CFO (Scott Hamilton) and our VP, Legal (Stephen Spracklin), working on an acquisition. Naturally, their phones started ringing; it takes some pretty big news to jump ahead of an acquisition in terms of priority and urgency, so it was obvious that something significant was afoot.

Being a public company, Sandvine immediately issued a press release announcing the ‘material’ news.

The timing of the news – coming as it did during the closing negotiation phase of an important acquisition – was poor. However, in conversation while walking around scenic Zurich, both Scott and Stephen expressed surprise that it had taken this long for Sandvine to face such a challenge: after all, the company is a market leader in a space that’s popular with trolls.

In conversation, both Scott and Stephen expressed surprise that it had taken this long for Sandvine to face such a challenge: after all, the company is a market leader in a space that’s popular with trolls.

Plus, one unfortunate reality of high-tech in general is that there’s no shortage of entities out there looking to leech off the success of others, and the legal system overall just invites this sort of abuse. As Daniels quoted from TechCrunch, “more than 10,000 companies have been sued at least once by a patent troll, and patent trolls file 84 per cent of high-tech patent lawsuits a year.”

So to Scott and Stephen, and I’m sure to the rest of the executive team, such a development was – unfortunately – inevitable. That inevitability, however, didn’t make it any more palatable.

In This Corner…

That press release used appropriately sugar-coated language to suggest that Packet Intelligence LLC (PIL) were patent trolls, and were behaving as patent trolls do – like jerks: “Sandvine is not aware of PIL creating products of any kind and its sole business appears to be the enforcement of patent rights. Sandvine did not receive any prior notice of this claim and has yet to receive any communication from PIL.”

Daniels describes Packet Intelligence’s background very well, so I won’t attempt to so here; however, I will speculate as to what I think the founding meeting looked like:

Daniels’ article included a picture of the outside of the nondescript building in which Packet Intelligence is headquartered. To see the inside of the building – which is perhaps even less-descript than the outside, check out the trailer for the documentary, The Patent Scam. Below, I’ve linked to the moment (starting at 10:42) when you can gaze upon Packet Intelligence’s amazing HQ.

For fun visual impact, let’s compare the hallway above with Sandvine’s corporate campus.

Case closed, amiright? OK, apparently the legal system requires more than photographs to win a case.

The Accusations

Quoting Daniels: “Packet Intelligence, headquartered in Marshall, Texas, was alleging that Sandvine’s products infringed upon three U.S. patents – No. 6,665,725, No. 6,839,751, No. 6,954,789 – which Packet now owned, and because Sandvine had not purchased a licence to make use of the property defined by those patents, Packet was demanding that Sandvine now do so for nearly US$14 million plus future royalties.”

This article from IP Watchdog provides some additional details on the patents in question and background. Fun facts: I drafted the “Policy Traffic Switch” functional block diagram, and I made the Visio diagram that shows a simplified view of the internal processing, memory, and packet switching.

Meanwhile, Inside Sandvine…

Coinciding with the press release announcing the claim filed against the company, Dave Caputo, Sandvine’s CEO, sent a brief email to the entire Sandvine team; this internal communication was short and to the point – just a line or two – and didn’t provide any information beyond what was publicly known.

There are obvious reasons for this brevity (update: see Don and Dave’s comments, at the bottom), but the truth is that many folks on the team had lots of questions. It must’ve been quite tough for our execs to remain disciplined, to avoid wandering into conversations about the case.

The feeling internally was that the whole thing was bullshit. When Dave announced to the company that we were going to fight the claims, he was treated to rapturous applause.

The feeling internally was that the whole thing was bullshit: the team believes in protecting intellectual property, and I’m sure the general attitudes towards patent trolls are negative, to put it mildly.

However, most folks on the team who follow such things would also know that there are many, many examples of trolls successfully suing companies, and of companies settling to avoid the whole hassle. As much as we all felt the whole thing was BS, there was a concern that it might simply prove pragmatic to settle, even at the cost of some personal dignity.

When Dave announced to the company, at a meeting in April following the release of our financial results, that we were going to fight the claims, he was treated to rapturous applause. As Dave would later say, when interviewed by Daniels, “I have a sense that once someone sees that you’re willing to fight this all the way, you’re less likely to attract patent troll lawsuits against you. So there’s a bit of an investment, as well.”

He didn’t get into much detail, but basically said that a) we believe we haven’t infringed on the patents, as accused; and b) in fact, we think a whole swath of Packet Intelligence’s patents are invalid, so we’re pursuing that parallel angle by asking for an inter partes review.

My personal feelings are that technology patents – considering the loose way they’re awarded and the rampant abuse that follows – are stifling innovation more than encouraging it. These systemic flaws are a beacon of light attracting the worst kind of people: those who contribute nothing to society, and just take, take, take. If it’s not strictly illegal, then they’re OK to do it. Again, as Dave said later to Daniels, “The reality is, there’s no law against being a patent troll, so they’re not doing something that’s against the law.”

These systemic flaws are a beacon of light attracting the worst kind of people: those who contribute nothing to society, and just take, take, take. If it’s not strictly illegal, then they’re OK to do it.

In my view, smart people should build things, not be dicks who leech off the success, ingenuity, and effort of others.

Continuing with the personal angle for a sec: when I was getting my Computer Engineering degree from the University of Waterloo, I foresaw this whole patent mess. I don’t claim any special visionary insights: even back in the early 2000s, patent trolls were a problem, and they were thriving in an environment in which one world, characterized by rapid advancement and extreme specialization – high tech – was running up against another world, this one characterized by glacial advancement and general ignorance about technology – the judicial system. I simply saw what was obvious: that there would be tremendous opportunity for folks who could bring expertise and knowledge to this environment, and briefly considered pursuing a law degree, with the intention to specialize in technology law. Ultimately, I decided I did not want to go down that path.

For the next few months, the case moved along in the background, as the gears of justice slowly turned.

In July, at the next company quarterly meeting, Dave reiterated what was explained in another press release: that we believe our legal team has uncovered evidence supporting our assertion that Packet Intelligence’s patents were invalid.

Note, however, that if you read that entire press release, there’s a part at the bottom that says, “Sandvine has been forwarded a copy of an e-mail distributed by PIL to an external party suggesting that PIL has filed a separate claim in Mannheim, Germany alleging patent infringement that Sandvine understands is substantially similar to the complaint filed in the Eastern District of Texas.”

Essentially, Packet Intelligence were opening another ‘front’ in our battle, this time in Germany.

So, that press release led with some positive news, and – to a pretty effective degree – managed to overshadow some negative news, while still complying with our obligations as a public company.

A Trip Down Memory Lane

Around the same time, my boss quietly approached his marketing team leads (e.g., Corporate Communications, Marketing Communications, and Product Marketing – me!) with an interesting and extremely urgent task: dig up all evidence that we released and were selling particular products at a particular time.

For an afternoon, the three of us combed through more than a decade’s worth of archived press releases, photographs from tradeshows, infosheets, advertising receipts, analyst coverage – you name it. In just a few hours, we found, compiled, organized, and summarized literally hundreds of pieces of evidence; these files were zipped up and sent on their merry way. So here’s a lesson: keep all that stuff! Storage is cheap, and you don’t know when you’ll need something seemingly trivial.

For an afternoon, the three of us combed through more than a decade’s worth of archived press releases, photographs from tradeshows, infosheets, advertising receipts, analyst coverage – you name it. So here’s a lesson: keep all that stuff! Storage is cheap, and you don’t know when you’ll need something seemingly trivial.

We also had to look through all our Global Internet Phenomena archives to track down network statistics that – thinking about is just now! – might have supported Don’s assertions about performance trade-offs (for the technically inclined: TCP and UDP traffic could impose differing performance demands).

Frankly, I don’t know what – if any – role those files and stats played in preparing our defence, but it was a fun trip down memory lane. We got to relive some crazy tradeshow memories, recall former colleagues, laugh at our old selves…the whole shebang. Sure, there was an aura of “Shit, this is important”, but it was a fun – albeit intensive – task nonetheless.

Moral Marketing and Accurate Communications

Around the same time, we had a marketing team meeting. Our team, while concentrated in Waterloo, had members in the US and Europe, so this meeting was one of the rare instances in which we were all together.

At one point, the conversation moved to the importance of accuracy in communications, specifically with our marketing material. No problem there: I’ve always believed in moral marketing: one of my jobs as a marketer is to help people come to the ‘correct’ decision (for them, and hopefully for us), so that they can fill a real need or desire. I know I can achieve this goal by providing information and helping guide them through the decision process, and without resorting to emotional manipulation, psychological exploitation, and other nefarious activities.

I recall during an onboarding session for some salespeople that one of them – who’d recently joined from a competitor – stated that he always knew that everything on a Sandvine infosheet was in the product, which made his previous job a challenge; he contrasted that with his previous role, in which he knew a large chunk of what was in the marketing literature didn’t exist in the products he was trying to sell; for a salesperson, managing this ‘overhang’ is part of the job.

Now, while I believe in and commit to moral marketing, my job wasn’t particularly easy: much of it entailed explaining really complex products, technologies, and features that solved really niche problems that customers often didn’t understand existed (they’d often feel the pain of a symptom without understanding or appreciating the true underlying cause).

So there’s an awful lot of education that needed to be done, and sometimes we’d need to simplify the message. The challenge was always to do so without sacrificing accuracy or clarity – and I think we did a pretty damn good job of meeting this balance, overall.

Nevertheless, if you go back through more than a decade of communications – some formal, some informal – you’re probably going to find a range in quality.

Case in point: During this marketing offsite, while discussing accuracy, some joke or flippant comment was made, and most of us shared a laugh. One of our execs, however, didn’t join in; instead, he replied to the effect of, “You guys joke about this but it’s deadly serious. I’ve spent the last few days defending a statement made by ________ in an email a decade ago. There was an explanation of how our product works, and it was wrong, and this is the type of thing that could sink us in the patent trial.”

“You guys joke about this but it’s deadly serious. I’ve spent the last few days defending a statement made by ________ in an email a decade ago. There was an explanation of how our product works, and it was wrong, and this is the type of thing that could sink us in the patent trial.”

Shit.

I remember thinking, “Man I hope this case doesn’t turn based on some simplified description I provided in a piece of marketing material, like an infosheet or a whitepaper, eleven or twelve years ago.”

I remember thinking, “Man I hope this case doesn’t turn based on some description I provided in a piece of marketing material eleven or twelve years ago.”

In fact, the email to which our exec referred might well have contained a description provided by me – back at that time, the gentleman handling those inquiries was fairly new, and we often fielded those questions and calls together as he ramped up, or he’d pass on particular aspects to me and I’d draft a chunk of the reply.

That being said, I don’t know how such things could be avoided: if an analyst asks for a general description of how your technology works, you’re typically not going to send him or her schematics, ladder diagrams, and the like; instead, you’re going to simplify things a bit, and doing so might omit seemingly unimportant details and could introduce ambiguity or things that aren’t technically correct. How can you find a balance? Surely we don’t have to add some massive disclaimer at the beginning of any non-canon description? But this patent case shone a light on the risk incurred when we simplify.

The Trial

Throughout the rest of the summer, we were somewhat distracted by the impending sale/acquisition of our company, which was kind’ve a big deal.

Plus, the pattern of limited internal communication about the patent trial continued. During company meetings, Dave would provide a very brief update, and would answer questions as best he could.

As Daniels noted, “Last spring, the U.S. Supreme Court ruled unanimously that patent holders could no longer hunt for friendly jurisdictions to sue companies.” Many folks at Sandvine saw this development and wondered if it would impact our case. Unfortunately not, but maybe it’ll help reduce abuse going forward.

We also knew that the trial was going to happen in the fall, but didn’t know specific dates.

As it happened, by the time the trial rolled around, aside from Dave – who stayed on as and continues to this day as Non-Executive Chair of the Board of Directors – none of the other executives were with Sandvine. Of course, that didn’t stop them from participating in the trial.

As the actual dates approached, word leaked to at least some of us as to when it was all going down. For instance, we were trying to book Don for a social engagement, and his availability depended upon the exact timing (i.e., when can he catch his flight home) of the trial.

Other than knowing it was happening, though, we didn’t get any updates. As Daniels’ said, folks who entered the courtroom had to surrender electronic devices, so it wasn’t like things were getting live-streamed on Twitch or Twitter.

As Daniels’ said, folks who entered the courtroom had to surrender electronic devices, so it wasn’t like things were getting live-streamed on Twitch or Twitter.

The first we knew of the outcome was when a certain genuinely-awesome-and-unintentionally-hilarious photo started circulating in the office, featuring Dave, Scott, and Don emerging triumphantly onto the courthouse steps.

The same day, the news came from Germany that a ruling declared the equivalent European patents invalid…so good news all around, and a deservedly bad day for Packet Intelligence.

Frankly, we in the office were all overjoyed for the guys: they took the battle to the end, and emerged victorious; I also imagine it was somewhat bittersweet, given that the company was no longer theirs.

Tales from the Trial

That night, over drinks (we were at a farewell celebration for a long-time colleague), Don regaled us with tales from the trial. None of us had been on the stand before, at least not as part of a patent trial, and we were curious what it was like.

Don’s stories were numerous and funny, as his stories generally are. For instance, he recalled how he’d stood outside the courthouse at one point and asked the guard, “So, what is there to do in Marshall, Texas?” to which the guard replied, “You’re doing it.”

Don recalled how he’d stood outside the courthouse at one point and asked the guard, “So, what is there to do in Marshall, Texas?” to which the guard replied, “You’re doing it.”

While he was on the stand, Don was asked what he had personally to gain by participating in this trial and mounting the defence. Don explained that, due to the acquisition, he had no financial interest in the outcome. When asked why he’d taken weeks of his life to help prepare the defence, and then additional days in person on the stand, he replied, “Because it’s the right thing to do.”

That’s a message that popped up several times throughout the trial, and is captured in Daniels article. No doubt it played at least some role in influencing the jury: on the one side you see a bunch of guys who really busted their asses building a real company, who are all about doing the right thing, who have little or nothing to personally gain from the outcome; on the other, you see…well, the precise opposite.

On the one side you see a bunch of guys who really busted their asses building a real company, who are all about doing the right thing, who have little or nothing to personally gain from the outcome; on the other, you see…well, the precise opposite.

Don also, without getting into any revealing details, mentioned the challenges imposed by the jury pool, and how that impacted the overall strategy. Daniels summarized nicely, “At the Sandvine trial, only one of the eight jurors – three men, five women, all of them middle-aged – would hold a university or college degree. As a result, the legal technique for both sides is to frame the case and their arguments in the simplest terms possible. Extraordinarily complex ideas that in some cases have taken engineers years to build are reduced in court to common, everyday concepts.”

You have to understand, Don – and people at Sandvine in general – are accustomed to speaking with insanely technical people. We can often assume that general technology and computing concepts are well understood, that our audiences have a firm foundation in networking technology specifically, and that we only really need to get into the nitty-gritty when we’re talking about our own proprietary technologies. That’s not always the case, particularly as you move up the decision-making hierarchy at a customer or speak with a reporter, but it’s pretty solid in most circumstances.

Speaking to a relatively less-technically literate audience would not come naturally, and could not be left to chance.

Speaking to a relatively less-technically literate audience would not come naturally, and could not be left to chance. On this subject, Don told us how impressed he was with the consulting and coaching he and the team had received about how to communicate: eye contact, body language, tone, message repetition, etc.

I picture a drill-sergeant standing over Don, making him practice, and screaming out, “Once more, with feeling!”¹ At least, that’s how I hope it went down.

¹Fine, this is a forced reference…but c’mon!

Don went on to say that he wished we’d done this training internally years ago. I showed great restraint in that moment and did not leap from my chair to strangle him – you know that feeling when someone comes to a conclusion that you knew and stated clearly years and years earlier? Well, that was the feeling I had.

You see, for many, many, many years (literally going back to a Communitech session I attended in ~2005) I’d believed and argued that we needed to invest more as a company in training our external-facing personnel to be more effective communicators and to hold them accountable for staying on-message. Here was Don suddenly singing the praises of the same type of thing (I’m sure he’ll argue/quibble with me on some trivial differences in circumstance). Oh well, better late than never! But still, grrrrrrr.

Of Rice and Vans

Don also reiterated the importance of the founding image of the Sandvine van. In Don’s view, seeing that van – repeatedly, throughout the trial – truly showed the jury that Sandvine is a real, decent organization, founded by hardworking, decent folk.

In Don’s view, seeing that van – repeatedly, throughout the trial – truly showed the jury that Sandvine is a real, decent organization, founded by hardworking, decent folk.

Daniels would underscore this point in his article, quoting one of Sandvine’s lawyers, Eric Buresh: “The story that most connects with the jurors’ collective human experience is most likely to win. Sandvine was made up of some really good individuals who had a very interesting and compelling story to tell.”

Somehow, despite chatting for six or seven hours that night, Don failed to mention the rice analogy – the first I learned of it was when I read Daniels’ article. And I was flabbergasted.

I’ve simplified our technologies for the sake of explanation on countless occasions, but I don’t think I’ve ever ventured into foodstuffs.

OK, look: I’ve simplified our technologies for the sake of explanation on countless occasions, but I don’t think I’ve ever ventured into foodstuffs. The rice thing just blew my mind, and illustrated the enormity of the challenge facing the defence team and those who took the stand.

I mean, I had no idea Don had been asked, “Why would you not want to put a net around the rice?” In what circumstance is that a real thing? If someone had just shown me that quote, in isolation, I would struggle to relate it to the issue at hand. I like rice, more than most, but when I think if it, I think of the late comedian Mitch Hedberg saying, “Rice is great when you’re hungry and you want 2,000 of something.”.

Who would’ve guessed in February 2016 that the trial might’ve come down to rice and vans?

Some Questions

Despite following things quite closely, and even being involved to a tiny extent – or perhaps because of following and being involved? – I’ve got a few questions that I’ll have to ask Dave and Don when I see them next:

• Throughout the process, the internal communications were necessarily few and lacking in detail – can you explain why that was or had to be the case?
• Looking at comments on LinkedIn, I’ve seen that several of Sandvine’s customers have congratulate Dave and the team on the outcome, which is great to see. I wonder if customers brought up any concerns about the case while it was ongoing?
• Regarding intellectual property: would you do anything differently, either looking back at Sandvine or thinking ahead to whatever the future holds?
• The jury pool was made up of people without a strong technology foundation – what strategies did you employ (besides the soon-to-be-famous “rice defence”) to make things clear without venturing into confusing?
• In his article, Daniels quotes Dave as saying, “Certainly when Francisco Partners acquired us, we passionately said: ‘Please don’t settle this. Let us fight it.'” How did the ongoing case impact the acquisition? For instance, was it just a liability with a certain percentage of risk attached, resulting in some appropriate adjustment of the valuation?
• Any lessons to share that aren’t already/otherwise covered?
• This whole tale underscores the importance of positioning, messaging, quality of communication and explanation. Beyond what Don already acknowledged in conversation, have you learned anything else in that regard?
• Some general legal stuff:
  • Is there any possibility of appeal by Packet Intelligence?
  • Does this loss reduce their chances in future trials?
  • Quoting from the IPWatchdog article: “Sandvine may yet further benefit from the patent validity trials available through the Patent Trial and Appeal Board (PTAB) enacted by the America Invents Act (AIA) of 2011. According to statistics collected by legal analytics firm Lex Machina, Sandvine has filed a total of seven petitions for inter partes review (IPR) proceedings at the PTAB to challenge various Packet Intelligence patents. Although six of the petitions were denied institution, one IPR proceeding which challenges the ‘725 patent was instituted by a panel of administrative patent judges (APJs) at the PTAB, indicating that Sandvine has shown a reasonable likelihood that the ‘725 patent is directed at unpatentable subject matter.” What potential further benefits might result if rulings come in Sandvine’s favour?
• Finally, for Dave: What direction did Tony give you for the headline photo? I’m envisioning something like, “We’re going for determined but somewhat displeased, so can we get just a bit of furrow? Yes, yes, brilliant!”

To any readers out there who’ve made it this far, if you’ve got any other questions for the guys then please feel free to ask in the comments section below and I’ll do my best to track down the answers!

And as a bonus, for anyone who wants to laugh sadly at the patent system, here’s a fun video from Last Week Tonight.