In another example of a competitor-based patent lawsuit involving cloud computing, Citrix Systems filed a major lawsuit against its newcomer competitor Avi Networks in the U.S. District Court of Delaware in December 2017. Besides flexing its muscles with infringement assertions of four patents relating to Citrix’s NetScaler cloud application delivery technology, Citrix also alleges false advertising, unfair competition, and deceptive trade practices and seeks a preliminary and permanent injunction against Avi Networks. And while not readily apparent from Citrix’s Complaint itself, Citrix targets two of its patents against Avi Networks’ Cloud Application Delivery Platform for OpenStack. Not only is this one more competitor vs. competitor patent action, but it marks yet another assertion against cloud-based open source software.
In the Complaint, Citrix recounts its history from its founding in 1989 to its emergence as a leader in cloud technology, including its acquisition of NetScaler, Inc. in August 2005. That acquisition enabled Citrix to continue developing the NetScaler technology which resulted in the issuance of numerous U.S. patents, including the four patents-in-suit. Avi Networks, founded in 2012, is relatively new to the cloud technology industry. And in keeping with an ever increasing pattern, Citrix goes to great lengths to point out that several Avi Networks senior executive leaders, including both its CEO and VP of Marketing, were previously executives at Citrix. Moreover, according to Citrix, “since Avi Networks was formed, several other Citrix employees have left to join that company, bringing with them their knowledge of Citrix’s products and intellectual property.” (Complaint, ¶ 9). In what could be viewed as further retaliation for executive ship-jumping, Citrix takes such offense to Avi Network’s comparative marketing materials that it levels pages of claims of false advertising, unfair competition, and deceptive trade practices. Such comparative marketing against competitive products is a common business practice, and unless something truly egregious is at hand, it seems unlikely that Citrix will make these allegations stick.
With regard to the patent allegations, two of Citrix’s asserted patents relate to methods of connection multiplexing and reuse that permit more efficient pooling of connections between clients and servers of the Internet (U.S. Patent 9,148,493 and U.S. Patent No. 8,631,120). Citrix alleges that the Avi Vantage Platform infringes these two patents. The other two Citrix patents relate to using dynamic response time to determine responsiveness of network service (U.S. Patent 8,230,055 and U.S. Patent 7,720,954). Again, Citrix alleges that Avi Networks infringes these two patents by installing the Avi Vantage Platform on cloud infrastructure such as a customer’s private cloud infrastructure or public cloud infrastructure. While not explicitly mentioning OpenStack in the Complaint itself, Citrix references several Exhibits attached to the Complaint that illustrate infringement of the ‘055 and ‘954 patents. A portion of a claim chart attached as Exhibit 15 (shown inline) cites to Exhibit 12 (shown below), which is an Avi Networks Solution Brief describing Application Delivery in OpenStack with Avi Networks. Some would find it very intriguing to say the least that Citrix has (at least in part) leveled patent assertions against use of OpenStack, an increasingly popular open source software offering for creating private and public clouds.
Other than the patent assertion against OSS, this lawsuit resembles BMC Software v. Cherwell Software, as previously reported by Cloud IPQ. The plaintiffs in both cases are established incumbents filing suit against relative newcomers in their respective fields. Citrix, akin to BMC, owns a substantial patent arsenal, while Avi Networks, like Cherwell, has only a handful patents. Further, both cases have a strikingly similar fact pattern in that the CEO of the smaller competitor was a former executive of the larger company. In this case, Avi Networks’ CEO previously worked at Citrix as the Vice President and General Manager of Mobile Solutions. And like BMC Software’s Complaint, in an effort to substantiate willful patent infringement by Avi Networks, Citrix refers to the previous Citrix employment of the executives now Avi Networks. (See Complaint, ¶¶ 48, 62, 77, 92). Allegations that former senior executives had or should have had specific knowledge of their employer’s patent portfolios has become a more common approach in post-Halo pleadings for willful infringement.
This case is still in its early stages, and Avi Networks has not yet filed its Answer in the case, nor has Citrix filed a motion for preliminary injunction as a follow-up to the Complaint. It wouldn’t be surprising to see a counter lawsuit filed by Avi Networks, although they only own a handful of issued patents at this stage. Perhaps Avi Networks will need to turn to the secondary patent market to bolster its patent portfolio. Given that there are no specific allegations at this point against Avi Networks’ Next-gen Application Delivery for Microsoft Azure, it doesn’t appear that Avi Networks could take advantage of the Patent Pick option of the Azure IP Advantage program. But that could always change as the case proceeds.
Authored By: Bart Eppenauer
Contributing Author: Charlie Zhao
