[co-author: Matthew Hohn]*

The amount of IP litigation between competitors in the cloud space is on the rise, and now a high profile cloud player, Dropbox,  has fired back against an emerging competitor.   The relatively young San Francisco based company has journeyed a long way from its start in 2007 to become a widely recognized name in personal cloud services.  Seemingly confident after a hot IPO in March 2018, Dropbox filed a complaint on June 20, 2018, against competing cloud service provider, Synchronoss Technologies, in the U.S. District Court for the Northern District of California alleging infringement of three of Dropbox’s patents by the Synchronoss Personal Cloud.

Synchronoss, a New Jersey based company, became a big player in the telecommunications world by offering device activation services to wireless providers.  Looking for new avenues of growth, Synchronoss has been pushing hard into the cloud arena.  Their cloud business has seen impressive success with their white-label Personal Cloud product that is sold to providers who then customize and brand the cloud service for their own customers.  These providers include industry behemoths such as AT&T and Verizon.

In the recently filed complaint, Dropbox—naming itself a “pioneer” and referring to Synchronoss as a “newcomer to consumer cloud backup”—alleges willful infringement of three patents directed to personal data backup for mobile equipment, synchronization of file upload, and control of access to data in a distributed environment.  The accused product, the Synchronoss Personal Cloud, offers users the ability to back up and sync personal data such as photos, contacts, and documents from a wide multitude of devices, a service that competitor Dropbox offers and argues falls under the claims of the asserted patents.   Dropbox is seeking relief in the form of damages, including enhanced damages that accompany willful infringement and a preliminary and permanent injunction against Synchronoss.

For a company like Dropbox to bring an expensive lawsuit against a competitor at this time may seem unusual.  In fact, this is the first patent action ever brought by Dropbox.  This may be Dropbox feeling more assertive and sure of its position in the industry, or this may be an indication that the key participants in the exploding field of cloud computing have not been settled and that the wave of litigation over cloud directed patents is likely to continue (and could possibly reach a similar level to that seen during the “smartphone patent wars”).  Alternatively, this may just be a case of ongoing conflict between the parties. In point of fact, Synchronoss filed a patent infringement action against Dropbox in 2015 in the District of New Jersey that has since been transferred to the Northern District of California in 2016 and remains ongoing.  However, Dropbox was not Synchronoss’ only litigation target.  In 2010, Synchronoss acquired the personal cloud company, FusionOne, and over the next few years began to assert the newly possessed patents against other cloud companies including Dropbox.  Under the pressure of this litigation, Synchronoss was able to acquire NewBay Software, Voxmobili, and cloud business units from F-Secure.  As the cases were dismissed, there was never a ruling on the validity of Synchronoss’ asserted patents.

It will be interesting to see how Dropbox advances with its action—that is only in its early stages—in light of the other case between the two competitors, especially since Dropbox acquired the presently asserted patents in the time period since Synchronoss’ earlier action was filed.  Do they want to pressure Synchronoss to dismiss the earlier case?  Are they trying to leverage a cross-licensing agreement or more favorable licensing terms on the patents at issue, or is this a signal that Dropbox has begun to become an aggressor when it comes to patent litigation?  Either way, this action by Dropbox could be seen as a move to protect and gain market share, and to secure freedom to operate in a technological realm that is rapidly growing.  Given that cloud market participants face an uncertain future in light of the vast amount of start-ups and blue-chip powerhouses that are interested in cloud based enterprises, it seems clear that IP litigation will become ever more commonplace.

*Matthew is a Summer Associate with Shook, Hardy & Bacon. He is a third-year law student at the University of Washington School of Law where he focuses on patents and other intellectual property issues. With a degree in computer engineering, he brings a background of knowledge and experience in computer related technologies and industries.