This FAQ is intended for ITRenew’s customers and potential users of Teraware to better understand why ITRenew filed suit seeking a declaratory judgement of non-infringement against Blancco Technology Group and Blancco Oy LTD, a Finnish subsidiary that owns Blancco’s only issued U.S. patent.
How was this initiated, what exactly was alleged and by whom?
In May 2016, ITRenew received a letter from Blancco Technology Group CEO Patrick J. Clawson requesting discussion of “potential product royalties and licensing arrangements” under a newly-issued U.S. patent, no. 9,286,231 (“the ‘231 patent'”). The ‘231 patent covers a method for erasing solid-state drives (SSDs).  Blancco’s letter was only one page and contained no specific allegations or other relevant information.
How did ITRenew respond to Blancco’s allegations?
ITRenew promptly formed a team of engineers and patent counsel to closely examine the ‘231 patent, its claims and its prosecution history, and to determine whether the patent could be interpreted to cover any aspect of ITRenew’s industry-leading Teraware platform. After extensive analysis, ITRenew determined that its proprietary Teraware SSD erasure technology bears no relation to Blancco’s patent. ITRenew therefore wrote back to Blancco, noting that the patent covers procedures distinct from those used by ITRenew and, further, that the patent bears so little relation to ITRenew’s technology that Blancco obviously failed to conduct due diligence before sending its letter. ITRenew therefore rejected Blancco’s invitation to discuss a royalty under the patent as without any legal basis.
What prompted ITRenew to file a declaratory judgment and what does it mean?
Despite ITRenew’s efforts to resolve the matter through analysis under the facts and law, Blancco reiterated its allegation, again with no supporting evidence or argument. ITRenew felt it was necessary to take legal action to protect itself against baseless allegations of infringement that would not be subject to legal scrutiny in the absence of an actual case. On June 10, 2016, we filed a Complaint for declaratory judgment of non-infringement in the U.S. District Court for the Northern District of California against Blancco. While ITRenew did not initially serve the Complaint, we felt pending litigation would be helpful in focusing any further discussions with Blancco.
A declaratory judgment complaint seeks a legal determination of an issue that has arisen between potential litigants. It allows parties to seek judicial involvement at the early stages of a controversy and provides a means of resolving any lingering dispute.
Under the Patent Local Rules of the Northern District, patent holders are required to serve detailed infringement contentions early in a case, and ITRenew believes that the suit will encourage Blancco to “put up or shut up” by either providing actual evidence of infringement or accepting that no such evidence exists. Furthermore, we believed that bringing suit will help resolve the matter expeditiously rather than permitting unsupported infringement allegations to linger without challenging their merit.
Additionally, under the Federal Rules of Civil Procedure, before filing suit a patent holder must conduct an adequate prefilling investigation and assess, among other things, how the accused method or product meets each and every element of one or more claims of a patent. Based on its analysis of the ‘231 patent in relation to Teraware, ITRenew felt that Blancco could not meet its burden of making an informed, good-faith assertion of infringement in an actual legal case. By trying to “discuss” infringement in a context without a neutral decision maker, Blancco was essentially asking ITRenew to rebut an unsubstantiated allegation of infringement by revealing details of its propriety technology to a competitor.
Nevertheless, in an effort to resolve the matter, ITRenew provided Blancco—without any legal obligation to do so—claim charts identifying specific details regarding its lack of infringement. Claim charts are commonly used in patent cases as a means of comparing claim elements with an accused product (to assess infringement) or prior art (to assess invalidity). ITRenew’s claim charts showed element-by-element how it does not infringe the patent.
On July 21, 2016, Blancco filed an Answer in the case. In an unusual move—and despite its public statements to the contrary—Blancco did not actually allege infringement of the ‘231 patent in its Answer. Rather, Blancco states that it “reserves the right” to amend its Answer to assert infringement “that discovery may reveal.” This means, basically, that Blancco lacks a sufficient legal basis to actually allege infringement but hopes to learn more about Teraware and may, at some later time, if information becomes available, seek to assert an infringement claim. In short, Blancco hopes the court will allow it to access and analyze ITRenew’s proprietary technology so it can compare it to its patent. Whether the court will agree remains to be seen. ITRenew is confident it will not.
Even though ITRenew has already conducted the analysis Blancco seeks to undertake and knows that it will fail to reveal any infringement, ITRenew has no desire to provide a competitor details about its proprietary technology without sufficient justification.
So then why did Blancco issue a press release that it is engaged in a lawsuit with ITRenew?
The press release is yet another example of what ITRenew believes is unprofessional conduct by Blancco. In failing to file an actual allegation of infringement, Blancco essentially admits it has no idea whether Teraware infringes its patent. ITRenew’s Complaint notes that, “Even the broadest claims of the ‘231 patent require the practice of over 20 separate elements. In fact, it would be difficult to infringe the ‘231 patent unless one were intentionally trying to do so, and even then it would be a challenge.”
Because Blancco lacks knowledge of how Teraware potentially infringes its patent—even though it initially requested royalties—Blancco seeks to try its case in public based on arguments it is unwilling, and we believe unable, to make in court. Mr. Clawson asserts that, “After a thorough review of ITRenew’s product portfolio, capabilities and marketing materials, we believe [ITRenew] is knowingly and unlawfully using our patented SSD erasure method to market and sell its data sanitization product, Teraware.” Despite Mr. Clawson’s assertion, Blancco’s unusual failure to even file a counter-claim for infringement in its Answer reveals how weak its position actually is.
How does this potentially impact us as an ITRenew customer and/or a potential user of Teraware?
It does not impact customers at all, and we do not believe it ever will. We believe that the nonspecific infringement allegation lacks factual and legal support, and furthermore our analysis calls into serious question the validity of the patent itself.
We believe that Blancco may be using its royalty request merely as a way to potentially access proprietary information about Teraware. Whether the court will require this, or whether ITRenew will potentially agree to voluntarily provide some information under strict confidentiality requirements, remains to be seen.
 Specifically, the ‘231 patent covers a particular type of data erasure apparatus or methodology involving the generation and subsequent P-value statistical testing of random data used to populate a data storage device prior to initiating a firmware-level erasure command. Even this is a fairly high level description of claim 1 of the ‘231 patent, which is 286 words and requires the presence of a number of other additional elements.