Ropes-&-Gray-is-NOT-looking-for-10-Mil.-Look-below:
StrikeForce offers a product having OOB authentication, presently known as ProtectID® (originally known as COBAS), that is covered by the ’698 Patent. StrikeForce has offered its patented product for sale in the United States since at least March 2003.
StrikeForce commenced advertising and marketing for its patented product in 2002. At that time, cellular phone technology and infrastructure had not yet matured to the point where using a peripheral device, such as a cellular phone, could be reliably used for out-of-band authentication. Since one-half of the authentication process under the ‘698 Patent takes place in the authentication channel, the authentication channel must be reliable without any dropped calls, for example.
Although StrikeForce entered the market too early, its advertising and marketing for its patented out-of-band technology raised awareness in the industry that its techniques were necessary to protect user data.
9.In approximately 2007, after cellular phone technology and infrastructure had become much more reliable, PhoneFactor, Inc. (“PhoneFactor”) began selling a stand-alone out-of-band authentication product that utilized a cellular phone.
In 2012, PhoneFactor was acquired by Microsoft Corporation (“Microsoft”). Following its acquisition, PhoneFactor stopped selling its stand-alone out-of-band authentication product and instead incorporated its technology within a larger Microsoft Azure platform. At the time it was acquired by Microsoft, it was my belief that PhoneFactor, Inc. was one of the largest providers of stand-alone out-of-band authentication products in the United States.
10.On March 28, 2013, StrikeForce filed suit against PhoneFactor, Inc., accusing it of infringing the ‘599 Patent. Once it issued, StrikeForce added the ‘698 Patent to that suit. StrikeForce separately filed suit, accusing Microsoft Corporation of infringement of the foregoing three patents, on June 5, 2015. Both cases settled on January 20, 2016. The above-captioned cases were then filed without delay, merely five months later, on June 20, 2016.
11.PhoneFactor’s acquisition by Microsoft in 2012 created a vacuum in the stand-alone out-of-band authentication product market. It was around that time when Duo Security, (“Duo”) entered the marketplace.
Duo was well-funded, receiving approximately $49 million in venture capital from such entities as Google Ventures, Repoint, True Ventures, and Radar Partners. However, as a relatively new company in the industry, Duo did not yet have a major market presence at the time.12.Duo’s funding enabled it to fill the void created by PhoneFactor’s departure from the stand-alone out-of-band authentication market before StrikeForce. Duo used its financial backing to penetrate such industries as financial services, healthcare, manufacturing, universities, government, social media, and publishing. Duo has since become the leading provider of stand-alone out-of-band authentication products. Its website states that it has over 8,000 paying customers, with $73 million in sales of out-of-band authentication technology in 2016.
13.StrikeForce did not have all of these same benefits that were bestowed upon Duo, which is another reason why StrikeForce has not been as successful in the market as has Duo.
14.Duo has used its position in the marketplace to establish dominance in education through a partnership with InCommon LLC, which allows Duo to provide out-of-band authentication services to 131 colleges and universities.
15.Duo is also integrated into technology partners, such as Beyond Trust and One Login. Duo’s integration into Beyond Trust allows it to provide out-of-band authentication services to over 4,000 customers and half of all Fortune 100 companies. StrikeForce attempted to engage in a partnership with One Login, but it chose Duo instead, likely due to Duo’s exploitation of its market position. Duo’s integration with One Login means that its out-of-band authentication service is pre-integrated into over 5,000 applications, such as Office 365, G Suite, and Amazon Web Services.
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