In early December, Swarmify filed a lawsuit against Cloudflare, alleging misappropriation of trade secrets, contract breach, and six other claims. Skiermont Derby LLP, who is representing Swarmify in the case, filed the suit with the United States District Court in the Northern District of California (CASE NO. 3:17-cv-06957).
Swarmify was founded in 2013 to solve video buffering problems and streaming failures. Court documents allege that Cloudflare’s new streaming product, Cloudflare Stream, contains trade secrets, intellectual property, and proprietary techniques disclosed under NDA to Cloudflare during discussions between the two companies around acquisition and partnership opportunities across 2016 and 2017.
Cloudflare launched in 2010 and made its reputation as a content delivery platform and security company. On September 27, 2017, it launched Cloudflare Stream, a service intended for websites and apps that want to build businesses hosting and streaming videos, similar to YouTube or Vimeo. Cloudflare has previously partnered with sites that stream video, but the idea behind Cloudflare Stream was to provide a more direct and more simplified hosting and streaming service than what is currently available in the market, allowing Cloudflare to rival the offerings of other CDNs who host video with an all-in-one package.
Cloudflare Stream combines encoding, global delivery and a media player into a single product for those customers that “want video streaming to work as a rational, seamless package”. With its launch, Cloudflare said, “we’re trying to fix both the technical and business issues that have plagued the video streaming market to date”. Its goal is to offer sites the ease of YouTube with the power and control you get from a bespoke system.
The company is also simplifying pricing – providing a single price for each step of the video streaming chain, and “instead of charging based on multiple variables, Cloudflare charges simply on the duration people actually consume the video“. TechCrunch described the new service as “a big shift from how things are done today”.
Following the launch of Cloudflare’s streaming solution in September, Swarmify retained Skiermont Derby LLP, a boutique firm representing plaintiffs in high stakes intellectual property disputes. The court filing alleges that Cloudflare revealed proprietary techniques on its blog in addition to utilizing these techniques in the Cloudflare Stream product. The lawsuit requests a preliminary and permanent injunction to put a halt to continued use of Swarmify Technology and Confidential Information by Cloudflare.
“It takes a tremendous amount of time and money to develop something like this,” Barnett said. “It is important that in the course of another company’s growth and success, that it doesn’t come at the expense of the rights of the next generation technology companies. I know our teams share many similar values and beliefs about the importance of the Internet to enabling innovation. My hope is that we will be able to find common ground on this issue as well so that we can all move forward with the important work both of our companies are doing.”
Nathan Barnett, CEO and Co-Founder of Swarmify, says its video acceleration solution was developed to achieve an 80 percent reduction in buffering and instant load speed for audiences. Swarmify has accelerated over 500 million streams in the past two years.
“Everyone at Swarmify has an incredibly high regard for the team and proprietary solutions that Cloudflare has brought to bear on web security,” Barnett said. “It is important that we ensure our innovations and intellectual property for video acceleration receive that same respect in return. When someone infringes on our IP, we have a responsibility to our customers, investors, and employees to protect the fruits of their time, energy, and resources.”