OT: Newegg Wins Important Verdict for Onling Shopping

Submitted by I Bleed Maize N Blue on January 27th, 2013 at 9:24 PM

All Our Shopping Cart are NOT Belong to You, or

Screw You, Patent Troll

How Newegg crushed the "shopping cart" patent and saved online retail

Appeals court invalidates three patents that Soverain was using to claim ownership of online shopping carts and file suits against online retailers.  (Ruling PDF link)  Soverain loses the $2.5M it had won from Newegg, as well as almost $18M plus a ~1% "running royalty" it had won from Victoria's Secret and Avon.  (And it has many other lawsuits pending.)

For Newegg's chief legal officer Lee Cheng, it's a huge validation of the strategy the company decided to pursue back in 2007: not to settle with patent trolls. Ever.

"We basically took a look at this situation and said, this is bullshit," said Cheng in an interview with Ars [Technica]. "We saw that if we paid off this patent holder, we'd have to pay off every patent holder this same amount. This is the first case we took all the way to trial. And now, nobody has to pay Soverain jack squat for these patents."

Yay, Newegg!

Comments

Seth

January 28th, 2013 at 11:16 AM ^

Not really. There's a meta element since this affects the MGOSTORE as much as it does Newegg. We weren't paying royalties to anybody for the Shopping Cart but we do run into online patent trolls and this ruling can be relatively broadly applied. No change to anything but we're safer today than we were before.

Atlanta_Blue

January 27th, 2013 at 9:33 PM ^

I think we've seen quite a bit of the new strategy of attacking the validity of the patent vs. trying to win in the lopsided Eastern District of Texas federal courts.  Hopefully lawmakers will consider an overhaul to the patent system in the near future, though given they can't even agree on major issues I'm not holding my breath.

UAUM

January 27th, 2013 at 10:01 PM ^

I think it's funny how the IP rights damages that corporate America/the entertainment industry pushed for and used to shut down those who infringe upon their rights were used against them.

I also think copyright trolls (much more prevalent) than patent trolls are an abuse of the system. We were offered to prosecute copyright infringement and after listening to their methods, it just blew my mind how shady those clowns are.

BiSB

January 27th, 2013 at 10:12 PM ^

A "patent troll" (or a "non-practicing entity") is one who owns a patent on something, but doesn't use it. They wait for someone ELSE to do something that infringes on the patent they own, and then they sue them to try to get paid off. In other words, they wait under the bridge until someone tries to cross, and then they try to collect their toll; hence, the 'troll' moniker.

There are a number of proposals for dealing with patent trolls, but there really is no silver bullet. Cases like this give me more hope, though.

TheGhostofYost

January 28th, 2013 at 12:06 AM ^

Why aren't declaratory judgments pursued more frequently?  I thought the main takeaway from the Genentech case was that you no longer have to wait to be sued even if the patent holder has no intention of filing a lawsuit.  Could be wrong though.

bluebyyou

January 28th, 2013 at 6:25 AM ^

One of the basic concepts behind patent ownership is that a patent gives you the right to exclude others from using your invention.  You can practice your invention, sell or license it to others or sit on it and do nothing. This is only touching the surface of this area of IP law. Ultimately, the quid pro quo is that when the patent expires the public is free to use the information disclosed and claimed in the patent grant.  One could write one or more books on the subject and still only scratch the surface.  

BiSB

January 27th, 2013 at 10:31 PM ^

The best one I've heard is being a little more targeted with the length of time and expansiveness of particular kinds of patents. Drug manufacturers might need 17 years from filing to recoup their expenses, but a software maker doesn't need that kind of time. Leaving these things dangling out there for decades increases the chances of trolls springing up. 

mgotom

January 27th, 2013 at 10:51 PM ^

I am not an attorney, but I am a software developer. Most software patents are too broad, and very frequently cover things that are prior art, or obvious, or simply routine stuff developers do all the time. Unfortunately, as the Ars article pointed out, defending patent suits is so expensive most defendants simply settle just make the problem go away. Good for Newegg for fighting this one.

I don't know if the fault for all this lies with the Patent and Trademark Office, or with patent legislation, but software patents should be much rarer and much narrower in scope than they are now.

bronxblue

January 28th, 2013 at 12:23 AM ^

The problem with software patents isn't so much that the enforcement as the fact that for many years the examiners had so few resources to rely on for prior art that bad patents were getting issued.  It's happened with other fields in their infancy, and over time the database of prior art fills out and these types of patents become rarer.  Also, the USPTO adopted a crowdsourcing-type program called Peer-to-Patent a couple of years ago that seeks prior art references from the community, with a particular eye on circumstances like this.  Still not a perfect system, but it is improving.  I do agree, though, that term limits for a variety of patents, including software and hardware, should be shortened, or at the very least tiered such that protection disappates the more ubiquitous the underlying technology becomes.

And this is coming from a software developer AND an IP attorney.  

Commie_High96

January 27th, 2013 at 10:40 PM ^

There is a joint NPR Planet Money/ This American Life show from a year or so ago that does a great job of detailing the Trolling issue. It does a much better job that I could, but I was too dumb to even take the IP Bar exam.

bronxblue

January 28th, 2013 at 12:19 AM ^

This is a big decision, and one that frankly needed to be made.  I understand the desire to protect one's intellectual property even if the principle venture fails, but companies like Soverain stymie innovation and put unnecessary taxes on successful companies through this trolling.

I love the court's reasoning because, for once, it felt both logical and systematic.  Even the expert witness's attempts to show differences amounted to "well, they didn't make a website when they used their system.  Of course, had the web been how it is now, they would have."