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How Newegg Saved Online Retail 259

Posted by timothy
from the thank-heavens-for-angry-lawyers dept.
bargainsale writes with an account at Ars Technica of "the inspiring story of Newegg vs the patent troll. Perhaps the system does work after all." Newegg's lawyer Lee Cheng has some choice words for the business model employed by Soverain Software, the patent troll which tried, with some success, to exact money from online retailers for using online shopping carts. Newegg has prevailed, though, and Soverain's claims are toast. From Ars: "The ruling effectively shuts down dozens of the lawsuits Soverain filed last year against Nordstrom's, Macy's, Home Depot, Radioshack, Kohl's, and many others (see our chart on page 2). All of them did nothing more than provide shoppers with basic online checkout technology. Soverain used two patents, numbers 5,715,314 and 5,909,492, to claim ownership of the "shopping carts" commonly used in online stores. In some cases, it wielded a third patent, No. 7,272,639."
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How Newegg Saved Online Retail

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  • Thanks, NewEgg (Score:5, Interesting)

    by sunderland56 (621843) on Sunday January 27, 2013 @10:41PM (#42712027)

    If I wasn't already a loyal customer, I sure would become one now.

  • by Frosty Piss (770223) * on Sunday January 27, 2013 @11:49PM (#42712391)

    Soverain had already picked a fight with the biggest kid on the playground and won. The first company it sued was Amazon, and Soverain scored a $40 million settlement from the giant retailer back in 2005. The Gap also settled for an undisclosed sum. That was back when defendants were afraid of RIM-sized damage payouts, before eBay v. MercExchange and subsequent Supreme Court decisions started to put some limits on what do-nothing patent holders could win.

    So what happens now to all that loot that these companies paid out?

    As far as I'm concerned I hope Amazon can't get any back, what with their own bullshit bag of silly patents...

  • Re:Patent troll? (Score:5, Interesting)

    by pwizard2 (920421) on Monday January 28, 2013 @12:06AM (#42712501)
    It seems like the easy way to fix the patent troll situation is for the government to require yearly progress reports (it's not too much to ask to have the patent holder produce something that indicates actual development work is going on whether the product is complete or not). The patent should be rendered null and void if the patent holder has done nothing but sit on it; if the holder hasn't done anything then it's time to let someone else try. No more free money by gaming the system and shaking people down.
  • by Jack9 (11421) on Monday January 28, 2013 @12:42AM (#42712663)

    > Perhaps the system does work after all.

    Winning your 1 case, does not mean the system is working as intended, regardless of the outcome.

  • by wbr1 (2538558) on Monday January 28, 2013 @12:46AM (#42712683)
    Non producing entity + welding patent = patent troll
    producing entity + wielding bad patents = patent ogre
  • Re:Patent troll? (Score:5, Interesting)

    by Just Brew It! (636086) on Monday January 28, 2013 @01:26AM (#42712825)
    Part of the problem is that many patents are so technical (or even intentionally obfuscated with technobabble), and there's so much potential prior art, that a patent examiner can't really be expected to sort things out properly. Maybe USPTO needs to have subject matter experts on retainer for all major technical fields, to assist the examiners.
  • Re:From TFA: (Score:5, Interesting)

    by Areyoukiddingme (1289470) on Monday January 28, 2013 @01:30AM (#42712837)

    They aren't going to have to do that a thousand times. If they can manage it two or three times, and get nice big public stories about it featured in the news, future patent trolls will conveniently forget to sue Newegg in favor of going after everyone else and collecting settlements that don't endanger their existence.

    Sadly, you are correct. Now that you mention it, I think you overestimate the number of times NewEgg will get a chance to defend against a troll. This may be the very last time. NewEgg's lawyer will be reduced to filing amicus briefs on those cases from which NewEgg was omitted.

    I do have one question for our lurking lawyers. Does this mean other companies who have previously settled automatically get their settlements refunded? Does Victoria's Secret get their $18 million back? I would assume it's not automatic, so my real question is can they file something and get it back? Or once you've settled, is your money gone forever? That's something I haven't seen addressed in the numerous Slashdot patent threads.

  • Re:Patent troll? (Score:4, Interesting)

    by Runaway1956 (1322357) on Monday January 28, 2013 @01:40AM (#42712869) Homepage Journal

    That seems proper, and fitting, to me. Also, increasing the number of examiners would help. I'm half way sure that the examiners are pretty smart people. If an examiner simply could spend TIME on an application, he could probably kick out a lot of the bogus patents.

    Face it - if the average slashdotter can take a casual look at a patent, think for less than ten minutes, then provide a half dozen examples of prior art, then a decent examiner could do the same. The examiner's biggest problem is probably time. The paperwork flows onto his desk at a breakneck pace, and he needs to get it off of his desk somehow. Skim it, rubber stamp it, and pass it on to the next person who rubber stamps it seems to be the most common method.

    Of course, there is the possibility that half the examiners are actually idiots. I'm not in a position to address that possibility.

  • by tlhIngan (30335) <slashdot AT worf DOT net> on Monday January 28, 2013 @01:50AM (#42712901)

    You gotta make sure it takes at least 2 clicks to check out, or you're done for. I still wonder why someone doesn't patent the 2 click, 3 click... n click patent so for anyone to do business without tribute it takes 1000 clicks!

    Actually, around the time Amazon was suing people for one-click, notably their competitor B&N [slashdot.org], B&N actually implemented "two click" check out. I think they simply asked "are you sure you wanted to order this item?" which gives you one last chance in case it was a mis-click.

  • Re:Patent troll? (Score:3, Interesting)

    by Anonymous Coward on Monday January 28, 2013 @01:52AM (#42712915)

    It seems like the easy way to fix the patent troll situation is for the government to require yearly progress reports (it's not too much to ask to have the patent holder produce something that indicates actual development work is going on whether the product is complete or not). The patent should be rendered null and void if the patent holder has done nothing but sit on it; if the holder hasn't done anything then it's time to let someone else try. No more free money by gaming the system and shaking people down.

    I completely agree. I've thought for some time that a patent holder should be given 2 years to produce and distribute a product based on the patent or lose the patent.

  • Re:Lousy lawyers (Score:5, Interesting)

    by Skapare (16644) on Monday January 28, 2013 @04:00AM (#42713347) Homepage

    And this is why the legal system (not just patents ... the WHOLE legal system) is so screwed up. Judgment on cases brought before the court should always, and only, be based on the merits of the case, no matter how good ... or how bad ... the attorneys are. This is what is raising the cost of lawsuits in this country.

  • Re:Patent troll? (Score:5, Interesting)

    by wienerschnizzel (1409447) on Monday January 28, 2013 @05:19AM (#42713613)

    This is just impractical. You would just get millions of bullshit reports for millions of bullshit patents. If the Patent Office is not able to examine the patent submissions properly in the first place, I doubt they would be able to examine the reports either.

    There was a better suggestion involving copyrights that could apply to patents as well:

    1) The patent submitter would have to set a price-tag on his patent from the get go - a license price.

    2) When it is accepted, the patent holder would have to pay a yearly tax for the patent (a percentage of the price he set up for it)

    3) Anyone could pay the posted license price to the patent holder to use the technology

    4) If anyone is found to be infringing on a patent, he would be required to pay the patent holder a sum relative to the price tag (such as 200% of the price per year infringed)

    The tax could be really small - like 1% so it would not bother real inventors while at the same time would stop patent trolls from clinging onto thousands of patents demanding unreasonable payments for the technologies.

  • Re:Patent troll? (Score:5, Interesting)

    by Anonymous Coward on Monday January 28, 2013 @07:30AM (#42714033)

    This is the clearest explanation I have seen of the difference between a troll and a non-troll. Thank you for that.

    A troll lurks under his bridge, the one you have crossed every day for a year, and then after you have crossed many times, maybe even built your business based around using that bridge, springs up and says, "You crossed 365 times without paying me. My bridge is critical to your livelihood - now pay me [some enormous amount] or you can not cross again!" The non-troll, on the other hand, proudly stands by the entrance to his bridge and, before you cross the very first time, says "Crossing the bridge will cost [some nominal amount] per trip. Do you wish to pay, or find another route?"

    There are in fact legitimate companies whose business model is to perform research, develop new technologies, and license those new, patented, technologies to other companies who produce products using those technologies. Some companies are good at making stuff. Others are good at inventing stuff. They shouldn't necessarily have to be one and the same.

    It bothers me that people want to throw all "non-practicing entities" in the same bucket as true patent trolls. Some NPE's add real value. (One example - look at the cell phone in your pocket. The fundamental technology behind that little wonder was developed 30 years ago by a company who today would be called an NPE. They still do R&D, they still actively license their patented inventions. They are the furthest thing from a troll. Google InterDigital.)

  • by lkcl (517947) <lkcl@lkcl.net> on Monday January 28, 2013 @07:42AM (#42714055) Homepage

    that newegg had to go to court at all indicates that "the system" is a failure. software is mathematics. mathematics is unpatentable. it was a lower-court ruling ignoring the supreme court which resulted in the mistaken impression that software can be patented: U.S. law *actually* says that only a hardware-software *combination* may be patented, i.e. something like an electronic cash register, or a calculator. if someone makes better software that runs on e.g. TI's hardware then, under U.S. Patent Law, that alternative software *cannot* be patent infringing. the problem is that it's going to take someone to stand up, just like newegg did, but this time to take it all the way through to the supreme court. and that's the problem: the cost of taking things to court. if patent litigation was zero cost to the defendant, including taking things all the way to the supreme court, *then* the system would not be unequal, and would be sorted out pretty damn fast.

A rock store eventually closed down; they were taking too much for granite.

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