Jury Finds Newegg Infringed Patent, Owes $2.3 Million

Jah-Wren Ryel sends this quote from Ars: "Newegg, an online retailer that has made a name for itself fighting the non-practicing patent holders sometimes called 'patent trolls,' sits on the losing end of a lawsuit tonight. An eight-person jury came back shortly after 7:00pm and found that the company infringed all four asserted claims of a patent owned by TQP Development, a company owned by patent enforcement expert Erich Spangenberg. The jury also found that the patent was valid, apparently rejecting arguments by famed cryptographer Whitfield Diffie. Diffie took the stand on Friday to argue on behalf of Newegg and against the patent. In total, the jury ordered Newegg to pay $2.3 million, a bit less than half of the $5.1 million TQP's damage expert suggested. ... TQP's single patent is tied to a failed modem business run by Michael Jones, formerly president of Telequip. TQP has acquired more than $45 million in patent licensing fees by getting settlements from a total of 139 companies since TQP argues that its patent covers SSL or TLS combined with the RC4 cipher, a common Internet security system used by retailers like Newegg."

Good advertising?

[Anonymous Coward]

Hopefully this turns out to be good advertising for NewEgg - I know I'll be making my next computer purchase from them to help support them in fighting a patent troll.

Well...

[TheSwift]

I need to buy a new desktop anyway. Newegg, my money's coming your way.

Re:Good advertising?

[Chameleon Man]

Is there anywhere else you should buy computer parts from? Their hardware all seems to be competitively price, and their customer service is outstanding. My buddy bought a mouse at Best Buy that didn't work. When they didn't take it back, Newegg did and gave them a full refund.

Re:Good advertising?

[cdl]

Ahh - did your friend tell Newegg that the mouse was bought at Best Buy? If so, props to Newegg for helping your friend out. If not, I think that's called fraud (and no props to your friend).

Re:Stupid judge/jury.

[cdl]

We can fight these stupid decisions coming out of east Texas one by one, or we could be smarter about it. We can try for patent reform, but the $$ involved, they will probably find a way around that as well. How about we start a PR fund with the goal of flooding the East Texas jury pool (buy TV/Radio/Newspaper/Internet in that geography) explaining why this is bad to the people that will be sitting in the jury box. Explain that it's actually killing small, successful companies, and only enriching the trolls/lawyers who actually did nothing. Call it carpetbagging - should resonate with Texans.

Re: Stupid judge/jury.

[Scowler]

Playing devil's advocate here... Why is this result some failure of the judge/jury of this case? Like it or not, this patent has previously been granted by the patent office. Jurors and judges don't get to invalidate patent claims because of some flaky idea of who is trolling who. Rather, they have to follow a more or less established legal process, regardless the side they may otherwise be rooting for. You want a "Bad Guy" for this event? Blame Congress, as current law incentivizes patent reviewers to accept questionable patent applications, and the number of years granted to these patents are too many.

Re:SSL?

[fuzzyfuzzyfungus]

What is somewhat surprising is that Newegg had, as expert witness, Whitfield Diffie, as in 'Diffie-Hellman' Diffie. I didn't even know that it was possible to lose an assymetric-key encryption related case with him on your side, especially against nobody in particular.

Re: Stupid judge/jury.

[gstoddart]

Playing devil's advocate here... Why is this result some failure of the judge/jury of this case?

When the guy who invented public key encryption tells you that the basis of the patent had been around for years, that is a failure of the jury in this case.

At this point, I think people should just be suing the USPTO for lousy patents which should never have been granted in the first place.

Re:Good advertising?

[larry bagina]

NewEgg stands up to patent trolls.

Amazon... well, one-click.

Is it possible that patents are an undue burden?

[Press2ToContinue]

As a developer of original software products, I consider it impossible - just my opinion - to determine if any software I create infringes on existing patents. There are usually thousands and often tens of thousands of ideas, algorithms and design approaches in a product that would need to be checked, and patents are so wordy that the time it would take to determine if there was infringement would always far exceed the time it takes to make the product. This seems to me to pose an undue burden, and is therefore unconstitutional?

Does anyone have any thoughts on this?

Re:Diffie was awesome

[jandrese]

NewEgg's lawyers spent a fair bit of time proving Diffie's claim. They had a textbook, his original paper, and he gave a very informative talk about the early days of public key crypto. I suspect what happened here is that they took TQP's argument to heart that said TQP has a piece of paper that says they own it, so the law says the must find in favor of TQP, despite whatever feelings the jurors might have on the issue.

TQP managed to make the trial about "Did Newegg infringe on this patent?", not "Is this a bad patent that should be overturned?" In that case, the answer is probably a yes.

Re:Good advertising?

[KingSkippus]

NewEgg stands up to patent trolls.

Amazon... well, one-click.

This. Exactly. I'd rather pay Newegg a few bucks more knowing that those bucks will be spent fighting patent trolls than saving a few bucks at Amazon knowing that the reason they're able to offer prices a few bucks lower is because they sued some other company out of existence for having the audacity to put a button on their web page that charges your credit card and checks you out in one action.

Re:Good advertising?

[pspahn]

So we have an article that talks about a company "sticking it to the man" (even if they lost) and then we have some /. locals come on to talk about how great "the man" is (Amazon) because their size allows them to offer slightly cheaper prices on stuff.

It's a bit like seeing a live performance of "Run Like Hell" and everyone in the audience is clapping because Waters said you should.

And people thought WalMart put a lot of Mom & Pops out of business.

Re:Diffie was awesome

[Anonymous Coward]

There is no "let's discuss this" based on what was presented. Any jury not doing so will be kicked out and the trial starts from fresh.

Then fucking do it!

Re:Good advertising?

[Enry]

I'd argue that there's a difference between Amazon and a true patent troll.

Trolls usually don't use the patent they own and use it solely as an investment tool.

Whatever you think of Amazon, they use the patents they hold. Maybe they enforce it, maybe they use it as leverage in case a competitor sues them (IBM, Microsoft, Intel, AMD, etc. all do this as well.).

That's not to say the one-click patent is valid or not, but I don't think I'd call Bezos a troll for patenting the idea.

Re:Good advertising?

[lgw]

Well, I'm generally extremely skeptical of such claims in reviews, since people are generally idiots and don't understand why claims are refused to begin with. BUt for sure the rate of complaints about "drive was shipped with no padding, arrived broken" are on the rise at Newegg. It's to bad too, as no good can come of Amazon having an effective monopoly over any product space.

Re:Good advertising?

[danomac]

Actually, it does - almost all pricing includes a float to cover all the expenses from debit and credit cards.

I went and paid cash to buy a headunit for my car, and they immediately took $60 off the price. Not only does it cost you, it costs everyone else, even those who use debit cards.

I was kind of surprised, the place I went to reduced the price without me even asking.

Re:Good advertising?

[stridebird]

Or one day, amazon will be all that's left. You want that? I agree that many small businesses are badly run, and often can't or don't get the service right, but if you end up with only one or two massive impersonal players, you will regret it. That means, noiw, today even, making a choice to stop that happening by buying from the small guys even if that means paying a couple of dollars more.