How Newegg Saved Online Retail 259
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."
Re:Patent troll? (Score:2, Insightful)
Since they died, it apparently was their time.
The Problem is Bad Patents, More Than Trolls (Score:5, Insightful)
Patent trolls often wield bad patents. There are also companies that make things that wield bad patents. Beware of associating the bad of our patent system only with trolls -- the problem runs deeper. If all trolls disappeared tomorrow, we would still have vast minefields of bad patents and enormous, destructive patent battles.
We have just invented the greatest tool since Gutenberg for the dissemination of information. An almost incomprehensibly powerful tool for decentralizing problem solving. At the same time, we have been radically increasing the breadth and power of patents, which inhibit the decentralization of problem solving. Patents have a good mission, but their method is a hinderance to the information revolution. That conflict is inherent in patents; it does not require a troll to cause harm.
Re:I knew that kid! (Score:5, Insightful)
The sarcasm was fun, but if you RTFA, you'll discover this isn't the lone mole. He's been at it for six years, and this is at least the 5th mole. So no, he hasn't Won the Game, but he's a lot farther in than one mole and he still has his mallet in his hand. More to the point, he has NewEgg executives and NewEgg's money behind him, so it's a pretty large and well-funded mallet.
NewEgg's executives should be inordinately pleased with themselves. Their strategy just paid for itself. All the money they sank into this defense will be paid back and then some by not having to pay a tax on every transaction to these stuffed shirts for the next 10 years. (Or 30 years, if they had filed an amended patent that magically re-ups the expiration term.) (Or 50 years. Or forever.)
Meanwhile, there's a laundry list of other retailers with an online presence who either knuckled under or fought just a little bit, then knuckled under. Ask yourself why. The answer starts with "cr-" and rhythms with brony....
Re:Patent troll? (Score:5, Insightful)
RTFA. The patents were overly broad/obvious, and there was prior art. Other companies who were approached by Soverain settled because they didn't want to get drawn into a lengthy and expensive legal battle. Newegg stood their ground, and ultimately prevailed.
Yes, Soverain was a "legitimate patent holder" in the sense that they legitimately owned the patents in question. But the patents themselves were not legitimate (in the sense of embodying anything original or unique).
I suspect that one of the reasons Newegg stood their ground is that -- unlike most of the other companies mentioned in the article -- they are exclusively an online operation, and therefore had more at stake.
From TFA: (Score:5, Insightful)
Screw them. Seriously, screw them. You can quote me on that.
In Internet vernacular: QFT—Quoted For Truth.
Thank you Mr. Lee Cheng for saying it and saying it with attitude. I'm afraid it will probably cost you in the future when judges read about it and are miffed by your attitude, but you'll probably only be seeing the same six judges for the next 20 years anyway, and they already don't like you on principle, so... full speed ahead and damn the torpedoes.
That's one useless little rent-seeker squashed. Only 1000 more to go...
(Mr Lee Cheng of NewEgg has some serious job security.)
Re:I knew that kid! (Score:4, Insightful)
Prior Art (Score:4, Insightful)
Re:The Problem is Bad Patents, More Than Trolls (Score:5, Insightful)
I think you're just using too narrow a definition of "patent troll". Patents are designed to foster innovation. They give an idea value so that people will take the risk of investing in that idea whatever the scale of the inventor. If all ideas are trivially copied once their details are known then either the ideas have no value so no one invests in them or the ideas get kept secret and we don't get to know about them and build on them. Good patents provide this functionality, they temporarily stifle competition in order to foster innovation.
Bad patents on the other hand merely stifle innovation. Patents can be bad for any number of reasons(the patent holder has no intention of seeking investment for them, the idea itself is trivial(a hard one since the whole idea of patents is that once someone shows you an idea it usually seems trivial), or the patent should not belong to the holder. Essentially these are patents with no upside for the community.
If you wield a bad patent you're a patent troll be you some little company with no assets or the latest do no wrong tech firm, if you use a good patent you're not.
This still leaves us with working out how the hell to determine things like triviality and prior art, but at least we don't have to try and determine intent. Patents, like copyrights and all sorts of other intellectual property, are a necessary evil, they always have downsides, but they're supposed to have upsides.When they don't, the holder is a troll.
Re:Patent troll? (Score:1, Insightful)
Ummm, kudos? Seriously? He could've used another term. You're both asses.
Re:The Problem is Bad Patents, More Than Trolls (Score:5, Insightful)
We have just invented the greatest tool since Gutenberg for the dissemination of information. An almost incomprehensibly powerful tool for decentralizing problem solving.
And the reason it has worked is that we have not let governments kill it. Regardless of how you may feel about politics in every other area of life, please leave the Internet the fuck out of it. The Internet is the greatest accomplishment of humankind to date IMHO, and has transformed my life in ways I could never have imagined. I'm about the same age as the personal computer - born in the mid 70s - and I never even imagined any of this would be possible even when I was 12 and got my first modem.
Re:So in other words... (Score:4, Insightful)
Re:Patent troll? (Score:2, Insightful)
Poor choice of phrase, even though it accurately connotes the situation, its so inflammatory that nobody can hear your comment, which is too bad, its a good comment. I'm a little torn by this issue, I understand the pain and anguish this language has inflicted, and that the black culture still experiences some PTSD from it and related language. That said, there is important, vital work, by people like Twain in his stories about life in slave era Missouri, that people need to understand and appreciate, and that truth plied with honest compassion and dignity invariably trumps well meaning dishonesty even when that dishonesty is easier or socially less expensive. Rewriting the works of Twain and for that matter sanitizing history, science and art for our children, so we don't have to address real problems or philosophically complex truths does no service to them or the future of our society. So I would honestly say that the parent post doesn't deserve a Flamebait rating, however, I would also say, in this era of social awareness, it behooves us all to choose our words with at least a modicum of consideration for their unintended impact.
As for the patent trolls. I want to flame them, and I don't mean over the internet. Thank you NewEgg, I've done business with you before and now I will do all my PC related business with you. You fight to keep the parasites and leaches from bleeding my world dry. This makes you heroic in my eyes, and I support your work to make this form of commerce safe from the greedy and conniving. We all suffer at the soulless ministrations of these sycophants and their legal minions. Its time to take back what it rightfully and justly ours, to stop this runaway train from sailing into the abyss, and put IP protection back to a place that serves the future rather than cannibalizing it.
Re:The Problem is Bad Patents, More Than Trolls (Score:5, Insightful)
...
If you wield a bad patent you're a patent troll be you some little company with no assets or the latest do no wrong tech firm, if you use a good patent you're not.
...
I think the term Patent Troll is more exactly defined than that, and divorced from the subjective judgment of "Good" or "Bad" patent. A Patent Troll is a non-practicing entity (NPE). The sole aim of a patent is to encourage the creation of new inventions. The mechanism to do that involves remuneration, but that's not the aim. A NPE doesn't produce anything, so it doesn't encourage the creation of new inventions. It sure encourages the creation of new patents, but is doesn't encourage the creation of new 'things'.
You might argue over the goodness/badness of Amazon's 1-click patent, but Amazon at least provides a useful service using the process for which they hold a patent and isn't, in my opinion, a patent troll.
Patents, like copyrights and all sorts of other intellectual property, are a necessary evil, they always have downsides, but they're supposed to have upsides.When they don't, the holder is a troll.
I disagree with you only over the term 'troll'. Otherwise, you've got to the nub. Patents and copyright exist only to benefit society. "We, the people" created them solely to benefit us. If the economic burden of the current copyright and patent system outweighs its economic benefit—which numerous studies have indicated is so—we need to uncreate them
That may seem naive, but OTOH, simply nuking software and business patents would go a huge way to fixing this, and that does seem to be the worldwide trend.
Re:The Problem is Bad Patents, More Than Trolls (Score:5, Insightful)
I think your scope is a bit too narrow. All "intellectual property" has this effect. All of it needs reform (sans trademark, which is more for consumer protection than a piece of "property").
A game where winner still pays the price (Score:4, Insightful)
Unfortunately this doesn't take into accounts the costs. Newegg was lucky that they had an in-house lawyer and the original owner who was prepared to make a stand. This is rare: Conventional wisdom is to hire outside lawyers - patent specialists and all. Lawyers don't come cheap, so Patent troll victims end up owing their lawyers millions of dollars EVEN IF THEY WIN. Under the American court system usually the loser does not have to pay the winners costs, and even in countries where they do, the loser only pays a fraction of the winner's costs costs. The article also doesn't consider the incredible waste of employee time responding to a suit where they could be doing something profitable instead. It also doesn't consider the stress on the employees and the owners. No one will buy a business threatened with a patent lawsuit. Business development grinds to a halt. In theory judges are supposed to dismiss law suits without merit, but they don't - because they don't give a shit about the costs and it gives them something to do.
That the original judge fucked up does not surprise me. Forget what you see on TV about just and fair judges: In patent troll counties like the Eastern District of Texas the judges are blatantly pro-plaintiff. If they were not all the money flowing into their district would dry up, the judges and legal fraternity would be looking for a job somewhere else. The system has not worked. Newegg may have won, but the suit would have still cost them a fortune. This is a rare outcome and usually costs the trolls nothing who shrug and move on to their next victim.
I suggest a new strategy: but the judges of the Eastern District of Texas and other patent troll counties under a microscope and petition the government to remove judges who are playing sides or unfit or incompetent to serve. Did you notice the article doesn't name the original judge? Awesome job. Imagine being able to fuck up like that but everyone is so in awe of your power no one will name you. In any other profession people would be laughing at them over the water cooler.
Re:How is he a patent troll? (Score:4, Insightful)
Under the current system, a lot of people own patents on things they shouldn't have been allowed to patent in the first place. That's the crux of the issue. I've got no problem with people enforcing patents on things that are truly innovative. But too many patents these days are for concepts which already existed prior to the filing of the patent and/or are clearly obvious.
Re:Patent troll? (Score:4, Insightful)
I really have little idea - I've allowed for that possibility. But, if you've read TFA, then Mr. Cheng indicates otherwise. You can take your pick - believe Mr. Cheng's statements, or assume that Newegg has settled quietly with other patent trolls. It's possible that Newegg simply believed this case was winnable, while other cases may not have been.
What I am very sure of, is that the patent office needs more funds, more personnel, and orders from congress to weed out all these submarine patents, get rid of obvious patents, and search for prior art patents. Before any of that, though, the patent system itself needs to be overhauled.
It's been noted often enough here, that companies don't WANT an "inventor" to be aware of prior art, etc. They WANT their "inventors" to submit ideas, so that the company can file the patent. They get it filed, if it gets approved, then it's valid on it's face. Better to wait for a civil suit, to have it's validity tested, when everyone can innocently claim, "Well, we did this all independently, and we had no idea that anyone else may have done it. It wasn't all that obvious, from where we were sitting, at the time!" Those, and similar arguments, might convince a jury, or they may not.
Basically, it's all a huge gamble, largely determined by the size of your legal staff - and it's so very wrong.
Re:Fugitive in the woodpile (Score:5, Insightful)
People who didn't want to appear to be complete assholes would avoid a phrase that not only used a vile racial slur, but was a metaphor suggesting that a fugitive slave was a hidden problem rather than a person to be aided by all means necessary.
In the GP post's context, such a person might say "The catch is the word `legitimate'," or "The snag is the word `legitimate'."
Re:Fugitive in the woodpile (Score:5, Insightful)
Why would you need to? There is no woodpile. There is no person, African or otherwise. It's just a phrase that means what the damn link it links to above says is means. There's about 17 billion different ways to say the same thing, many of which aren't needlessly jarring (and hence don't detract from the actual point being made).
Re:Patent troll? (Score:5, Insightful)
More to the point, while the point of patents (and other IP laws) was explicitly to incentivize innovation, patent trolls act as parasites and discouragements to innovation. They provide no new ideas or products of their own, instead litigating against and punishing those who do.
They undermine the very system they are abusing, and hurt everyone involved for their own gain.
Re:From TFA: (Score:4, Insightful)
It's part of the gambit. They have to generate as much publicity as possible so that other patent trolls see it.
It's the same technique as "we don't negotiate with terrorists". It doesn't work if no one knows it's what you do. The idea is that patent trolls won't bother going after them because the patent trolls want the settlement option, they don't want it to end up in court and certainly don't want the patents themselves challenged.
Re:It is okay to use a shopping cart so long as (Score:4, Insightful)
And two-clicks is actually more user friendly because then you don't have to go through a dozen clicks to cancel the order you accidentally placed.
Re:Patent troll? (Score:4, Insightful)
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.
Well, there is also the problem that in most jobs the ones whom management considers the best workers are those who go through their work the fastest, not those who do the highest quality work.
Re:Patent troll? (Score:5, Insightful)
Re:The Problem is Bad Patents, More Than Trolls (Score:5, Insightful)
Yeah, patents are designed to foster innovation like my kid's bee costume is designed to let him fly.... badly.
Patents don't give an idea value. They give a piece of paper value. That creates an economy based on pieces of paper, and to prevent those pieces of paper from losing their artificial value, you need to enforce restrictions on people, ie take away some of their freedom.
But actually, all you *really* need for people to invest in an idea is lots of them. The more people you have, the more likely you'll find one willing to invest in an idea. It's that simple. That's how it's always worked before patents even existed.
Here's another secret: all you need for lots of inventions is lots and lots of inventors: educated people with time to tinker. We have those, more than we ever had in the history of the world. Ideas get rediscovered *all*the*time*.
We really don't need silly pieces of paper that are collected by a bunch of rich corporations so they can stop other people from actually inventing new things. And we don't need US courts to tell us we should pay a ransom to the owners of those pieces of paper, just because they paid the USPTO a fee for the privilege of demanding our money.
Re:Fugitive in the woodpile (Score:2, Insightful)
There's a lot of colorful (no pun intended) speech from a time before the civil rights movement. My Mother used to own a nut and candy store, and old folks would come in and ask for N***** Toes, a euphemism for Brazil Nuts. There was no dark intent, no racial slur, its just what people from a certain part of the country called Brazil Nuts. This is valid speech, yet it has the burden of all these unintended consequences. I was watching a Ralphie May video [youtube.com], I don't know if his idea for destroying words that reflect hate is the right way to go, but I have to applaud the attempt... Gays have reclaimed "Queer", though a number of bigots still use it as an epithet, but the word most folks looking to hurt use now is "Fag" or its longer variant, because queer has lost its sting..
I was listening to Shawn Mullins' song "Shimmer [youtube.com]" and the first verse talks about a child being born perfect and we'll teach it how to hate. But, we're born to shimmer, born to shine, born radiate, born to live and born love, and born to try not to hate. I think George Carlin had it right. There are no bad words. Those are just arbitrary noises coming out of our mouths. There are bad intentions, bad deeds, bad actions predicated on hate and ignorance. Its time to wash the words clean. Its time to end the hate and embrace our differences, celebrate our diversity.
Re:Patent troll? (Score:4, Insightful)
Nope. All that would do is produce another mountain of fake/useless bureaucracy at taxpayer expense. Patent troll are quite capable of pretending to do "research".
Re:Patent troll? (Score:4, Insightful)
...or... after the second year we should limit patent damage claims to a multiple of what the licensee was paying the patent office every year to maintain that patent. A patent which is earning you millions every year is worth paying $100,000 a year to maintain, right? 5% of the patent's value feels about right.
Hang on... that might actually work.
I've just fixed the system!
Re:Patent troll? (Score:2, Insightful)
1. Require the plaintiff in a patent suit to actually manufacture and sell a product using the patent in question. No patent holding companies putting their tax on innovation.
2. Require patents to be available under a statutory rate which must to the lowest license fee charged to any of the current licensees.
Re:Perhaps the system does work after all. (Score:3, Insightful)
I'd call it "mistaking succesful damage control for correct functioning". Apparently the system isn't entirely dysfunctional as patents can be revoken and it is possible to prevail against a patent troll, depending. But that doesn't imply the system as a whole is functional.
The fact that these patents were issued in the first place and that patent troll companies can exist on settlements and the occasional lawsuit already ought to be proof enough that the system is at least partly dysfunctional and therefore not fully functional. I would even argue it is dysfunctional enough to warrant immediate takedown of the entire system, and a rethink of what we originally wanted with the system.
If you can't see that, then maybe you're not really informed and if you're trying to inform the public while in such an uninformed state you're likely to spread misinformation. As such, shame on ars technica for wishful thinking. They ought to have known better.
Nice thought but... (Score:2, Insightful)
That won't work. The patent troll will just do the minimum amount of 'work' to keep the patent active. "Report: prototype now uses green LEDs instead of blue ones for better readability. Still much more to be done."
Posting anonymously b/c I'm moderating. (Immerial)
Re:Patent troll? (Score:3, Insightful)
Re:The Problem is Bad Patents, More Than Trolls (Score:4, Insightful)
Intention does not make reality.
The monopoly privilege directly harms innovation by third parties. The least destructive option is therefore trade secrets. I have no problem with that, because it allows others to come up with inventions independently.
As it should be, for if I come up with something that other chemists can duplicate, there's no reason to give me a monopoly. I would only be setting back the scientific advances by a generation.
Nobody said life shouldn't be inconvenient, except those arguing for patents. And they conveniently forget how inconvenient they make life for everybody else, since that is the price for making life convenient for just one.
Suppose you invent an airplane, and patent it. You'll prevent innovation ands stifle your local industry , while in other parts of the world people who are just as smart as you will make huge progress.
That said, you still aren't forced to make sealed cameras, you can sell unsealed cameras that people can tinker with. If your cameras are good, you will still make a nice living from them. And if you get competitors, then the market will grow, and you'll sell more units.
This is not better. You're monopolizing the process, thereby preventing others from improving "your" idea, expect rent from everyone and cause the idea to be shunned by the vast majority of potential inventors until your patent expires. This is not better for the customer, who could be having a full ecosystem of alternatives and modifications.
That is pure fantasy. Have you even read a single patent? They are totally unsuitable for learning a process. Nobody reads patents to learn a competitor's secrets, they just look at the other guy's products, and think through the problem or reverse engineer. Granted, this requires other people with the same basic knowledge and intelligence as the inventor. There are plenty of those in the world.
Finally, I don't believe the claim that everybody is better off if the new guy has to pay royalties. In the absence of patents, the new guy can just reinvent his own version of the product, and price it competitively (you don't believe tha
Re:Lousy lawyers (Score:3, Insightful)
That would be a Justice system.
Some people call what we have a justice system, but they are wrong. What we have in the US is a legal system.
There are a few good things about a legal system. Also a few pitfalls in having a "Justice System".
Though I think I would still prefer a justice system. Even though it would result in the instantaneous execution of many lawyers and politicians.
Notice how such a large number of scum sucking politicians are lawyers?
Re:Patent troll? (Score:4, Insightful)
Nope. That way just opens the door to creating new ways to beat the system.
I think letting patent holders choose how much to pay the patent office, then limiting their damage claims to a multiple of that amount is the way. In that world nobody could afford to sit on a stack of patents in the hope of suing somebody for big money. The only patents being actively maintained would be patents that were earning real money.