Jury Finds Newegg Infringed Patent, Owes $2.3 Million 324
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? (Score:5, Insightful)
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.
Re:Good advertising? (Score:5, Insightful)
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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.
Lately, I've found that Amazon usually meets or beats Newegg's pricing for most things I buy, with free 2 day shipping (for Prime members). Even when NewEgg does offer free shipping, it's their "Standard 5 -7 days shipping" - I don't purchase enough things that Newegg carries to make it worth signing up for their $79/year "Shoprunner" service that provides 2 day shipping on many items.
Re:Good advertising? (Score:4, Informative)
This was when I stopped using Newegg as well - the moment my wife signed us up for prime. We actually did it for the video and kindle, but once you experience free shipping like that it's pretty hard to accept anything else.
Add in that they allow me to pay using my Discover card rewards right at checkout and it's a dangerous combo.
Well played, Amazon.
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Don't forget cheap as dirt next day shipping, for the things I have used it on so far, being a prime member takes 1 day shipping from $14+ to like $1-3.
When taking that into account the prime membership pays for itself after a few purchases, plus you get your stuff quite a bit faster. Oh yeah, and you get free video services to boot.
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Re:Good advertising? (Score:5, Insightful)
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:Good advertising? (Score:5, Insightful)
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.
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Funny this should come up in a topic about patent trolls.
Amazon is no stranger to patent trolls, since it also is a patent troll. One-click shopping, anyone?
I have never bought ANYthing from Amazon, and NEVER will. While I won't go all over-the-top Scott Adams on Amazon customers and wish them die a slow, painful death, I most certainly am happy to wish it on Amazon as a corporation. Though not a slow death; a quick one. The sooner, the better.
It is the epitome of irony that consumerism ultimately funds it
Re:Good advertising? (Score:5, Insightful)
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? (Score:5, Informative)
I assume you do this after you used Newegg to search for the item. Because Amazon's search engine doesn't have 1% of the power that Newegg's has. I can't go to Amazon and find out which video cards use a 4-pin power connector versus a 6-pin. Stuff like that is what makes newegg awesome.
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Of course not everything is on prime and if you compare the prime vs. non-prime price you will find that, no, the shipping isn't really free.
Let's look at a few examples from Newegg's Pre-black-friday sale:
Samsung 10.1" tablet in white - $299 on NewEgg (free 5 day shipping), $299 on Amazon (Prime shipping)
Intel Core i5-3570K Ivy Bridge 3.4GHz - $199 on NewEgg (free shipping), $197.99 on Amazon (Prime)
ASUS RT-AC66U Dual-Band Wireless-AC1750 - $179.99 on NewEgg (free shipping), $179.99 on Amazon (Prime)
So Amazon is the same price or cheaper with faster shipping. Sure, the shipping may be built-in to the prime price, but I don't care if it matches
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Prime shipping is not free. Last I checked it was $75 a year. So factor that in.
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Almost everything on Amazon is Prime-eligible, and at a price lower than everyone else. Even car parts.
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Depends on where you live. In Alaska, there are 'lots' of things that are not Prime eligible. Or just cost more. Amazon is a pretty good buy on most things, but they do tend to move the cheese around.
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Also who the heck uses Discover cards?
They offer 5% cashback bonus categories rotating quarterly and even a cashback referral revenue sharing program similar to Ebates or Fatwallet. I earned $50 just on my last statement - all of which will be spent at Amazon.
Every purchase over $100 goes on it as well as most restaurant and gasoline purchases.
Most everyone accepts them these days, and it doesn't cost me extra.
Re:Good advertising? (Score:4, Insightful)
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.
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I've started comparing prices for each component at both sites.
Also check out camelcamelcamel.com and camelegg.com. Now we just need a site where you enter your build and it puts together order lists from newegg and amazon to optimize for price. Ideally it would also search for near substitutes (different brands of value ram for instance) and build your shopping cart for you.
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Now we just need a site where you enter your build and it puts together order lists from newegg and amazon to optimize for price.
http://pcpartpicker.com/ [pcpartpicker.com] does exactly that!
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Yup. I browse NewEgg because their products are meticulously tagged and organized, and their reviewers are by and large much more knowledgeable than those on Amazon.
But I almost always buy on Amazon. Because of Prime.
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I don't care about the shipping cost, but I've found that Amazon often has better packaging. Newegg is awesome about returns for damaged goods, but still: better extra padding in the first place.
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go read up on newegg's own reviews about disk drives.
more and more, they are denying your return for bogus reasons. read up and you'll see.
Re:Good advertising? (Score:5, Insightful)
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? (Score:5, Insightful)
NewEgg stands up to patent trolls.
Amazon... well, one-click.
Re:Good advertising? (Score:5, Insightful)
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.
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their 'ultra cheap' shipping is also a joke. it comes via UPS for the main leg and then usps via the last mile. takes twice as long and saves, what, a dollar? sheesh. what a waste.
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I hope their RMA department has stopped intentionally bending pins in the CPU socket to avoid having to replace the boards for their customers. I'll never buy from them again.
http://hardforum.com/showthread.php?t=1694667 [hardforum.com]
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Sometimes Amazon has stuff for like 4 dollars less, but their prices are different at different times of the day and sometimes (rarely) even when browsing their site with different browsers. Really, it's trust; I trust Newegg, I don't trust Amazon.
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fyi, do not EVER buy an 'open box' item from newegg.
you may think it goes thru some kind of sanity checking or testing but they DO NOT TEST. NOT EVER.
I got a bad ssd (someone must have done their own, (cough) testing of the ssd before returning it) and I got stuck with this dud. when I complained newegg told me they never test customer returns. I was shocked! and they did nothing for me since it was over 30 days before I found that the ssd was worn out.
I normally buy things from there, but this turned m
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While a bit old, it's still valid [nytimes.com]. Sorry to hear about your luck, I've been bitten by return periods (with brakes) but I ended up reselling them on my own. As far as computer components, I prefer to buy those from a walk-in retailer like Microcenter. They're right down the street from me and I prefer being able to do returns same day if th
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"Is there anywhere else you should buy computer parts from?"
Pricewatch.com. Monoprice.com.
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I was a long time Newegg customer and fan until my Black Friday laptop two years ago. They shipped me a DOA unit (which was a common issue in this model as comments after Black Friday revealed). They were reasonably quick to suggest a few basic troubleshooting items and issue an RMA. Then it went to hell. Long story short, they received my laptop then lost it. They lied to me repeatedly, blamed it on the carrier, refused to cooperate with the carrier (who was willing to cover it despite the obvious problems
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As a former Fry's employee (before they built that giant Fremont store) I'm not sure where you get this concept of hassle free RMA/returns. Even when I worked there and was a model employee they would give me the run around if I was returning something I bought there. I even had returns refused because, "you work in computer service, don't you? You must have broken this trying to modify it".
I was even stopped by their loss prevention guys and almost fired because I borrowed a burned diagnostic CD from a co
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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.
Newegg follows a 'no protection money to trolls' policy generally. Plus, they ship fast and always seem to be within a few percent, plus/minus, of the going rate (aside from occasional retail loss leaders, or the 'you can get 20 USB cables for a dollar, on the slow boat from China' ebay deals). Microcenter FTW for retail; but they make a fairly compelling case for online purchases.
Re:Good advertising? (Score:5, Informative)
Amazon.com charges a restocking fee under exactly the same circumstances that Newegg does... except Amazon can hit you for 20%-50% of the item's price instead of just 15%.
That said, it's always worth shopping around - but I find Newegg pretty consistently has better prices, and lately they even have a price guarantee on some things.
=Smidge=
Comment removed (Score:4, Interesting)
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you can always 'refuse shipment'. the vendor is full of shit, here.
it sounds like newegg has jumped the shark. they used to be #1 but I won't do business with them anymore unless there is no other option (and that rarely happens).
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Its not a study.
Well... (Score:5, Insightful)
Stupid judge/jury. (Score:4, Informative)
Trolls 1, good guys 0.
Stupid judge/jury.
At least it sounds like NewEgg will take it higher.
Re:Stupid judge/jury. (Score:4, Insightful)
Re:Stupid judge/jury. (Score:5, Funny)
Or we could just encourage Texas to follow through on their threats and secede from the United States. Problem solved!
Re: Stupid judge/jury. (Score:4, Insightful)
Re: Stupid judge/jury. (Score:5, Insightful)
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.
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Actually I've often wondered why people dont sue the USPTO for that or something similar.
I read somewhere that in the US if you sue the police and win, you cant get legal costs awarded too, so consequently not may people risk suing the police.
Is it the same with any government agency? (i.e. including the USPTO?)
Re: Stupid judge/jury. (Score:4, Interesting)
People can and do sue the USPTO.
http://www.patentlyo.com/patent/2012/08/suing-the-uspto-to-cancel-improperly-issued-patents.html [patentlyo.com]
Re: Stupid judge/jury. (Score:5, Informative)
This really was the worst kind of patent too. So I see you're doing asymmetric crypto for key transfer...but ah ha, I got a patent for asymmetric crypto for key transfer using RC4! Checkmate! Like wow, you applied the most common (at the time) algorithm to a system that kind of resembles a SSL connection, except that it's with modems and came a few years after the big Diffie-Helmann paper.
And of course they aren't suing the people who made the SSL offload appliances that got NewEgg into trouble, they're suing all of their customers, for using the thing with the default settings. And they're calling it willful infringement because they didn't go an explicitly disable the RC4 feature to comply with a patent they knew nothing about.
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Public Key Cryptography is just another of the many things that the US claims they invented, but was actually invented by the British and just 'better marketed' by the US.
However as the British research was for the UK government/military it was kept secret until sometime after the conference where Diffie anounced his own research. It is terefore clear that Diffie/Helmann were acting completely independently of the British work and also announced it first.
That said, even if he takes care to always cite the B
Re: Stupid judge/jury. (Score:5, Informative)
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The most amazing thing is that TQP's argument against Diffie involved them finding potential prior art to show that Diffie wasn't the inventor of public key cryptography. Even if this argument succeeded, then it should have put an even bigger nail in their coffin since it would show even more prior art for the patent.
TQP's patent wasn't invalid over Diffie's invention alone. Rather, TQP even admits that their patent is a combination of Diffie's work and some other work by Lotus - if the two prior art* references are applied together, then the invention is obvious in light of the combination.
But, their argument was that the Lotus work doesn't legally count, because Lotus kept it secret until after they applied for the patent.
So, as you note, they found some earlier work before Diffie that shows that he wasn't really t
Re: Stupid judge/jury. (Score:5, Interesting)
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.
Except he didn't, and they didn't. Read page two of this article [arstechnica.com] from yesterday about his testimony.
Basically, TQP admits that their patent is obvious in view of a combination of two references, one of which is Diffie's work, and the other of which was some work by Lotus: neither Diffie nor Lotus invented TQP's invention, but if you slap the two together in a reasonable way, they teach everything in TQP's invention, so it's obvious.
Except, Lotus didn't publish their work until after TQP filed their application. And legally, that means it's not prior art, even though they were working on it in secret for some time. In other words, even though someone else invented what they did, it doesn't count, because that someone else kept it secret.
So, Diffie gets on the stand and talks about his work on crypto, which was the first half of TQP's combination. On cross examination, TQP's lawyer points out that he didn't really invent it, did he? And Diffie says that someone else invented what he did, but it doesn't count, because that someone else kept it secret.
So, it sounds like the jury was persuaded by Diffie that TQP's patent was valid.
Re: Stupid judge/jury. (Score:4, Interesting)
The claims weren't really about the encryption. They admitted they did not invent RC4. The claims were about the transactional model (SSL). I still feel it's bogus though, but reading the full articles and history can help.
The real issue may be the locale. Patent trolls love that court house. And no one in the court room was allowed to use the term "patent troll". The juries there seem to love standing up for the little guy who's being bullied by the big company. So the Newegg company and its lawyer, from the distant land of California, versus a locally based company and a lawyer from Dallas. Even the local Marshall Texas newspaper in the article saying that the trial had started took care to point out that the lawyer was from Dallas. Liberal big business California versus local home grown salt of the earth folks.
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Good. If it really easy to get a patent overthrown, only patents which are strongly defensible will be granted. And then everyone (but the patent trolls) wins.
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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.
http://en.wikipedia.org/wiki/Jury_nullification [wikipedia.org]
If Jurors are expected to be robots helplessly putting up with all measure of insanity placed before them what is the point of having a Jury? In the real world legitimacy matters.
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.
I blame "we the people" for not insisting on campaign finance reform and ending "K" street.
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I'm wondering if there was any discriminatory thinking by the jury. Probably the troll's technical guy was neat and clean cut versus some hairy bearded academic sounding guy (whether well dressed or not, whether a nice guy or not, whether qualified or not). Average people have built in ideas of what qualified trustworthy 'real' business people look like. People here on /. may not like it, but regular folks do pay attention to that kind of thing and give more credence to people without the long hair and bear
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I have to agree that Newegg has gone down hill. But this was still a wrong decision.
not over yet (Score:2)
expect appeals for years to come.
SSL? (Score:3)
Re:SSL? (Score:5, Insightful)
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How can that company not be a patent troll?
I don't think that there's any doubt that they are. Unfortunately, and I think most people don't really grasp this, being a patent troll in the United States is not just legal, it's extremely lucrative. That's why, while I certainly hope that Newegg eventually successfully appeals this case and continues defending against patent trolls, what we really need is better legislation to make all of this shit illegal.
Marshall TX (Score:2)
aka Patent Troll Capital.
Surely Newegg is going to appeal this idiocy?
What's that I smell? (Score:2)
Is it an appeal? Oh yes it is. These ass-clowns who think they have patents on the internet haven't yet faced the wrath of slashdot's anti-patent group of extremely knowledgeable and resourceful people.
I suspect a few people here with a little time on their hands will be able to prior-art their way to having the patent completely invalidated.
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You would be surprised. Appalled even.
Stealing math from the public (Score:2)
Something's rotten in the state of Texas.
Diffie was awesome (Score:5, Informative)
"And how is it that you're familiar with public key encryption?"
"I invented it."
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"I invented it."
Not enough for the jurors, apparently.
Re:Diffie was awesome (Score:5, Interesting)
Let's stop this jury are morons myth. The judges gives the jury a list of very specific questions to answer in these cases, taking 2-5 hours. It's not like 12 Angry Men, where people debate what they're heard and sway opinions.
The judge controls the entire jury thought process and has clearly spent a long time crafting the question list beforehand. Being an expert at law, they have already determined the result and knew precisely how to ensure their verdict is the one reached, but they still need to go through the proletarians to reinforce his chosen result.
I've been on jury duty in a bullshit patent suit, and despite the obvious sane result, the judge's contrived question list ensures you cannot come up with any result other than what (s)he has already determined. 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.
The massive issue here is that this is all behind the scenes, none of it is allowed to become part of the public record, hence posting AC.
Re:Diffie was awesome (Score:5, Interesting)
I've been on jury duty in a bullshit patent suit, and despite the obvious sane result, the judge's contrived question list ensures you cannot come up with any result other than what (s)he has already determined. 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.
Meaning a Jury could stall a verdict by doing what is right and debate the issue. correct?
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Except, of course in Apple v. Samsung, where they explicitly ignored Judge Koh's instructions.
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"I invented it."
That only has meaning if the jury is already informed. Assuming this jury is like most, all they've got is one guy saying "I invented it" compared to the patent being disputed which essentially says the same thing about another guy.
Maybe there was more to it, like spelling out the patents he was awarded for PKE (if there were any) or journal articles he wrote about it. That sort of thing. But if there wasn't a lot of effort put in to establish his credibility beyond his own words on the stand, then I can
Re:Diffie was awesome (Score:5, Insightful)
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.
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I would think that an honorary doctorate is harder to earn than a traditional one.
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I still have my original copy of the IEEE journal paper that I clipped in the 1970's. It stood out as a landmark paper then. About 15 years ago, I was at a technical talk and was able to get Martin Hellman to autograph it.
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No, someone laid out some thoughts along the right lines in 1973, they wrote a single memo about it which was shelved and forgotten about for 20 years. Diffie independently came up with the same thoughts and actually fleshed them out into a working, practical system. It's the difference between saying "if you burn some stuff, and it goes shooting out this end here... you'll move forward" and the blueprint for a working rocket engine.
Newegg made its name on appeals (Score:5, Informative)
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Retailers (Score:2, Funny)
a common Internet security system used by retailers like Newegg
Perhaps the retailers should make a gentleman's agreement to stop shipping to Marshall, TX.
I've said it before and I'll say it again... (Score:2)
... the justice system simply doesn't work. [youtube.com]
Rather stupid verdict (Score:2)
I have no idea how in the world anyone with a clue can claim that this patent and SSL using RC4 have anything to do with each other. I just took at look at the linked patent and in a nutshell, what it does is have both parties switch encryption keys multiple times during a transmission by having both parties have identically configured pseudo random number generators which supply the encryption keys (this means that a limited amount of the transmission is encrypted with the same key before the key gets chan
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SSL handshaking takes serious CPU time when you're doing it thousands of times per minute.
How much is serious? These days, CPUs are stupid fast compared to when we started using SSL.
Is it possible that patents are an undue burden? (Score:5, Insightful)
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?
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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.
I'll make it easy for you: it does. Unless you're coding ridiculously simple, run of the mill, junior college project level software, you are violating someone's patents somewhere in your code. Will someone come kicking down your door someday? Probably not, at least, not unless you become successful enough to be worth it.
not worried (Score:2)
Annual Sales
Approximately $2.5 billion in 2010
http://www.newegg.com/Info/FactSheet.aspx [newegg.com]
I'm sure this will really hurt their bottom line. lol
I'm surprised Newegg doesn't just buy this company and fire the entire staff with extreme prejudice.
I do a lot of business with newegg. As a hobby I run a small "custom computer" business. I basically started out building computers for my familly and friends... and then it move on to "extended family and friends" and now I do between $10k and $20k in business with them
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It would be great if they spent an extra couple of mil and hired the mafia to off these fuckers and their families.
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The problem isn't just parents, it is also that we allow sociopaths to pass the bar exam.
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I agree. Teachers are unionized so they must be at fault somehow.
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"The problem isn't just parents, it is also that we allow sociopaths to pass the bar exam."
I disagree. Parents aren't doing enough these days to keep their kids out of law school.
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The problem isn't just parents, it is also that we allow sociopaths to pass the bar exam.
But can't we blame the parents for raising a sociopath?
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The problem isn't just parents, it is also that we allow sociopaths to pass the bar exam.
But can't we blame the parents for raising a sociopath?
I'm not a fancy psych expert; but my understanding was that sociopathy is born, not made, though the distinction between the dumb, locally dangerous sociopaths(who will probably kill somebody, maybe more than one; but then end up in prison or going down in a hail of bullets) and the smart, systemically dangerous ones (who would never do anything so crass; and are alarmingly likely to worm their way into positions of influence, may be environmental.
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I don't believe that SSL infringes at all. However, RC4 is frequently used as a PRNG (after all, one of it's biggest advantages is to be used as a stream of 'random' numbers to be exclusive ored with the clear text to create the cyphertext which in turn can be xored with an identical stream of bytes at the other end to decrypt. This allows encryption to byte boundaries and doesn't require blocks of 8 bytes to be sent per transmission.) Perhaps that secondary use of RC4 along with the time honored practice o
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That's one more reason to stop using RC4, which isn't secure anymore when used with SSL/TLS
While I agree with security sentiments this particular patent expired in 2012. They were going after Newegg for past transgressions.