To achieve a decisive victory in these cases, Newegg typically has to take the defense of its case through a full trial and possibly an appeal.
People often fail to appreciate just how risky a trial can be. We stand on the sidelines and laugh at how absurd this or that flaky patent appears. And yet - and yet - the law itself went through a phase in which such patents were almost routinely granted. Standards may have tightened over time but, still, a patent claim in a hotly litigated case will not survive to trial unless it has been able to withstand a host of pretrial challenges by which a defendant has already asked a court to rule that the patent, as a matter of law, should not stand. It is only when a court tosses the patent claim in the pretrial phases that a defendant avoids the risk of a potentially absurdly high verdict after trial. If the claim survives such challenges, then the defendant has no choice but to settle or to play it out through trial while incurring just a risk of having a large verdict entered against it. This is the point at which most defendants - even large, deep-pocket defendants who can otherwise afford to pay the costs of defense - will fold. Newegg, on the other hand, has made the tough decisions, incurred the major risks, and largely managed to defeat such patents on the merits.
In doing so, it incurs the very large costs of defense typical in such cases. And it has the guts to take the potential liability risks of going through full trials to take the cases to verdict.
Large, institutional defendants have occasionally (though rarely) adopted such policies in the past. For example, over decades, GM adopted a policy of never settling injury claims if its own experts had determined that the GM autos were not at fault. In doing this, it would often incur defense costs that far exceeded the value of the claim being defended. But it did so to send a firm message to the plaintiff's bar that prosecuted such claims - that is, "if you want to sue GM, your case had better have merit - you will get no nuisance settlement from us."
Newegg effectively is delivering the same message but with an important twist. If GM successfully defended a particular injury claim, that ended the case for that claimant but had no preclusive effect on other, similar claims. If Newegg successfully defends and defeats a patent claim by having the patent declared invalid, the law of what the lawyers call "res judicata" (meaning, "a matter adjudged") kicks in and kills that patent off forever.
So, not only does Newegg take out the garbage, it makes sure it won't accumulate ever again.
This is a true public service for which we all must tip out hats.
I really appreciate Newegg's approach here -- one of the main reasons that patent trolling is so successful is that the cost of settling is smaller even than the cost of winning a suit. Newegg is performing an (expensive) community service. How should I be supporting them (other than making them my "first place to check" for electronics shopping)?
> one of the main reasons that patent trolling is so successful is that the cost of settling is smaller even than the cost of winning a suit.
Is the underlying reason for this strategy the low costs of settlement, or the extremely high costs of lawsuits? What if the value of a patent really is only a few thousand dollars?
Note that this very tactic is used by big companies to avoid licensing valid and useful patents owned by smaller entities. Licensing discussions often begin with the potential licensor saying "sue me", or these days, outright suing you first with a Declaratory Judgement. Can an individual afford to take on a large company? Trolls appear to simply be a symptom of this disparity in the market.
I don't know if I agree. The thing is, what Newegg is doing, especially by publicizing it is to tell trolls to avoid Newegg.
That's great for Newegg, but it means that future trolls will skip them, and just go after the startups and small businesses that don't have the resources to fight a lawsuit on principal.
I'm not saying that what Newegg is doing is bad, or even that it doesn't help. I'm just saying that the publicity that they are seeking for it might end up working out well for them by getting people to stop suing THEM, but won't work well to get people to stop suing other, smaller businesses.
If a patent troll were to sue you for something you've implemented, and you knew that Newegg implemented it too, you'd have a difficult time getting Newegg to fund your defense I think. Unless the troll sues Newegg, nobody's going to help you out. If the trolls just avoid Newegg, they can still get their payout.
Perhaps a solution to this would be a Kickstarter like anti patent troll site. Patent trolls usually go after smaller businesses at first, businesses who could not possibly afford to fight, even if they wanted. The site would allow a business to post their legal case online, and other businesses who face similar exposure, could contribute to the defense fund.
The "perk" of contributing would be that you would get access to all of the expert witness prepared statements and legal work, so if a patent troll comes after you next, you would have a lot of your defense work already done for you. Plus, once the patent troll looses a case, especially on appeal, that decision can be used as precedent.
This is an intriguing idea, but I think it would have a big marketing problem. Most of the people who are at risk of being sued by a patent troll aren't aware of that risk, or so I imagine. Maybe that's changing as the problem gets more press, but I still think the necessary outreach would be difficult.
Seems like an insurance policy, except that you get access to the details of past settled cases. Could I not just join as soon as I get served a notice?
Erich Spangenberg is America's most notorious patent troll mafia head. I blames him for taking full advantage of the broken U.S. patent system to squeeze upward of $30 billion each year and the tremendous waste of use our legal system resources.
EFF[1] and NYT[2] ran full reports on him previously.
As everyone knows in industry, this is not really a "win". Patent trolls are setup in such a way that if they win they make lot of money and if they lose then they lose very little. In many cases, they don't have to even pay damage or lawyers fee for other party. If they are ever ordered to do so then they would just announce bankruptcy of their shell company. They don't even lose their portfolio because it's allocated in to hundreds of shell companies. So in nutshell, Newegg has done very little damage to the troll. The troll already made $45M and now they will just move on to next patent in their next shell company.
All the other efforts like preventing bad patents through StackExchange etc also have very little impact on troll business model. The only real weapon you can use against them is crafting laws that strongly discourage trolling. One would think tech industry with 100s of billions in bank have enough lobby power to get this done quickly. The issue again is that tech industry itself want to own such lousy patents to use against each other. So the industry will only support weaker forms of laws against trolling. I would highly suspect there would be end of trolling anytime soon. Industry as a whole would be more than willing to absorb this cost instead of giving up on their own ammo.
"... tech industry itself want to own such lousy patents to use against each other."
I recall a story where Steve Jobs called Eric Schmidt from Burning Man and threatened Schmidt with "nuclear war" over Android. What did he threaten him with? Legitimate competition? Guess again.
Junk patents are a perfect vehicle for vexatious litigation.
This is just my biased opinion but the IT industry appears to have no shortage of child-like executives.
World's largest patent troll co-founded by former Microsoft CTO and a licensing lawyer from Intel who coined the term "patent troll". Two individuals who had certainly seen their share of trolling by smaller entities against MSFT and INTC. I believe the lawyer blogged about the problem of "patent trolls" anonymously for while at Intel in the late 90's, but was later "outed".
The industry was aware of this problem very early on.
Reading that the patents were about SSL and RC4, I had an evil thought. A patent troll with these patents would actually help make the Internet a safer place.
Companies that are still using those should be sued for not securing their consumers' information properly. Failing that, this would be an even better way of achieving the same thing.
Because there would be very little point. One part of the issue is patent laws themselves, the other part is that the USPTO is taken to task for both overly lengthy examinations[0] and insufficiently rigorous examinations. I don't have much experience with the USPTO themselves, but knowing people working in european patent offices:
1. they are judged pretty much solely on the number of patents examined and their responsiveness
2. patent offices are funded through maintenance fees (fees paid to renew the patents and keep them enforceable) creating a fucked up incentive to accept patents by default at the cost of the already very loose and subjective patentability criteria ("novelty" and "inventive step or non-obviousness")
3. especially given patent offices are generally underfunded and short-staffed, especially in high-flying specialists able to actually evaluate patents which are either complex or in novel fields (being a patent examiner is few people's idea of a great career, even less so once you've built experience and respectability in your field, and that's assuming the patent office could even hire and pay you), even more so compared to the high-powered business they face
4. this is compounded by states routinely "diverting" (plundering) patent offices's funding, in the US Congress diverts about 10% of the USPTO's collected fees to the general treasury
5. it is also compounded by the opening of whole new and novel patent fields ("business method" patents) which generate even faster growth than the historical patent fields and are the source of much of the bullshit patents
that's not even considering that the existing patent system simply isn't a good fit for software, more generally the whole field of business method patents seems incredibly fucked up and created specifically to be abused (good thing europe has declined to implement it)
USPTO is the patent granting entity. They perform essentially two checks:
- does the patent have the right structure? (A series of progressively refined claims)
- is the patent sufficiently different from all other patents?
What they don't do is check for actual originality, because that's extremely hard in a technical field. That part of the process has to be tested in court.
Software really proceeds too fast for the patent system, has network effects that are stronger than most other technologies, and has a strong collaborative, public spirit surrounding the Internet and communications technologies.
There's also the "using a computer" loophole: while pure software may not be patentable, the process of using a computer (a mechanical device) to do something is a physical process and therefore patentable.
Because laws are broken and allow brazen protection racket to be declared "legal". In any normal society such racketeers should be in jail. And the reason laws are broken is basically corruption. See how patent reform constantly stalls because those who profit from this sabotage it all the time.
Seriously excellent work by Newegg. I'm worried, however, that they've now made themselves well-known enough in the industry to avoid future targeting by patent trolls. Honestly, who would go after Newegg at this point with their current track record? In the long run, this probably helps Newegg a lot with good PR and fewer trolls attacking them. With the exception of the specific cases they've already won, I just don't see this really helping the little guys over the long run. Patent trolls are going to remain a huge headache until we get serious reform.
Oh, don't worry. There'll probably be a saucy agreement regulating a change in that in the disguise of a Free Trade Agreement.
Disclaimer: I have absolutely nothing against Free Trade or Free Trade Agreements. I do have a major problem when they're over-reaching and include off-topic subjects and regulations though.
There are Software Patents in Europe unfortunately. Common myth is that there are no Software patents (Not saying you said that BUT many people state that there are none)
Why would Congress ever pass a law punishing lawyers who abuse the system for personal gain at the expense of the public? They're all lawyers whose entire careers have been spent doing just that.
You mean you don't win the war? I'd say this is definitely a battle that they won, but there is still a ton of work to do to change the legal atmosphere in the USA.
Do you seriously want to live in such an atmosphere? Do you really think that if that situation ever came to be then it would be the only change occurring in society?
Patent trolls may suck, but IP is a thing we're not going to get rid of. As long as it's "property" it can be traded. As long as it can be traded, the possibility that the current owner has desires at odds with the original owner can arise.
It's totally excellent that Newegg is doing this. As a side note, I don't like when people include silly infographics in articles like this. I think it sort of cheapens the message and this particular message is important.
Another well known patent troll is Apple, patenting your hands movements and phone shape since 1984. Allowing the marketing industry to replace the hardware industry product after product.
This brings up a good point. I need to buy from the vendor that's doing some good with my money. Sometimes I hesitate to buy from Newegg because I can always find the parts cheaper (Hey! Rent's a killer on the West coast right now!) I think I'll buy PC parts solely from them for as long as they fight the patent trolls.
I wonder if Newegg's much publicized fights against patent trolls could be advantageous for them by deterring trolls from going after them for royalties.
N expensive lawsuits might be cheaper than M cheap settlements, if M is sufficiently larger than N.
> In this latest round of Newegg vs. the patent trolls, Newegg went against a company that claimed its patent covered SSL and RC4 encryption, a common encryption system used by many retailers and websites.
Maybe rights over patents should be lost if the rights holders fail to actively defend it (similar to trademarks)? That would at least prevent the absurd scenario where a patent holder waits for their technology to become widespread before starting to prosecute.
Interesting... I just learned that NewEgg's order page fails gracefully under NoScript. You do have to turn on scripts for some domains, but it has buttons that let you continue after doing so. I haven't seen that before.
This system is sick, sick, sick. The patent system needs a major overhaul. It can't be pay to play. Given the state of affairs it would help if all patent litigation fees were paid for by the government.
[+] [-] grellas|10 years ago|reply
To achieve a decisive victory in these cases, Newegg typically has to take the defense of its case through a full trial and possibly an appeal.
People often fail to appreciate just how risky a trial can be. We stand on the sidelines and laugh at how absurd this or that flaky patent appears. And yet - and yet - the law itself went through a phase in which such patents were almost routinely granted. Standards may have tightened over time but, still, a patent claim in a hotly litigated case will not survive to trial unless it has been able to withstand a host of pretrial challenges by which a defendant has already asked a court to rule that the patent, as a matter of law, should not stand. It is only when a court tosses the patent claim in the pretrial phases that a defendant avoids the risk of a potentially absurdly high verdict after trial. If the claim survives such challenges, then the defendant has no choice but to settle or to play it out through trial while incurring just a risk of having a large verdict entered against it. This is the point at which most defendants - even large, deep-pocket defendants who can otherwise afford to pay the costs of defense - will fold. Newegg, on the other hand, has made the tough decisions, incurred the major risks, and largely managed to defeat such patents on the merits.
In doing so, it incurs the very large costs of defense typical in such cases. And it has the guts to take the potential liability risks of going through full trials to take the cases to verdict.
Large, institutional defendants have occasionally (though rarely) adopted such policies in the past. For example, over decades, GM adopted a policy of never settling injury claims if its own experts had determined that the GM autos were not at fault. In doing this, it would often incur defense costs that far exceeded the value of the claim being defended. But it did so to send a firm message to the plaintiff's bar that prosecuted such claims - that is, "if you want to sue GM, your case had better have merit - you will get no nuisance settlement from us."
Newegg effectively is delivering the same message but with an important twist. If GM successfully defended a particular injury claim, that ended the case for that claimant but had no preclusive effect on other, similar claims. If Newegg successfully defends and defeats a patent claim by having the patent declared invalid, the law of what the lawyers call "res judicata" (meaning, "a matter adjudged") kicks in and kills that patent off forever.
So, not only does Newegg take out the garbage, it makes sure it won't accumulate ever again.
This is a true public service for which we all must tip out hats.
[+] [-] IndianAstronaut|10 years ago|reply
[+] [-] mcherm|10 years ago|reply
[+] [-] throwawaykf05|10 years ago|reply
Is the underlying reason for this strategy the low costs of settlement, or the extremely high costs of lawsuits? What if the value of a patent really is only a few thousand dollars?
Note that this very tactic is used by big companies to avoid licensing valid and useful patents owned by smaller entities. Licensing discussions often begin with the potential licensor saying "sue me", or these days, outright suing you first with a Declaratory Judgement. Can an individual afford to take on a large company? Trolls appear to simply be a symptom of this disparity in the market.
[+] [-] 88e282102ae2e5b|10 years ago|reply
[+] [-] ChrisGranger|10 years ago|reply
[+] [-] zeidrich|10 years ago|reply
That's great for Newegg, but it means that future trolls will skip them, and just go after the startups and small businesses that don't have the resources to fight a lawsuit on principal.
I'm not saying that what Newegg is doing is bad, or even that it doesn't help. I'm just saying that the publicity that they are seeking for it might end up working out well for them by getting people to stop suing THEM, but won't work well to get people to stop suing other, smaller businesses.
If a patent troll were to sue you for something you've implemented, and you knew that Newegg implemented it too, you'd have a difficult time getting Newegg to fund your defense I think. Unless the troll sues Newegg, nobody's going to help you out. If the trolls just avoid Newegg, they can still get their payout.
[+] [-] x0054|10 years ago|reply
The "perk" of contributing would be that you would get access to all of the expert witness prepared statements and legal work, so if a patent troll comes after you next, you would have a lot of your defense work already done for you. Plus, once the patent troll looses a case, especially on appeal, that decision can be used as precedent.
[+] [-] tux1968|10 years ago|reply
[+] [-] ScottBurson|10 years ago|reply
[+] [-] greenNote|10 years ago|reply
[+] [-] akshat_h|10 years ago|reply
[+] [-] andresmanz|10 years ago|reply
If anyone wants to google them and can't find anything (like me), that's because the name is Soverain, not Sovereign.
[+] [-] devy|10 years ago|reply
EFF[1] and NYT[2] ran full reports on him previously.
[1] https://www.eff.org/deeplinks/2013/07/times-profiles-patent-...
[2] http://www.nytimes.com/2013/07/14/business/has-patent-will-s...
[+] [-] sliverstorm|10 years ago|reply
[+] [-] sytelus|10 years ago|reply
All the other efforts like preventing bad patents through StackExchange etc also have very little impact on troll business model. The only real weapon you can use against them is crafting laws that strongly discourage trolling. One would think tech industry with 100s of billions in bank have enough lobby power to get this done quickly. The issue again is that tech industry itself want to own such lousy patents to use against each other. So the industry will only support weaker forms of laws against trolling. I would highly suspect there would be end of trolling anytime soon. Industry as a whole would be more than willing to absorb this cost instead of giving up on their own ammo.
[+] [-] rawdisk|10 years ago|reply
I recall a story where Steve Jobs called Eric Schmidt from Burning Man and threatened Schmidt with "nuclear war" over Android. What did he threaten him with? Legitimate competition? Guess again.
Junk patents are a perfect vehicle for vexatious litigation.
This is just my biased opinion but the IT industry appears to have no shortage of child-like executives.
World's largest patent troll co-founded by former Microsoft CTO and a licensing lawyer from Intel who coined the term "patent troll". Two individuals who had certainly seen their share of trolling by smaller entities against MSFT and INTC. I believe the lawyer blogged about the problem of "patent trolls" anonymously for while at Intel in the late 90's, but was later "outed".
The industry was aware of this problem very early on.
[+] [-] jvdh|10 years ago|reply
Companies that are still using those should be sued for not securing their consumers' information properly. Failing that, this would be an even better way of achieving the same thing.
[+] [-] emirozer|10 years ago|reply
- Why is this happening in the first place?
- Who is this entity that grants a loose patent?
- Why isn't this entity being interrogated ?
[+] [-] masklinn|10 years ago|reply
Because US patent laws and practices allow for it
> Who is this entity that grants a loose patent?
The United States Patents and Trademark Office.
> Why isn't this entity being interrogated ?
Because there would be very little point. One part of the issue is patent laws themselves, the other part is that the USPTO is taken to task for both overly lengthy examinations[0] and insufficiently rigorous examinations. I don't have much experience with the USPTO themselves, but knowing people working in european patent offices:
1. they are judged pretty much solely on the number of patents examined and their responsiveness
2. patent offices are funded through maintenance fees (fees paid to renew the patents and keep them enforceable) creating a fucked up incentive to accept patents by default at the cost of the already very loose and subjective patentability criteria ("novelty" and "inventive step or non-obviousness")
3. especially given patent offices are generally underfunded and short-staffed, especially in high-flying specialists able to actually evaluate patents which are either complex or in novel fields (being a patent examiner is few people's idea of a great career, even less so once you've built experience and respectability in your field, and that's assuming the patent office could even hire and pay you), even more so compared to the high-powered business they face
4. this is compounded by states routinely "diverting" (plundering) patent offices's funding, in the US Congress diverts about 10% of the USPTO's collected fees to the general treasury
5. it is also compounded by the opening of whole new and novel patent fields ("business method" patents) which generate even faster growth than the historical patent fields and are the source of much of the bullshit patents
that's not even considering that the existing patent system simply isn't a good fit for software, more generally the whole field of business method patents seems incredibly fucked up and created specifically to be abused (good thing europe has declined to implement it)
[0] https://en.wikipedia.org/wiki/Backlog_of_unexamined_patent_a...
[+] [-] pjc50|10 years ago|reply
- does the patent have the right structure? (A series of progressively refined claims) - is the patent sufficiently different from all other patents?
What they don't do is check for actual originality, because that's extremely hard in a technical field. That part of the process has to be tested in court.
Software really proceeds too fast for the patent system, has network effects that are stronger than most other technologies, and has a strong collaborative, public spirit surrounding the Internet and communications technologies.
There's also the "using a computer" loophole: while pure software may not be patentable, the process of using a computer (a mechanical device) to do something is a physical process and therefore patentable.
[+] [-] csvan|10 years ago|reply
[+] [-] shmerl|10 years ago|reply
[+] [-] samch|10 years ago|reply
[+] [-] yenda|10 years ago|reply
[+] [-] ghayes|10 years ago|reply
[1] https://en.wikipedia.org/wiki/Alice_Corp._v._CLS_Bank_Int%27...
[+] [-] ersii|10 years ago|reply
Disclaimer: I have absolutely nothing against Free Trade or Free Trade Agreements. I do have a major problem when they're over-reaching and include off-topic subjects and regulations though.
[+] [-] baldfat|10 years ago|reply
https://en.wikipedia.org/wiki/Software_patents_under_the_Eur...
[+] [-] kazinator|10 years ago|reply
[+] [-] Floegipoky|10 years ago|reply
[+] [-] bargl|10 years ago|reply
[+] [-] HeyLaughingBoy|10 years ago|reply
Patent trolls may suck, but IP is a thing we're not going to get rid of. As long as it's "property" it can be traded. As long as it can be traded, the possibility that the current owner has desires at odds with the original owner can arise.
[+] [-] davesque|10 years ago|reply
[+] [-] ild|10 years ago|reply
[+] [-] Udo_Schmitz|10 years ago|reply
http://www.engadget.com/2015/07/24/vizio-ipo-inscape-acr/
[+] [-] yenda|10 years ago|reply
[+] [-] thinkcomp|10 years ago|reply
http://www.plainsite.org/flashlight/newegg-inc/
[+] [-] FrankenPC|10 years ago|reply
[+] [-] aidenn0|10 years ago|reply
N expensive lawsuits might be cheaper than M cheap settlements, if M is sufficiently larger than N.
[+] [-] olalonde|10 years ago|reply
Maybe rights over patents should be lost if the rights holders fail to actively defend it (similar to trademarks)? That would at least prevent the absurd scenario where a patent holder waits for their technology to become widespread before starting to prosecute.
[+] [-] IanDrake|10 years ago|reply
[+] [-] unknown|10 years ago|reply
[deleted]
[+] [-] altcognito|10 years ago|reply
[+] [-] Natsu|10 years ago|reply
[+] [-] transfire|10 years ago|reply