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A victory for common sense, the tech industry, and right-thinking citizens everywhere. May the gods of the market continue to smile upon Newegg (a prosperous Lu

A victory for common sense, the tech industry, and right-thinking citizens everywhere. May the gods of the market continue to smile upon Newegg (a prosperous Lunar New Year to them!). Points of interest to me: Lee Cheng: And we'll take a case through trial as a matter of principle because we want to accomplish the purpose of making good law. Like eBay did, like Quanta did when they challenged LG. It's part of our duty as a good corporate citizen to try to accelerate the rationalization of patent law. This guy talks like a crusader for just law instead of an executive or business owner. You'd pretty never hear this from anyone in a public company, it just wouldn't be possible. More's the pity that most people can't really achieve big results like this; we have to retain ownership of our businesses in order to really live out our principles. - A commenter on Ars, on why no one else fought Soverain to the end: I think the problem from most defendants' perspective is that they can just pass the costs along to their customers without facing any strategic disadvantage. Compared to its competitors, does Newegg winning this lawsuit give them any competitive advantage? After all, their competitors are no longer subject to paying for the invalidated settlements either. By paying the settlements, the companies reinforce an awful system, but they also don't need to face the volatility and potential cost of a jury-trial in districts cherry-picked by the trolls. By going to trial, the defendant only stands to maintain patent troll cost parity with their competitors (if they win and invalidate their competitors' settlements)- or they lose and get hit with a judgment that could be extremely costly. Further, in most organizations, management risks the ire of their shareholders should they elect to go to trial and lose. They're again put in a situation where their personal risks outweigh any benefits they stand to gain. Even for executives that consider themselves ethical, they can still rationalize that minimizing risk to the shareholders is the ethical decision. - This seems true enough - from a (rational) game-theoretic perspective, why should any victim really fight hard to overcome a troll, if in doing so they risk big losses, and don't gain any advantage over their competition even if they win? The main potential upside is that consumers and potential partners will view them more favorably and give them more business (as is happening now), but this is a very unreliable bet to make. The downsides of "doing the right thing" are very likely greater than the upsides. The main motivator to fight the trolls has to be personal principle, and even then the principled person has to balance it against the real risks to his company and lifestyle. Newegg had the gumption and muscle to see the case to its end, but it was the lucky one, the one-in-a-hundred with the right attributes (principled owners, private ownership, deep pockets). We're not likely to see this kind of thing happen very often, with the odds stacked against what should be the right outcome. And that's all the more reason to salute Lee Cheng, Fred Chang, and James Wu and their victory against profiteers in a flawed system. CEO Fred Chang probably deserves as many, if not more, accolades as Lee Cheng, for deciding as the major shareholder to take this battle to its end.

ScottBurson 14y ago
I understand that the recent pattern has been that settling with one troll brings more out of the woodwork. Once that becomes common knowledge, I think it has to change the calculation. Settling is no longer about how much the troll in front of you is asking for; it's about the unknown number behind them in line, as well. While it certainly sucks to have to bet your company to get these trolls to go away, if the alternative is for dozens of them to bleed you slowly dry, the bet may seem more worth taking.
- creamyhorror 14y ago
  Indeed, and this increased risk would make it an even greater imperative for potential victims to form or support a patent-busting cooperative as suggested by several commenters already - much like how some prey animals form defensive herds against hunting packs. Hopefully cases like these will push companies to band together and not remain tight-lipped like they were on the Soverain case (until Newegg broke the chain). There's a coalition for the open Internet, why not a coalition for fair innovation in technology? (Perhaps in collaboration with the EFF's Defend Innovation initiative?)[1] [1] https://defendinnovation.org/ https://defendinnovation.org/ edit: Interesting trivia from a legal news site: http://www.americanlawyer.com/digestTAL.jsp?id=1358711387829 http://www.americanlawyer.com/digestTAL.jsp?id=1358711387829 In Tuesday's decision, the Federal Circuit ruled that three of Soverain's core patents are invalid on obviousness grounds. "The district court's conclusion that a prima facie case of obviousness was not met is not explained by the court by Soverain, and does not accord with the record," the appellate panel ruled. "[T]he trial record contains extensive testimony of the experts for both sides, discussing every claimed element of the patented subject matter and the prior art system." If I understand this right, Judge Davis simply ignored all Newegg's testimony about prior art and ruled that they hadn't even made a prima facie case for obviousness. Thankfully the Court of Appeals didn't think so. I wonder if Davis was simply leaving the issue of patent validity to a higher court to decide, or if he really had a good legal reason to ignore prior art and the evidence for obviousness. The Soverain lawyer's blogpost provides an inside view on the 2010 case: http://mcsmith.blogs.com/eastern_district_of_texas/2010/08/jmol-rulings-in-soverain-v-newegg-damages-experts-future-royalties-jmol-standards-obviousness-etc.html http://mcsmith.blogs.com/eastern_district_of_texas/2010/08/j... In the end the jury's $2.5m award might not even have covered Soverain's legal costs, meaning that it wasn't a win for them either - more of a draw. Reading the fresh Appeals opinion is interesting too: http://www.cafc.uscourts.gov/images/stories/opinions-orders/2011-1009.Opinion.1-17-2013.1.PDF http://www.cafc.uscourts.gov/images/stories/opinions-orders/... Precedent agrees with Newegg that a person of ordinary skill[2] could have adapted the CompuServe order command to known browser capabilities when these capabilities became commonplace, and that it was obvious to do so. The product identifier message term does not distinguish the shopping cart claims from the prior art CompuServe Mall. Clearly sensible reasoning, not misled by technicalities and sophistry - I like it. The opinion is basically a no-nonsense slap-down of Soverain's arguments and Davis's ruling, which will no doubt restore your confidence in the justice system a little. It was surprisingly easy for a layman like me to read, too.

ScottBurson 14y ago

I understand that the recent pattern has been that settling with one troll brings more out of the woodwork. Once that becomes common knowledge, I think it has to change the calculation. Settling is no longer about how much the troll in front of you is asking for; it's about the unknown number behind them in line, as well. While it certainly sucks to have to bet your company to get these trolls to go away, if the alternative is for dozens of them to bleed you slowly dry, the bet may seem more worth taking.

creamyhorror 14y ago
Indeed, and this increased risk would make it an even greater imperative for potential victims to form or support a patent-busting cooperative as suggested by several commenters already - much like how some prey animals form defensive herds against hunting packs. Hopefully cases like these will push companies to band together and not remain tight-lipped like they were on the Soverain case (until Newegg broke the chain). There's a coalition for the open Internet, why not a coalition for fair innovation in technology? (Perhaps in collaboration with the EFF's Defend Innovation initiative?)[1] [1] https://defendinnovation.org/ https://defendinnovation.org/ edit: Interesting trivia from a legal news site: http://www.americanlawyer.com/digestTAL.jsp?id=1358711387829 http://www.americanlawyer.com/digestTAL.jsp?id=1358711387829 In Tuesday's decision, the Federal Circuit ruled that three of Soverain's core patents are invalid on obviousness grounds. "The district court's conclusion that a prima facie case of obviousness was not met is not explained by the court by Soverain, and does not accord with the record," the appellate panel ruled. "[T]he trial record contains extensive testimony of the experts for both sides, discussing every claimed element of the patented subject matter and the prior art system." If I understand this right, Judge Davis simply ignored all Newegg's testimony about prior art and ruled that they hadn't even made a prima facie case for obviousness. Thankfully the Court of Appeals didn't think so. I wonder if Davis was simply leaving the issue of patent validity to a higher court to decide, or if he really had a good legal reason to ignore prior art and the evidence for obviousness. The Soverain lawyer's blogpost provides an inside view on the 2010 case: http://mcsmith.blogs.com/eastern_district_of_texas/2010/08/jmol-rulings-in-soverain-v-newegg-damages-experts-future-royalties-jmol-standards-obviousness-etc.html http://mcsmith.blogs.com/eastern_district_of_texas/2010/08/j... In the end the jury's $2.5m award might not even have covered Soverain's legal costs, meaning that it wasn't a win for them either - more of a draw. Reading the fresh Appeals opinion is interesting too: http://www.cafc.uscourts.gov/images/stories/opinions-orders/2011-1009.Opinion.1-17-2013.1.PDF http://www.cafc.uscourts.gov/images/stories/opinions-orders/... Precedent agrees with Newegg that a person of ordinary skill[2] could have adapted the CompuServe order command to known browser capabilities when these capabilities became commonplace, and that it was obvious to do so. The product identifier message term does not distinguish the shopping cart claims from the prior art CompuServe Mall. Clearly sensible reasoning, not misled by technicalities and sophistry - I like it. The opinion is basically a no-nonsense slap-down of Soverain's arguments and Davis's ruling, which will no doubt restore your confidence in the justice system a little. It was surprisingly easy for a layman like me to read, too.