30 November, 2013

Newegg Loses Patent Appeal

Patent trolls have been discussed, not only on this blog before, but all over the IP community in the last several years. Although steps are being taken to address this potential abuse of the patent system, until things are resolved these entities will still attempt to reap the benefits of their unused patents to make quick profits through settlement or litigation. One of the companies which has faced a wave of patent litigation of the past few years is the online retailer Newegg, having beaten Soverain, another patent troll company, on appeal after a tumultuous litigation process. It seems Newegg has yet to end its patent litigation chapter.

In the recent case against TQP Development, a company owned by Eric Spangenberg, Newegg faced a patent infringement case dealing with a patent invented by Michael Jones, which was since bought by TQP. The patent itself covers the usage of common encryption methods (SSL and RC4)  together to protect purchases online for example; although Mr. Jones did not invent the methods themselves.

This case is one which won't be fully cracked just yet
The jury in the case found that Newegg had indeed infringed the patent owned by TQP, awarding them with 2,3 million dollars in damages, and deciding that the patent held by the company was indeed valid. Although the decision has already rattled some cages, Newegg will without a doubt appeal the decision, as it has been their stance throughout all of their patent litigation history.

While the verdict itself is important, the motives behind litigation by not just TQP, but other similar companies as well, shows a blatant and open abuse of the current US patent system. The owner of  TQP Development Mr. Spangenberg openly states on his website for his company IPNav that he will "...[turn] idle IP assets into revenue streams", having sued a over 1600 companies in the last five years alone. Although clearly successful in his endeavors, Mr. Spangenberg's motives are highly questionable and only highlight a need for reform.

Newegg's Chief Legal Officer Lee Cheng took to Reddit and gave encouraging words over the verdit and previous ones, clearly further affirming their intentions to appeal the decision. Whether things will go better for them further down the line will remain to be seen, but at least this writer is optimistic.

Source: Ars Technica

1 comment:

  1. Amazingly, this blog post doesn't even being to tell the true story about how infringers have nothing but contempt for inventors:

    Here is an article quoting a judge on the true story on patent infringers (invention thieves):

    http://legalnewsline.com/news/256218-former-federal-circuit-judge-patent-licensing-best-practices-are-well-intentioned-though-unrealistic

    Former Federal appeals Judge Michel:

    “If a company was practicing an invention you made and you pointed that out to them, they would take a license,” he said. “Because they would see that they’re infringing a patent and they want to avoid a lawsuit and they want to be a good corporate citizen, they’d say, OK, I better pay and buy a license.

    “We’ve totally gone the other way now.”

    Attorneys are now advising their clients NOT to take a license and to fight the claim, Michel said.

    “They’re telling these company owners that they can probably get it knocked out and that even if they don’t succeed, that they can outlast the patent owner, SO DON’T TAKE A LICENSE NO MATTER HOW CLEARLY YOU’RE INFRINGING,” he explained.

    As a result, the licensing of patents has gone into a “freefall” and the value of patents themselves has “plummeted,” Michel said.
    The former judge said adopting best practices might have worked a couple of years ago, but since then “things have been turned upside down.”

    “The current debate in Congress is preposterous,” he said. “Most of the legislation is way off-base, not based on facts, statistics, hard numbers or logic. IT’S SIMPLY BASED ON PUBLIC RELATIONS, PROPAGANDA, CAMPAIGN CONTRIBUTIONS AND DISTORTED VIEWS.

    “I’m shocked by what a disaster it has become.”

    And Mr. Vizard has become the unwitting mouthpiece for companies that NEVER even try to figure out if they are infringing anyone's patent and instead just throw money at their attorney to stop all infringement lawsuits.

    Look up the newegg patent litigation from last Fall to see the lies some infringers will stoop to before they get nailed in court.

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