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Patent Troll Shopping Cart Blocked By Newegg Appeal

 2:52 pm on Jan 28, 2013 (gmt 0)

An interesting story where any ecommerce site may have become the target.

Anyone who visited Soverain Software's website could be forgiven for believing it's a real company. There are separate pages for "products," "services," and "solutions." There's the "About Us" page. There are phone numbers and e-mail addresses for sales and tech support, even a login page for customers.Patent Troll Shopping Cart Blocked By Newegg Appeal [arstechnica.com]

It's all a sham. Court records show Soverain hasn't made a saleóever.
Soverain's plans were always bigger than Amazon and bigger than Newegg. It wanted nothing less than to extract a patent tax from the entire retail sector, using three patents it claimed covered pretty much any use of "shopping cart" technology.
Soverain isn't in the e-commerce business; it's in the higher-margin business of filing patent lawsuits against e-commerce companies. And it's been quite successful until now. The company's plan to extract a patent tax of about one percent of revenue from a huge swath of online retailers was snuffed out last week by Newegg and its lawyers, who won an appeal ruling [PDF] that invalidates the three patents Soverain used to spark a vast patent war.


Robert Charlton

 8:55 pm on Jan 28, 2013 (gmt 0)

This is an important victory, and Newegg deserves our thanks. This goes way beyond ecommerce....

For Newegg's Chief Legal Officer Lee Cheng, it's a huge validation of the strategy the company decided to pursue back in 2007: not to settle with patent trolls. Ever.

"We basically took a look at this situation and said, 'This is bull$#!+,'" said Cheng in an interview with Ars. "We saw that if we paid off this patent holder, we'd have to pay off every patent holder this same amount....

Just in our experience, we've been hit by companies that claim to own the drop-down menu, or a search box, or Web navigation. In fact, I think there's at least four that claim to 'own' some part of a search box.

For more background on the venture-capital funded industry of patent trolling, see...

How patent trolls are affecting software and technology
When Patents Attack! - "This American Life"


 9:08 pm on Jan 28, 2013 (gmt 0)

I hope this isn't cutting into the OP too much but it is very highly relevant to the underlying theme of patent trolls. It's a nearly 30 minute video called Patent Absurdity. A real eye opener into what's going on out there.

My apologies to the mods if it's not appropriate to the OT and you need to remove it [ia700307.us.archive.org...] <------- that link is directly to a .ogv video.

If you want various other video format options or choices I found that link on this page [patentabsurdity.com...]


 9:08 pm on Jan 28, 2013 (gmt 0)

I think anybody trying to do online business in the US (the only area that I know off that suffers from software patents) needs to send a big thank you to newegg.


 9:13 pm on Jan 28, 2013 (gmt 0)

A refreshing moment of sanity in the world of tech law


 10:19 pm on Jan 28, 2013 (gmt 0)

Yes, a huge thank you to Newegg! It's often much easier (and cheaper) to just pay off scum like this instead of fighting. Congrats to them for getting the patents invalidated- no easy feat.


 11:24 pm on Jan 28, 2013 (gmt 0)

From within the OP linked article near the end Newegg Chief Legal Officer Lee Cheng says....

Screw them. Seriously, screw them. You can quote me on that.



 12:12 am on Jan 29, 2013 (gmt 0)

It's the PANIP ecommerce patent trolling all over again. Quite a few years back those clowns didn't come after us, the company selling the software, they went after customers running the software.

Glad Newegg took a stand but what amazes me is so many companies allow themselves to be extorted by patent trolls just to make them go away until they find one that won't. Once they hit resistance is when the class action resistance starts and that's the end, but why do people wait so long and blindly accept the con before fighting back?



 2:14 am on Jan 29, 2013 (gmt 0)

I've got a buddy that got involved with a patent troll, second hand (using a component in his manufacturing that got trolled). They went after him for 7 figures. He actually fought it and somehow ended up with six figures coming his way (I don't recall the details, I was 3 beers in during the story and laughing till I had tears). But in order to fight it, he had to push back hard against strenuous advice from his lawyers, senior management, and directors.

The only reason he got away with it was because he controls almost the entire company and he decided he was prepared to lose 7 figures rather than be bullied by trolls. Most companies do not have that luxury - laywers and shareholders are going to force management to settle. The CEO can be principled all he/she wants, but in the end it's the shareholders that decide, and they're unprepared to risk losing.

Koodos to Newegg. I've shopped there rarely because I decided to shop locally, but this is going to put them back on my radar. I like voting with my pocket book. Maybe I'll go buy buy a new monitor from them or something, just because.


 2:15 am on Jan 29, 2013 (gmt 0)

the cost of lawyer is just so ridiculous, the justice system is a huge blackmail weapon for anyone having the lawyer power. None of the small guy can say no, and they have to bend over...

The system is a giant scare crow, controlled by whoever want to put money behind a group of lawyer.

very sad system that we live in !

People who use those scare tactic need to be PUNISHED severely to show a clear path of what will not be tolerated.

judges are being manipulated by those guys, it is time for the justice system to step it up !


 6:35 am on Jan 29, 2013 (gmt 0)

Seriously only word came to mind as I read this (This was the first I had ever heard of this company or the lawsuits)



 9:27 pm on Jan 30, 2013 (gmt 0)

The big problem, is with all the companies that cave in and settled. This money was used by Soverign to pay the lawyers to go after more victims. Sounds like an extortion racket to me.


 1:34 am on Jan 31, 2013 (gmt 0)

The big problem, is with all the companies that cave in and settled. This money was used by Soverign to pay the lawyers to go after more victims. Sounds like an extortion racket to me.

That's exactly what they do, go after the little fish first to build a war chest to go after bigger and bigger fish. Had they gone after the software makers themselves, often VC backed or very large companies with lots of money and lawyers on staff, they'd get swatted like bugs from the very start.

I had no clue that someone could enforce patents by going after the customers instead of going after the manufacturer. That was all new to me. Could you imagine someone suing every car or computer owner for instance over a component being used? Typically you can't find them and there are too many so it's not practical to go after the customers directly. However, on the internet, finding potential victims for a frivolous patent lawsuit is just one query away, or as easy as firing up a scraper script to scour the web looking for every shopping cart in use on the planet.

The problem is these people are often threatened if they expose the fact that they're being sued. or the terms of the settlement include NDA, so many won't even post about the problem looking for others to band together and fight it off because they're being extorted in legal silence.

The lawyers that file these frivolous lawsuits need to be disbarred which would discourage this crap from happening again. That's how you really stop it, take away the incentive for being part of the problem.


 9:09 pm on Feb 21, 2013 (gmt 0)

Wanted to post this earlier - but couldn't find the archived link.

Tim, owner of DeBrand Fine Chocolates .. served with this PanIP lawsuit back in early September '02 .. had to make a decision.
Pay them the $5000 they were asking for something I didnít think they had a right to,
or Fight Back!

Tim setup a site, which can still be viewed here:

PanIP's patent on all websites [geek.com] quote:
    PanIP holds patent number 5,576,951, a patent for "composing individualized sales presentations created from various textual and graphical information data sources" using "the retrieval of interrelated textual and graphical information." As most Web pages fall into this category, PanIP claims millions of Web pages infringe on its patented methods.

March 30, 2004, 11:35 AM ó Mom-and-pop Web stores can breathe easier: PanIP LLC has ended patent infringement lawsuits [itworld.com] against a number of small businesses, which defendants had warned could threaten thousands of similar companies.
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