Hacker News new | past | comments | ask | show | jobs | submit login
Jury: Newegg infringes Spangenberg patent, must pay $2.3 million (arstechnica.com)
550 points by lukeholder on Nov 26, 2013 | hide | past | favorite | 280 comments



Article starts with the most important two words:

MARSHALL, TX

From Wikipedia:

Marshall has a reputation for plaintiff-friendly juries for the 5% of patent lawsuits that reach trial, resulting in 78% plaintiff wins.

I've stopped myself getting surprised for any patent suits where troll gloriously wins and that decision comes from a court in Marshall. This town's economy probably runs on lawsuits that trolls bring in and jury members from the town seem to have special incentive to favor plaintiffs almost 4 out of 5 times!


It would be interesting to see some of the cases where the plaintiffs have not won in Marshall.

As this place in Texas has over the last 10 years built an industry around the IP cases going to trial there (with e.g. short-term office rental rates as high as in NYC) - maybe those are cases that are not "supporting" their continuing gold rush.

None of that of course touches on the fundamental flaw in the system that IP cases are so exorbitantly expensive that most have to pay those modern "highwaymen" even when knowing that their demands are most of the time completely without base and are solely a legalized form of extortion.

Just consider how you feel, when you worked for years and developed / invented a large scale real-world solution and those crooks with IP / patents originally being provided to protect their work on bicycles and abacuses are lining up outside your office all claiming that they would have done all the work.

So the first step to cure this must be a protection of business that have invested substantial time and money into their products, are bona fide and actually running a business based on their work, to be able to defend themselves against such frivolous law abuses.


...all claiming that they would have done all the work.

Its worse than that. They claim that the speculative idea was all of the work, and you're nothing but a thief who stole it and did the easy part of, you know, actually doing stuff.


Those are my favorite too - I normally call them Jules Verne patents - dreamt up something, written a fictional essay aka patent on it, then claiming money from the first one who actually built it and actually invented it.

If this continues, soon someone might claim that Gerdt von Bassewitz invented space travel (Peter and Anneli's Journey to the Moon - the German title is actually nicer - translated: Little Peter's travel to the Moon -http://en.wikipedia.org/wiki/Peter_and_Anneli%27s_Journey_to... )

Ideas come in thousands and if not executed are not worth a dime. Doing it is the hard part and that's why companies building things generally get paid / make more money than science fiction book writers.


Look on the bright side. Soon sci-fi will be considered prior art! If I'm not mistaken, this has already happened with regards to "design" patents.


It has indeed. See the case of Charles Hall, who invented the modern waterbed in the 1970's, and was denied a patent on his invention because Robert Heinlein had already described the waterbed in novels as early as 1942: http://www.techrepublic.com/article/geek-trivia-strange-wate...


Ideas _are_ the patentable work though. The system is designed to get people to share their ideas. The problem is that most patents should never have been granted in the first place, because they are obvious or non-novel.

If you had to manufacture something before you could patent it, then your idea could be stolen by any potential investor. And some solutions you can't manufacture without help from entrenched businesses. Robert Kearns shopped around an idea to GM and Ford for a new wiper system. They stole it without paying him. If patents couldn't be held by NPEs, then the law would always be on GM and Ford's side, because Kearns didn't happen to own a massive automobile production line.

Why should owning a massive car factory be the only thing that qualifies you as an inventor?

Also, anyone who can beat you to market has a defense against your patent claim. The biggest, richest, fastest manufacturers win the right to produce everything they never invented.

Don't get me wrong, the patent system is definitely broken. The way it's broken happens to get exploited by certain non-practicing entities. But the problem isn't NPEs, it's _some_ NPEs, and really, it's just the features of the system those NPEs are exploiting.

The problem with our patent system is that no one actually seems to care about novelty or obviousness, even though they are supposed to.

Consider "a method for thermal refreshment of bread" (patent number 6080436). It's a toaster patented in the year 2000. David Martin, a patent quality assessor, claims that about 30% of the patents his firm reviews are for things that have already been invented.[1]

Software has it's own special version of this problem. Juries can't code, so they don't have any clue what's obvious, what's just an incremental improvement that anyone could produce if they knew the language. Juries can't tell the difference between design tweaks and brand new methods.

The problem is not that the system rewards intellectual effort, the problem is that the system rewards things that are effortless.

[1] http://www.thisamericanlife.org/radio-archives/episode/441/t...


What about an evaluation mechanism that doesn't depend on patent clerks, but more like peer reviewed science papers in academia?

E.g., a test for novelty and obviousness is that a skilled practitioner of the arts is shown the "result" of the patent (or a description of the result), but not the actual patent (which details how to achieve said result). If the practitioner can infer how the result is achieved, then the patent is not novel enough.


Planet Money has a story on one such case: http://www.npr.org/blogs/money/2013/06/07/188370495/when-pat...

In that particular case, which was regarding a ridiculously broad patent for offsite network-backups, the plaintiff lost on a technicality; there was proof of a co-inventor who hadn't been included in the patent-filing. If it wasn't for that oversight they would almost certainly have won the case.


I posted something similar in the previous HN thread where claims were made about how these jurors are the best jurors in IP cases because they're so "experienced" and this was a slam dunk victory for Newegg. Afterall, Diffie spoke, so that seals the deal, right? My skepticism of those claims didn't go over too well.

Well, I was right. I really wish people better appreciated how corrupt and broken the patent process is and how appealing to ultra-conservative districts isn't some solution. Its part of the problem.

If anything, this verdict should prove that we are farther from a solution than ever. Maybe we'll have better luck with the next congress.


This particular town was exposed as being well, corrupt, when it comes to patent suits. This American Life: they did a great job on this topic.

http://www.thisamericanlife.org/radio-archives/episode/441/t...


Not probably. The economy does run on the lawsuits.

I remember reading a while back that the hotel closest to the courthouse was owned by the son of one of the judges. Can't find the source right now, though.


Without knowing the percentage of cases that result in plaintiff wins in other cities, you can't draw any meaningful conclusions from that stat.


Patent holders win 78 percent of the time [In Marshall], compared with an average of 59 percent nationwide, according to LegalMetric, a company that tracks patent litigation.


What is the variance? skewness?


How are you wanting to measure those for a Bernoulli variable?

In any given case, the plaintiff either wins or loses. Assuming different cases are independent (which is probably at least a decent assumption), there's no more to say about the distribution than the win probability.

You could of course ask about the variance, skewness, kurtosis, 17th moment, etc., of the distribution of damages awarded or length of trial or total lawyers' fees or something. But for the actual win-or-lose figures, the question doesn't make sense.

Well, it kinda makes sense. Define the outcome to be 0 if the plaintiff loses and 1 if the plaintiff wins. Then with a win probability of 0.78 the variance is 0.17, the skewness is -1.35, the excess kurtosis is -0.17, etc., but there's no more information in any of these numbers than was already provided when we learned that the probability was 0.78.


I don't understand what you don't understand, given that you are yourself taking each county/town (not sure what is the atomic unit of judicial division here) as one RV to which you associate a winning rate. There are surely enough of them to get them in bins of winning rate.

Anyway, my point was to highlight that the mean alone is not very informative.


Ah! You were asking about the distribution of win rates across counties or towns or whatever. I completely misunderstood and thought you were asking for more information about the distribution of wins and losses within Marshall.

My apologies.


I am disturbed to see that the great-grandparent of this comment (the one saying "that doesn't make sense for a Bernoulli variable) has attracted 5 new upvotes since the parent of this comment (the one saying "oops, that was a mistake") was posted.

Everybody: Please stop upvoting my wrong comment. It was wrong. At best it may suggest a lack of clarity in the comment it was replying to, but that doesn't deserve 10 upvotes.

Thank you.

(Not that I mind being upvoted as such, but I do wish I saw more correlation between the quality of my comments and the votes they attract.)


I understood differently, that the parent was asking for the distribution of win rates per town.


[deleted]


Not sure if your whole reply is sarcastic. See my reply to gjm11 if what you need is an explanation of what I wrote.


Well, he is actually right that the town is essentially funded by patent lawsuits. http://www.nytimes.com/2006/09/24/business/24ward.html?_r=0


Doesn't that make the trial unfair? Isn't "no associated interest" a basic marker of a fair trial?


It's very hard to show actual jury bias.

Though i bet if the anti-patent groups got together and bought marshall a new football stadium, the win rates would go down ....


Well, are the claimants buying them a new football stadium? The Lemley paper I posted below certainly seems to indicate no great preference for plaintiffs over defendants.


Thats a tough one for an appeal though, showing the jury was unfair.


Here's a much more detailed analysis with a lot more data and nuance:

Mark Lemley, "Where to file your patent case"

http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1597919

EDT is not actually at the top for claimant win rates.


Honest question from an ignoramus, would companies be able to avoid fighting patent battles in this district by refusing to do business there (thus preventing any claim of jurisdiction)? If so, what's the size of the market they would have to avoid?


The United States of America. These cases are in federal courts.


I understand they're in federal courts, but can every district court in the U.S. claim jurisdiction over any alleged claim/crime, regardless of where that claim/crime took place within the U.S.?


Here's the technical answer: the federal courts have jurisdiction over (among other things) claims arising as a result of federal statutes, e.g., the patent laws. Suing in a particular US District Court is a matter of venue and venue is proper wherever the defendant does business. If New Egg ever sold an item or offered to sell an item anywhere in the Eastern District of Texas (and if you've got a website, then the answer is yes), then venue is proper in E.D. Tex.


> If New Egg ever sold an item or offered to sell an item anywhere in the Eastern District of Texas (and if you've got a website, then the answer is yes), then venue is proper in E.D. Tex.

Right, this is exactly what I'm asking. But why is the answer automatically "yes"? Why can't websites have a disclaimer saying "this company does not sell or ship to entities in the Eastern District of Texas"?


So, in theory, Newegg could blacklist the entire Eastern District of Texas from ordering things from Newegg, and nobody could sue them from there.


I think if more companies actually did that, maybe those IP cases would work differently. This is actually great idea.


Newegg doesn't want to do this. They deliberately fight patent trolls and exhaust all avenues of appeal in an attempt to overturn bad patents. The fact that they lost in the trial court is a formality; they will win on appeal.


TigerDirect would keep selling there. This does nothing to stop the tide.


Actually it's not (edit: only / mainly) a question of venue, it's a question of personal jurisdiction as defined by Rule 4(k) of the Federal Rules of Civil Procedure.

The general rule is that a federal court only has personal jurisdiction where a state court of general jurisdiction would have it. So both the constitutional due process requirements (International Shoe, et. al.) and the state long arm statute come into play. (This assumes the patent statutes don't have unique PJ rules, they might.)

All that said, without having actually looked into the case law, I'd imagine you couldn't defeat jurisdiction by not doing business in the forum because the Calder effects test would be construed to apply to infringing a patent owned by an entity in the forum.


I wonder if running an anti-patent troll marketing campaign in Marshall would help fix this. Educate the population about the problem.


They call that quaint there... These aren't stupid hicks. If you think for a second that these folks don't see this as an awesome way to give a big Texas flying finger to Silicon Valley types with their skinny jeans, silly beards, and smugnaciousness... you've merely increased their will to continue this process.


Eschewing justice in favor of giving "a big Texas flying finger to Silicon Valley types with their skinny jeans, silly beards, and smugnaciousness" pretty much makes them stupid hicks, sorry.


If true, it would make them jerks, but it would be foolish to dismiss them as stupid.


There's a difference between "clever" and "not stupid." One can be a stupid "clever" person. These people are "clever," because they know what butters their bread. That doesn't mean they aren't also dumb hicks.


"Shortsighted" and "ignorant of justice" come to mind as synonyms for "stupid".


I'm from that area. "Stupid hicks" isn't entirely inaccurate. As in other areas ranging from religion to economics, these salt-of-the-Earth folks are culturally conditioned to adopt the views of whoever gets to speak first.


I doubt it. They are not stupid. They know what they are doing. They are attracting more patent cases. They are acting rationally in their own best interest.

Crunching the numbers, though, there are around 171,000 people in the counties that make up the juries. If national ratios of under 18 and felon populations hold that is a 115,000 member jury pool. If a jury is 8 to 12 people it would only take an influx of 11,000 to 17,000 software patent unfriendly people to average one juror on that side per case.

In short: Perhaps it is time to create a techie colony in the Marshall area. Remote working for the win!


It looks like the population of Marshall is ~23K as of 2010. I wonder if it would be possible to pay a sizable number of people to move to Marshall to alter the average patent sentiment.


Someone who was paid to move to a town so they could be on a jury could never get onto a jury.


Can you appeal these cases? I mean 2 million dollars is no pocket change and instead you can afford some good lawyers for that much money.

I mean to appeal the case judgement in another state...


What if everyone decided to put a tech embargo on this town? Refusing to do business with the inhabitants.


That ignores the way wholesale channels work, and I'm pretty sure a judge's son would setup shop by acquiring said embargoed products elsewhere. It would have less than 1% of an impact on the average juror's life.


Still, it would be pretty inconvenient if newegg, amazon, other online stores wouldn't ship to your home address. Netflix, other services could block them based on billing address. Yes there are ways around this, and the real issue is patent law in the first place. Just a thought experiment.


Pretty sure Amazon is pro-patent (see "one click")

You hit on a more important point: the real issue is the patent law. In East Texas there's a certain ideological slant, and it sucks for legitimate companies. But in the end, they're merely implementing the law. Pretty sure punishing a municipality because of verdicts in a federal court there would result in a fist in the mouth from the FTC. Marshall, Texas, or Boston, or San Francisco, or wherever, results in zero change - the real effort needs to take place in Washington DC.


Which wont happen for a while. This kind of crap has been going on even when Henry Ford was trying to sell his Model T.


Can you just pick any court you want? And the appeal would be held where?


Assuming that this is a conservatively minded region (correct me if I'm wrong), aren't frivolous lawsuits one of the things that they campaign against?


Texas is conservative -- with a small c. Lots of suspicion towards outsiders generally, and towards large corporations in particular, have resulted in many outsized jury verdicts (in non-IP or patent cases) from Texas, as well as other red states like Mississippi, Alabama, Florida panhandle, etc. It certainly isn't the 17 story cash register that LA Superior Court, Downtown Civil Division is, but the smaller counties in Texas aren't bad at all from a plaintiffs' perspective. Just be sure the lead lawyer on the trial team is from around there and speaks with something of a twang.


The patent involved basic traffic encryption (SSL or TLS combined with the RC4 cipher), and the company already has made $45 million off it.

Here's some more info on the company they lost to:

http://www.techdirt.com/articles/20121109/02321120982/meet-p...

TL;DR: They're patent trolls.


>the company already has made $45 million off it

I know that saying "made" is the generic form for acquiring money through any means. However, it also carries the connotations of production, of creation. I would rather say that they have already extorted $45 million using it.


Well since Newegg made the money, perhaps TQP was awarded the $45M that Newegg et al made, or TQP was shown to deserve the $45M that Newegg et al made. But you're right, let's be clear: TQP didn't create any wealth here.

EDIT: I'm mixing numbers. Not all of the 45M was from Newegg.


If the copyright enthusiasts can misuse legal terminology to refer to copyright infringement as actual theft, I say let's go ahead and call this a theft as well. We'd be closer to the truth.


So they have six more years to sue. Can they renew and is there any plan they will renew this? Even though RC4 is no longer recommended I don't see us moving away from it for another 5-6 years given many servers probably can't upgrade to newer ciphers (I am thinking about those old RedHat servers). Correct me if I am wrong though.


I think the patent has expired. Patent apps issued before June 8, 1995 have a 17 year term from issuance. 35 U.S.C. 154. This patent issued in May 1995. See "date of patent" in upper right corner of the pdf doc.


I know that. The article said they have 6 graceful years after expiration. My question is can they renew it?


Patent holders can, in some cases, sue for damages for acts that occurred up to six years in the past. But there's no new infringement or damages accruing after expiration.


Patents can never be renewed. That's the entire point of patent systems: limited-time monopoly.


Not entirely true. Pharmaceutical patents can be effectively renewed if a new use for an already patented drug is discovered.


They can also attach a molecule to the side of an existing drug and patent that, and then stop manufacturing or marketing the original drug.


I've wondered, how does that prevent a generic version of the original from appearing? Clever marketing and control of their product isn't good but it's not evil.


Most generics are in fact manufactured by the original patent holder and sold to third parties (or in some cases marketed by a subsidiary with a different name). Setting up a manufacturing process for a drug is often non-trivial, so if the original manufacturer stops producing a drug, it may not be worth anyone else's while to (a) create a factory, and (b) get their version of the drug through safety testing, etc.

(I'm no expert, but I did work with pharmaceutical companies for about a decade, and in many cases they were manufacturing selling brand name and generic drugs side-by-side, or selling brand name in some markets and generics in others -- all from the same factory.)


> Setting up a manufacturing process for a drug is often non-trivial, so if the original manufacturer stops producing a drug, it may not be worth anyone else's while to (a) create a factory, and (b) get their version of the drug through safety testing, etc.

So what you're saying is that drug patents add only a thin/negligible benefit above and beyond natural barriers to entry? I guess that's a good trade then--i.e., here's a "monopoly" (in your uncontested market) in exchange for the recipe of the secret sauce. From society's point of view, all that's left is to tune the expiration of the patent to coincide as closely as possible with the competition completing their tests and first factory without dissuading applicants.

Alternately, if competition is never going to reproduce the secret sauce as described in the patent, may as well do away with them since they could be scare would-be competitors from entering the market.


It's not black and white. The US is particularly screwed because of loopholes in regulations that drug companies started exploiting in the late 90s to advertise direct to patients (illegal almost everywhere else). So you've got drug A which is going out of patent and A' which is A with something hanging off it that's harmless but counts as novel. So you switch gears and put all your marketing behind A' (including cherry picked studies). You can produce A cheaper than anyone else, but you don't have to. Anyone trying to enter the market with A risks you undercutting them, and meanwhile you're marketing A' against A.


The original Anglo-Saxon juries were chosen from among local people because they knew the witnesses who would be testifying. The idea was that they could judge the credibility of the witnesses based on their direct experience with them.

Then later on after the idea of an unbiased jury took hold, there arose a justifying theory that the jury could tell by careful observation whether or not a witness was telling the truth. This theory is dubious enough when applied to simple questions of outright lying. When it comes to judging expert witnesses testimony, it is totally bogus.

If they don't want to create a patent office court to adjudicate these cases, at the very least Congress should authorize the appointment of special masters to do fact finding in patent cases.


Moreover, there is a cottage industry of being an "expert" to testify for some of these technical issues. They are often experts in as much as they have been called before as "experts", even thought the industry they are supposedly explaining might consider them charlatans -- people who just know how to dress well and talk bullshit, but in a very convincing tone.


That's basically how I saw them trying to paint Diffie in this trial: by pointing out that he hadn't graduated from university, that he wasn't a professor, that he didn't even invent PKC!

It seems they managed to convince the jury at least.


If he claimed to invent PKC and the other side points out he hadn't, his credibility goes down the toilet.

I saw lots of love for Diffie's "I invented it" line. But if he overplayed his hand, he ended up hurting his side more than he helped it.


When there are museums that consider you to have invented it, and you DID invent it (just perhaps were not the first, though that was not known at the time), it seems fair to say that you did.

After all, we consider that both Newton and Leibnitz invented calculus.


Then he should have said that. "I am often called the inventor of public key cryptography.[1]"

But it would not have been as cool to quote on web forums.

[1] I don't know if that's heresy or whatever; Egghead's legal team, however, would know and could coach him appropriately.


>If they don't want to create a patent office court to adjudicate these cases, at the very least Congress should authorize the appointment of special masters to do fact finding in patent cases.

I'm not sure if special appointments of patent office courts would help. Look at the people congress places on technology commissions. Some of them wear their badges of technological ignorance as if its something to be proud of.


Optimism please, they've beaten patents on appeal before:

> "We're certainly very disappointed," said Cheng. "We respectfully disagree with the verdict that the jury reached tonight. We fully intend, as we did in the Soverain case, to take this case up on appeal and vindicate our rights."

> Soverain was the "shopping cart" patent that Newegg was ordered to pay $2.5 million for, but the company then knocked it out on appeal. Soverain's damage request was huge for Newegg: $34 million.


I'm not sure why one should be optimistic. Even if they win, they've lost; the legal costs alone are silly and aren't paid for by the loser.


The chief legal officer of Newegg _wants_ these cases and to take them to completion in attempts to correct the problems with software patents. One should be optimistic because Newegg is putting up the good fight and winning rather often. If it were almost any other company, you'd be hearing about a settlement if you heard anything at all. As a Newegg customer, I am glad that some of my dollars are going towards these kinds of legal costs and that's the type of thing that comes to mind when making decisions about where to buy.

Some more information about previous cases:

http://arstechnica.com/tech-policy/2013/05/newegg-nukes-corp...


this is the sole reason i rather buy from them instead of amazon. before those cases, i steered clear of newegg as i do of any merchant that bores me with coupons and rebates.


This is an excellent point! I hope everyone who cares about this issue is doing their part and voting with their dollars. Yes, donate to EFF, write to your congresscritter/senator, but also reward the business that invests money in causes that you care about. Sure, they are doing it to benefit their bottomline, but they could just as easily have paid that money to make the problem go away like so many other businesses did.

Newegg has been my exclusive source of tech goods since they started standing up to trolls. I intend to keep rewarding them with my repeat business.


Thank you for the reminder. I've been a long-time customer of them, but I had forgotten that this was one of the reasons. (How embarassing to admit that.) Even while reading this, my thoughts were, "Man, I'm glad Newegg is so awesome" -- rather than "I am glad I am spending my money there". Now I'm glad of both. ;)


Even if they win, they've lost; the legal costs alone are silly and aren't paid for by the loser.

You could have said the exact same thing when they first went to court and it would have been just as true. But that's why they are doing it. They already lost simply by operating in a country with such broken patents.


No. Even if they lose, they've won.

The whole point of their strategy is to discourage the next patent troll from trying to shake them down. Even if they lose this case, they will have continued to demonstrate that they are no push over.


If you don't stand up to a bully, then you will always be the victim of bullies.

I would imagine some patent trolls think twice about going after Newegg because they will fight. Fighting in court is not what a patent troll wants, they want the easy victim that will surrender easily.

Because if they go to court, not only does it cost them money but it could cost them their patent. It's better to go after an easier target.

It's why Wal-Mart was known for fighting all lawsuits back in the day. Because after the first time you settle with someone that "slipped" in the aisles you will suddenly find that someone "slips" in your stores nearly every day.


Don't get me wrong, I have a lot of respect for Newegg and what they're doing to this patent troll. This is also the exact strategy I'd take in this same situation if dealing with a patent troll, but nevertheless it's a horrible waste of time and money that could be better placed elsewhere.


I cannot disagree with you on that.


If they won a previous case on appeal, and as micahgoulart observes didn't use a potentially valuable witness in this case. This suggests a strategy of bleeding out the patent trolls through their lawyers.

A troll's business model relies mostly on settlements, newegg can just keep selling computers.


> This suggests a strategy of bleeding out the patent trolls through their lawyers.

I was depressed when I read the verdict, but your point here gives me new hope. I hadn't thought about that.

I wonder if they're going to hold back on their witnesses then for the appeals process as a sort of "ace in the hole?" I further have to wonder if the reason they decided not to use that witness was because they suspected they were going to lose this case and have to appeal?

I can only hope that the appeals process ends up invalidating this patent.


Perhaps someone who knows more about the legal system can help me understand something: at this point, it's well-known that these areas of Texas are good for patent disputes: they receive national attention, and a massive influx of spending as companies travel there to fight court battles.

Given that, surely any jury made up of locals has a huge incentive not to kill the golden goose and deter patent trolling by letting defendants win. Is there not a conflict of interest here?


I have no special legal knowledge, but I spent several years within spitting distance of this district, so I know the area, was in the jury pool, and as far as I know might still be close enough to be called as a juror.

Based on that experience, I am inclined to disagree with your general premise. While these lawsuits bring a tiny bit of additional business to directly-related service industries (hotels, copy shops) my observation is that most of the "big money" stays within the legal industry, which is mostly based in the home locations of wherever these companies are. It is further my observation that the East District Court is not unusual in the kind of business that it brings to the surrounding area relative to other district courts (e.g., if not patent lawsuits, other suits) so there isn't much of a desire to protect its reputation as a patent court.

Finally while these stories do receive "national attention", this is pretty much entirely within the software development community, and patent lawyers. Ordinary people in East Texas don't follow any stories about patent lawsuits ever. They're boring.

Here's a benchmark for you: I am a software developer, who lobbied my congressman about patent law earlier this month, and on the day this lawsuit was filed, I was 45 minutes from the court by car. I am the textbook case of a person who would be following this story. Today is the first day I have ever heard anything about it.


Thanks for the reply: that makes a lot of sense.


There are actually other districts that have higher win rates for patent trolls. One attorney told me that people use EDT simply because that district has built up a fair amount of knowledge and experience in this area of law, and thus the cases are cheaper to fight there. I don't know this to be true, this is just what I've heard.


> There are actually other districts that have higher win rates for patent trolls.

This would be a good point if patent cases were randomly assigned to districts. But they're not, of course - EDT courts are stuffed full of BS patent troll cases. So of course the patent suit win rate is lower there. It's still famously friendly to patent plaintiffs.


Patent trolls like EDT because it's a "rocket docket". EDT judges speed up the process and it forces the defendants to play catch up. They can't spend as much time doing research on the patents. A shorter trial also limits the up-front costs for the patent trolls

http://www.law.com/jsp/article.jsp?id=1103549728998&slreturn...


If they've built up knowledge and experience, they ought to prove it by rendering verdicts that make sense. Maybe it's just a case of confirmation bias on my part, but it feels like they've got their heads firmly lodged up their asses over there.


FWIW, a friend of mine who's an IP lawyer said the same to me.


this. It's not the win rate per se, it's the fact that the District Court judges and clerks are unusually experienced in IP litigation. You have to understand that in other districts the judges are doing federal criminal matters, civil class actions, debt collection abuse litigation, admiralty law (any slip and fall on a cruise ship is a federal lawsuit) and so on.

In ED Texas, the clerks all have hard-science undergrad (and sometimes graduate) degrees as well as degrees from top law schools because this is a major leagues of IP litigation. Want a guaranteed six figure income as a 26 year old? Clerk for two years in Marshall, then send your resume to Cooley or Wilson Sonsini or Loeb & Loeb and see how fast they return your call.

This is miles and miles beyond most lawyers, who struggle with basic math and still use dictaphones and WordPerfect and aol.com email addresses.

This also means that the litigation goes faster, which is always something that clients complain about. Win or lose, you want the dispute resolved.


Personally, I think that theory is utter crap.

A well-informed jury about the topic at hand is bad for one party of a lawsuit. It's better that a jury is a blank slate so that the lawyers can attempt to convince them their story is the one, true story in the debate. It's why during jury selection they often actively attempt to find a juror that knows nothing about the topic or carries no opinion about it.

Of course, that's not necessarily true across the board. Sometimes one side does want people that know the topic and have an opinion about it but I bet those are mostly criminal cases.

Plus, to me anyway, if the juries did actually have this supposed high-level of knowledge and experience then the results would be more balanced. Because there's no way you can tell me that nearly every single patent troll out there is in the right with these cases. More of these patents should be tossed out for the silliness that they represent.

Lawyers do their best to get into courts and before judges they feel will be sympathetic to their case. To do otherwise is a disservice to their client.


I could have sworn that due to a below average crime rate, the legal system is able to get patent litigation through quicker.


You might have been correct originally, but the number of patent cases has changed the focus.


To those patting themselves on the back as we begin another round of Texas bashing (because, let's face it, for a number of people here that's their favorite part of patent stories), may I ask why you blame an entire state?

When things go wrong in California or New York or Massachusetts, those states aren't blamed: the individuals take the heat! (What a concept!) But whenever something bad happens in Texas, somehow all 26 million of us are involved and culpable.

Case in point: a few minutes ago there was a post here saying we should poison the water in East Texas to stop this. Thankfully, it has been deleted.

Battling bigotry with bigotry is not likely to work. When Hollywood pushes for another batch of draconian copyright laws no one here raises up there hands and hopes for the "big one" to knock LA into the ocean. When municipalities go after Uber or AirBnb no one begs to push that entire state out of the union. Why the double standard?

(I know why, no need to answer that question)

Certainly as a Texan and tech person I'm not a fan of this ruling but the vitriol displayed here towards an entire state verges on disgusting. FWIW, I grew up in the Bay Area and across California, I'm not some Pineywoods hick who never left the trailer park.

I am, however, quite tired of the hatred and, frankly, gleeful malevolence sometimes displayed on this site towards Texas.


I'm a Texan (10 years in Houston, 10 years in Austin, and currently residing in Austin), and I'm one of the most vocally anti-Texas people in this thread (though I'm not suggesting poisoning the water).

I'm just very frustrated. The future of Texas, just like the rest of the country (but very much so Texas), is technology. This one little town, and this one judge, seem to be hell-bent on destroying innovation. There's just so much wasted energy and effort, and it makes me sad to see the bad guys win so frequently (and these are bad guys; they've extorted millions from people who had no idea this really silly patent existed).


Agreed. As a fellow Texan, I'm embarrassed that this relatively small town has become the de facto venue for patent battles... especially those involving patent trolls.

How would we go about changing this? Surely the rest of the nation is taking note at the bias afforded to patent trolls by Marshall. I just don't understand how, especially in this case, they could have sided with the troll. Is there an economic benefit for the people of Marshall to side with the trolls or are they just completely oblivious when it comes to technology cases? I am completely dumbfounded by this Texas court.


Judges are elected in Texas, but I don't think that applies in the case of federal judges. The infamous T. John Ward retired a couple years back, but it seems like the tradition continues with whoever is hearing these cases now.

I think, in the end, there needs to be patent reform...which just got shot down before it ever really even got any traction. So, I don't know. Educating people about the harmful effects of software patent law and patent trolls might be a useful start. This is pretty obscure stuff to most people.


_I completely agree with everything you have said. My reply is not about that._

But the comparison is not very apt. Hollywood's draconian copyright laws would mean that you can't watch a movie or listen to a song, which is no big sacrifice. Patents are an affront to your freedom. Any service, app or business you build will violate some patent or the other. Countries have chosen to hand over monopolies on ideas and thought.

This may not affect many of us. But having to watch helplessly while companies like NewEgg suffer is very, very painful.


That's exactly it.

Patents can affect anyone at any time, whereas copyright laws affect certain individuals that have violated the terms.

Theoretically of course. There have been cases of people being sued for piracy when they don't even have a computer.


Fair enough, it's a poor analogy. I absolutely agree with your assessment of patents however.


What are you talking about? We bash Hollywood all the time. Now we're bashing East Texas - not all 26 million of you.


I think you're just being a tad over-sensitive here (and I say that as someone who moved to Dallas in 1987). I've been on HN for 4-5 years and I've never heard or seen "Texas bashing" here.

Texas' population is almost 10% of the US. Texas is also the 2nd largest state, comprising almost 8% of the land mass of the US. Besides, I'd guess half of the HN crowd today are overseas - I doubt the average non-North American HN person could name more than 7 states. And of those 7, Texas, California, and New York are in every single person's list.


There has been a fair share of Texas bashing here. Mostly complaining about EDT and other various shenanigans going on.


> When things go wrong in California or New York or Massachusetts, those states aren't blamed: the individuals take the heat! (What a concept!)

Well, as a Florida resident, I think we must be some exception to your rule then. It seems we always get blamed as a whole for the actions of the few.


You should see the French-bashing here.


It says this patent covers using SSL with RC4. SSL dates back to Netscape, was released in 1995, and has no one involved in it has anything to do with the patent holder here. RC4 was designed in 1987 by Ron Rivest who also has nothing to do with this case.

Someone named Michael Jones patented using SSL with RC4. Which in seems was a known and used combination at the time he did so, as was testified by the expert witness? But the jury thought that not relevant.

The patent would seem to avoidable if say using AES instead.

Caution: I don't know what I am talking about and just looked the above up on wikipedia, which I probably misunderstood. Hopefully someone who understands this in more depth will post.


You really have to read the claims to understand what the patent covers instead of trying to understand it from what is infringing. This patent has pretty easy-to-read claims. It essentially covers an encryption method where the encryption/decryption keys are updated (edit to correct my misreading) if a certain number of bytes are detected to have been exchanged. It's kind of a key-synchronization method.


Then I'm actually puzzled by how it applies to NewEgg and so many other e-commerce companies.


US patent law counts as infringement making, selling, or using anything covered by the claims. NewEgg uses SSL with RC4 to secure their connections, the combination of which TQP contends, perform the steps covered by their claims.


going forward, maybe. but AES was not standardized until 2001, and not in wide browser adoption for what? another 10 years?


Maybe this will be the motivation everyone else needs to dump RC4?

http://googleonlinesecurity.blogspot.com/2013/11/a-roster-of...


The patent has already expired. Feel free to use it to your heart's content.


Worse, there's the allegation that NSA can crack RC4 in realtime (although I don't know what that means, other than "fast").

https://twitter.com/ioerror/status/398059565947699200


realtime means your algorithm is guaranteed within a certain window of time, even accounting for delays talking to memory, caches, etc. If it's okay to "drop frames" it is referred to as "soft real time", otherwise it is referred to as "hard real time".

Soft example: Video decoding.

Hard example: Mars rover.


I'm not much into crypto but I'm pretty sure RC4 has been broken for a very long time now.


  "We've heard a good bit in this courtroom about public 
  key encryption," said Albright. "Are you familiar with 
  that?"

  "Yes, I am," said Diffie, in what surely qualified as the 
  biggest understatement of the trial.

  "And how is it that you're familiar with public key 
  encryption?"

  "I invented it."

I think I see the trailer for the TV Mini series right there :-)


And they still lost... what? Every time I read about our patent system the blood drains from my face, how do we fix such a broken system?


Its worth thinking what do we want?

- That we have good and effective Intellectual Property laws. It seems one of the big lessons of the Industrial revolution was the right property laws. The principles behind patents and copyright law make sense in this regard. Its the specifics that have problems.

- The analogy to physical property is worth following more deeply - countries such as in S America, ie Chilie, are trying to undergo property law revolutions, and often local knowledge is clear - everyone "knows" that Juan lives in that building and has done since he was born, and maintains it for his family. Therefore it is "his" house. Our IP laws generally need to come to some agreement on a similar situation - where there is clear contentious dispute, local (ie expert) knowledge is needed.

- This is more or less what is happening here - someone is claiming Juan's house was actually their house. A jury was asked to decide with clear expert local knowledge. So the process is what we want. Its just in this example we choose a bunch of idiots for the jury.

- Software should be copyright. This will cause difficulties in "porting" software, and in doing the same algorithm in php and then perl.

summary: IP rights is more likely to be a good thing than a bad thing, just like property rights. However bad implementations of property law have seemingly held back countries like Brazil / Chile, and we do not really know what IP law should look like to be most suited. I prefer allowing local knowledge to be primary in cases of dispute.

(http://www.ted.com/talks/niall_ferguson_the_6_killer_apps_of...)


Intellectual property laws steal and misappropriate property - not protect it! My use of "your" idea doesn't exclude your use of that idea. There is no conflict of property.

According to the reasoning behind IP, if I chop some wood I should have to ask the person who invented fire if I can make a fire. IP is the idea that you own my uses of that wood, and get to tell me whether I can build a fire or not. You can then have a bunch of thugs take my wood if I even dare try to build a fire with it. Or if I do build a fire and use it to cook food, then the thugs also demand food.

The important part is that building my fire doesn't exclude you from building fires. In no way does my knowledge of how to build a fire prevent you from using that knowledge to build fires.

> That we have good and effective Intellectual Property laws. It seems one of the big lessons of the Industrial revolution was the right property laws. The principles behind patents and copyright law make sense in this regard. Its the specifics that have problems.

No, the principles don't make sense. IP is not based on the same principles as property. It doesn't even share the same legal history. Copyright law originated from the church attempting to regulate and control the printing presses. Copyright shares more legal history with censorship than anything else. Early copyright laws in England were even referred to (correctly) as "monopolies."

> The analogy to physical property is worth following more deeply

There is no analogy. Ideas aren't physical things. My use of "your" idea doesn't exclude your use of that idea. There is no conflict of property.

> Software should be copyright.

No, I have the right to use information as long as that use does not exclude others from using it.


The problem with this line of reasoning is that it simply hands power to those who already have other forms of monopoly or property.

Intellectual property increases freedom by creating a form of property that individuals can create without needing to own a scarce resource. People can become property owners simply through usefully employing power of their intellects.

If you dislike this form of property, then you must articulate an alternative way to divest power from those who hold other forms of property, otherwise you are merely a defender of landowners, governments, corporate monopolists and other vested interests.


> If you dislike this form of property, then you must articulate an alternative way to divest power from those who hold other forms of property

I don't follow. Why do my arguments against intellectual property depend on some your unstated arguments against owning any property at all?

I'm left to assume you support the decision in this court case, because it's perfectly consistent with the reasoning behind copyright and patents.


Your arguments against intellectual property don't exist in a vacuum. They exist in the world where other forms of property exist and give rise to power. An argument for or against intellectual property is an argument about who and what should be accorded power.

A corrupt court making a poor decision has nothing to do with the reasoning behind copyright and patents.


>My use of "your" idea doesn't exclude your use of that idea

It can and does exclude me from certain uses of that idea. For example, if my intended use of that idea involves profiting from selling a good/service incorporating that idea, but my target customers decide not to buy from me specifically because you are using that idea. Sure, I can still use the idea in many other ways, same as you can use your land for many other things even whilst my sheep are grazing on it, and what was your wood for other things even after if I've burnt it to ash, but your use of my idea has reduced its value to me. All property is monopoly rights over something, and yes, all forms of property rights can be abused; that in itself is not an argument for their elimination.


The greater violation of liberty is preventing many entities from using an idea rather than a single entity losing the opportunity to profit from an idea.

Especially because a fire inventor being deprived of profit is not what is happening. What is happening is someone uses a broken system to register their idea of cooking rabbits after watching other people cook different animals. He is then given exclusive rights to cook rabbits, and he goes directly to extort shells and shiny rocks from the guy two caves down who has been cooking and trading rabbits for years now.

If we cannot have patents without "scan-to-email" extortionists we should not have patents. Creating an incentive to do no B2C business because it is more profitable to sue other companies for using obvious ideas is contrary to the intended purpose of the patent system anyway. Either get patent examiners that can do it properly, make it dirt cheap to challenge a patent, or shut it all down.


Thinking by analogy is limited. An algorithm is no more a house than the Internet is a "series of tubes".

If Juan and I each claim the house then our furniture and our bodies would be in each other's way if we used it at the same time.

If you use my algorithm (add each value in order and check against a checksum provided from another account) to balance your check book, it won't keep me from balancing mine.

Comparisons to the industrial revolution and medical devices are likewise bogus analogies because it takes time and resources to turn designs into physical products. I can use my algorithm and profit from it as soon as I've worked it out. And, as RMS would point out, we write software to do things. Make money off doing the thing, not trying to sell an idea.

Software patents are relatively new in the world. So far, they have only led to damage.


> The principles behind patents and copyright law make sense in this regard.

I personally disagree strongly with IP in the first place. Of course, this leads to a divisive opposition against the current regime between those who still want IP and those who don't, but it is something I feel strongly enough about I am not willing to concede on. Things are awful right now, and having "better" IP would reduce the likelihood of an open information society because people would be even more complicit if the laws weren't so laughably bad right now.


It is anecdotal but I think of the invention of forceps - incredibly useful for midwifery but kept secret for fear of losing money.

I think that Diffie et al did actually invent something in mathematics. They were able to publish in an environment where their claim to invention would be respected and they could reasonably expect to profit from it (in career terms).

This is the nice, fluffy level where everyone publishes for the common good. I am all for that. I just don't think that works for a world where the majority of value is exepcted to arise from not physical labour but the application of intelligence (to physical labour)

As a simple example - I build a concrete "squirting" robot that like a dot matrix puts dabs of concrete down on the ground, and with some darn clever software it can build a house or a office block.

I think I should have to choice whether to release that code as free, or if I make all building companies pay me royalties. How we enforce that I do not know, but I do know that I would rather live in a world that has the problem of working out how to share out the value created by robots that build everything, than potentially strangle it in its crib.


I'd rather live in a world where you didn't invent your robot then one where you have sole discretion over who gets to build anything in its likeness.

IP isn't about whether you own the robot you built, it's about whether you own similar robots other people built.


Then you'd rather live in a world where inventors and their corresponding corporations can't actually sell anything, lest advantageous innards be studied and duplicated. Instead, they have to hire armies of lawyers to issue non-disclosure agreements to all their customers, who are greatly constrained in their use of new inventions because of the need for secrecy. It's all the same to the lawyers.


There are other ways to encourage innovation besides creating legal weaponry which are suppressive to individuals and small companies, and provide wide motes against competition to giant corporations. The Nobel Prize, Pulitzer, Fields Medal etc. The X-Prize (a private space craft!) Open source software has resulted in companies achieving billion dollar plus market capitalizations for the companies which created them (orders of magnitude more in businesses based on such sw), successful kickstarters which raise millions for a great idea... In the technology world that we live in, what has created more wealth and technological velocity, patents or open source software? The right to restrict the use of an idea is a terrible idea. It's a global lock on thought.


Except it isn't economically feasible to have a lawyer army and to try to keep millions of NDAs under wrap.

But you come at it from the perspective that you just clonk down our culture and psyche around information into a world without IP and everything goes to shit.

In reality, businesses evolve and adapt. Rather than consider r&d a capital investment in future revenue, your r&d budget is a public service - something you would want either cultural pressure to coerce out of businesses (I'm also a libertarian, and IP is just raw governmental power) but you could also argue from the socialist perspective the idea of using violent coercion of the state to transfer wealth into r&d.

Either way, you are not researching to create profit. And I would argue you don't need to anymore. The things people want are things people will pay money to see developed. Not pay for in the end product, but pay the researchers up front. Instead of sitting back and hoping a cure for Parkinsons gets funded by a medical megacorp looking to profit off the IP, you throw money at Parkinsons thinktanks, and can appraise them on an individual basis for their merits, and put money where your mouth is for the things you care about.

And then the rest can be voluntary. For the most part today many of our modern revolutions are voluntary - everything from standardized Internet protocols to tcp/ip were all developed not as for profit ideas but as standards to elevate humanity, and we reaped huge benefits from them.

Because all that money spent today on R&D, and today on the patent lawsuits and lawyers, and today on policing every corner of society to ban thoughts and numbers, could be spent funding the research you want.

Because it is a value proposition in whatever regime you have, but I am of the opinion that those who value research into certain fields would throw money at it regardless of profit motive because they want the end product, not the potential capital gain. I'd even argue that is a more effective way to develop innovation, because if your goal is the invention and not the profit afterwards, you have much greater clarity of vision to meet your goals.


you throw money at Parkinsons thinktanks, and can appraise them on an individual basis for their merits, and put money where your mouth is for the things you care about.

Historically, the "throw money at it" approach to solving problems has not been particularly successful. We're not just talking about a single disease, we're talking about thousands upon thousands of illnesses. Markets are the most efficient mechanism we have yet discovered for the productive allocation of resources. Unless you can show how you'd bring that power to bear on practical medical research in the absence of IP, you're stuck telling a story about how this time, some bureaucracy will get the job done. I'm shocked any libertarian really believes that.


You're talking about adverse possession of patents?


I don't know :-) What does it mean ? (Too lazy to google, or perhaps too aware of the difference between a human explanation and google's)


Sorry for the long delay. Adverse possession is the common method of taking gaining ownership of land that you have occupied and used for an extended period of time as if it were your own.

I can go into more detail if you'd like.


It is unfixable because people think that fixing it is a solution. It isn't. Patents need to be abolished completely. The world for which they were designed does not exist anymore.


It never did exist; new inventions tend to (1) come from people who invent them for the purpose of using them themselves, and (2) be invented by several people at around the same time.

OTOH, the existence of patents gives people a reason to keep their ongoing research secret, and so maybe moves us closer to the world they were designed for. Patents exist for the purpose of alleviating problems which mostly only exist in a world that has patents.


Bring a California company in front of a Texas jury, and call wild-haired Stanford visiting professor Diffie as a witness? I'm afraid this says more about the bigotry of the jury members toward Californians than it does about the case. My hunch is they (wrongly in so many ways) thought they would teach the hippie a lesson.


Pot, meet kettle?

Ahh yes. Nothing but knuckle draggers out there. Am I right? Nevermind all the great engineering schools, top cancer centers, and major tech hubs. Nope. Texas is nothing but racist bigots despite being one of the most racially and culturally (the most?) states in the union.

Believe it or not, the lower right 1/3 of the US is a little more diverse than is portrayed on Dallas and The Dukes of Hazzard.


I grew up and live in the lower right 1/3 of the US and his depiction is not that far off. Based on totally made up statistics that I'm pulling from my nether regions right now I'd guess at least one jury member had the exact thought the GP mentioned, while at least a few others just subconsciously would not lend credibility to the "dirty hippy."


I think you're absolutely right. In fact, the TQP lawyer went on the attack, which would be a miscalculation anywhere but Texas:

> TQP lawyer Marc Fenster could have acknowledged Diffie's accomplishments while arguing that his client—an admittedly little guy—still should get his rights, his little piece of "intellectual property."

> That's not what Fenster did. He went on the attack.

http://arstechnica.com/tech-policy/2013/11/newegg-trial-cryp...


Do you have any actual reason to believe this?


The jury's decision... frankly I trust Whit Diffie on this stuff more than I would trust a jury from Marshall.


You're attributing motivation, though, based on no evidence.


It's a hunch, as I said. My evidence is my own experience, but that's known only to me, to be fair. You have a better hunch? Let's hear it.


My hunch is the jury really did try to judge the case on its merits. I think it's a lot more likely than your hunch.


This comment makes you the bigot.


And you think this because?


Because of the jury's decision.


Disgusting. This is one of the reasons Texas has such a bad reputation: Ignorant juries and judges in the pocket of patent trolls.


No Texas district is even in the top 5 for win rates for patent plaintiffs. You'd think if they were "in the pockets" of patent trolls, the trolls would achieve better outcomes there.

The actual reasons filing patent cases in EDTX is popular are:

• EDTX does not have a busy Federal criminal case load. Criminal cases have higher priority than civil cases. If you try to litigate a complex civil case in a district that has a heavy criminal load (e.g., anywhere that has a lot of drug trafficking), it can be nearly impossible to get any court time.

• Patent cases are complex. If you have a judge with little experience with patent cases, things will go slow. So, people like to file in districts that have a few judges with patent case experience.


http://www.technologyreview.com/news/405259/a-haven-for-pate...

http://gizmodo.com/5824912/who-is-really-snuffing-out-americ...

http://www.wired.com/gadgetlab/2011/05/app-store-patent-trol...

Damned near all patent troll are based in hickville towns. It is not coincidence and it is not because the judges are "experienced" with patent cases. It is because those judges side with the plaintiffs.

"No Texas district is even in the top 5 for win rates for patent plaintiffs. You'd think if they were "in the pockets" of patent trolls, the trolls would achieve better outcomes there."

Because they shouldn't win any of these software patent cases. We're talking about trolls...businesses whose only purpose is to shake down people who build real products for real people. Every damned one of these cases should be laughed out of court. They go to Marshall because they won't get laughed out of court.


> No Texas district is even in the top 5 for win rates for patent plaintiffs. You'd think if they were "in the pockets" of patent trolls, the trolls would achieve better outcomes there.

Not necessarily. If all the plaintiffs with poor-quality patents sue in that district (and they mostly do), those losing cases will pull down the patent plaintiff win rate for the district.

So it could still be the most patent-plaintiff-friendly district, even if the win rate is lower there.


A bad reputation among who? Maybe in your insular circle, but certainly not for the majority of middle-class Americans. It has the highest in migration rate for a reason.


Yeah, I live here (Austin; spent 10 years in Houston, too). I love Texas.

But, Texas does have a reputation for being backward, regressive, racist, and willfully ignorant. It was Texas State Board of Education that led to a decades-long battle over evolution. If that's not embarrassing, I don't know what is.

Texas also just passed a law that will shut down all but 4 (maybe 5) of the health clinics that offer abortion in the entire state. Those clinics are also where a lot of folks get birth control, STD testing, and often where poor women go for gynecological care.

Texans will spend 15% more on healthcare because of the stubbornness of our governor. Whether one agrees with Obamacare or not, it's pretty nasty to intentionally screw over poor people out of nothing more than spite.

Texas definitely has a bad reputation. And, it deserves that bad reputation.


As a native Texan (I've lived in the Houston area for about 26 years), I agree with most of what you say.

RE: the clinics, instead of closing, could those clinics continue to offer the other services and simply stop offering abortions? I feel like it's throwing the baby out with the bath water to just shut down altogether. Perhaps I am just misunderstanding the legislation, so please correct me if I'm wrong.


The hell of it is, we've still got one of the strongest economies in the US, especially if you're looking for more traditional blue-collar labor.


Luckily some of those things are improving. The SBOE just voted in real science textbooks and our asshole governor isn't running again.


First of all: News != Truth

I do not belive all Texans (or even the most of them) are as bad as one might think, but the tiny bits of information we get about Texas paint an ugly picture.

We do not get Reports like "Things are going well in Austin!". In the internatiol news reports. We get reports like "Stricter abortion laws, force clinics to shut down", "Armed Militia hunting illegal imgrants at the Border", "Patent troll wins in Texas", "...".

Texas is a great target for critics all over the world:

Texas is well known and is closly associated with Cowboys, strict laws, and the death sentence.

Liberals have someone, to bash and local conservativs are glad that critics get distracted by someone far far away.

So I´m sorry Texas reputation is bad, not only among IT folks, and not only in small hardcore leftist cells.

I do _NOT_ say that all this true. Hell, I would be shocked if it really was!


So do you expect everyone to understand how the ssl handshake occurs?


No, and that's one of the problems with our patent system.

But, in this case, all they had to do was judge the difference between the inventor of public key encryption and a paid shill for patent trolls. The expert witness on the side of the troll is a guy who does this for a living; the expert witness on NewEgg's side was Whit Fucking Diffie. The "Diffie" in "Diffie-Hellman".

There's a reason patent trolls have all set up shop in this backward little Texas town. It's biggest industry is stifling innovation for the rest of the country.


The average American is going to find Whit Diffie to be an ass.

I mean no disrespect to the man. I hold him in high regard. But watch an interview with him and tell me that you think most people are going to find him to be a humble and appealing man.


This statement (thanks for providing a concise version of it) sums up the problem with the whole idea of a jury trial. It is completely irrelevant if someone thinks he is an ass. He is there to provide expert knowledge, nothing else.

"Lack of evidence? Who cares? He looks evil, must be a killer .."


No, that is not what they had to judge. I disagree with the outcome too, but the case was more complex than that. As far as I understand, part of the problem was whether or not this patent or RC4 had priority based on timing, which hinged on when RC4 and the method in the patent under litigation became known by enough people to be considered publicly known.


I wonder if that ever gets flagged in courts? You know, people who appear to be "professional expert witnesses", i.e. they make their living being an "expert witness" in court?


No, but I would expect jurors in a patent validity case to understand the concept of "prior art", which was demonstrated quite conclusively for this "invention".


This was my opinion too. I'm shocked that they didn't take it into consideration. Ironically the plaintiff tried to discredit Diffie by mentioning that the GCHQ "invented" the encryption even before Diffie did (this was mentioned in a previous Ars Technica article) which makes it prior art to the alleged patents too. A sad day :(


Therein lies one of the problems with software, patent law, and our judicial process: if the jury doesn't understand the underlying technologies, how can they possibly make an informed and responsible verdict?

I'd also be curious to see the results of an unbiased survey covering the public's awareness and understanding of patent trolls.

If only I could change careers and go into patent law... And help fight the good fight.


I, for one, expect juries to listen to Whitfield Diffie even if a lawyer keeps saying "but you don't have a master piece of paper".


Makes me wonder why we allow juries to hear patent disputes. Do they really understand patents and their terse wording? I would rather have a jury of individuals that would be able to read, code and test the same concepts that they are deciding on.


This famously came up during the Apple/Samsung suit, where the jury's foreman went around making misinformed statements about patent law in mainstream media: http://www.techdirt.com/articles/20120830/02063020214/


But some people claim the reason to use that district is because the jury pool does have knowledge and experience directly relating to patent matters. We see how that is turning out.

Although, I disagree with the theory.


I think Newegg was complacent, perhaps a bit cocky, bringing in the expert on encryption, pandering to the jury and going through a humorous exchange on his knowledge of it, thinking they had it in the bag after the shopping cart win.

And then the defense surprisingly declined at the end to rebut the damages claim of $5.1 million:

"Then came another stunner: Newegg rested its case. It did so without putting on its expert witness to rebut TQP's $5.1 million damage claim—even though documents in the court docket clearly indicate the company had such a witness."

[1] http://arstechnica.com/tech-policy/2013/11/newegg-trial-cryp...


They had planned to appeal anyway if they lost. Getting a damage award reduced on appeal is relatively common. And the problem with taking about the award amount after arguing that the patent is flat-out invalid is that one can seem to be conceding the infringement argument.

IANAL, but it seems like a reasonable gamble to me.


Newegg's strategy is to invalidate patents in order to discourage future litigants.

Just winning a cheaper verdict today won't reduce their costs in the long run by much. The PTO issues hundreds or thousands of new patents every year on business processes Newegg is already using so there's no limit on potential future litigation.


Could NewEgg simply be wanting to escalate their appeal to a higher court, and thus have their eventual verdict carry more weight? This operates on the gamble that NewEgg believes they would be eventually triumphant and that the cost of a longer fight is less than the damages of a lower court. (Speculation, but perhaps reasonable, given NewEgg's previous victories.)


Don't forget going to a higher court will likely get the case out of that district's court.


"Why Patent Trolls Worldwide Love Marshall, Texas" -- http://www.techdirt.com/articles/20060203/0332207.shtml

Nearly 8 years ago. Unfortunately nothing whatsoever has changed.


Doesn't this just motivate startups to incorporate somewhere where software patents aren't enforced, like New Zealand?

http://www.cnn.com/2013/10/01/business/10-best-places-to-sta...

I mean at the end of the day this lack of timely reform is fundamentally making people look for asymmetric ways to entirely avoid problems. Is that the way society should be driven? I think that is an unstable driver of future events --- a society that cannot reform itself in a timely manner, that cannot properly forecast events and repercussions, is a society that is forgetting it's responsibility for balancing itself.

I really do not like this behavior; it is abhorrent of a society that can be a seer. I mean there is the usual belief that we are all equal and deserve equality --- but that cannot happen as long as we inherit citizenship, wealth and networks. It is a nice belief but simply cannot be rendered in any sort of predictable manner.

This creates a situation. Their are private discussions on the ongoing nature of patents --- but I feel that more than anything people are forgetting that as the point of a corporation is it's superhuman predictable nature, that the further antagonization of new corporations will balance itself not with a mutated form of socialism but with an asymmetric alliance of corporations - one which favors unpredictability and an increased rate of change.

Wealth and the rate of innovation are separate --- and that fiction will reveal itself at a much faster rate if proper steps are not taken in a timely manner.


Not really. You're going to want to sell your products in the US anyhow; the New Zealand market is tiny compared to the US market. If you sell your products in the US market, you have to play by the US's patent rules or your products won't be able to be imported (but as Samsung has found out, popular US based companies like Apple can get federal government intervention to veto an import ban on their products, but Samsung can't do the same: http://www.bloomberg.com/news/2013-10-08/samsung-loses-bid-f...).


What if the real money is in B2B and this is simply going to push the expenditure into a special trade communication zone? Are American companies going to be banned from certain expenditures? Is is it possible that people would create a proxy corporation to leverage the service in different areas?

I'm probably acting like an idiot. But I mean I think this just is creating a recipe for crazy lawyers to try some shit on someones dime.


In the future the argument will be that with both patent trolls and government spying that doing business in the US is a bad idea in the long run.


There's some rather large markets outside the US too!

How much better is the patent landscape in the EU? I've heard conflicting reports.


> "I feel fortunate to live in a country with a judicial system like this where a jury can decide these things," [Jones] said.

Of course he does. It's the very judicial system that presented him with an easy $45m. He is a parasite (quite literally) and he knows it.


Indeed, he might as well have said "No other country would let me get away with the shit I'm pulling over on people right now." This whole situation is quite disappointing. Kudos to Newegg for trying, at the very least.


Here's coverage from the local paper.

http://www.marshallnewsmessenger.com/news/online-retailer-ne...

Seems to be more of a TQP slant to it.


Thanks for that. It describes the sort of reasoning very well that the plantiff's attorney knows appeals to people in the area:

> Fenster described the inventor of the patent, Michael Jones, as a hard worker.

> “He doesn’t have all these fancy degrees,” said Fenster. “He’s a hard worker, creative, smart, an innovative guy, and he loves technology. He’s great at recognizing problems of the future and finding solutions.”

The article is entirely one sided and reads as if the plaintiff himself wrote it. As it is the only exciting thing happening in town, many of the jury member's family and friends will be reading articles of this sort during these trials, representing only one side of the case.-

Amazing that the article notes the patent was awarded in 1995 and fails to mention that RC4 was invented in 1987.


> “He doesn’t have all these fancy degrees,” said Fenster.

I find it funny that Fenster, after praising Jones in this way, would attack Diffie's credibility by pointing out that he lacks a master's or PhD.

[1] http://arstechnica.com/tech-policy/2013/11/newegg-trial-cryp...


Wow, pardon my french, but what the fuck is this article. This sounds like a paid advertisement. "The company, owned by Erich Spangenberg, of Dallas, is seeking a reasonable royalty of $5.1 million." How much did they get paid for that line?


Used in this context, "reasonable royalty" is a legal term that describes the money that is to be paid due to the infringement. I don't believe the author was making a judgement call on the fairness of the award.


Oh! Okay, this explains a great deal.


I didn't get that. It spends roughly the first half presenting the TQP arguments and roughly the second half presenting the Newegg arguments. They sound like they might be quotes from the case's opening arguments.

If they are, I can see why TQP won. The TQP statements do a much better job of appealing to emotion, talking about "the little guy" who "doesn't have all these fancy degrees." A "hard worker" who created "the invention that makes [Internet credit card] transactions safe," and TQP saw companies "using it and not paying for it," so they "invested millions of dollars" and now "more than 125 companies, including PetSmart and Amazon" have taken licenses.

Can't say I like the results, but I can see why it worked. It tells a story that people love to believe.


I meant "slant" compared to the OP where Ars just calls TQP a patent troll straight up.


Kudos to NewEgg for the immense risk in fighting these.


Is the jury required to explain the logic of the decision, or it's simply "we decide this"? Rejection of such obvious proof of patent invalidity and existence of prior art looks pretty bad.


The topic of jury secrecy came up in the Apple vs. Samsung case. I can't find a link to the specific rules right now, but basically, jury deliberations are secret.


If there's no gag order, jurors will often talk about what happened. Now, whether to believe them or not is another thing.


So, did they explain here why they sided with the troll?


I have yet to hear of anyone coming forward. I guess the trial was not big enough news for someone to attempt to get their fifteen minutes of fame.


A few have commented how, internally to the IP law industry, the district is known to have a lot of specific domain experience with the argument of IP law. I can definitely understand why that would be attractive to patent-holding firms, in the way that Delaware is attractive to large corporations.

Most of us not in the IP industry think a lot of these suits are ridiculous, and it's because we don't make our lives by the reality of how IP law is structured.

These cases are ridiculous because IP law is ridiculous. It's not Marshall, TX's fault that IP law is ridiculous, and these juries very well may be the most knowledgeable jurours out there. That fact is dangerous, however, because this town's specialized experience makes it as if these companies are arguing cases in front of a jury of paralegals instead of representatives of the public, which absolutely will bias results.

Part of the reason we have juries is to balance the law with common sense. Common sense means something different when you're almost as knowledgeable about the law as the lawyers in front of you.


"It's not Marshall, TX's fault that IP law is ridiculous, and these juries very well may be the most knowledgeable jurours out there."

As a lifelong Texan I do believe you overestimate the knowledge base of people that willing live in East Texas. Most of the technical smart folks in Texas have migrated to Austin, DFW, San Antonio or Houston for real jobs. And most of them don't have a fucking clue about encryption.

East Texas is a dream situation for attorneys considering the average knowledge is lower than the rest of this state. Have this trial in Dallas and you might get a engineer from TI or a statistician from my company on the jury. East Texas is what we in the city refer to as the "Sticks". The per capita income is half that of even the older suburbs in Dallas.


I agree. I, for one, am tired of seeing this nonsense that the jury pool in that district has a high-level knowledge and experience with matters pertaining to patents.

Patent trolls want that district because that's where they win the most. It's similar as to why they avoid certain districts, because that's where they lose the most.

If another district had the reverse stats, where a large number of patent suits are filed but patent trolls lose 80% of the time, you would have a district that had a "high knowledge base" in the jury pool. Patent trolls would avoid it like the plaque, despite having such a supposed intelligent jury pool.


Depressing, but this might be a good time to donate to those fighting for patent reform, like EFF.org


How can your average startup and company owner rest assured that they're not unconsciously walking into a patent troll's lair? I might be unknowingly infringing patents nobody has heard of (except companies like these).

Business idea: a service that investigates your stack (with your permission) and verifies that you're not likely to be sued.


Mission impossible, as any business that operates is likely infringing on thousands, it not tens of thousands of patents every single day.

Patent law has transformed into basic extortion, and it's interesting (for some definition of interesting) to see that such extortion is actually legal in the United States.


I agree, at this point if you do anything tech related you are infringing somebody's patent on something. Whether you get sued or not depends on how much money you have.

As for the legal extortion using lawsuits. That's an old game in the US, there are people who make an active living out of suing somebody for something and offering to settle. Get a copyright infringement letter from somebody? I guarantee you that the settlement offer will be much less than defending yourself in court, even if they are mistaken in their accusation. It's an industry that people have been abusing for years, if not decades.

The courts themselves have to do something to stop this but I see no signs they are interested in reducing the need for more resources to be spent on things the courts need to address these cases.


On the flipside then, a business that investigates a company's potential patent violations and makes them known to patent holders, but offers companies a paid way to opt out from their investigation (beforehand) sounds much more likely (and much more ignoble)


its hard to guess what trolls will do. You could come to Europe.


What about Australia, Canada or New Zealand? And what happens if you would like to offer products and services in the US(which is a huge market). I'm assuming just like Samsung they are still liable if they want to sell something.

I'm genuinely curious and concerned.


Offering products in the US is a problem, so Europe is perhaps more attractive as the market is larger...


Why are patent disputes resolved by laymen (juries) rather than experts in law and the area of study of the patent itself? I just don't see how people completely unfamiliar with the subject matter at hand can be expected to understand highly technical arguments necessarily to determine patent validity.


Who would judge whether someone was truly an "expert" in the area of study?


Why not judge by objective metrics, like whether the expert's name is included in one of the oldest and most important protocols in the area of study?


At the end of the day, real people have to choose which objective metrics to look at, and real people then have to look at those metrics and make the actual call.


Judges would be perfectly capable of doing so.


Can we put up billboards in East Texas letting potential jurists know what the stakes for the country are?


It's getting late and I don't really have the energy to dig into this patent (http://www.google.com/patents/US5412730), but on a cursory reading I don't see how it differs from the encryption work that Claude Shannon and Alan Turing were doing during World War 2, later embodied as http://en.wikipedia.org/wiki/SIGSALY ... is it just because it transmits the data in "blocks"? Pretty low bar for novelty, there.


That's terrible but I feel like they will win once they appeal the decision.


To put it bluntly, that fucking sucks.


As a person with a computer science degree and years of experience in the software industry, I would love to be chosen for a jury like this so I could do my part in smacking down a troll. However I realize this will never happen precisely because I actually know something about the subject. Sadly, jurors are chosen for their ignorance and gullibility.


Since we can't seem to stop these horrible patent trolls, perhaps they could be reined in with a law that limits how much damage they can do. If a new law limited these sorts of claims to a grand total of 10% of a company's gross sales for the year, a small business could survive these kinds of attacks without having to pay millions of dollars for lawyers. If a business was attacked by multiple patent trolls, then those trolls would have to fight each other in court as they each argued that they deserve the lion's share of the capped 10% of the company's gross sales for the year. Since our current patent system is being thoroughly abused, the question we should be asking is: What can be done to limit patent trolls so that small businesses can survive? Because right now it is very lucrative to be a patent troll, so in the future, we could wind up with a ton of them. It's not a bright future.


Unless you got sued by 10 trolls.


There is no way in hell I'd start a company in the US. This BS is absolutely ridiculous. I can't imagine the thought of constantly living in fear I'd get sued for millions because I was using a fax machine, or some other ridiculously common piece of technology.

It doesn't help that juries are apparently the dumbest people on earth.


This is sad but not surprising. The game is stacked against the accused (they either pay a lot to defend themselves or pay in an effort to get the case to go away) and then they have to deal with venue shopping (Texas).


Yesterday I was reading an article about this case that stated Newegg didn't even bother to call their witnesses to dispute the amount of damages that would've been caused by their patent violation. It gave the impression that they were so confident that they had roundly destroyed the plaintiff's arguments that they didn't even bother to follow standard operating procedure for how to fight these types of cases.

On one hand, it's yet another nail in the coffin of innovation in our country. On the other hand, shame on Newegg's lawyers for being so hubris.


I was confused by that as well. I agreed that, from what I read, that they made the plaintiff's arguments look quite silly. I would say the plaintiff's lawyer half argued Newegg's case for them with his whole a patent is still valid if prior art was a secret thing.

My current thought was they planned to appeal from the beginning to get it out of that district. Why waste time in a district you know there's an automatic 80% chance you're going to lose?


"I feel fortunate to live in a country with a judicial system like this where a jury can decide these things"

I still feel fortunate to live in this country but the dysfunctional patent system has nothing to do with it.

The status quo is this: When you receive a letter from a patent troll, you're already out at least $50k or so, possibly several $100k or even more if you decide to fight on longer. You can receive such a letter simply for scanning and printing a pdf file, or operating a shopping cart on your site.

This situation must be fixed.


I'm curious if these juries have any college education.


You're implying that their conclusion is the result of them being uneducated? Pretty sure it's the result of ideological bias, not intellectual ability or knowledge.


No I meant it in regard to being taught critical thinking.

College isn't a guarantee of being able to process things that way or the only way to acquire such habits, but it is a good indicator.


Patent trolls are certainly a problem, but realistically you can't have laws without someone trying to abuse them.

I think it might be more effective to attack the problem from the other end: making sure patents like don't get issued in the first place. Maybe it's not reasonable to expect every jury to understand the basics of encryption. But it is reasonable to expect the patent office to understand prior art in cryptography.


I've never had the pleasure of serving in a jury. How does it work? I have been under the impression that all jury members must agree on a single verdict? I know for a fact that I would not agree with this verdict. And I can't rationalize finding against Newegg here. Can someone who can see the other side (whether or not you agree) explain it here?


You're thinking of criminal cases. Many civil trials only require a certain majority (say, nine of twelve) to find a verdict.


Ah! I didn't know that. And of course most (all?) of these cases are civil cases. That makes much more sense to me, thanks!


Stupid question to those who know the US law: theoretically, would it be possible for Newegg to refuse to do business with residents of Texas, so it is impossible for other conmpanies to sue them in Texas?

To other commentators: no offence meant for people of Texas, if it is how it works, it is just cold-blooded business decision, nothing more.


Companies in Texas can sue anyone they want as long that other entity is under United States jurisdiction.


Isn't $2.3m negligible for the size of companies involved and even compared to the legal expenses for this case?


It is, the more important point is that going forward this judgement has set a precedent that can be used to win or leverage in future situations.


I'm beginning to think that a sniper rifle is the best answer to these trolls.

Props to Newegg for fighting the good fight.


Does the jury for a highly specialized patent case exist and function in largely the same way as a jury for other trials? Namely, "peers" instead of educated individuals on the particular topic at hand?

If that's the case, the United States needs some serious judicial reform.


By extension, would you prefer that a panel of doctors preside over malpractice cases?


Yes, juries are selected just like any other trial. They are educated on the relevant law and case law by the presiding judge and expected to serve simply as "finders of fact".

I'm not sure I agree that this is the actual problem with the patent system.


Guidelines | FAQ | Lists | API | Security | Legal | Apply to YC | Contact

Search: