
Newegg sues patent troll that dropped its case - bane
http://arstechnica.com/tech-policy/2016/01/newegg-sues-patent-troll-that-dropped-its-case/
======
netcan
My bias is that I think patents are over-used, over-granted & over-litigated.
I think the system is fundamentally broken in favor of incumbents, lawyers,
the wealthy. Between the brokenness of the systems these days, and some
fundamental mistakes in original the assumptions about what a patent system
would do, I think it makes a mockery of the stated intention of patents, to
promote innovation. On patent trolls, I think they're an ugly boil that pops
up when the underlying system is bad and the running of that system is worse.

So FWIW.. I have an opinion going in. Disclosed.

All that (verbosely) said, I can't join into the delighted cheering wen I hear
about a broken and unfair legal system where "my" side is getting the better
of it.

This whole system of cherry picking courts, maneuvering, intimidation… When
the normal legal strategy is to bury the opponent in legal bills for years
while psychologically piling on weight via drawn out legal processes, we
(anywhere, I'm not american) do not have a judicious legal system. It's not
fair. It's not justice. It's not doing a good job and it's there for lawyers
and their wealthy clients. Newegg might be in the right, but that's not why
they're winning. They have more money, or better lawyers or whatnot.

What if you don't have the money, disposition or bad ass legal team to fight
back, in a bullshit rules fight?

I'm offended.

~~~
ohitsdom
From the article: "Newegg's lawsuit asks only for a judicial ruling of non-
infringement, not money damages."

What is not fair about this?

~~~
RogerL
As the OP wrote, that you have to have the financial wherewithal of a Newegg
to have any hope of fighting these patent troll lawsuits.

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hellofunk
This is very delightful to read. I can imagine the casual off-the-cuff remark
that one of Newegg's lawyers made over coffee one morning when they heard the
news that their adversary had dropped the case.. "ha ha, they didn't know what
they were in for, no wonder they pulled out... (pause, and a sip of coffee)..
heck, we should probably just sue them for dropping the case." laughs all
around the table... then, everyone silently staring at each other.

~~~
achow
Agree, very delightful! However, the backstory is little more calculative..

"Newegg Chief Legal Officer Lee Cheng says the move is necessary since Minero
dismissed its Texas lawsuit without prejudice, meaning it can refile the case
at a time of its choosing.

Cheng noted that Minero continues to litigate against other retailers that
sell Rosewill-branded products and that Newegg may have defense obligations to
those other companies. Minero continues to press its case against more than 20
companies, with the defendants including Office Depot, Walmart, and
Amazon—three big retailers that sell Rosewill products.

Newegg's lawsuit asks only for a judicial ruling of non-infringement, not
money damages..."

[http://arstechnica.com/tech-policy/2016/01/newegg-sues-
paten...](http://arstechnica.com/tech-policy/2016/01/newegg-sues-patent-troll-
that-dropped-its-case/)

~~~
hellofunk
I don't believe it. My dramatization of that moment in time is much more
movie-accurate, and therefore, much more believable.

~~~
chris_wot
Also, Newegg have always stated they would fight every single patent case to
the death. And they haven't just stated that, they've gone ahead and done it.

That's actually not only awesome, but smart. You do _not_ want to sue Newegg
for patent infringement. Notice how fast that company dropped their patent
suit? Unfortunately for them, Newegg never, ever gives in. Ever.

~~~
PhantomGremlin
_Newegg have always stated they would fight every single patent case to the
death_

Blue Jeans Cable took much the same approach to Monster Cable. The response
was an all-time classic. I've posted snippets here before but can't resist
doing it again:

    
    
       if you file on this sort of basis, you are in
       Rule 11 frivolous-claim territory
       ...
       You are required, as a matter of legal ethics,
       to display good faith and professional candor
       in your dealings with adverse parties, and you
       have fallen miserably short of your ethical
       responsibilities
       ...
       Read the patents narrowly, and Monster loses;
       read them broadly, and Monster loses.
       ...
       I spent nineteen years in litigation practice
       ...
       I am "uncompromising" in the most literal sense
       of the word. If Monster Cable proceeds with
       litigation against me I will pursue the same
       merits-driven approach: I do not compromise with
       bullies and I would rather spend fifty thousand
       dollars on defense than give you a dollar of
       unmerited settlement funds.
       ...
       Not only am I unintimidated by litigation;
       I sometimes rather miss it.
    

[https://news.ycombinator.com/item?id=9284093](https://news.ycombinator.com/item?id=9284093)

~~~
wiredfool

       Not only am I unintimidated by litigation;
       I sometimes rather miss it.
    

That is one of the better lines to ever be written in a legal letter.

~~~
ibmthrowaway271
> That is one of the better lines to ever be written in a legal letter.

Along with: [http://www.lettersofnote.com/2013/08/arkell-v-
pressdram.html](http://www.lettersofnote.com/2013/08/arkell-v-pressdram.html)

------
gcampos
Is not the first time newegg goes after patent troll. I think what they are
doing is amazing, but unfortunately a lot of small companies don't have the
resources to do the same

~~~
_ikke_
I think that's why Newegg is doing this. They try to invalidate the patents of
patent trolls so they can't abuse them against smaller companies.

~~~
morninj
But Newegg isn't suing to invalidate the troll's patents. Newegg is asking for
a judgment saying that Newegg hasn't infringed the troll's patents.

~~~
drzaiusapelord
I agree with this, but there's probably a side-effect of building up a library
of case law that can be used in the future by all for patent troll disputes.

------
a_e_k
Interesting. I never knew that Rosewill was their house brand. Makes a lot
more sense seeing all their products there and gives me a bit more confidence
in buying Rosewill in the future.

~~~
spb
Really? I know you can buy Rosewill on Amazon.

~~~
notnarb
Second sentence in the article:

> ... dropped its East Texas lawsuit against Newegg subsidiary Rosewill ...

And later on:

> Beyond the possibility of being sued again, Cheng noted that Minero
> continues to litigate against other retailers that sell Rosewill-branded
> products and that Newegg may have defense obligations to those other
> companies.

------
sethbannon
Could be an interesting tactic to increase the costs of patent trolling. No
longer is merely dropping a lawsuit when a company pushes back a way out --
now the patent trolls also have to deal with a separate litigation in a far
away jurisdiction. I hope we see more of this.

------
sixQuarks
Newegg, fighting the good fight. I try to buy all my computer products from
them.

~~~
mc32
Speaking of, what if they put up a check box at checkout where buyer could opt
in to donate amount X or percentage of their total Y and let that go into a
general "fight patent trolls fund". Even get other sellers to join "the
consortium" \--with oversight, of course.

~~~
EvanPlaice
Please don't. The last thing we need is someone to get the idea that we need
more dedicated non-profits to fight tasteless legal battles.

Supporting their business is a better option in the long-run. Hopefully, their
success will signal to other companies; going out of your way to do the right
thing _is_ a good business strategy.

~~~
mc32
My thought was that a united front would pose a disincentive for trolls to
think of launching patent attacks against weaker players who don't have the
resources a NEgg has.

~~~
EvanPlaice
In principle, I wholeheartedly agree. In a perfect world that would be a great
solition.

In reality, non-profit groups will inevitably grow in scope relative to the
ambition of its leaders and/or accessibility to easily acquired sources of
funding.

At some point the organization will grow the the size where it'll have to seek
funding via membership dues and/or direct sponsorship.

The 'we stand up for the little guy' will become a marketing facade to justify
the organization's existence. Meanwhile, membership and the protection it
provides will be carefully meted out and sold to the highest bidder.

NewEgg is doing something much more beneficial overall. Instead of building
alliances and hedging resources for an impenetrable defense. They're saving
all that wasted effort by going on the attack.

They accepted a much greater degree of risk at the start but legal policy is
relativistic. The more they win, the more they will win because they can use
the outcomes of prior casses to support their arguments.

In a way, their success is literally writing the future law of patent
litigation and filling in all the gaps that the trolls have been aggressively
exploiting for years.

------
danielki
This might be a naive question, but why has there been no strong push to
reform patent law in a way that eliminates non-practicing entities? It seems
like it would be wise to have a law that a patent expires if the company who
holds it goes a certain length of time (2 years, perhaps) without producing a
product covered by the patent or transferring it to a company who does.

Would such a law increase innovation (companies are more willing to build
products without fear of being sued by patent trolls) or decrease it (patents
being less valuable might decrease R+D investment)? My hunch is that it would
increase innovation, but I'm not completely sure.

~~~
kllrnohj
The claim is that it would hurt small investors as they start out life as a
non-practicing entity.

Which is really what patents are for, to give the inventor time to become a
practicing entity before a large company can copy it. Just that the world
doesn't work like that anymore, and patents are now abused by large companies
to hurt the little guy.

~~~
lytol
IANAL but my understanding is that patents cover the implementation not the
idea. If you aren't capable of practicing (yielding the product), you probably
shouldn't be holding/filing a patent.

~~~
kllrnohj
Let's say you invent a doodad in your garage. You have the implementation, you
have a working device, but you don't (yet) have a product you can sell. You
are unlikely to be setup to manufacturer this, so you'll you need to find a
partner to produce that doodad. Patents protect you during this process, so
that a manufacturer can't just go "oh cool we'll not pay you and instead just
go do this under our house brand without you"

At least that's the theory. The reality is it's increasingly unlikely you'll
be able to invent anything physical by yourself in a garage anymore in the
first place and things like software have no barrier to mass distribution like
physical goods do.

------
outworlder
Well, if that's a publicity stunt, it totally worked with me. I'll search
Newegg before Amazon now.

------
klochner
In addition to being aligned with business strategy, this is a great
recruiting strategy as well.

I'd be giving Newegg a call if I were a patent attorney looking for my next
gig.

------
kelukelugames
A few news articles say Minero Digital is a shell for Intellectual Ventures.
Can someone please help confirm?

~~~
ascorbic
According to this, IV transferred the patent to Minero in April last year:
[http://arstechnica.co.uk/tech-policy/2015/09/nest-ceo-and-
ex...](http://arstechnica.co.uk/tech-policy/2015/09/nest-ceo-and-ex-apple-
star-are-inventors-in-patent-troll-suit-over-usb/)

------
chjohasbrouck
I'm not a lawyer, but my understanding of patent trolls is that they make all
their threats and legal actions through shell companies they can light up and
shut down for a few hundred dollars. How much good does it do to go after
them? Is Newegg piercing the corporate veil, or are they just trying to
invalidate patents?

Aren't there tens of thousands of bad patents? Wouldn't it cost billions to
invalidate them all, and by the time you were done there'd just be another ten
thousand new ones?

I think what they're doing is great, but I just wish it wasn't so sacrificial.
Does it make economic sense for them to do this? As long as it doesn't, the
primary focus should be on legislation.

~~~
bdcravens
They're trying to get invalidation of patent on record. And it does make
sense, as plaintiff can refile (ostensibly after they sue a few others and get
precedent in place)

~~~
morninj
Where do you see Newegg asking for the troll's patent to be invalidated?

~~~
bdcravens
Just responding to question of motivation.

------
leeoniya
glad to see this is where the delta between amazon and newegg pricing goes.

~~~
blahedo
I just bought a bunch of parts and I got them all from newegg, specifically in
support of them fighting the good fight on patent trolls. In nearly every
case, newegg was a _little_ more expensive than at least one other
supplier—but not by very much, and totally worth it. (Nice side benefit:
ordering all the parts from one place meant the orders were aggregated into
less deliveries....)

~~~
re_todd
I haven't ordered from newegg in a couple years, but this will motivate me to
start buying from them again.

------
gist
> Newegg Chief Legal Officer Lee Cheng says the move is necessary since Minero
> dismissed its Texas lawsuit without prejudice, meaning it can refile the
> case at a time of its choosing.

To me this sounds like self justification by the legal staff at Newegg. Most
likely the troll is away for good. If they come back at that point engage
legally with them. There is a cost to any litigation and this could also
backfire. A troll who comes after them and knows that they sue even when a
case is backed away from (regardless of prejudice) will be less likely to drop
the case at that point.

The other side to this of course is the hope that the troll won't defend the
suit so they have bought themselves some insurance. However it's unclear
exactly why that matters if the probability of the troll returning is low. Why
would they return? Why not just go after an easier target? Newegg has already
proven their point.

~~~
tyree732
> A troll who comes after them and knows that they sue even when a case is
> backed away from (regardless of prejudice) will be less likely to drop the
> case at that point.

Perhaps, but it also serves to deter future trolls from engaging Newegg in
court over patents. Newegg is making it clear that if you sue them over a
patent, that suit is going to be taken to a verdict, whether you like it or
not.

------
yati
> "...Now that they have started the litigation, it would be irresponsible for
> Newegg to not finish it."

Cheng is a badass :)

------
PhasmaFelis
Why is Newegg the only company I've ever heard of in any industry that does
this? I know small companies can't afford it, but there are a lot of companies
bigger than Newegg. Obviously it costs money in the short term, but the
benefits in the long term seem clear enough.

~~~
rhino369
Newegg gets sued more than most companies because it's the big seller of
imported products made from companies with no US presence. Since you can sue
newegg instead that is a bigger target.

Most midsized or small companies don't get sued nearly as often. So they don't
have a shot at building a reputation like newegg does.

Another reason is that Newegg is mostly targeted by small trolls. You aren't
going to get a billion dollar verdict against newegg. They don't sell enough
of any one product for that.

So newegg has leverage too. The trolls don't want to go to trial blow a
million dollars on legal fees then win 500k in damages.

But trolls are willing to trial for a 20% shot at a 200 million dollar verdict
against Apple or intel. And Apple and Intel aren't willing to risk a trial
with a 20% chance of 200 million loses if they get a settlement offer for 10
mil.

But companies like Apple and Intel do fight a huge number of troll cases. So
little trolls with shit patents don't go after the big dogs. They know they'll
lose. Newegg just adopts a Stalingrad approach to appear like a big dog.

------
kinofcain
Interesting, if slightly irrelevant: The patent lists Tony Fadell and Steve
Perlman as inventors.

[https://www.google.com/patents/US5675811](https://www.google.com/patents/US5675811)

------
bronson
How the heck does a weak patent filed by General Magic end up at a patent
troll?

~~~
ksherlock
After General Magic filed for bankruptcy, their patents and other assets were
auctioned off. (To Intellectual Ventures via Paul Allen). IV then sold or
rented it out to the patent troll. (IV protests their hands are clean but
won't say why or how their patents end up with trolls).

------
ryandrake
Remember, the patent system can only be abused if people participate in it. I
hope nobody here cheering for Newegg has benefited from their company's
"patent award" system (which many companies have, where they pay you a small
bonus for every patent you help the company get). You can't claim that
software patents are bad while getting paid for helping to write them.

