
Don't mess with Newegg - keerthiko
http://blog.newegg.com/patent-trolls-learn-mess-newegg/?cm_mmc=SNC-Facebook-_-SS-_-Blog-_-NA
======
mixmax
It seems to me that the legal system in the US is largely broken, and that
just about anyone can be sued if only you find the right grounds. Being sued
and defending yourself is enormously expensive which is what patent trolls
exploit.

Why not use this offensively against patent trolls? Find all sorts of ways to
take them to court, the American legal seems to have plenty of opportunities
in that regard. There are some problems with standing, but I'm sure that a
concerted effort could be effective.

Sue them into the ground with guns blazing. Sue them for everything from not
upholding workers rights, to misleading advertising and spelling mistakes.
Make them taste their own medicine.

The effort could be crowdsourced.

~~~
bsder
And the troll companies are always shell companies with nothing but the
patents. So, even if you win, the shell company will declare bankruptcy. This
is what changed the game. Before, two big companies generally had enough
patents that they would simply agree to cross license because they both
infringed one another's patents.

So, for the company being sued, it's a no win situation.

~~~
weland
IMHO, this should not be dealt with at a company level, since the shell
company is arguably not engaged in any economic activity: their juridical
entity is, essentially, worthless.

Instead, given the toxic economic climate the _people_ behind it create, this
should be transported into criminal charges brought against the make-believe
CEOs behind the shell companies that specifically engage in patent trolling.
They're arguably pulling a con against a system designed by the state for
something completely different, and their con should be treated no differently
than, say, tax evasion.

I think the only reason why companies like these continue to flourish is that
the people behind them are entirely safe. No legal system will be able to
close down as many companies as they can open. So jail the motherfuckers, or
otherwise forbid them to take part in the economic system, and it's bound to
stop.

~~~
mcherm
> this should be transported into criminal charges brought against the make-
> believe CEOs behind the shell companies

Ah, but the original proposal was for individuals to file lawsuits.
Individuals cannot press criminal charges -- only the state (in the form of
the prosecutor's office) can do that. And the state can not (and SHOULD NOT)
use that power to go after individuals because we don't like those people, or
because we don't like who they work for, or because we don't like what the
companies they work for do.

THAT would be abuse of power.

~~~
dtech
It is fairly common, even necessary, for justice to go after the key figures
of businesses that engage in criminal behavior (e.g. Maffia, money laundering
companies). Otherwise it would be a type of behavior for which no-one can be
held (individually) accountable.

------
suprgeek
Awesome Principled Stand by Newegg! This is one of the reasons to support
buying from them.

However this only underscores how easy it is to sue over flimsy patents and
how expensive and time-consuming it is to go after and shut down these
horrible trolls. Add to this the fact that Patent reform was killed in the
Senate by Pat Leahy & Harry Reid (Both of whom are notorious supporters of
trial lawyers & pharma) and it is a net loss for the tech industry this week

~~~
mst
What fascinates me is how easy it is to fight _if_ you practice. Lee Cheng is
impressive, but I suspect his secret weapon is actually having fought a bunch
of such cases knowing he has a 'fuck them, they are going to lose' mandate. An
enemy who's very practiced at -not- settling is probably not something his
opponents know how to deal with.

~~~
calbear81
Newegg has always been against paying out even way back in the day when I
worked there. In the early days of patent trolling, someone sued us in a
printer-related lawsuit and they offered to settle for a small sum (VERY
small). Basically, the in-house lawyer said that it would cost more money to
fight it given his hourly wage but that the CEO was not going to pay if it was
a frivolous lawsuit. I see that the same principle has persisted now, a decade
later.

~~~
mikeash
It's strange that more companies don't see the long term problems created by
signaling that you're willing to spend money to settle frivolous lawsuits.
Another symptom of the corporate world's excessive focus on the short term?

~~~
tmerr
Not all companies have as much power as Newegg to fight back. I'm guessing it
does often make financial sense to just pay it, otherwise companies would have
turned the tables already. I don't think it's a lack of long term thinking as
much as it is a tragedy of the commons related situation.

------
dctoedt
The article is out of date -- in a good way -- on one point: It says that to
recover attorneys' fees from a troll, the winning defendant must show that the
troll acted in bad faith. The U.S. Supreme Court changed that rule last month,
easing the burden of proof considerably, and giving trial judges far more
latitude on that score. [1]

[1] [http://patentlyo.com/patent/2014/04/discretion-attorney-
liti...](http://patentlyo.com/patent/2014/04/discretion-attorney-
litigation.html), by patent law professor Dennis Crouch.

------
slaven
I feel it's really important for us, as consumers, to support companies like
Newegg. This strategy is really risky for them (despite all the good PR it
brings).

It's easy for patent trolls to just move onto different targets and avoid
suing combative companies like Newegg, but if we vote with our dollars maybe
more companies will see that they too should take a stand.

------
TheMagicHorsey
Lee is a hero. Most patent lawyers talk in very measured tones when it comes
to patent trolls, because they don't want to foreclose the possibility of
feeding at the money faucet themselves.

Lee doesn't give a fuck. He straight up calls them thieves and asshats. Baller
status.

~~~
zo1
Agreed. The first step to fixing any vague/grey problem is calling it by its
real name. If only we could hold our politicians to such a standard, patent
reform wouldn't be an issue as it'd already be fixed.

------
miles
Despite rarely buying from NewEgg (outside of the continental US shipping is a
bear), I'm signing up for their Premier membership simply to support them in
the fight against patent trolls. Their product photos and customer reviews
have also offered a lot of value to me over the years.

~~~
ElComradio
I think you've discovered the origin of NewEgg's stance: why order from Amazon
when you can buy from Newegg _and_ fight patent trolls?

------
ArtDev
I am a longtime customer of Newegg. No where will you find product reviews
written by such a dedicated base of geeks. Newegg customer service is also
really really good. I buy virtually all of my hardware on Newegg, even if its
a few dollars more. That said, I am an even more loyal customer after reading
this article.

------
tdicola
Wow I love that they're taking a stand, and got quite a laugh out of the
image. Definitely makes me want to support Newegg as a customer much more in
the future.

~~~
jerrytsai
+1

~~~
saturdayplace
Instead of posting a comment like this, it's generally better just to upvote
the comment you're agreeing with. The mods are trying to optimize the
signal:noise, and there's not much signal in a two-character comment.

------
thedaveoflife
The lesson from this article: PR can be an effective legal deterrent.
Publicize your victories.

------
takinola
It seems to me that there is a good way for the industry as a whole to address
the issue of patent trolls without waiting for legal reform by attacking the
economics of the business.

Trolls make money by simply 1\. Amassing patent portfolios (the only real
fixed costs for this business) 2\. Sending infringement letters to victims
(sorry, targets) 3\. Walking to the bank to cash the checks of companies who
cannot afford a legal battle.

Once a troll goes to court, the economics of the business start to fall apart
as the legal fees add up and eat into profits. Also, they risk invalidating
their patents which jeopardize future revenue streams.

It should be possible to create an alliance of companies (Apple, Google,
Yahoo, Microsoft are obvious candidates) that have an interest in a strong
ecosystem of innovation to put together a fund that makes legal defense grants
available to anyone in the mobile/web space who can demonstrate they have a
plausible defense case. The amount needed would not be large (less than $20
million a year should be sufficient to cover the entire industry) since just
the fact that every kid on the playground now has the ability to face up to
the bullies will reduce the bad behavior considerably.

------
Erwin
Cheng did a "AMA" on reddit -- here are all the questions & answers in a
convenient tabled form:
[http://www.reddit.com/r/tabled/comments/2693ur/table_iama_hi...](http://www.reddit.com/r/tabled/comments/2693ur/table_iama_hi_i_am_lee_cheng_chief_troll_hunter/)

------
finkin1
As the CEO of a small 5-person startup, getting sued by a patent troll scares
the shit out of me. Seeing Newegg take it to these asshats puts a grin on my
face. I'll be voting with my dollars by shopping at Newegg.

~~~
tempestn
Not that I blame them for it at all, but I'm sure the potential for
thisresponse isn't overlooked by Newegg when they decide to fight these suits.
That said, good on them. Far better to spend money building their brand by
fighting back against patent trolls than on run of the mill advertising. (And
in the best case scenario, like this one, fighting might not even cost them at
all.)

------
onedev
This is so beautiful, I am going to support the hell of out Newegg extra
deliberately from now on (e.g. buying stuff even if it's more expensive, takes
longer shipping).

I absolutely love this. Lee Cheng, rock on!

------
sgdesign
> Thanks to the efforts of Lee Cheng and his legal team, the Federal Circuit
> Court of Appeals ordered a trial court to reconsider its earlier denial of
> Newegg’s request for attorneys’ fees and costs in the patent infringement
> lawsuit brought on by SUS.

Wait, so what did the trial court conclude? Are they making the troll pay or
not? I feel like I'm missing something?

Also, isn't it worrying that they had to appeal in the first place?

~~~
jessaustin
IANAL: The trial court had found for Newegg on the infringement case, but had
not taken the additional step of awarding attorney's fees to Newegg. The
appeals court has now recommended that the trial court take that additional
step. The appeals court doesn't have time to wade through reams of legal
invoices. Actually the trial court may have been trying to avoid that as well,
but now it has no choice.

It's my impression that courts don't want to award attorney's fees to civil
defendants very often, because that would discourage litigation. I think it's
reserved for obviously "frivolous" cases. Therefore the need to appeal doesn't
seem like a problem.

~~~
yxhuvud
Living in a country where the default is that the loser pays (within reason),
I must wonder: Why is discouraging litigation a bad thing?

~~~
jessaustin
Siblings have plausible explanations. Another reason, however, is that we have
_so many_ lawyers, and they must be employed somehow, otherwise one of them
might take the judge's job. Why not employ the teeming masses in litigation
and/or the prevention of litigation?

~~~
rthomas6
Uh, because employing the teeming masses in production of goods that improve
the quality of life is better than jobs for their own sake.

------
hkmurakami
Personally, I love the fact that this title evokes the "Don't mess with Texas"
line, given that it's the East Texas courts that aid patent trolls so greatly.

~~~
digitalengineer
If it's mainly the Texas court, then why not go after that angle?

~~~
saryant
It's a federal court based in Texas, not a state court.

------
djb_hackernews
> the defense managed to move the trial out of the Eastern District of Texas,
> a jurisdiction that is known for favoring plaintiffs in patent suits.

They REALLY need to publish how they did that, because that'll help every
other company battling patent trolls.

------
ajju
Well done Newegg. From now on, Anytime I buy electronics, i am going to check
Newegg first.

------
us0r
Acacia Research has been at this for a long time now. I remember when they
went after porn. They claimed to own streaming media and thought the adult
industry would settle. While some did, one company took them up and won. If I
remember he said it cost them $500k to defend.

~~~
jacquesm
It cost them quite a bit more than that but they won anyway. That did not stop
acacia from extorting (or in some cases trying to) pick fights with smaller
entities. They then started to withdraw their cases if it became apparent
someone would actually fight back.

(I know this because I supplied a whole bunch of information in that lawsuit
and the defendants are customers of mine, Acacia also tried to sue TrueTech
Canada Inc but dropped the case when they realized that (1) I wasn't going to
budge and (2) the IP was all vested in the Dutch parent company, so the
'shell' effect worked to our advantage for a change. If they'd won in Canada
we'd have declared bankruptcy, opened a new office two doors down the hall and
continued business with a new daughter company. The Canadian subsidiary had
little to no assets, just desks and a bunch of computers.).

------
hollerith
Right now was a good time for me to learn that Newegg takes a principled stand
against patent trolls because I've been thinking of starting to buy from
Newegg because I keep on hearing bad things about how Amazon treats its
employees.

------
heyheyhey
> Most companies choose not to recover their legal fees in patent suits
> because prevailing defendants are required to demonstrate that a plaintiff
> acted in bad faith. This is extremely difficult to prove and it’s usually
> easier to just walk away and count your losses – unless your name is Lee
> Cheng.

Interesting. So if you're a patent troll, there is little to no downside to
constantly suing companies aside from the legal fees?

~~~
jliptzin
Legal fees? I would assume they have a team of full-time attorneys on payroll.
Since their legal fees are fixed, they're incentivized to use that team as
much as possible.

------
swang
NewEgg and Nintendo seem to be the only companies willing to actively fight
patent trolls. Anyone else?

~~~
tdicola
Adam Carolla is pooling funds to battle a patent troll that is suing him for
podcasting:
[http://fundanything.com/patenttroll?locale=en](http://fundanything.com/patenttroll?locale=en)

------
danieltillett
Does anyone know why these cases are so expensive to defend? They can't be
that complex given the troll basically has nothing. Could you not just hire a
junior lawyer out college for next to nothing and put them in charge of
running all the defences?

~~~
wtallis
They're expensive because the eastern Texas courts are so favorable to patent
plaintiffs that in order to have a meaningful chance for a win you have to
either get the USPTO to throw out the patent or get the case moved to a
different court (as Newegg did here). The former is extremely time-consuming
and expensive, and the latter is difficult and rarely successful. A direct
fight against the subject and claims is all but doomed to lose in those
eastern district Texas courts regardless of the content of the patent. And if
you do find a way to win, you have nothing to retaliate against or recover
fees from.

~~~
danieltillett
Why is it more expensive to run a case in East Texas with some junior lawyer
than anywhere else?

~~~
sounds
Because you will lose, regardless of whether you hired a junior lawyer or the
most expensive law firm in the world.

~~~
danieltillett
I don't think it is as simple as that as people do win in East Texas [0]. I
found it interesting that the latest troll shopping location is Delaware.

[0] [http://arstechnica.com/tech-policy/2013/01/east-texas-
courts...](http://arstechnica.com/tech-policy/2013/01/east-texas-courts-are-
back-on-top-for-patent-lawsuits/)

------
zinxq
Whenever I can, I buy from Newegg for this reason.

------
galaxyLogic
The big companies probably don't worry too much about the "trolls", and the
current legislation reflects that. They have the legal and financial resources
to defend themselves. The Trolls make life hazardous for smaller companies who
might go bankrupt because of them. For big companies it's probably just good
that smaller disrupting innovators get out of business sooner rather than
later.

------
throwaway7767
I really appreciate the NewEgg strategy in these cases. They're fighting the
good fight. And it's a great move to make the most PR splash from their
victories to discourage future trolls.

If only they shipped outside the US, I would give them all my business. :)

------
DigitalSea
We need patent reform now.

 _" their patented technology related to the registration of websites on
search engines"_ — this right here is conclusive proof the patent system in
the US is broken. Lets fix this now. How many legal/government resources have
been wasted because of trolls like SUS? Leave the judges to put real criminals
away.

Thank you for making a good example for the rest of us NewEgg. There are too
many people that are unable to defend themselves in situations like these, it
is great to know there are companies out there willing to fight (even if it
takes years and hundreds of thousands of dollars to win).

------
superuser
I'm a little surprised that patent trolls get such a bad rap on hacker news. I
would argue that patent trolls exists to protect the small inventors. Without
patent trolls, the big companies can easily infringe the small inventors'
patents knowing full well that the little guys can't afford to go up against
them in court. The patent trolls merely step in to enforce the rights of the
small inventors.

That is not to say that software patents are a good idea or should be allowed,
and one could certainly make the case against them, but that's a separate
issue.

~~~
queensnake
No, the difference is in the added word _troll_ , not simply a _defender_.
_Trolls_ are non-practicing, and produce nothing and protect nothing. I'm sure
a legitimate 'little guy' with a patent would get all the sympathy he deserves
here, unless perhaps, as you mention, it's a software patent.

~~~
superuser
I think you're missing the point. You can't distinguish between the patent
troll and the little guy inventor because their rights are one and the same. A
patent troll purchases the right to enforce a patent from an inventor who
would otherwise not have the resources to enforce it himself. It is that
right, the right granted to the inventor, that is being enforced. Without the
patent troll the inventor's rights would get trampled by the large
corporations. Hence, the patent troll is defending the small inventor's
rights.

The fact that the patent troll is not practicing the invention matters not.
There is no requirement that a patent holder practice the patent in order to
enforce it. I can assure you the big corporations do not practice all patents
they hold and enforce, many just get licensed out - and there's nothing wrong
with that. But there also shouldn't be anything wrong with the small inventor
doing the same thing, except for him it often requires the help of a patent
troll. The patent troll is just doing for the inventor what the big
corporations do for themselves, thus leveling the playing field.

------
rbanffy
Is there a "Patent Troll Response Command" to coordinate the response of
companies being sued and to facilitate the creation of groups to fight such
lawsuits together?

~~~
tim333
I was thinking that - or is there a site where you can post your troll letter
and be put in touch with the other companies that have received the same one?
Wouldn't be that hard to build. Does anyone know if there is one?

------
klunger
I'm American, but have lived in Scandinavia for a couple years now. When I
incorporated my bitty start-up last year, I could choose between incorporating
here or in the US.

Despite the higher tax burden, I ultimately decided to incorporate here. Why?
There were a lot of reasons, but the two biggest ones were: 1) I didn't want
to worry about patent trolls 2) I didn't want to worry about net neutrality
effecting my first users (we are starting local)

~~~
harryh
Are you sure that the biggest reason wasn't that you live in Scandinavia?

------
MrBuddyCasino
This is an interview with Paul R. Ryan, former Forbes CEO and now the guy
behind Acacia Research, the firm behind the Newegg patent law suit. Was
surprised he is not as slimy as I expected:
[http://vimeo.com/57723958](http://vimeo.com/57723958)

~~~
Intermernet
If you're a slimy character, and you want to get to CEO the slime has to be
inside, and invisible. These guys are _very_ smart, and _very_ manipulative.
Think evil Derren Brown and you'll be close to the mark.

------
galaxyLogic
In respect to SW patents isn't the recently renewed US legislation more a
problem than a solution. As I understood it, it is no longer who wrote a piece
of code that exemplified an idea first, but who first filed for the patent for
it?

------
the_watcher
I really wish NewEgg had shirts that looked better than the ones they sell.

~~~
tunap
I get plenty of compliments on my "Geek On" shirt. Of course, something more
subdued and pro would be nice...maybe even a collar?

I've been down on their services the last few years, lots of headaches and
noticeable lag in ship times... it feels like they had the IPO after all.
Also, I don't appreciate having to take the extra step/refresh to exclude the
'Marketplace' from my searches every time... drop-ship crap has sullied their
image, IMO. Anyway, I will recommence making them my 'go-to' e-tailer due to
this action & for their years of providing (mostly) exhaustive product images,
complete spec pages & informed reviews.

~~~
the_watcher
I meant the patent troll shirt. It's a shade of gray that makes it hard to see
the image, and I'd like one more obvious about what it's about.

------
joshstrange
I wonder if someone has patented the idea of sue for patents that you never
actually use...

Would love to see patent trolls sued for trying to sue for patents they don't
use.

~~~
thyrsus
Yup: [http://www.npr.org/blogs/money/2012/08/01/157743897/can-
you-...](http://www.npr.org/blogs/money/2012/08/01/157743897/can-you-get-a-
patent-on-being-a-patent-troll)

------
joshjdr
I agree with the principle presented here... but before we all hail Newegg,
I'll explain why I have not conducted business with this company since 2009...

Here is a letter I wrote Amex then, disputing a nasty transaction with this
company. ￼
[https://www.dropbox.com/s/8b8dg9diowqz48y/Amex%20Dispute%20R...](https://www.dropbox.com/s/8b8dg9diowqz48y/Amex%20Dispute%20Redacted.pdf)

This is real, and I won.

~~~
cryowaffle
Trust me, I am doing you a favor: Your redaction technique is very poor.
Almost every redaction you used allows us to see the tops and bottoms of the
letters which is enough to recreate all the hidden characters.

Partial redaction is no redaction.

~~~
joshjdr
Was there anything beyond that which would enable reconstruction of the data?
Just curious. I was only trying to share, and on a level which would enable
the audience to know it was real. Thanks.

------
shmerl
That's one of the reasons I avoid Amazon and prefer to buy on Newegg.

------
lazyant
Great but singing victory too soon, Newegg haven't won any money yet

~~~
Goronmon
>Great but singing victory too soon, Newegg haven't won any money yet

They even said that there endgame isn't even to win money in these situations.
They are just happy if they can get the other side to spend their own
resources/time/money more than they normally would want to litigating cases
like this.

------
Shorel
If only they would sell stuff to me (I'm not in the USA).

------
bsimpson
> "those asshats"

Lawyered.

------
fusionefredda
I hope for the patent trolls the same that happens to SCO

------
arjn
Newegg is my hero!

------
tyang
As a lawyer, I approve this message.

------
khaki54
apparently at newegg you can say asshat on the corporate blog. I like that

------
eklavya
We need more of this.

------
sidcool
Pretty bold move by Newegg.

------
mantis369
Newegg are cheapskates. The publicity from doing this pays far more than the
money they'd save by settling with patent trolls.

~~~
jeorgun
The fact that they're being rewarded for their actions doesn't mean that those
actions aren't laudable (especially when that reward consists of their being
lauded).

~~~
wutbrodo
The HN community collectively hasn't ever been able to grasp this concept;
apparently if a corporation has any possible benefit from an action, it MUST
be the motivation behind the action. It's a particularly delightful cop-out
because any positive action (including philanthropy) can be dismissed as a PR
move.

~~~
aidenn0
I vaguely remember reading about some philosophy where there was no such thing
as a selfless act, as you always get _something_ out of it, even if it's just
a warm fuzzy feeling inside.

That's just one example of why I find most of philosophy to be a complete
waste of time.

~~~
allanb
Relying on vague memories for such broad judgements. Seems like a sound
philosophy to me ;)

