
Jury: Newegg infringes Spangenberg patent, must pay $2.3 million - lukeholder
http://arstechnica.com/tech-policy/2013/11/jury-newegg-infringes-spangenberg-patent-must-pay-2-3-million/
======
sytelus
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!

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

~~~
rurounijones
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.

~~~
agravier
What is the variance? skewness?

~~~
gjm11
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.

~~~
agravier
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.

~~~
gjm11
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.

~~~
gjm11
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.)

------
gkoberger
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...](http://www.techdirt.com/articles/20121109/02321120982/meet-
patent-troll-suing-hundreds-companies-encrypting-web-traffic.shtml)

TL;DR: They're patent trolls.

~~~
MereInterest
>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.

~~~
arh68
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.

------
bradleyjg
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.

~~~
rdtsc
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.

~~~
codeka
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.

~~~
danielweber
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.

~~~
gknoy
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.

~~~
danielweber
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.

------
taspeotis
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.

~~~
kintamanimatt
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.

~~~
colechristensen
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...](http://arstechnica.com/tech-policy/2013/05/newegg-nukes-corporate-
troll-alcatel-in-third-patent-appeal-win-this-year/)

~~~
gcb1
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.

~~~
shiven
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.

------
zellyn
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?

~~~
jamesaguilar
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.

~~~
surrealize
> 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.

------
saryant
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.

~~~
jeswin
_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.

~~~
astrodust
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.

------
droithomme
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._

~~~
throwawaykf
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.

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

~~~
throwawaykf
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.

------
lifeisstillgood

      "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 :-)

~~~
hobs
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?

~~~
lifeisstillgood
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...](http://www.ted.com/talks/niall_ferguson_the_6_killer_apps_of_prosperity.html))

~~~
dreamdu5t
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.

~~~
gress
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.

~~~
dreamdu5t
> 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.

~~~
gress
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.

------
natch
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.

~~~
deelowe
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.

~~~
consultant23522
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."

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

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

~~~
SwellJoe
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.

~~~
droopybuns
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.

~~~
sgift
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 .."

------
brianobush
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.

~~~
machrider
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/](http://www.techdirt.com/articles/20120830/02063020214/)

------
micahgoulart
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...](http://arstechnica.com/tech-policy/2013/11/newegg-trial-crypto-
legend-diffie-takes-the-stand-to-knock-out-patent/2/)

~~~
erichurkman
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.)

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

------
meritt
"Why Patent Trolls Worldwide Love Marshall, Texas" \--
[http://www.techdirt.com/articles/20060203/0332207.shtml](http://www.techdirt.com/articles/20060203/0332207.shtml)

Nearly 8 years ago. Unfortunately nothing whatsoever has changed.

------
batgaijin
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...](http://www.cnn.com/2013/10/01/business/10-best-places-to-start/)

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.

~~~
lambda
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...](http://www.bloomberg.com/news/2013-10-08/samsung-loses-bid-for-
presidential-veto-of-apple-won-import-ban.html)).

~~~
batgaijin
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.

~~~
talmand
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.

------
linuxhansl
> "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.

~~~
EdgarVerona
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.

------
awwducks
Here's coverage from the local paper.

[http://www.marshallnewsmessenger.com/news/online-retailer-
ne...](http://www.marshallnewsmessenger.com/news/online-retailer-newegg-s-
patent-infringement-case-begins-in-
marshall/article_fe84fb88-636d-5c3f-a460-9abe0e4fbfc9.html)

Seems to be more of a TQP slant to it.

~~~
droithomme
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.

~~~
EdgarVerona
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?

~~~
msmith
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.

~~~
EdgarVerona
Oh! Okay, this explains a great deal.

------
pbreit
Kudos to NewEgg for the immense risk in fighting these.

------
shmerl
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.

~~~
nitrogen
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.

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

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

~~~
talmand
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.

------
mattlutze
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.

~~~
xradionut
"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.

~~~
talmand
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.

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

------
josscrowcroft
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.

~~~
ghshephard
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.

~~~
talmand
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.

------
Osiris
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.

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

~~~
khafra
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?

~~~
baddox
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.

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

------
defen
It's getting late and I don't really have the energy to dig into this patent
([http://www.google.com/patents/US5412730](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](http://en.wikipedia.org/wiki/SIGSALY)
... is it just because it transmits the data in "blocks"? Pretty low bar for
novelty, there.

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

------
scotth
To put it bluntly, that fucking sucks.

------
excitom
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.

------
ytNumbers
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.

~~~
coldcode
Unless you got sued by 10 trolls.

------
CalRobert
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.

------
RexRollman
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).

------
consultant23522
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.

~~~
talmand
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?

------
arbuge
"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.

------
ck2
I'm curious if these juries have any college education.

~~~
bdcravens
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.

~~~
ck2
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.

------
Totient
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.

------
zacinbusiness
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?

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

~~~
zacinbusiness
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!

------
mynegation
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.

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

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

~~~
josefresco
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.

------
CamperBob2
I'm beginning to think that a sniper rifle is the best answer to these trolls.

Props to Newegg for fighting the good fight.

------
kunai
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.

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

------
caycep
Were they expecting to set up a the criteria/grounds for appeal? If Newegg
accomplished that, then they hopefully met their objective. I think the goal
is to get it out of the Texas court and onto some place that is more
objective.

------
bane
Just in time for me to throw some money at Newegg while I build out a new
computer.

------
mkramlich
I stopped reading a few pages in when kept talking about meta/social/gossip
stuff rather that what the case was _actually_ about, what the patents were
about. Low S/N.

------
beaker52
Imagine where we could be if everyone openly shared everything they discovered
or invented. Just imagine a world where we co-operated instead of making life
harder for one another.

------
ChikkaChiChi
Marshall, Texas; population 24,751.

Definitely small enough for the entire town to know and understand that voting
in favor of a plaintiff today brings more money to your town tomorrow.

~~~
talmand
It's the county seat as well, so lots of legal people walking around with town
influence I'm sure.

------
droopybuns
Uhhh.... RC4 + SSL = broken cryptosystem, right?

We're not bummed about additional incentives to avoid this broken approach to
TLS, are we? This is actually a fucking good thing.

~~~
EdgarVerona
We're not bummed out because the cryptosystem is broken, but rather that every
victory for a faulty patent is a victory for the system around which faulty
patents are allowed to thrive (and strangle out others). Regardless of the
tech behind the "patent" and whether it's feasible or not, it's another
situation where a dubious patent has wrung money out of someone by exploiting
our vulnerable system.

------
rwbt
Does the jury give a detailed explanation beyond the judgement? Also how come
all these patent trolls are incorporated in Texas?

~~~
daliusd
A little bit information here:

[http://en.wikipedia.org/wiki/United_States_District_Court_fo...](http://en.wikipedia.org/wiki/United_States_District_Court_for_the_Eastern_District_of_Texas#Patent_litigation)

While it would be interesting to know why it happens in Texas.

~~~
talmand
It had to happen somewhere. Lawyers just like to go where they think they have
a better chance of winning.

You can see something similar on a local level.

Being accused of certain type of crime? You really want this judge.

Having an argument with your neighbor over a fence issue? Well, let's try to
get this judge because I know he doesn't like that guy's uncle.

------
loganfsmyth
We'll have to hope it goes better on appeal. I would be very interested to
hear the jurors reasoning.

~~~
downer96
If the glove don't fit, you must acquit.

------
codygman
Can we troll the patent trolls yet?

~~~
pistle
Not really. Arbitrage is already pretty advanced. The analogy to bitcoin
mining rigs and mining pools isn't far-fetched.

Some well-positioned people smell it and started refining the process while
building up legal machines for consolidating power and squeezing every
advantage out of the system.

They also have already moved ahead in protecting interests from retribution of
the noble AND pitchfork variety.

Let's also not forget that there are parties shaking hands over a couple few
million... and we're just sitting here worrying that someone is plotting a
highway tax for when we finally ascend to such neighborhoods.

------
dec0dedab0de
I planned on shopping at Newegg this week anyway, but now maybe a bit more
than normal.

------
betterunix
Great, another patent on abstract math upheld by our court system...

------
pezh0re
It's cases like this that make me really miss Groklaw.

------
bovermyer
So... when are we going to abolish patents?

------
charlysisto
sadly, one word comes in mind : the new mafia.

------
venomsnake
Well ... expect some bad stuff to happen. Like a company subsidiary shell
company developing all business method IP overseas and "selling" it to the
parent and when a lawsuit emerges they will have just enough funds to mount a
defense and then blow the fuse company. That way shell companies will fight
shell companies in court ... the fun.

------
dreamdu5t
I'm confused by people who both hold the position that these case are "patent
trolls" while simultaneously supporting patents and copyright? This verdict is
perfectly consistent with the reasoning and intention behind copyright and
patent law.

------
smegel
Why can't the world be just, I don't know, more decent and reasonable and
just?

------
wnevets
what a disgrace

------
Fishrock123
Bullcrap.

------
voltagex_
Oh. Crap.

