
Newegg nukes "corporate troll" Alcatel in third patent appeal win this year - jfb
http://arstechnica.com/tech-policy/2013/05/newegg-nukes-corporate-troll-alcatel-in-third-patent-appeal-win-this-year/
======
buro9
> "There's bad news and there's good news," said Cheng in an interview with
> Ars. "The good news is, we won this case on every point. The bad news is,
> we're running out of lawsuits. There are fewer trolls for us to fight. I've
> spent a lot of time over the last seven years figuring out what to do with
> these guys. There are strategies I think would be really neat and effective
> that I literally can't execute. I can't make good law because I don't have
> any appellate cases left. They [the trolls] are dismissing cases against us
> before any dispositive motions." - Lee Cheng

.

That's a great quote.

~~~
larrys
It's a great quote but there's a problem.

Your legal officer, your attorney or anyone at your company should realize
that this isn't about them nor is it about (business wise at least) protecting
anyone else but the interests of your company. His quote smacks of a challenge
that he liked and as such you also have to at least question whether he
operated at arms length from the problem at hand.

Newegg's business isn't fighting lawsuits.

~~~
mullingitover
You have to admit, this is fantastic press that gives them incredible amounts
of customer goodwill. See also: comment threads all over the internet with
people swearing to spend money on NewEgg purchases because of their actions
here.

Also, this is good long-term planning that is preventing them from being seen
as easy targets by patent trolls. It could end up saving them millions.

~~~
larrys
"incredible amounts of customer goodwill"

It gives them goodwill the question is how much and what is the amount of
sales increase? Hackers tend to overestimate the importance of things like
this and not take into account those in flyover country or people who aren't
aware of things like this. Besides publicity gain isn't a reason to pursue a
strategy like this. That's not a gamble that makes sense.

"easy targets by patent trolls. It could end up saving them millions."

Companies have used similar strategies against legal predators for the longest
time. Nothing new about doing that. Yet many companies led by responsible
legal teams and management also settle and move on. This is not clear cut by
any means.

~~~
jlgreco
> _Hackers tend to overestimate the importance of things like this and not
> take into account those in flyover country or people who aren't aware of
> things like this._

"'Hacker News' Hackers" also tend to grossly overestimate how well they know
what is in the best interests of a company that they personally have little to
do with.

~~~
larrys
""'Hacker News' Hackers""

Exactly. Take Godaddy (a competitor of ours) which is one of the most hated
companies ever discussed on Hacker News. Yet they continue to do great
business and are clearly well liked by many others who have no clue or care
about the issues that forum readers care about.

As an aside, companies that are the darling of any online forum can quickly
have their name turn to "mud" if they don't continue to acquiesce to what the
group thinks is the right thing to do. (Then the question is does that name
turning to mud motivate those to actually take action.)

------
dasil003
> _"Alcatel Lucent, meanwhile, they drag out some random VP—who happens to be
> a decorated Navy veteran, who happens to be handsome and has a beautiful
> wife and kids—but the guy didn't know what patents were being asserted. What
> a joke."_

This is pathetic. You have a billion dollar company try to play legal hardball
and they don't even do the most basic coaching of your executive team. They
must have been getting really comfortable in East Texas to fuck up this bad.

~~~
raverbashing
It's not that they are good at it, but it's the others are really bad.

I've said it once and I'll say it again, say the word 'patent' and most
executives (and their corporate legal representation) will shudder and think
you're in the right. They have no idea of what the state of patents are, what
can be done about them, and that the people suing you are most likely doing it
for a quick buck.

------
stephen
Newegg's anti-troll stance is exactly why I bought 2 weeks ago I bought the
majority of my desktop components from them, without even pricing checking on
amazon/etc.

~~~
hkmurakami
I have to admit that I feel a bit ashamed that I split my orders between
Amazon and Newegg based on price last month when building my machine :(

~~~
Amadou
Newegg still benefits simply from you doing business with them. Presumably
they are not using a loss-leader strategy - so every sale is still profitable.

There are a lot of vendors out there, it isn't generally feasible to price
shop all of them for orders of more than one or two items. So the fact that
they are merely on your list of vendors to consider is a win for them.

------
ChuckMcM
Nice, a win for the good guys. I'm glad to see the '131 patent die but it died
last year anyway due to its expiration. Sad that it caused pain up to this
point. I keep hoping we'll plateau on the silly patents as everything between
'92 and '98 starts to expire.

The other interesting thing here (and it was evident in Oracle v. Google as
well) is that the judiciary is coming up to speed on both the technology
aspects of these patents and the general inanity of trying to "obvious" stuff.

I really hope this is another sign of the beginning of the end for this abuse
of the patent system.

~~~
chasb
Change from the judiciary takes years and is usually piecemeal at best. And
small wins like this undercut the urgency for legislative action. Ugh.

~~~
ChuckMcM
Patience chasb, patience. Legislative action is not always the desired
outcome, pushing for legislative action on Copyright reform got us DMCA, a
mixed blessing at best. Legislative action informed by judicial review of key
concepts and organizing principles makes for better laws in my experience.
Time will tell of course. Change does happen.

------
hkmurakami
Newegg and Rackspace are definitely building a reputation for pushing back
against patent trolls and even borderline-legitimate (maybe?) cases like this
one. I wonder how we as outsiders can go about assessing the impact of
building this reputation (ex: a troll going after various retailers but not
Newegg, for instance)

~~~
Zikes
As soon as that happens it will validate Newegg's strategy, and only further
incentivize other companies to adopt it.

~~~
jamon51
It's like feeding the troll...in reverse.

~~~
artursapek
Starving the troll. :) Nothing lasts forever. I think this immoral money-
making tactic is on its way out.

~~~
jessaustin
More apt perhaps would be: "curb-stomping the troll, desecrating the remains,
and then mailing the whole mess in a bucket to its mother"?

------
_lex
Newegg's strategy here is basically applied game theory, where they loudly and
publicly state that they will never pay licensing fees to trolls, and then
they loudly and publicly show that to be the case. Worse, they're actually
winning their court cases, and destroying the value of their opponent's patent
portfolio.

Nobody in their right mind would waste time trying to troll them now - unless
they have a really rock-solid case, which is unknowable before litigation.

------
gcb0
I'm always torn apart when buying electronics.

In one hand newegg kills trolls and I'd love to buy from them... But to get
close to amz prices you have to give in to mail rebates and other forms of
marketing trolling.

~~~
yock
Perhaps this is a good demonstration of why buying based on price is not in
your long-term best interest?

~~~
hkmurakami
and yet even when we understand this, it is _still_ very hard to buy the more
expensive option. That demonstrates how hard this dilemma is to solve.

~~~
TheRealDunkirk
And within this one microcosm, you've captured the entirety of the problem
that we now face with the US government. No one is willing to sacrifice their
vote for the greater good or long-term viability. All they care about is THEIR
pocketbook, RIGHT NOW. "More stuff" is going to break the federal government,
as surely as it has some countries in Europe, and now some of the largest
cities in the US. Paying a little more from Newegg over Amazon is an easy call
for me to make. I wish more people valued the benefit to society the extra $50
or $100 could bring over the few grande triple-shot mocha frappachinos it
represents to them personally.

~~~
hkmurakami
You're absolutely right and I admit fault and guilt on all counts. I even made
multiple "selfish" votes last fall even though I knew it was bad for the
country (ex: voting for that idiotically unfair car insurance price
segregation proposition in California).

It's as if I'm an addict. I know I have a problem but I can't stop.

------
rayiner
Its interesting to observe that Alcatel Lucent is the successor to certain ATT
R&D operations, most notably Bell Labs.

~~~
1123581321
At this point, the "Bell" part of AL's Bell Labs is little more than the name
and the patents. It's mostly ALs's telecom-related research.

------
jbrowning
A question for any lawyers out there: if you licensed a patent that is later
invalidated, are you entitled to a refund of your licensing fee?

~~~
jfb
I would imagine that it would vary from license contract to license contract,
but I'm not a lawyer, nor do I play one on TV.

------
famousactress
I'll be making a point to make a couple purchases at newegg that I probably
would have gone to amazon for.

------
darxius
Sad to see they're Bell Labs patents. We owe a lot of innovation from the work
done there. Dammit, and to think I was going to work for Alcatel.

edit: wow, spelling.

------
Xcelerate
Alcatel sure has fallen. My father worked for them in France in the mid-90s.
He said at the time, they were one of the best run and most exciting companies
in the world. They had research labs in all sorts of things all over the
place. Eventually, new management was established and Alcatel began falling
apart, and then they merged to form Alcatel-Lucent in 2006. I don't think
anyone even knows who they are anymore.

~~~
hkmurakami
Even Lucent was one of the tech darlings of the first .com bubble. How fan
they have fallen...

~~~
jessaustin
Yeah, but no one ever accused Lucent of being "one of the best-run... in the
world". I worked there, and I saw management do some jaw-droppingly stupid
things.

------
JakeSc
The patent in question is pretty absurd. If I understand it correctly, Alcatel
patented the concept of using an ID to reference an object:

"referencing... an object that is to be displayed on the terminal display with
a particular identifier"

If I understand it correctly, I've violated this patent hundreds of times. But
in Alcatel's defense, they patented it a couple years before I started using
IDs.

------
specialp
New York City has taken a similar approach. They have now started fighting
many more lawsuits even though the settlement amount would be less than the
cost of defense. The problem with settling is that it emboldens others to come
in as they can threaten a costly fight, while knowing that the city is not
going to do that and make easy money. So while it may save money in the
beginning, settling gets more people to sue you. Now that lawyers know that
their bluff may be called and they may have to fight in court, they will be
much more selective of what cases they take in to fight. Of course it can
sometimes backfire as in Research in Motion's case, but you cannot always give
in to threats.

[http://www.nytimes.com/2013/02/26/nyregion/new-york-to-
stem-...](http://www.nytimes.com/2013/02/26/nyregion/new-york-to-stem-civil-
rights-suits-is-now-reluctant-to-settle.html?_r=0)

------
ChikkaChiChi
Newegg is winning the hearts and minds of the "Tech Influencers" here. People
like us who follow the news and understand the importance of supporting
endeavors like this are more likely to recommend and influence the buying
decisions of others.

You go from being a customer, to an evangelist.

------
Osiris
With trolls being such a problem, why haven't companies formed alliances to
defend each other against lawsuits? Wouldn't the tech world be better off if
suing one company meant taking on most of the industry?

~~~
Guvante
Because the only way to do that is put yourself in the crosshairs. If 3 of the
20 companies are being sued, the other 17 could ask for a summary judgement
and allow everyone to pool resources, but then 17 companies had to put the
result of the lawsuit on their own heads too.

You are correct that it would be better for the system as a whole, but each
individual is better off not participating.

------
brianbreslin
Can someone put in layman's terms the patent and how it was being applied in
this case? They say in the article it was an "old cell phone patent being
applied to the internet" but don't explain how/what. thx

~~~
yew
The patent (US #5649131, there's a link in the article) covers a general
scheme for standardized communication between a server and client (the patent
refers to 'host' and 'terminal').

Specifically, the server and client agree on a set of defined 'objects' (in
this case including text boxes, drop-down menus, and images). The client then
displays said objects to the user by following instructions from the server.
The claimed innovation seems to be that the server and client talk _about_ the
aforementioned objects rather than sending exact descriptions of the client's
display back and forth.

Alcatel-Lucent intended to apply the patent very broadly - consider a web
server as the 'host' and a web browser as the 'terminal', for example.

~~~
jessaustin
So that's basically every interactive site ever? It certainly includes AJAX
but it probably includes basic HTML over HTTP.

~~~
yew
More or less. NewEgg are calling it a patent on menus and they're not far off.

------
SwellJoe
When I ran a hardware oriented business, I spent tens of thousands of dollars
every year at Newegg. Since moving exclusively to software, I buy a lot less
hardware. But, I know where I'm buying my computers and electronics from now
on.

My livelihood depends on not being targeted by trolls, and companies that
fight back against trolls help me avoid the damned near certain destruction of
my company that a patent troll could cause me (I'd, ethically, be compelled to
fight...but I simply don't have the resources to win such a fight).

------
thorntonbf
Hopefully this will provide some motivation to other companies that have been
faced with similar threats by trolls and have caved. It doesn't take a lot of
wins to start turning the tide in our favor.

The trolls will certainly be back after they regroup - and their tactic may
shift to coming after increasingly smaller companies that can't afford to go
to court in the first place, much less actually stand up a fight. Nonetheless,
any movement in the right direction is a good thing as far as I'm concerned.

Way to go Newegg!

~~~
pyre
Going after increasingly smaller companies also means attempting to get
increasingly smaller amounts of money from a larger number of defendants.
Eventually this will become untenable, at least for larger operations like
Alcatel-Lucent, because there is still an overhead of running such an
operation.

------
mk3
It seems the only one way to battle against patent trolls is to forbid them to
use their patent infringement card if they do not use it themselves.

------
quackerhacker
I always laugh a little when I hear a professional use the term "troll." It
really reminds of video games. Tra la la la.

Excerpt from the article: "There are fewer trolls for us to fight."

------
unreal37
Thank God for Newegg having a backbone to stand up for what is right. Let the
market deliver to them their just rewards - customer loyalty and increased
profits!

------
thomasjames
This just highlights how much it pains me that Bell Labs is now in the hands
of a foreign firm like Alcatel, which has also been quick to hijack its
history.

~~~
Kliment
What does the "foreign" have to do with it?

~~~
thomasjames
Bell Labs was one of the country's greatest resources and the model of what a
corporate research facility should be. It was a decidedly domestic phenomenon,
and also could work on sensitive topics freely. Its now being foreign has
everything to do with it, which is why they had to spin off a small segment to
continue with government contracts.

------
chenster
Newegg just won my heart for what they did!

------
omegant
Yeah! I feel like when in saving private Ryan the panzer at the last scene is
blown by a mustang. Give'em hell!

------
greenlander
Now if someone would only kill off Rambus, a true scourage to our industry
would be eliminated.

------
wissler
Unfortunately that just makes a bigger target of the smaller businesses who
can't afford such a vigorous defense.

