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?
People aren't cheering because the legal system is doing its job, they're cheering because Newegg is, as you say, in the right, and it's winning.
I don't think there's a single person here cheering who isn't doing it with the unspoken proviso of "the justice system might be fucked up, but at least the good guys are winning this time".
It would be irresponsible not to cheer and applaud Newegg for fighting for the side of morality.
sorry, but did you read the article? newegg isn't suing for punitive damages, it's suing for a judicial ruling that Rosewill products are not violating the patent troll. this closure would benefit some 20+ other parties that are currently being sued for carrying Rosewill products.
I think just about everybody cheering already knows this stuff about the legal system, so the story illuminates nothing for us. The one new thing it shows is that the good guys are, for once, using the broken system to smack the bad guys around instead of vice versa.
In the US, the success of big-pocket troll-crackers is a a body of legal precedence that smaller defendants can use to more easily defend themselves.
If you don't have the money or bad-ass legal team to break new legal ground, you cheer from your soul that big firms with the money and bad-ass legal team are going to go and do it for you.
That's often true, but this action is limited to the patents belonging to Newegg and the troll. It won't create legal precedent that other companies can use to slay trolls.
This is correct. They only ask for a judgment that they do not infringe, not that the patent is invalid. They may have done this b/c 1) it's cheaper; 2) they don't want to pay for free-riding by others who will benefit from them taking out this patent; or 3) they want to file for an administrative agency review of the patent's validity, which must be done before you seek such a ruling in court.
You're right, the fact that the reason Newegg has money allows them to go after these people. So the system sucks. But why is this not a victory of something big with resources doing the right thing even though it might cost them? Winning a battle when the war is unjust doesn't make the people fighting offensive; it also doesn't make the unjust war anymore appetizing. So be offended, but perhaps in another thread about technology patents.
It's a moderate victory, potentially for potential victims of patent trolling. I have no criticism for Newegg. They're acting well, and others might benefit from that too.
I just don't normally have much dealing with the judicial process. When I look in and hear about something out of general interest like this topic/article I get disgusted and worried. The judiciary is important and it's very bad, offensively so.
"loser pays" does have some disadvantages though - it can actually act to prolong litigation as people will know that if they give up they will face an immediate bill for the other sides costs so they will continue in the small hope they will win.
Doesn't it favour the big guys, though? If I'm a mom-and-pop store and a big guy infringes on my product (for the sake or argument, let's say I have a genuinely good™ patent), were I to sue I'd face the prospect of having to pay however much money it costs them to buy the verdict. I simply would not sue in that case, even if I'd be justified in doing so.
If they have to pay the other side if they lose, there would be a lot less lawsuits, so in the end it probably evens out in terms of strain on the legal system.
NB My wife is a specialist commercial litigation lawyer in the UK and I had discussed this issue with her after seeing it mentioned on HN and she pointed out a lot of issues with "loser pays".
Well, it was a while ago and was probably over a shared bottle of wine... :-)
It was one of those occasions where I probably made some comment about how daft the US legal situation sounded to me and she lectured me with a long list of issues with "loser pays" - as she is far brighter than I am I probably didn't quite appreciate the subtleties other than not to remind myself not to make sweeping statements about the legal system around her...
English rule = loser pays winner's legal costs. If patent trolls had to pay the legal fees of the other side, if/when the other side won, then the patent trolls would be unprofitable.
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.
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..."
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.
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.
Delightful, indeed. You don't often get to hear one company publicly tell another that it "sucks." It certainly does sound like this is personal for Cheng, who said, "Minero’s case does not have merit, and its patent is not only expired but would suck even if it wasn’t expired."
Another great quote from Cheng [1]:
"I never get invited to parties anymore," Cheng said in an e-mail. "Now I keep getting kicked out."
>It certainly does sound like this is personal for Cheng //
I don't think I'd conclude that: effectively if someone is claiming a section of the "public domain" as private IP then they're infringing on all of our rights (why don't the public prosecute such cases?). It impacts Cheng's company more, ergo they are suing - but it's responsive rather than some sort of vendetta. It's the opposite of personal if it doesn't matter who took the action they would still sue.
An analogy in real property: Minero has taken a public park and put gates up and a notice saying it's theirs. Cheng just happens to be the first to roll up wanting access to the park but it's an affront to all those who might wish to use it.
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
Why spend money on marketing when you could spend that on legal defense and receive an endless stream of good will and positive publicity?
Technically inclined customers are inevitably the ones who sell NewEgg to non-technical users because non-technical users will look to ghe technically inclined for advice when they are out of their depth.
We love the site for it's accurate and in-depth user reviews. We love them for fighting patent trolls and standing up for the little guy trying to build a product. The little guy that many of us aspire to be one day.
Being slightly neurotic and overly-excitable about the technical things we like, we can't help ourselves but to share that info with anybody/everybody within earshot.
Traditional marketing has a deterministic half life dependent on the length of people's attention span; which is growing shorter with every tweet, instagram photo, FB post, etc. That's why it's so damn profitable. The more marketing materials sold, the more marketing materials will be needed to remain competitive.
NewEgg is the 'real deal'. They stand up for the tech community against greedy abusers of legal policy. Whatever goodwill and success they receive as a result of it, they've earned.
Exactly. The way I see it is these patent trolls are sandbox bullies.
Newegg's suing back is a genius move. It basically sends the message that if you're going to make a frivolous claim and decide to abandon it, we'll file suit and stop you from making further claims (hopefully setting a case law precedent), and we won't even ask for our time/money back.
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.
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.
> ... 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.
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.
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.
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.
I don't think it would be a non-profit. Rather it would be, "Here, Newegg, take this donation to your legal fund, without me having to waste your time shipping me low-margin products!"
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.
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.
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.
Non-practicing entities seem like an easy target, but really, they're not the root of the problem. The root of the problem is ridiculous patents on obvious ideas.
A patent is a grant of a temporary monopoly to an inventor in exchange for disclosure of the invention. But nobody in the system is charged with looking out for the public interest in the making of this deal. Patent examiners do not get bonuses based on the number of bad patents they reject. Despite that, in court, a granted patent is presumed to be valid! It takes a strong argument to invalidate it.
By my analysis, it is the presumption of validity that is the worst problem. A patent owner suing for infringement should first have to present objective evidence that their patent is nonobvious.
The system is as broken as you might think it is. My pet theory is that it is an upper-middle-class jobs program. Serious reform would put thousands of patent attorneys, examiners, paralegals, secretaries, etc. out of work.
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.
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.
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.
One reason is that an organization of lawyers actively lobbys (lobbies?) for things to not change. It's a revenue stream. That's not the only reason but it's definitely a big one.
disclaimer: I'm not of the mind that patents are a raw evil that needs to be swept from the earth. I understand how they can be beneficial for society ideally.
There's a lot of ideas out there that it's just old fashioned corruption and lobbying preventing it, but I can see one semi-valid justification:
Imagine a non-practicing company who ends up with a collection of patents (not a non-practicing patent troll). Today, and what normally happens, they would just license those out to various entities who wished to use them, and those companies signal a fairly pure intent to actually build something and sell it. The license cost is simply passed on to the consumer, but if the product is unique enough it's not like there's a cheaper alternative for anybody to compare against anyway. In the end the economy is richer for having the widget because now people can buy a new capability.
Now imagine a case where companies must exercise their patents. They'll
a) be less likely to work on R&D since they'll no longer be able to exercise a guaranteed monopoly, first to invent (or first to file) no longer has a motivational push to generate new ideas. Even inventing for the sole purpose of licensing your idea is a legitimate one. R&D is very expensive.
b) Only organizations with the financial power to both invent and manufacture will now file for patents. This locks away many small-time inventors (garage R&D) who today make a reasonable living off of their work via licensing to large corporations and locks away the power of innovation only at large and powerful organizations. In a sense the current patent regime is intended to allow anybody, large or small, access to a level playing field. e.g. I have a small LLC, if tomorrow I come up with a cool idea through my LLC and get it patented, I'd have to go about building it and putting it on the market, all expenses that I know my LLC doesn't have the funding to support.
c) As a result, lots of half-assed shit will end up on the market since inventors will be forced to pump something out. Except now it will be optimized to cost them the least amount possible to get to market with rather than be optimized to try to be successful (that takes loads more money to try).
d) And/Or a weird economy will show up of small "pass through" businesses that exist only to provide a store front for the crap that inventors now have to produce in order to lock down their patent (since the end-game in most patents is licensing). They don't really have any intention of selling anything, but inventors maybe produce 10 of their widget, pay a small stocking fee and the store will put it up for display. These stores will likely be in small, off-main-street light industrial zones with no traffic. It's easy money for the store owners since inventors will literally pay them to stock the minimally produced junk. Think of the "As Seen on TV" stores at some local malls, now imagine those multiplied by a million.
IMHO a better solution is to make patents non-sellable. They can only exist under ownership of the inventor and can't be accumulated under non-inventing entities.
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.
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)
I agree that invalidating the patent is a strong motivation, but I imagine that another major motivation is in establishing their reputation. Future putative litigants will think twice about getting dragged into a legal battle with a company that doesn't let them walk away from a battle when it no longer suits them.
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....)
> 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.
> 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.
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.
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.
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).
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.
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.