To achieve a decisive victory in these cases, Newegg typically has to take the defense of its case through a full trial and possibly an appeal.
People often fail to appreciate just how risky a trial can be. We stand on the sidelines and laugh at how absurd this or that flaky patent appears. And yet - and yet - the law itself went through a phase in which such patents were almost routinely granted. Standards may have tightened over time but, still, a patent claim in a hotly litigated case will not survive to trial unless it has been able to withstand a host of pretrial challenges by which a defendant has already asked a court to rule that the patent, as a matter of law, should not stand. It is only when a court tosses the patent claim in the pretrial phases that a defendant avoids the risk of a potentially absurdly high verdict after trial. If the claim survives such challenges, then the defendant has no choice but to settle or to play it out through trial while incurring just a risk of having a large verdict entered against it. This is the point at which most defendants - even large, deep-pocket defendants who can otherwise afford to pay the costs of defense - will fold. Newegg, on the other hand, has made the tough decisions, incurred the major risks, and largely managed to defeat such patents on the merits.
In doing so, it incurs the very large costs of defense typical in such cases. And it has the guts to take the potential liability risks of going through full trials to take the cases to verdict.
Large, institutional defendants have occasionally (though rarely) adopted such policies in the past. For example, over decades, GM adopted a policy of never settling injury claims if its own experts had determined that the GM autos were not at fault. In doing this, it would often incur defense costs that far exceeded the value of the claim being defended. But it did so to send a firm message to the plaintiff's bar that prosecuted such claims - that is, "if you want to sue GM, your case had better have merit - you will get no nuisance settlement from us."
Newegg effectively is delivering the same message but with an important twist. If GM successfully defended a particular injury claim, that ended the case for that claimant but had no preclusive effect on other, similar claims. If Newegg successfully defends and defeats a patent claim by having the patent declared invalid, the law of what the lawyers call "res judicata" (meaning, "a matter adjudged") kicks in and kills that patent off forever.
So, not only does Newegg take out the garbage, it makes sure it won't accumulate ever again.
This is a true public service for which we all must tip out hats.
I really appreciate Newegg's approach here -- one of the main reasons that patent trolling is so successful is that the cost of settling is smaller even than the cost of winning a suit. Newegg is performing an (expensive) community service. How should I be supporting them (other than making them my "first place to check" for electronics shopping)?
> one of the main reasons that patent trolling is so successful is that the cost of settling is smaller even than the cost of winning a suit.
Is the underlying reason for this strategy the low costs of settlement, or the extremely high costs of lawsuits? What if the value of a patent really is only a few thousand dollars?
Note that this very tactic is used by big companies to avoid licensing valid and useful patents owned by smaller entities. Licensing discussions often begin with the potential licensor saying "sue me", or these days, outright suing you first with a Declaratory Judgement. Can an individual afford to take on a large company? Trolls appear to simply be a symptom of this disparity in the market.
The legal system is not equally available to all entities. That it is the center of how we enforce our rights and hold others to their duties is a major problem. Even if we could fix it in the case of patents, we still have major issues within other civil and criminal courts. I do not know the solution or even have any half baked ideas on it, but I do think the first step to any solution is for us, as a society, to realize that the legal system is largely pay to win and not a justice system.
There are other countries, where this issue is solved (more or less) by the fact that the side which have lost the case is covering trial costs. This does stop 'court trolling' because even is the cost of winning the case is higher than the cost of the settlement, winning the case nullifies that cost. But hey, US is special this way! (and many others... ;)
Having litigated against adversaries who use the courts primarily to be a nuisance, with little or no regard to the actual strength or weakness of their claims, I've become convinced "loser pays costs and attorney's fees of prevailing party" is a better system than what we have in the U.S.
This is not the only difference between the justice systems in US and EU (EU is what I consider to be elswhere): in US the case is the battle between boths sides lawyer, and the judge is simply a watching function, that a the end calls the sentence, based on the outcome of that battle. In EU, the case is a so called 'process of finding material truth' and the judge can take active stance, call witnesses, ask additional questions, call for professional opinions and so on - it is no longer a battle of who has better lawyers but a way to find what's the actual state of things.
The US system is also supposed to be a process of truth-finding, just that we leave the parties to support their own positions as adversaries. Without advocacy, American courts do very little on their own. So far that doesn't bother me, but I'm a lawyer. For someone thrown into the system, there can be an incorrect expectation that the court will automatically act to do justice.
Part of the problem with the adversarial system is that if one party has bad lawyers, you can end up with bad case law as a result of them failing to properly argue their case.
You could end up with one party intentionally losing a case in order to establish precedent that they expect to profit from in the future, because they expect they'll usually be on the other side of similar cases.
Not sure, but I seem to recall a case where Microsoft was on the other side of a suit from where you'd expect them to be, and people were afraid they'd lose intentionally. No idea what it was about or how it ended, though.
There's an important qualifier: loser pays reasonable costs of prevailing party, and the judge decides what is reasonable. It's not automatic. This addresses the concerns about a deep-pocketed party spending lavishly and winning, and the loser being forced to pay a massive legal bill.
(I'm not an expert on the subject, but it's been discussed before on HN, and this is my recollection.)
It occurs to me that an interesting variation would be for the loser to pay an amount equal to the lesser of the two parties' legal bills. That would limit the risk, and remove the incentive for the deeper-pocketed party to spend money just to inflate the bill.
I am small troll A suing company B. I lose, judge orders that troll A pay all the legal fees. I don't have the money, I file bankruptcy, I flee the country.
Lawyers still want to get paid. I doubt any legal team will just chase some random around into collections because "loser pays"
>>There's an important qualifier: loser pays reasonable costs of prevailing party,
I remember a comment a while back on HN or somewhere which suggested an approximate solution to this : the loser must pay the costs equal to its or the winners fees- whichever is lower.
Is there any issue with unfair inflation of costs? From what I understand these patent trolls are mostly teams of lawyers. Under this ruling could they charge themselves exorbitant rates, then the few times they do win makes up for the times they lose?
What about the situation with east Texas where they side with the patent holder the majority of the time?
Under this I might almost be more likely to just settle. Do I pay nothing, a paltry sum to settle, or 2-4x the cost without "loser pays" to lose? If I have even a 10% chance of losing it sounds like settling might be a good deal.
>Under this ruling could they charge themselves exorbitant rates, then the few times they do win makes up for the times they lose?
Not to mention that the costs to the losers the few times they win would really scare anyone who isn't able to eat the massive costs anyways. Would you sue someone from stealing thousands from you if there was a small chance at you owing them millions?
How do they avoid disincentivizing small parties from suing larger ones in this system? Let's say I have a strong case (say 90% chance of winning) to sue an insurance company for, say, $50k. But the cost of their legal team/experts/discovery to defend it is, ~$500k, then things look a bit more bleak.
Are there caps? Is one side prohibited from charging substantially more than the other?
I believe it's at the judges discretion. There was recently a case against a journalist who paid bribes on behalf of a news corporation in which the judge outright stated that if the corporation had been paying costs he would have ruled for a much larger costs settlement then he did when it emerged the journalist himself was going to have to pay. The remainder gets picked up by the taxpayer, so whatever happens the winning party isn't expected to pay the loser's costs.
Standard disclaimer: you should consult an actual solicitor!
I think it would somewhat depend on the judge's assessment of the situation, but I would think so long as you're acting in good faith they'd likely rule for you to pay whatever costs you can afford, and the rest would be covered by public finances.
It wouldn't surprise me to hear of judges deciding that the defence's legal team is grossly excessive and telling them they're not claiming for everything either, at least in the UK judges have quite a lot of leeway in what they can do in their own court room.
Well, if you want to sue them for $50k, and the cost of defense is $500k and your case is 90% chance to be lost, then the solution is quite simple - settle the case for 50k.
Limit the cost to reasonable costs. What is reasonable? Well, limiting the expense to the lower of the two parties' legal costs would strongly discourage the larger party from spending $500k on the case. And if they do it anyway, they pay for it themselves.
This does not solve it. Consider little guy suing mega corp. Little guy's costs may be covered if he wins, but with only 50K to spend, he still could lose because mega corp can drop 5M on the case. This could even make it worse, because without the ability to recover costs, little guy has a small chance at victory and losing the 50k and a large chance at losing the 50k with nothing. With the loser having to pay, it changes to little guy having a small chance at victory and losing nothing and a large chance at losing 5M + 50K.
But even then you propbably will get reimbursed only what an average lawyer would have been costing you. Not what the specialized high profile Lawyer normaly asks for.
In which case the problem isn't solved as the rich can still spend money to win (but they don't get it back). It makes the legal system pay to win and once again allows trolling. Maybe not as much, but still a lot.
This would only boost behavior that takes advantage of massive numbers of weaker individuals because in the rare case of one of them winning, you are only going to get a minor fee.
If the max cost of predatory practices isn't much higher than the gain from using them in the rare cases when caught, it creates an incentive to use such practices.
> If the max cost of predatory practices isn't much higher than the gain from using them in the rare cases when caught, it creates an incentive to use such practices.
This isn't a complete economic argument in favor of companies behaving poorly. Punitive damages pale in comparison to a threat of loss of future business dealings as a result of poor behavior.
Japan, for instance, prohibits punitive damages. Is there any suggestion on your part that companies there are somehow more "predatory" than ones here in the US?
>Punitive damages pale in comparison to a threat of loss of future business dealings as a result of poor behavior.
That fully depends upon how you simulate humans in one's argument. For a generally rational generally well informed human this is likely true (note I'm not even going with the 'fully rational fully informed'). But for the majority of consumers, there is less cost and there are ways to reduce the cost further. There will be some impact when the news breaks (if it breaks, the story being publicly available is a world of difference from the story being CNN/Fox New's headline of the day), but people will quickly lose interest or otherwise stop caring. While punitive damages may not be enough to fix the issue, I think there is an issue and I think the issue would be worse without them.
I'm a software engineer. Consequently I have to admit ignorance about this concept of a valid and useful patent. All I ever see is patents that hinder the Progress of Science and useful Arts. Are there really enough valid and useful patents that we should hesitate in our fight against the rest?
There are useful patents though they may hinder more then they help depending on your PoV. Various codecs and some crypto algorithms come to mind.
You run into a lot more useful ones at the intersection with the physical world where some protection lets a company get a chance to be the first one to market and reap some benefit.
In some industries (Pharma) it's really the only practical approach due to the extreme development costs (easily over 1B$) and often cheap production costs.
To be clear, when I say "patent" I'm referring to a legal instrument that secures exclusive rights. When I say "useful patent" I'm talking about the utility of the legal instrument, not the utility of the mathematical algorithm claimed in the patent.
I'm confused, are you asking if you should be fighting patent trolls or patents? If trolls, then fighting them is better than not. Patents are tools, valid and legal, you don't fight tools, you use them, improve them, complain about them, etc.
Though seriously, I think the term landmine is loaded toward using patents exclusively as a troll. A wider analogy could be like a toll bridge, where the builder should be compensated by travelers. Some tolls could be usurious, but that wouldn't invalidate the whole principle.
Can you explain why you think patents hinder progress of science and the useful arts? How many cases do you know of that people were unable to advance the arts because of a patent? People talk about patent trolls suing startups and main street shops: How many of them actually do anything technically innovative? Hinder commercialization of some old technology? Sure, patents can do that. Stifle progress? Not so much. There are studies on these types of things that you can find on ssrn.com
Your impression is likely based on what you hear in a) tech media, which is largely supported by ads and hence welcome rage-views, and b) tech forums like this where open source is the dominant religion. But count how many times you've heard of a merit-less lawsuit, and compare that to the dark matter of millions of active patents out there. Forming opinions based on cherry picked examples is not a good idea. Better to look at empirical evidence.
I'll give you some numbers less than 1% of patents are ever asserted, and only a fraction of them make it to a trial. The vast majority of patents lie fallow because there is no demand for their technology in the market. Now does that look like a serious problem anymore?
How many cases do you know of that people were unable to advance the arts because of a patent?
For one concrete example, anyone who worked on data compression outside of purely academic areas has been harmed, and by extension their customers have been harmed, by early software patents in that area. The LZW patent (infamously associated with the .GIF file format) and IBM's patents on arithmetic coding both rendered entire fields of computer science radioactive for years.
It's perhaps even more enlightening to spend some thinking about what life would be like if everything that could be patented under the incredibly loose standards of the USPTO was patented. It's safe to say you wouldn't be able to afford the computer or tablet you're typing on, nor the Internet service necessary to convey your thoughts. But this argument is also moot because neither of those technologies would be available in their present form, at any price.
Your impression is likely based on what you hear in a) tech media, which is largely supported by ads and hence welcome rage-views, and b) tech forums like this where open source is the dominant religion.
My impression is based on decades of work in the industry.
I'll give you some numbers less than 1% of patents are ever asserted
How many land mines ever explode? Does that make land mines a good thing? Patents are intellectual land mines, nothing more, nothing less.
I'm looking at actual data. You are speaking from hearsay and anecdotes. Here's a paper to get started with. It is a review of dozens of papers most of which have empirical results:
Your example is not concrete. What you think of as "radioactive" could simply be researchers concluding that specific area was not worth exploring anymore. Here's how you can give a concrete example: Those patents have expired. Can you point to any new fundamentally significant compression technology that has since emerged that could have been thought of as being previously held back by those patents?
Now I can give a concrete example of how those very same patents caused innovation: When they sued people over lzw in gifs, that prompted people to develop alternate methods like PNG. Sounds like progress to me. Was it forced innovation? Sure! But that's always been one of the rationalizations of patents. People often don't innovate unless forced to.
>My impression is based on decades of work in the industry.
So let's get even more anecdotal: how often have you been unable to "advance the arts" due to a patent?
> How many land mines ever explode?
How many good ideas get ripped off with their creator getting nothing in return? If we want to be hyperbolic, I could just say "anti-patent people are just intellectual thieves, nothing more, nothing less"?
The "dark matter of millions of active patents out there" is an apt description of failure. The constitutional purpose of patents was to disclose inventions that others could build on. If that purpose were being fulfilled we'd be browsing the patent database instead of all the places we actually go when we want to pick up a new technique.
Give concrete examples instead of vague generalizations. I just have an example of how the GIF patent actually provoked progress as it was used to sure people who were using it without remuneration to the creators.
Image compression experts say JPEG2000 is simply not used because it's just not enough of an improvement to make it worth the hassle. Patent issues are secondary. And note that patents did not prevent it from bruin developed in the first place.
H.264 patents did not slow down development of new technology, it just slowed adoption of existing technology (h.264) in a different existing environment (browsers) Would you really qualify using the same technology in a browser as a significant technical innovation?
So coming back to my challenge: Now that the RSA patent has expired in 2000, 15 years ago, what novel developments can you point to that you can say was blocked by the patent?
Your metrics are the percentage of patents asserted and how many make it to trial? You don't even consider the amount of settlements that happened for obvious universal technologies, or perhaps more importantly the number of uses of a patent to implement something useful which could not have been developed independently.
You're asking to assume patents are useful until proven otherwise, and waving your hands about cherry-picking, when in fact you'd have to cherry-pick pretty severely to find an example of a software patent which would stand up to an honest evaluation of its novelty. This is because software is not created by lone inventors having eureka moments behind closed doors—the state of the art is pushed forward primarily through massive collaboration. The vast majority of software patents only exist because software and mathematics are arcane topics that the patent office doesn't have the expertise to understand or the incentive to evaluate honestly.
Software patents and IP are not natural laws with inherent value. It is not for us to empirically prove their harm, rather they are specific legal constructs designed for the public good, and thus their good must be justified, not the other way around.
> I'll give you some numbers less than 1% of patents are ever asserted, and only a fraction of them make it to a trial. The vast majority of patents lie fallow because there is no demand for their technology in the market. Now does that look like a serious problem anymore?
It sounds like you are arguing to abolish patents. The rest of the world is held hostage for under 1% of the patents issued? It doesn't sound like a serious problem to just do away with then all according to your stats.
If you know you have a valid case (you aren't a troll), how hard would it be in practice to find someone to front the money for a lawsuit? Or for that matter, could you go to the competition and sell your patent? That is, say Apple's infringing on my patent; will Samsung buy the patent from me for a fair price and then sue Apple?
> how hard would it be in practice to find someone to front the money for a lawsuit?
What about paying into an troll insurance policy every month so that if a troll wanted to sue you they would see that you were protected and would fight the lawsuit with a giant pile of money. This might deter the troll from suing in the first place.
There is a whole ecosystem that is funding these lawsuits. It also operates somewhat anonymously, with funding sources working directly with law firms and indirectly with inventors (if they are even involved anymore). I've seen emails between law firms and the inventor that literally title the investors as "the funding source." The original inventor need not put any money at risk, and the law firms and funding sources do their own diligence to decide if it's worth proceeding to file suits. In most cases, the entity filing suit is created for each series of attacks so that if they actually lose a suit and are supposed to pay out, there are no assets from which to pay. Therefore, low risk and potentially very high reward.
The biggest factor for that is not the validity of the patents, but the breadth and ability of the patents to be filed against "juicy" targets with a lot of cash. The cost of filing a suit is literally in the hundreds of dollars (I think ~$750) and most of these cases get settled out fairly early because of the immense cost of the defendants to complete the discovery process.
This is true, except for tech and biotech startups, where patents have been shown to facilitate funding, potentially by signaling future success. Less than 1% of inventors get anything from their patents.
However to me this signals the possibility of an inefficiency in the market, and something that trolls leverage. Intellectual Ventures was reputedly originally formed to fix this gap.
That is one of the problems, he who fronts the money expects to get the reward. Hence class actions where the lawyer who works on contingency gets millions and those wronged get a nickle.
1. You'll still get a significant sum if the total is significant (and if the case is open-and-shut, the risk wouldn't be too high for an investor, so you could get a favorable deal)
2. The infringing company would have to pay in full, which discourages them from doing it in the first place.
I guess I really want to know is if this actually happens in practice, or if there are reasons I'm not thinking of that stop it from happening.
The cost is not just the lawyers' time (which you may be able to get on contingency), but the administrative time: managing the lawsuit, discovery, assembling evidence, time of witnesses, and so on. Then there's the business risk: lawsuits only happen when both parties think they have a case, so by definition one of them will be disappointed.
The selling out to a bigger player does happen, although since it's a distress sale it's often for a low value.
Some Patent lawsuits are taken on contingency (the winning lawers get a good size cut).
This isn't common. See Jarg corp which was basically out of cash, then hired lawyers on contingency (with patents licensed from Northeastern University) then sued google. I think google paid northeastern in a settlement.
There are people who specialize in evaluating patents and being the middleman if they believe there is value in licensing and/or asserting your patents. They are often thought of as just another breed of patent trolls.
Because agencies specialising in licensing a patent (i) are non practising entities, and many people's view a troll is pretty much defined by the concept of acquiring IP without the intention of doing anything with it other than seeking fees, and (ii) occupy their time sending legal threats to firms already using aspects of the patented invention rather than delivering sales pitches to people searching for technological breakthroughs, because "the right to develop your own technology which does X using Y" is a really hard sell.
'Genuine' with respect to patents is a very low bar. They've issued patents on any number of scientifically impossible inventions, in spite of rules against that sort of thing. So the courts are usually required to sort it out after many years and endless litigation.
Is the underlying reason for this strategy the low costs of settlement, or the extremely high costs of lawsuits?
Lawyers are expensive. Good lawyers are extremely expensive. There are also experts, investigators and consultants to hire. Everything about the process is expensive. It's very good that newegg is doing this because it helps everyone.
This is actually a very important observation. The entire modus operandi of patent trolls is to go after the weak. Let's not kid ourselves when suggesting incompetent lawyers can't gain competence.
Mentions Google, Apple and Samsung (respectively 192, 191, 151 lawsuits over last 5 years). Microsoft has mentioned similar numbers, but I can't find a reference off hand. Google for "patent trolls target Microsoft"
Ars has a strong anti-patent bias and they are not afraid of twisting facts to fit the narrative. Note how they made the troll lawyers look stupid in their coverage of the TQP/Newegg trial, but TQP prevailed in that one. Newegg recently got off on non-infringement, but that was because Newegg lawyers were incompetent in not bring up that defense the first time.
Their bias got so bad that even their typically anti-patent commenters called it out on one of their recent articles.
As a bonus, it's also a really good source of PR with their core Geek demographics. That goodwill offsets a lot of their legal costs. That and an in-house legal team so they pay salary, not outrageous hourly fees.
I don't know if I agree. The thing is, what Newegg is doing, especially by publicizing it is to tell trolls to avoid Newegg.
That's great for Newegg, but it means that future trolls will skip them, and just go after the startups and small businesses that don't have the resources to fight a lawsuit on principal.
I'm not saying that what Newegg is doing is bad, or even that it doesn't help. I'm just saying that the publicity that they are seeking for it might end up working out well for them by getting people to stop suing THEM, but won't work well to get people to stop suing other, smaller businesses.
If a patent troll were to sue you for something you've implemented, and you knew that Newegg implemented it too, you'd have a difficult time getting Newegg to fund your defense I think. Unless the troll sues Newegg, nobody's going to help you out. If the trolls just avoid Newegg, they can still get their payout.
What we need is a big party willing to defend all the small parties.
How about some sort of patent troll insurance that takes over your defense and sues to invalidate the patent? The insurance should cost a smaller amount of money than settlement would cost. The more companies have that insurance, the bigger the defense you can mount, and the lower the costs for everybody are.
The first person sued by the troll immediately takes it to court and wins, invalidating the patent, and ensuring that only one lawsuit will have to be fought and everybody else is safe.
Of course this could mean that a lot of people feel they don't need the insurance because someone else will invalidate the patent for them, but if the list of people and companies protected by this insurance is public, those without it will be the first to be sued. So eventually, everybody will want this insurance, and the trolls will be forced to take it to court every time.
Perhaps a solution to this would be a Kickstarter like anti patent troll site. Patent trolls usually go after smaller businesses at first, businesses who could not possibly afford to fight, even if they wanted. The site would allow a business to post their legal case online, and other businesses who face similar exposure, could contribute to the defense fund.
The "perk" of contributing would be that you would get access to all of the expert witness prepared statements and legal work, so if a patent troll comes after you next, you would have a lot of your defense work already done for you. Plus, once the patent troll looses a case, especially on appeal, that decision can be used as precedent.
Also valuable, but as I understand it the OP's solution is applicable specifically to companies that have actually received C&Ds and suspect there are others [about to be] on the end of a similar shakedown which might have an interest in pooling defence teams.
This is an intriguing idea, but I think it would have a big marketing problem. Most of the people who are at risk of being sued by a patent troll aren't aware of that risk, or so I imagine. Maybe that's changing as the problem gets more press, but I still think the necessary outreach would be difficult.
Lawyers specialising in handling IP cases would probably have an interest in such a service though; potentially far more work for them than agreeing with the client that settling probably is the cheapest option. Insurers underwriting intellectual property liability insurance (it exists!) also have a very strong incentive to encourage, or even require their clients to use such a service.
And for some non-software industries many firms might have a pretty good idea which competitors/suppliers/clients of theirs are likely to be threatened by the same patent.
Seems like an insurance policy, except that you get access to the details of past settled cases. Could I not just join as soon as I get served a notice?
You know how they say that the best defense is a good offense. Well, this is the same concept. Sure, you can join the defense fund at any time, but by joining early, and putting up a good fight, you are helping to make sure that you your self will never get served. By joining the fund you are also sending a message to the troll that you are willing to fight, which makes you a harder target.
Erich Spangenberg is America's most notorious patent troll mafia head. I blames him for taking full advantage of the broken U.S. patent system to squeeze upward of $30 billion each year and the tremendous waste of use our legal system resources.
EFF[1] and NYT[2] ran full reports on him previously.
As everyone knows in industry, this is not really a "win". Patent trolls are setup in such a way that if they win they make lot of money and if they lose then they lose very little. In many cases, they don't have to even pay damage or lawyers fee for other party. If they are ever ordered to do so then they would just announce bankruptcy of their shell company. They don't even lose their portfolio because it's allocated in to hundreds of shell companies. So in nutshell, Newegg has done very little damage to the troll. The troll already made $45M and now they will just move on to next patent in their next shell company.
All the other efforts like preventing bad patents through StackExchange etc also have very little impact on troll business model. The only real weapon you can use against them is crafting laws that strongly discourage trolling. One would think tech industry with 100s of billions in bank have enough lobby power to get this done quickly. The issue again is that tech industry itself want to own such lousy patents to use against each other. So the industry will only support weaker forms of laws against trolling. I would highly suspect there would be end of trolling anytime soon. Industry as a whole would be more than willing to absorb this cost instead of giving up on their own ammo.
"... tech industry itself want to own such lousy patents to use against each other."
I recall a story where Steve Jobs called Eric Schmidt from Burning Man and threatened Schmidt with "nuclear war" over Android. What did he threaten him with? Legitimate competition? Guess again.
Junk patents are a perfect vehicle for vexatious litigation.
This is just my biased opinion but the IT industry appears to have no shortage of child-like executives.
World's largest patent troll co-founded by former Microsoft CTO and a licensing lawyer from Intel who coined the term "patent troll". Two individuals who had certainly seen their share of trolling by smaller entities against MSFT and INTC. I believe the lawyer blogged about the problem of "patent trolls" anonymously for while at Intel in the late 90's, but was later "outed".
The industry was aware of this problem very early on.
Reading that the patents were about SSL and RC4, I had an evil thought. A patent troll with these patents would actually help make the Internet a safer place.
Companies that are still using those should be sued for not securing their consumers' information properly. Failing that, this would be an even better way of achieving the same thing.
Because there would be very little point. One part of the issue is patent laws themselves, the other part is that the USPTO is taken to task for both overly lengthy examinations[0] and insufficiently rigorous examinations. I don't have much experience with the USPTO themselves, but knowing people working in european patent offices:
1. they are judged pretty much solely on the number of patents examined and their responsiveness
2. patent offices are funded through maintenance fees (fees paid to renew the patents and keep them enforceable) creating a fucked up incentive to accept patents by default at the cost of the already very loose and subjective patentability criteria ("novelty" and "inventive step or non-obviousness")
3. especially given patent offices are generally underfunded and short-staffed, especially in high-flying specialists able to actually evaluate patents which are either complex or in novel fields (being a patent examiner is few people's idea of a great career, even less so once you've built experience and respectability in your field, and that's assuming the patent office could even hire and pay you), even more so compared to the high-powered business they face
4. this is compounded by states routinely "diverting" (plundering) patent offices's funding, in the US Congress diverts about 10% of the USPTO's collected fees to the general treasury
5. it is also compounded by the opening of whole new and novel patent fields ("business method" patents) which generate even faster growth than the historical patent fields and are the source of much of the bullshit patents
that's not even considering that the existing patent system simply isn't a good fit for software, more generally the whole field of business method patents seems incredibly fucked up and created specifically to be abused (good thing europe has declined to implement it)
Don't forget the Court in Eastern Texas which is a popular place for patent lawsuits. Popular because the court is friendly to patent trolls due to the revenue the court generates. [1]
> And the frequent charitable donations Samsung makes to causes in Marshall, TX, home of many of the the court's jurors.
I'd love to be a fly on the wall when an East Texas jury convenes: They all know what their verdict will be going in so I imagine they just hold out for one last free lunch and chit chat to fill up the time while they "deliberate".
> 1. they are judged pretty much solely on the number of patents examined and their responsiveness
AFAIK, it's more about responsiveness rather than number of patents. Examiners are judged on how many responses ("Office Actions") they file, whether allowing or rejecting a patent. Since a patent can keep coming back for examination after every rejection, they typically generate more responses than patents.
> 2. patent offices are funded through maintenance fees...
They get paid an examination fee every time 1) someone files a patent application and 2) someone requests for further prosecution after they get a "final" rejection.
You could also argue that this creates a perverse incentive to keep rejecting patents, especially as issuing rejections can also be easy for an examiner. They are supposed to attack every element of the claim and prove it is covered by specific sections of prior art, but I've seen responses where they literally dismiss entire claims with some vague prior art references. And there is really nothing an applicant can do about such behavior other than suck it up and pay for continued examination.
> the existing patent system simply isn't a good fit for software...
I'd say that's not true anymore. There was period where patent offices suddenly had to start accepting software-based patents and didn't know how to deal with them, resulting in poor quality patents. Things are lot tighter now.
Also, I wouldn't conflate "business method" patents with "software" patents. In fact, there is no such thing as "software" patents. There are only patents on solutions to problems that happen to be best solved with software. Business methods are just one such area of problems (which I'd agree are not amenable to patenting).
USPTO is the patent granting entity. They perform essentially two checks:
- does the patent have the right structure? (A series of progressively refined claims)
- is the patent sufficiently different from all other patents?
What they don't do is check for actual originality, because that's extremely hard in a technical field. That part of the process has to be tested in court.
Software really proceeds too fast for the patent system, has network effects that are stronger than most other technologies, and has a strong collaborative, public spirit surrounding the Internet and communications technologies.
There's also the "using a computer" loophole: while pure software may not be patentable, the process of using a computer (a mechanical device) to do something is a physical process and therefore patentable.
You have to be careful not to run afoul of Alice now. At the time many patents were granted, you didn't. So now you have to fight in court to prove that Alice applies, and therefore that the patent is invalid.
There is a lot of politics and lobbying present, but there's also intertia. It takes time to fix things. Present patent system is woefully inadequate to the world of Internet-delivered software, which is quite a recent development. It serves somewhat better in other areas.
The point of a patent is to protect your idea from being sabotaged by others so the money goes into your account hopefully and feeds your family and pays for your kids education, etc. Patents are not a block, they are a building block. If you find a patent that makes you think you are stuck and have to abandon your idea; think again. Look for ways to improve on the already patented idea and file a new patent referencing that patent and any others that apply. Patents are not a block; they are a building block. I'm not a lawyer though so my views are not to be taken as legal advice.
Google "build on a patent", here's on example of what I'm talking about:
"Your brilliant idea needn't fall by the wayside simply because you don't want to deal with the patent process."
We also need to comply with laws in order to live in a civilized society. Where in the world are there no patents today and that also has any significant positive impact on society as does America and Europe? Europe does have software patents after all.
Where in the world are there no patents today and that also has any significant positive impact on society
Due to the Berne convention, we don't get to have that comparison. Although lots of people argue that China's weak enforcement of non-Chinese IP has had rather a positive influence on their industry.
Because laws are broken and allow brazen protection racket to be declared "legal". In any normal society such racketeers should be in jail. And the reason laws are broken is basically corruption. See how patent reform constantly stalls because those who profit from this sabotage it all the time.
Seriously excellent work by Newegg. I'm worried, however, that they've now made themselves well-known enough in the industry to avoid future targeting by patent trolls. Honestly, who would go after Newegg at this point with their current track record? In the long run, this probably helps Newegg a lot with good PR and fewer trolls attacking them. With the exception of the specific cases they've already won, I just don't see this really helping the little guys over the long run. Patent trolls are going to remain a huge headache until we get serious reform.
It's worth noting that the Supreme Court has generally given rulings that suggest that intimate that software patents are broadly unpatentable. The key decision that allowed software patents in the first place was State St., which was never heard by the Supreme Court (indeed, in Bilski, every opinion went out of their way to emphasize just how wrong State St. was).
Between Bilski, Alice, and even the older decisions of Benson, Flook, and Diamond v. Diehr, SCOTUS has generally held that most software patents are basically inherently invalid. It should also be pointed out that many patents favored by trolls would also fail obviousness and/or prior art tests: the problem isn't that the patents are valid, it's that trolls can extract money from people by charging them somewhat less than the cost to go to court to prove that the troll's patents are invalid.
One way you could fix the system is to punish the trolls for knowingly peddling invalid patents: if an entity gets three patents invalidated by the court system and they've been aggressive in suing people for compliance with those invalid patents, then all patents that they hold are summarily invalidated and they get prohibited from enforcing any patents for 5 years. On top of having to reimburse everyone they charged (plus damages… plus interest ☺).
> One way you could fix the system is to punish the trolls for knowingly peddling invalid patents...
Most "patent trolls" spin off separate legal entities for each patent they're using. This is to minimize losses if a suit goes wrong and they end up having to pay legal fees. So, trying to punish trolls would be extraordinarily difficult; you'd have to figure out some way to explicitly link all of these entities, which is something the trolls are already specifically trying to prevent.
Oh, don't worry. There'll probably be a saucy agreement regulating a change in that in the disguise of a Free Trade Agreement.
Disclaimer: I have absolutely nothing against Free Trade or Free Trade Agreements. I do have a major problem when they're over-reaching and include off-topic subjects and regulations though.
There are Software Patents in Europe unfortunately. Common myth is that there are no Software patents (Not saying you said that BUT many people state that there are none)
Why would Congress ever pass a law punishing lawyers who abuse the system for personal gain at the expense of the public? They're all lawyers whose entire careers have been spent doing just that.
You mean you don't win the war? I'd say this is definitely a battle that they won, but there is still a ton of work to do to change the legal atmosphere in the USA.
Do you seriously want to live in such an atmosphere? Do you really think that if that situation ever came to be then it would be the only change occurring in society?
Patent trolls may suck, but IP is a thing we're not going to get rid of. As long as it's "property" it can be traded. As long as it can be traded, the possibility that the current owner has desires at odds with the original owner can arise.
> Do you seriously want to live in such an atmosphere?
Certainly. What these people are doing is effectively extortion and fraud; there should be a legal framework in which such abuses can be identified as such and treated accordingly.
The "IP" in question is not valid; it is predicated upon a lie. The lie is that the patented idea is a significant new invention without prior art. The trolls know this and exploit it by looking for obvious implementations of everyday things that could conceivably land within the language of a patent, which is a patent of specifically this type which they specifically acquired for the purpose of trolling.
It's totally excellent that Newegg is doing this. As a side note, I don't like when people include silly infographics in articles like this. I think it sort of cheapens the message and this particular message is important.
Another well known patent troll is Apple, patenting your hands movements and phone shape since 1984. Allowing the marketing industry to replace the hardware industry product after product.
Well, last time I checked, "patent troll" wasn't on the dictionary.
But let's all accept the definition that says that big corporations can do everything they want, while small inventors (yes, they exist) must concede unilaterally of any rights. No way there's a better definition around.
I thought the accepted definition was a company whose only source of revenue was patent licenses and lawsuits, not products or services based on said patents.
Doesn't help much apparently, since android is one of the largest software design 'thefts' ever, and the only thing they couldn't include was 'swipe to unlock' and the apple logo.
I think they do for chips and stuff, not sure about design. Much harder to enforce most design stuff because once you've found 'the good way' it seems super obvious.
This brings up a good point. I need to buy from the vendor that's doing some good with my money. Sometimes I hesitate to buy from Newegg because I can always find the parts cheaper (Hey! Rent's a killer on the West coast right now!) I think I'll buy PC parts solely from them for as long as they fight the patent trolls.
I wonder if Newegg's much publicized fights against patent trolls could be advantageous for them by deterring trolls from going after them for royalties.
N expensive lawsuits might be cheaper than M cheap settlements, if M is sufficiently larger than N.
> In this latest round of Newegg vs. the patent trolls, Newegg went against a company that claimed its patent covered SSL and RC4 encryption, a common encryption system used by many retailers and websites.
Maybe rights over patents should be lost if the rights holders fail to actively defend it (similar to trademarks)? That would at least prevent the absurd scenario where a patent holder waits for their technology to become widespread before starting to prosecute.
Interesting... I just learned that NewEgg's order page fails gracefully under NoScript. You do have to turn on scripts for some domains, but it has buttons that let you continue after doing so. I haven't seen that before.
This system is sick, sick, sick. The patent system needs a major overhaul. It can't be pay to play. Given the state of affairs it would help if all patent litigation fees were paid for by the government.
In winning these cases has Newegg shared any learnings that might help smaller companies affected by patent trolls, or is it almost as simple as ponying up the cash and going to trial?
To achieve a decisive victory in these cases, Newegg typically has to take the defense of its case through a full trial and possibly an appeal.
People often fail to appreciate just how risky a trial can be. We stand on the sidelines and laugh at how absurd this or that flaky patent appears. And yet - and yet - the law itself went through a phase in which such patents were almost routinely granted. Standards may have tightened over time but, still, a patent claim in a hotly litigated case will not survive to trial unless it has been able to withstand a host of pretrial challenges by which a defendant has already asked a court to rule that the patent, as a matter of law, should not stand. It is only when a court tosses the patent claim in the pretrial phases that a defendant avoids the risk of a potentially absurdly high verdict after trial. If the claim survives such challenges, then the defendant has no choice but to settle or to play it out through trial while incurring just a risk of having a large verdict entered against it. This is the point at which most defendants - even large, deep-pocket defendants who can otherwise afford to pay the costs of defense - will fold. Newegg, on the other hand, has made the tough decisions, incurred the major risks, and largely managed to defeat such patents on the merits.
In doing so, it incurs the very large costs of defense typical in such cases. And it has the guts to take the potential liability risks of going through full trials to take the cases to verdict.
Large, institutional defendants have occasionally (though rarely) adopted such policies in the past. For example, over decades, GM adopted a policy of never settling injury claims if its own experts had determined that the GM autos were not at fault. In doing this, it would often incur defense costs that far exceeded the value of the claim being defended. But it did so to send a firm message to the plaintiff's bar that prosecuted such claims - that is, "if you want to sue GM, your case had better have merit - you will get no nuisance settlement from us."
Newegg effectively is delivering the same message but with an important twist. If GM successfully defended a particular injury claim, that ended the case for that claimant but had no preclusive effect on other, similar claims. If Newegg successfully defends and defeats a patent claim by having the patent declared invalid, the law of what the lawyers call "res judicata" (meaning, "a matter adjudged") kicks in and kills that patent off forever.
So, not only does Newegg take out the garbage, it makes sure it won't accumulate ever again.
This is a true public service for which we all must tip out hats.