Newegg sues patent troll that dropped its case
arstechnica.com
arstechnica.com
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.
https://en.wikipedia.org/wiki/English_rule_(attorney%27s_fee...
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.
http://www.lawdepartmentmanagementblog.com/law_department_ma...
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".
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...
It's more expensive to go to court.
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.
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.
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 why I'm encouraged.
What is not fair about this?
"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..."
http://arstechnica.com/tech-policy/2016/01/newegg-sues-paten...
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.
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.
Not only am I unintimidated by litigation;
I sometimes rather miss it.
Along with: http://www.lettersofnote.com/2013/08/arkell-v-pressdram.html
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."
[1] http://arstechnica.com/tech-policy/2016/01/patent-troll-real...
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.
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.
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.
> ... 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.
Apparently, neither did troll. ;)
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.
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.
I wonder if there's any computer gear I need. Hmm...
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.
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.
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.
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.
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.
I'd be giving Newegg a call if I were a patent attorney looking for my next gig.
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.
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.
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.
Cheng is a badass :)
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.