Don't mess with Newegg | Hacker News Reader

Don't mess with Newegg

blog.newegg.com

1,469 pointskeerthiko190 comments

It seems to me that the legal system in the US is largely broken, and that just about anyone can be sued if only you find the right grounds. Being sued and defending yourself is enormously expensive which is what patent trolls exploit.

Why not use this offensively against patent trolls? Find all sorts of ways to take them to court, the American legal seems to have plenty of opportunities in that regard. There are some problems with standing, but I'm sure that a concerted effort could be effective.

Sue them into the ground with guns blazing. Sue them for everything from not upholding workers rights, to misleading advertising and spelling mistakes. Make them taste their own medicine.

The effort could be crowdsourced.

The law firms that back up patent trolls are very large and very powerful. The largest and most powerful in the nation.

This is why extortion works - if your enemy is more powerful than you chances are you will subdue. The mafia figured this out centuries ago.

If you don't stand up to a bully, even if he is Goliath, he will keep on bullying.

> Being sued and defending yourself is enormously expensive...

I think you answered your own question there.

That's where the crowdsourcing comes in :-)

I'm sure there are young lawyers that would like to give some of these cases a try. Surely there must be someone with a conscience in that line of business. I could also imagine that companies and individuals might want to donate.

Adam Carolla is spearheading a group of the top podcasts in the world doing exactly this. I've donated, I know Carolla can rub people the wrong way, but he's the guy you want running something like this, since he'll spend a ton of his own money to prove his point.

http://fundanything.com/patenttroll?locale=en

Carolla's opines are based in logic I have always found. I can not donate to his cause because I find it impossible to justify another countries broken legal system has to accept bribes to stop from destroying innovation.

What's your solution then? Complaining gets nothing done in the US unless it's backed with money.

And the troll companies are always shell companies with nothing but the patents. So, even if you win, the shell company will declare bankruptcy. This is what changed the game. Before, two big companies generally had enough patents that they would simply agree to cross license because they both infringed one another's patents.

So, for the company being sued, it's a no win situation.

be a bit more creative. It's known who the parent company is, so sue them. Since you're basically just suing for whatever you can get away with you should of course go for the mother ship.

But there isn't always (or even usually) a "mothership" from what we've seen lately. Look at the Prenda Law saga (Ars Technica has some great write-ups). They can't even figure out who officially owns the company, it is almost entirely opaque. I think the problem is that corporate personhood has run completely amok. It is far too easy to invent a new corporate person with little or no visible or even provable connection to any natural person.

It's worth pointing out that corporate personhood in the commercial sense is not the same as corporate personhood in the Citizens United sense. Governments are free to regulate how a 'corporate person' can come into existence and do business. They are just bad at it.

Agreed, that is an important distinction to make.

Oh Prenda Law. My favorite angle on their scam was when they started embedding malware into gay porn downloads to extort money out of them.

I hope someone eventually gets to the bottom of who is behind that enterprise and they can be very publicly shamed and exposed.

If they can't pay due to bankruptcy, isn’t there a chance as someone they owe money you will get some of their patents (assets)?

If you win then their patents aren't very valuable.

But you've also taken away (at least some of) their tools to troll people with.

So has the precedent of the court case you just won.

Typically troll maintains pool of patents. If they file bankruptcy, its an opportunity to shave them off clean and flush out their pool. Even if they had just one patent, it is still worth pursuing this because it puts strain on their legal resources to continue trolling. This is advantage to large company who practically have far more legal resources to spend then individual trolls.

The bottom line is that if all tech companies pubically takes oath like Newegg that they would never let patent troll walk away like that I suspect trolling would continue at the current level if at all.

I think the idea is to increase the marginal cost of doing business, so it isn't economic any more. That is, assuming it takes enough some time and effort to declare bankruptcy, set up a new corporation etc.

But you're right, it wouldn't be a win for a specific defendant, it's more a long-term strategy to change the ecosystem by the community - crowdsourced, as the GP suggests. Another option is a consortium of well-heeled companies to methodically troll trolls.

Unfortunately, funding trolling of competitors is probably something some hidden department of those very companies do, while other departments sincerely complain about it.

Excluding billed time for the process, it is amazingly easy to set up a corporation and transfer patents to it. Fixed costs for creating a shell corp are around ~$100.

Newegg's approach (Never settle. If you sue us expect to pay our legal fees.) is maybe the best way to eliminate the economic incentives, given the uncertainty of the US legal system.

There's a comment downthread by jacquesm detailing one way he exploited shell companies _against_ the trolls and they backed off...

The fact that these shell companies don't actually do anything besides sue people is also a problem. It's difficult to find grounds to sue a business that doesn't have any business activities. (Except countersuits as in Newegg's case, so good on them.)

>> And the troll companies are always shell companies with nothing but the patents. So, even if you win, the shell company will declare bankruptcy.

I think you've hit on it. Anyone who proclaims patents are bad overall are not considering that the real problem is the shell companies, "patent trolls", who are taking advantage of a system that was intended to encourage good faith between businesses; these shell companies are the real problem. The law needs to go after them with the "pierce the corporate veil" mantra.

Patent trolls are definitely a distinct problem, although the problem is exacerbated by, if not created by, the profusion of bad software patents.

So if you reduced the number of bad patents you might fix that particular problem but, for me, software patents are a problem in and of themselves.

OK I'm with you, abolish patents! Legalize pot too while we're at it! Free love and sex any time anywhere!

Abolish software patents, not all patents. The costs are substantial and the benefits do not seem to be.

If troll files bankruptcy, can't the winner claim their assets, i.e., junk patents as payment? Isn't this even better because troll now loses the weapon itself to cause more damage?

Lot of tech companies are sitting on mountain of cash. There is absolutely no reason for them not to go after trolls with 1000% vengeance and eik out every possible cent from them even it cost 10X more to them. I'm dumb founded that no one other than Newegg had this attitude even though these companies keep playing victims.

Often the the shell companies don't actually own the patents, they just license them from the parent company. This way when the shell company loses and goes bankrupt the licenses is automatically revoked and there is nothing left to claim.

Patent trolls might be evil, but unfortunately most of them aren't stupid.

If a shell company does not own the patent how can they (as a licensee) sue for infringement?

The parent company simply writes that into the license. Companies like Intellectual Ventures set up a shell company and give that company a time limited exclusive right to some patents, including the right to sue other companies for infringement, during that time period. In exchange for this exclusive license the shell company agrees to pay, let's say, 95% of any revenue generated by sub-licensing or court settlements to the parent company.

Incredible that such a transparent strategy would not be punctured in court. Just requiring that the principal holder of a patent is the only one with standing to sue for infringement would get rid of this particular trick immediately.

Presumably what would happen in that case is that the parent company would sell the patent to the shell company, who would then just sell it back as soon as there was any threat that a victim was going to fight it in court.

It's still an improvement, but I'm sure that there are plenty of even cleverer ways to get around this than my off-the-cuff guess.

If the shell company sues ten companies over a patent, and one of them threatens to sue, and they sell the patent back to the parent company, wouldn't that mean they no longer have standing to sue the other nine either, and they'd have to file a motion to dismiss all the rest?

Yeah, that's why one of the major target reforms is being able to track the ownership chain up to the actual patent owner. This would allow courts to reward damages directly from the actual perpetrator to the victims of patent trolling, rather than this shell game nonsense.

Could the company being sued start playing the same game? As soon one is sued by a troll, reconfigure the 'offending' bit into an asset-less shell company that you purchase/license/etc. things from.

No, you would have to do that before being sued, for obvious reasons...

Then just take a vengeance legal actions against a parent company, not against an empty shell.

Its so trivial to set up a shell company that we can assume the trolls are running one per patent. If a shell goes bankrupt they only lose that one patent, which has been shown to be worthless anyway

IMHO, this should not be dealt with at a company level, since the shell company is arguably not engaged in any economic activity: their juridical entity is, essentially, worthless.

Instead, given the toxic economic climate the people behind it create, this should be transported into criminal charges brought against the make-believe CEOs behind the shell companies that specifically engage in patent trolling. They're arguably pulling a con against a system designed by the state for something completely different, and their con should be treated no differently than, say, tax evasion.

I think the only reason why companies like these continue to flourish is that the people behind them are entirely safe. No legal system will be able to close down as many companies as they can open. So jail the motherfuckers, or otherwise forbid them to take part in the economic system, and it's bound to stop.

If everyone agrees that it's a "con", as you put it, wouldn't it be easier to just change the rules to prevent it happening, instead of letting it still happen but criminalizing people who do it?

There's a system, there are rules. Some people have found ways to utilize those rules which many of us think are bad. The solution should be to change the system and the rules, not criminalize more people for doing something that is currently entirely legal.

I'm not sure if that could be worked out in a fair manner. Holding patents as a nearly-bankrupt company that's essentially out of business is not necessarily to be forbidden -- it can still be used constructively, e.g. by licensing them free of charge to non-profit organizations in order to relieve some of the uncertainty of potential donors. Just like with extortion, the fact that it can be punished is pretty much the best deterrent we have.

Of course, the real solution would be to stop all this software patent nonsense, but that's so last year.

How about a licensing requirement for non-earning, non implementing companies? If they don't have revenues that haven't been awarded by a judge, require them to license according to a schedule determined by a regulatory board.

Hm, good point. My difficulty was this: if a company holds patents that it is not exploiting, all they're doing is adding unneeded pressure on competitors who have to think twice about implementing something similar because you never know when the other guys might sue. On the other hand, it also seems unfair to force patents away from companies that, while having financial difficulties, would also actually like to exploit those patents and simply need some time to find additional income sources.

This would actually be a good idea: such companies should be required to either present a good schedule for how they intend to actively use the patents they hold, with the implementation of that schedule supervised by a third-party (maybe state?) representative. Companies that fail to implement their patents should be subject to limitations that discourage them from using the patents in an anti-competitive fashion, or simply for financial gains that do not result in any implementation.

There could be a ton of variations on this theme. For instance, companies could be required to pay a certain fee for each patent they hold, that decreases if the patent is actually implemented and increases (possibly to impractical amounts) for every year that it is not implemented. This way, companies would be discouraged from hoarding patents, while actively offering an incentive for implementing technology they claim to be patentable.

> this should be transported into criminal charges brought against the make-believe CEOs behind the shell companies

Ah, but the original proposal was for individuals to file lawsuits. Individuals cannot press criminal charges -- only the state (in the form of the prosecutor's office) can do that. And the state can not (and SHOULD NOT) use that power to go after individuals because we don't like those people, or because we don't like who they work for, or because we don't like what the companies they work for do.

THAT would be abuse of power.

It is fairly common, even necessary, for justice to go after the key figures of businesses that engage in criminal behavior (e.g. Maffia, money laundering companies). Otherwise it would be a type of behavior for which no-one can be held (individually) accountable.

Working as a lawyer for an extortionist company of this sort does makes you an extortionist. And this is how it works many times, otherwise hitmen could just claim that they were only doing their work for a company.

I agree with your interpretation. I've seen some legal experts try to argue in favor of the RICO laws being used to prosecute the owners of patent troll companies for engaging in what amounts to racketeering and extortion.

Moreover, patent lawsuits have a high probability of engaging a single programmer's responsibility, since all contracts engage the programmer not to use derivative works of anything else and not to use patented work. So I would think it's only fair if the counter penalty were directed at the CEO in person instead of the patent troll.

In one British case I was involved in, the troll's strategy was so obvious they were required to put up a bond to cover at least part of our side's legal fees if they lost. That's a pretty good way to reduce completely frivolous cases.

They did eventually lose (we invalidated their patent). We were still out of pocket, but if their patent had been even weaker, I think they'd have backed out when they had to post the bond.

> the troll's strategy was so obvious they were required to put up a bond to cover at least part of our side's legal fees if they lost.

Yeah, how much money did you spend getting to that point?

That part, only the client knows. But I'd guess at least £1m (out of £3m or so total legal costs on our side). These cases are not cheap if they get as far as going to court.

The difference is that under the English rule there's a presumption that the loser pays the winner's legal costs, while under the American rule the presumption is that each side bears their own costs. In a few areas of law, Congress has by statute adopted the English rule, and in those areas it is common for courts to insist on posting a bond, but in places where the American rule is in place it is very uncommon to do so.

If the patent portfolio of these companies that go bankrupt sold at auction to satisfy creditors? Who buys these, other patent-trolls?

That might be a problem right there.

kind of like the mayone.us of patent trolls. brilliant idea.

Some may refuse to do this as a matter of principle - not sinking to the level of those you despise.

If you could put plenty of arguments and the right team together, perhaps you could raise money from a host of technology companies to pursue this.

If you can grind them to a halt or even perhaps drive them to bankruptcy and potentially buy up their patents to open to the public, this could be fundable.

Before I even got to the end of your post, my mind was already thinking about crowdsourcing the system. THIS. NEEDS. TO. HAPPEN.

Why was this downvoted? It's a completely positive comment. Are patent trolls downvoting on ynews? :)

yep. it is broken.

even in this win, they wasted time and money, that a bankrupt shell company cant pay back.

meanwhile, amazon paid a small settlement fee (which makes the troll case even better) and wasted those same resources hiring engineers to build a tablet or whatever.

Well from people outside of US, it is not only the legal system. It seems to me US itself is largely broken.

At the last Startup Weekend Honolulu 2014, I introduced my approach towards solving this problem; The Open Patent Foundation (Non-Profit). Similar to concepts such as Creative Commons, and Open Source Software Licenses, the idea is to create Open Patent License(s) that standardize a method to share intellectual property with the Community. While this does not directly solve the problem, I think it is a necessary first step towards realizing that we (as a Community) can leverage the existing broken Patent System in a way that favors us (the Community). Not only does this have the potential to accelerate innovation, it will also prevent Patent Trolls from claiming ownership of innovations, and that's a big deal. These Trolls currently use a Licensing approach to extort people (pay our Licensing Fee or else we will sue). I think it would be ironic (and awesome) to use the same approach to effectively null Patent Trolls. Considering how ineffective Legal Reform is, this might be our best bet; To come together collectively as a Community and decide that we want to take a stand and start using the System in a new and different way. It would be a double win, accelerate innovation and null Patent Trolling. If this sounds interesting, the website is http://www.openpatentfoundation.com and I recently moved to Mountain View, so I'm looking to spend more time on this and see if we can get some Community Support.

How is that different from OIN [1]?

[1] http://www.openinventionnetwork.com/ «The Open Invention Network is a shared defensive patent pool with the mission to protect Linux. Launched in 2005, OIN has strong industry support with backing from Google, IBM, NEC, Philips, Red Hat, Sony and SUSE (a business unit of Novell). Any company, project or developer that is working on Linux, GNU, Android or any other Linux-related software is welcome to join OIN, free of charge or royalties.»

The underlying concepts and the approach are very similar. The idea of a non-assertion pledge (or defensive patent pool) is a refreshing example of forward thinking Businesses and Organizations that recognize the adverse effects that Patent Trolling has on innovation. Google is a great example [1]. The Open Patent Foundation takes this concept, and applies it with a different approach. Instead of choosing a specific focus or scope, we want to allow the Community (as a whole) to drive the creation of Open Patent License(s). The end result would be a set of Licenses that any Person or Organization could use and apply towards any Intellectual Property or Patents they may own. So some of them may end up being specific to Software. others may end up being specific to Utility Patents. And yet others might end up being non-specific in terms of application, but specific to a Time Period, or perhaps Distribution Guidelines. It would be up to the Community to decide what we want to use, and that is what (IMO) makes the entire concept so powerful. It is not implied to be a better approach, just a new one. In the end, all of these types of movements are positive. The end goal is to accelerate innovation and stop Patent Trolling.

http://www.google.com/patents/opnpledge/

Cross-licensing and other "we won't sue you if you don't sue us" foundations get created at the rate of about one a year.

If the previous iterations all failed to do anything meaningful, why do you believe that starting yet another iteration will do something meaningful?

I would not agree that previous iterations have failed to do anything meaningful. It is very hard to gauge the success of a non-assertion pledge or defensive patent pool. For example, if you take Google's Pledge of MapReduce related patents, one could argue that Google has helped accelerate innovation in the Big Data space. The resulting Businesses and Products, and their resulting Revenues and Market Caps could possibly be considered data points indicating success. The same could be said for the Open Invention Network and Linux, which has accelerated innovation in Infrastructure, Security, and many other industries. The problem is, it's hard to measure this success, and in many cases the benefits are not realized for quite some time.

I believe that the Open patent Foundation has the potential to do something meaningful because the Community will determine the scope, focus, and relating Licenses. This creates the potential to positively impact a large range of industries. This could apply to Technology, Software, Medicine, Energy, and many other industries where Patent Trolling or similar extortion related tactics have stalled innovation. The concept of an Open Patent License won't stop Patent Trolling overnight. But it will give the Community a standardized method to share future innovations, effectively providing the potential to accelerate innovation over time (from Today moving forward).

The biggest factor in the problem is the US administration complicity, plain and simple.

It's not a technical problem, it's a social one; the are simple ways to largely reduce the problem, which are not applied, because it would hurt corporate interests.

It's weird that 40-45% of Congress is attorneys.

Well, their (nominal) job _is_ to make laws. Members of Congress should be able to read and understand them before voting on them.

But a more representative sample of occupations would be great too.

On the face of it, it doesn't seem any more odd than that judges are usually attorneys. Also, you'd expect people who are more involved with arguing the law to gravitate toward trying to get the job that involves creating or amending the law.

Some of that is what's become a standard career path for A.G.'s and prosecutors.

I understand where you are coming from but it does seem straightforward that people who study the law would end up in careers where they write the law.

Its equally weird that a large chunk of people employed to write software went to college and majored in things that require understanding and writing software.

It's no weirder than a large percentage of programmers holding degrees in computer science or computer engineering.

It's about 26%: http://economix.blogs.nytimes.com/2012/02/23/first-thing-we-.... Banking and business is catching up, though, at about 20%.

The system is working perfectly, if you subscribe to the belief that you can own an idea. If an idea can be property, and you can control how your property is used and distributed just like any other property you own. I can not make a product, but simply licence it's use. A middle man is after all the bulk of capitalism. The patent trolls are a solid business model, and the system isn't broken. Again, this is only if you subscribe to the notion that an idea can be owned.

I don't think you can own an idea, actually I know you can't. But we create an artificial and abstract environment in order to put real world constraints on things that simply cannot be contained. It's why we get all these stupid laws, and why they don't work. They are trying to do the impossible.

A corporation is not a person, an idea is not property. But it will take a revolution to change that, and I'm too lazy to start it.

The cognitive dissonance is somewhat disturbing to witness. People decry patent trolls while simultaneously supporting patents. Everyone agrees that excluding others from building a fire because you "own" the process of building a fire would be ridiculous - yet will turn around and apply that same logic to defend patents and copyright.

Awesome Principled Stand by Newegg! This is one of the reasons to support buying from them.

However this only underscores how easy it is to sue over flimsy patents and how expensive and time-consuming it is to go after and shut down these horrible trolls. Add to this the fact that Patent reform was killed in the Senate by Pat Leahy & Harry Reid (Both of whom are notorious supporters of trial lawyers & pharma) and it is a net loss for the tech industry this week

What fascinates me is how easy it is to fight if you practice. Lee Cheng is impressive, but I suspect his secret weapon is actually having fought a bunch of such cases knowing he has a 'fuck them, they are going to lose' mandate. An enemy who's very practiced at -not- settling is probably not something his opponents know how to deal with.

Newegg has always been against paying out even way back in the day when I worked there. In the early days of patent trolling, someone sued us in a printer-related lawsuit and they offered to settle for a small sum (VERY small). Basically, the in-house lawyer said that it would cost more money to fight it given his hourly wage but that the CEO was not going to pay if it was a frivolous lawsuit. I see that the same principle has persisted now, a decade later.

It's strange that more companies don't see the long term problems created by signaling that you're willing to spend money to settle frivolous lawsuits. Another symptom of the corporate world's excessive focus on the short term?

Not all companies have as much power as Newegg to fight back. I'm guessing it does often make financial sense to just pay it, otherwise companies would have turned the tables already. I don't think it's a lack of long term thinking as much as it is a tragedy of the commons related situation.

The article is out of date -- in a good way -- on one point: It says that to recover attorneys' fees from a troll, the winning defendant must show that the troll acted in bad faith. The U.S. Supreme Court changed that rule last month, easing the burden of proof considerably, and giving trial judges far more latitude on that score. [1]

[1] http://patentlyo.com/patent/2014/04/discretion-attorney-liti..., by patent law professor Dennis Crouch.

I feel it's really important for us, as consumers, to support companies like Newegg. This strategy is really risky for them (despite all the good PR it brings).

It's easy for patent trolls to just move onto different targets and avoid suing combative companies like Newegg, but if we vote with our dollars maybe more companies will see that they too should take a stand.

Lee is a hero. Most patent lawyers talk in very measured tones when it comes to patent trolls, because they don't want to foreclose the possibility of feeding at the money faucet themselves.

Lee doesn't give a fuck. He straight up calls them thieves and asshats. Baller status.

Agreed. The first step to fixing any vague/grey problem is calling it by its real name. If only we could hold our politicians to such a standard, patent reform wouldn't be an issue as it'd already be fixed.

Despite rarely buying from NewEgg (outside of the continental US shipping is a bear), I'm signing up for their Premier membership simply to support them in the fight against patent trolls. Their product photos and customer reviews have also offered a lot of value to me over the years.

I think you've discovered the origin of NewEgg's stance: why order from Amazon when you can buy from Newegg _and_ fight patent trolls?

I am a longtime customer of Newegg. No where will you find product reviews written by such a dedicated base of geeks. Newegg customer service is also really really good. I buy virtually all of my hardware on Newegg, even if its a few dollars more. That said, I am an even more loyal customer after reading this article.

Wow I love that they're taking a stand, and got quite a laugh out of the image. Definitely makes me want to support Newegg as a customer much more in the future.

Instead of posting a comment like this, it's generally better just to upvote the comment you're agreeing with. The mods are trying to optimize the signal:noise, and there's not much signal in a two-character comment.

I'm proud to be a Newegg customer because they call me their customer, not their consumer.

The lesson from this article: PR can be an effective legal deterrent. Publicize your victories.

It seems to me that there is a good way for the industry as a whole to address the issue of patent trolls without waiting for legal reform by attacking the economics of the business.

Trolls make money by simply 1. Amassing patent portfolios (the only real fixed costs for this business) 2. Sending infringement letters to victims (sorry, targets) 3. Walking to the bank to cash the checks of companies who cannot afford a legal battle.

Once a troll goes to court, the economics of the business start to fall apart as the legal fees add up and eat into profits. Also, they risk invalidating their patents which jeopardize future revenue streams.

It should be possible to create an alliance of companies (Apple, Google, Yahoo, Microsoft are obvious candidates) that have an interest in a strong ecosystem of innovation to put together a fund that makes legal defense grants available to anyone in the mobile/web space who can demonstrate they have a plausible defense case. The amount needed would not be large (less than $20 million a year should be sufficient to cover the entire industry) since just the fact that every kid on the playground now has the ability to face up to the bullies will reduce the bad behavior considerably.

Cheng did a "AMA" on reddit -- here are all the questions & answers in a convenient tabled form: http://www.reddit.com/r/tabled/comments/2693ur/table_iama_hi...

As the CEO of a small 5-person startup, getting sued by a patent troll scares the shit out of me. Seeing Newegg take it to these asshats puts a grin on my face. I'll be voting with my dollars by shopping at Newegg.

Not that I blame them for it at all, but I'm sure the potential for thisresponse isn't overlooked by Newegg when they decide to fight these suits. That said, good on them. Far better to spend money building their brand by fighting back against patent trolls than on run of the mill advertising. (And in the best case scenario, like this one, fighting might not even cost them at all.)

This is so beautiful, I am going to support the hell of out Newegg extra deliberately from now on (e.g. buying stuff even if it's more expensive, takes longer shipping).

I absolutely love this. Lee Cheng, rock on!

> Thanks to the efforts of Lee Cheng and his legal team, the Federal Circuit Court of Appeals ordered a trial court to reconsider its earlier denial of Newegg’s request for attorneys’ fees and costs in the patent infringement lawsuit brought on by SUS.

Wait, so what did the trial court conclude? Are they making the troll pay or not? I feel like I'm missing something?

Also, isn't it worrying that they had to appeal in the first place?

IANAL: The trial court had found for Newegg on the infringement case, but had not taken the additional step of awarding attorney's fees to Newegg. The appeals court has now recommended that the trial court take that additional step. The appeals court doesn't have time to wade through reams of legal invoices. Actually the trial court may have been trying to avoid that as well, but now it has no choice.

It's my impression that courts don't want to award attorney's fees to civil defendants very often, because that would discourage litigation. I think it's reserved for obviously "frivolous" cases. Therefore the need to appeal doesn't seem like a problem.

Living in a country where the default is that the loser pays (within reason), I must wonder: Why is discouraging litigation a bad thing?

The balance to this is that corporations and rich individuals already have far more money to spend on a legal defense that further discouragement makes it that less likely that regular individuals will be able to use the legal system to redress civil wrongs that those parties have done to them.

I.E. the plot of the show Leverage.

Litigation isn't inherently bad. It all depends on how it's used. You don't want a policy that makes life hard for patent trolls to also make it impossible for, say, a person who's horribly disfigured in a car crash from suing the company for a legitimate design defect that caused the crash.

Siblings have plausible explanations. Another reason, however, is that we have so many lawyers, and they must be employed somehow, otherwise one of them might take the judge's job. Why not employ the teeming masses in litigation and/or the prevention of litigation?

Uh, because employing the teeming masses in production of goods that improve the quality of life is better than jobs for their own sake.

Personally, I love the fact that this title evokes the "Don't mess with Texas" line, given that it's the East Texas courts that aid patent trolls so greatly.

If it's mainly the Texas court, then why not go after that angle?

It's a federal court based in Texas, not a state court.

That caught my eye. Surely that's evidence of corruption in itself, if a particular area's courts seem unusually biased in a particular direction?

> the defense managed to move the trial out of the Eastern District of Texas, a jurisdiction that is known for favoring plaintiffs in patent suits.

They REALLY need to publish how they did that, because that'll help every other company battling patent trolls.

Well done Newegg. From now on, Anytime I buy electronics, i am going to check Newegg first.

Acacia Research has been at this for a long time now. I remember when they went after porn. They claimed to own streaming media and thought the adult industry would settle. While some did, one company took them up and won. If I remember he said it cost them $500k to defend.

It cost them quite a bit more than that but they won anyway. That did not stop acacia from extorting (or in some cases trying to) pick fights with smaller entities. They then started to withdraw their cases if it became apparent someone would actually fight back.

(I know this because I supplied a whole bunch of information in that lawsuit and the defendants are customers of mine, Acacia also tried to sue TrueTech Canada Inc but dropped the case when they realized that (1) I wasn't going to budge and (2) the IP was all vested in the Dutch parent company, so the 'shell' effect worked to our advantage for a change. If they'd won in Canada we'd have declared bankruptcy, opened a new office two doors down the hall and continued business with a new daughter company. The Canadian subsidiary had little to no assets, just desks and a bunch of computers.).

Right now was a good time for me to learn that Newegg takes a principled stand against patent trolls because I've been thinking of starting to buy from Newegg because I keep on hearing bad things about how Amazon treats its employees.

> Most companies choose not to recover their legal fees in patent suits because prevailing defendants are required to demonstrate that a plaintiff acted in bad faith. This is extremely difficult to prove and it’s usually easier to just walk away and count your losses – unless your name is Lee Cheng.

Interesting. So if you're a patent troll, there is little to no downside to constantly suing companies aside from the legal fees?

Exactly. This is the main reason why patent trolling even exists today, because the troll companies never really lose.

This is also the primary aspect of patent troll legislation (punish companies harshly that file frivolous claims) with HUGE bipartisan support, that has just been shelved.

http://www.nytimes.com/2014/05/22/business/legislation-to-pr...

Legal fees? I would assume they have a team of full-time attorneys on payroll. Since their legal fees are fixed, they're incentivized to use that team as much as possible.

NewEgg and Nintendo seem to be the only companies willing to actively fight patent trolls. Anyone else?

Adam Carolla is pooling funds to battle a patent troll that is suing him for podcasting: http://fundanything.com/patenttroll?locale=en

I'm not down with Nintendo - their games are region-locked.

Rackspace is another company that stands up to fight Patent Trolls. And they run OpenStack. (Double the Awesome)

Does anyone know why these cases are so expensive to defend? They can't be that complex given the troll basically has nothing. Could you not just hire a junior lawyer out college for next to nothing and put them in charge of running all the defences?

They're expensive because the eastern Texas courts are so favorable to patent plaintiffs that in order to have a meaningful chance for a win you have to either get the USPTO to throw out the patent or get the case moved to a different court (as Newegg did here). The former is extremely time-consuming and expensive, and the latter is difficult and rarely successful. A direct fight against the subject and claims is all but doomed to lose in those eastern district Texas courts regardless of the content of the patent. And if you do find a way to win, you have nothing to retaliate against or recover fees from.

Why is it more expensive to run a case in East Texas with some junior lawyer than anywhere else?

Because you will lose, regardless of whether you hired a junior lawyer or the most expensive law firm in the world.

I don't think it is as simple as that as people do win in East Texas [0]. I found it interesting that the latest troll shopping location is Delaware.

[0] http://arstechnica.com/tech-policy/2013/01/east-texas-courts...

So why are they so favourable to plaintiffs in patent troll cases in East Texas? Is it as simple as "favourable outomes for patent trolls = more patent troll cases in East Texas = more money for us"?

My layman's guess is that the discovery and documentation processes would be very invasive and time consuming. Plus the risk of a loss is severe.

It looks like discovery is the cause - quoting from [0] "After all, the great struggle in every patent litigation is balancing the fact that discovery is by far the most expensive part of the process...".

It would seem that basically patent trolling is really discovery trolling - pay us or else we will make you go through discovery.

[0] http://patentlawcenter.pli.edu/wp-content/uploads/2010/09/Di...

Whenever I can, I buy from Newegg for this reason.

The big companies probably don't worry too much about the "trolls", and the current legislation reflects that. They have the legal and financial resources to defend themselves. The Trolls make life hazardous for smaller companies who might go bankrupt because of them. For big companies it's probably just good that smaller disrupting innovators get out of business sooner rather than later.

I really appreciate the NewEgg strategy in these cases. They're fighting the good fight. And it's a great move to make the most PR splash from their victories to discourage future trolls.

If only they shipped outside the US, I would give them all my business. :)

We need patent reform now.

"their patented technology related to the registration of websites on search engines" — this right here is conclusive proof the patent system in the US is broken. Lets fix this now. How many legal/government resources have been wasted because of trolls like SUS? Leave the judges to put real criminals away.

Thank you for making a good example for the rest of us NewEgg. There are too many people that are unable to defend themselves in situations like these, it is great to know there are companies out there willing to fight (even if it takes years and hundreds of thousands of dollars to win).

I'm a little surprised that patent trolls get such a bad rap on hacker news. I would argue that patent trolls exists to protect the small inventors. Without patent trolls, the big companies can easily infringe the small inventors' patents knowing full well that the little guys can't afford to go up against them in court. The patent trolls merely step in to enforce the rights of the small inventors.

That is not to say that software patents are a good idea or should be allowed, and one could certainly make the case against them, but that's a separate issue.

No, the difference is in the added word troll, not simply a defender. Trolls are non-practicing, and produce nothing and protect nothing. I'm sure a legitimate 'little guy' with a patent would get all the sympathy he deserves here, unless perhaps, as you mention, it's a software patent.

I think you're missing the point. You can't distinguish between the patent troll and the little guy inventor because their rights are one and the same. A patent troll purchases the right to enforce a patent from an inventor who would otherwise not have the resources to enforce it himself. It is that right, the right granted to the inventor, that is being enforced. Without the patent troll the inventor's rights would get trampled by the large corporations. Hence, the patent troll is defending the small inventor's rights.

The fact that the patent troll is not practicing the invention matters not. There is no requirement that a patent holder practice the patent in order to enforce it. I can assure you the big corporations do not practice all patents they hold and enforce, many just get licensed out - and there's nothing wrong with that. But there also shouldn't be anything wrong with the small inventor doing the same thing, except for him it often requires the help of a patent troll. The patent troll is just doing for the inventor what the big corporations do for themselves, thus leveling the playing field.

Is there a "Patent Troll Response Command" to coordinate the response of companies being sued and to facilitate the creation of groups to fight such lawsuits together?

I was thinking that - or is there a site where you can post your troll letter and be put in touch with the other companies that have received the same one? Wouldn't be that hard to build. Does anyone know if there is one?

I'm American, but have lived in Scandinavia for a couple years now. When I incorporated my bitty start-up last year, I could choose between incorporating here or in the US.

Despite the higher tax burden, I ultimately decided to incorporate here. Why? There were a lot of reasons, but the two biggest ones were: 1) I didn't want to worry about patent trolls 2) I didn't want to worry about net neutrality effecting my first users (we are starting local)

Are you sure that the biggest reason wasn't that you live in Scandinavia?

This is an interview with Paul R. Ryan, former Forbes CEO and now the guy behind Acacia Research, the firm behind the Newegg patent law suit. Was surprised he is not as slimy as I expected: http://vimeo.com/57723958

If you're a slimy character, and you want to get to CEO the slime has to be inside, and invisible. These guys are very smart, and very manipulative. Think evil Derren Brown and you'll be close to the mark.

In respect to SW patents isn't the recently renewed US legislation more a problem than a solution. As I understood it, it is no longer who wrote a piece of code that exemplified an idea first, but who first filed for the patent for it?

I really wish NewEgg had shirts that looked better than the ones they sell.

I get plenty of compliments on my "Geek On" shirt. Of course, something more subdued and pro would be nice...maybe even a collar?

I've been down on their services the last few years, lots of headaches and noticeable lag in ship times... it feels like they had the IPO after all. Also, I don't appreciate having to take the extra step/refresh to exclude the 'Marketplace' from my searches every time... drop-ship crap has sullied their image, IMO. Anyway, I will recommence making them my 'go-to' e-tailer due to this action & for their years of providing (mostly) exhaustive product images, complete spec pages & informed reviews.

I meant the patent troll shirt. It's a shade of gray that makes it hard to see the image, and I'd like one more obvious about what it's about.

I wore my Rackspace patent troll t-shirt all day. I love Lousy!

I wonder if someone has patented the idea of sue for patents that you never actually use...

Would love to see patent trolls sued for trying to sue for patents they don't use.

Yup: http://www.npr.org/blogs/money/2012/08/01/157743897/can-you-...

I agree with the principle presented here... but before we all hail Newegg, I'll explain why I have not conducted business with this company since 2009...

Here is a letter I wrote Amex then, disputing a nasty transaction with this company. https://www.dropbox.com/s/8b8dg9diowqz48y/Amex%20Dispute%20R...

This is real, and I won.

Trust me, I am doing you a favor: Your redaction technique is very poor. Almost every redaction you used allows us to see the tops and bottoms of the letters which is enough to recreate all the hidden characters.

Partial redaction is no redaction.

Was there anything beyond that which would enable reconstruction of the data? Just curious. I was only trying to share, and on a level which would enable the audience to know it was real. Thanks.

What's the point of redaction if you keep enough of the data intact to trivially reconstruct it?

I guess none. The information redacted was not really critical, I tried to remove personally identifying information while making the point... but I understand your point and appreciate the feedback. Thank you.

Understood, and totally redacted now.

Look, I was just trying to present some truth, at least my truth.

I tried to anonymize, but I understand the audience here is pretty sophisticated..

If anyone wants to advise on how to share this better please advise. I'm not trying to hate, just share some facts. I was surprised the seemingly fanboy level reaction to Newegg here. I did a fair amount of business with them previously and their behavior in this case was truly objectionable. This isn't exactly a Snowden level revelation... I was just saying this company isn't exactly a bunch of angels...

I now use Amazon for what I used to buy from Newegg. They cost a bit more for some things but are a stand up company and have always stood behind their sales. If something doesn't work they accept a return (which is commendable), and if something is delivered broken (which is what happened in this case) they don't give you a rash of sh*t.

> "I was just trying to present some truth"

Here on HN, we don't want mere truth. We also optimize for interesting and directly relevant comments. "Newegg egregiously screwed up a return for me" may be true, but how exactly is it interesting or relevant in a discussion about their response to patent trolls?

The response here has been a surge of "I'd do more business with Newegg because of this." I stated my point. I agree with this point of the article, but I wouldn't do business with these guys.

For the record, the letter previously published outlined exactly what happened. They shipped me an item that came out of the box broken. When I wrote to them they responded acknowledging, and issued an RMA. When they received the item they denied the return. I wrote back this was unacceptable. After a further week of no response I disputed the charge. At that point Newegg updated the status to "Repair". They shipped me back the "Replacement Item", and I put these things in quote because it references their language, when in fact it was the same broken item that I received. I reopened the dispute, demonstrating with photography exactly what happened. I wrote that I intended to re-open the dispute, at which point I received a refund from Amex.

I am surprised I am losing karma for this. For what? An opposing view? I've been nothing but genuine here. If you want to know who I am you don't need to analyze the parts of the small % of the letters that weren't redacted. Google my e-mail address. It's in my public profile.

Also, if you want to fight patent trolls, support EFF. They don't have t-shirts, but they do have hoodies: https://supporters.eff.org/shop/nsa-spying-hooded-sweatshirt

I think you're missing the point. off topic ranting about why you don't like newegg is why you're being voted down. it has no relevance to the topic no matter how important it feels to you.

I say this having no particular allegiance to newegg. I'm simply pointing out something you don't seem to understand.

> "I am surprised I am losing karma for this. For what? An opposing view?"

As I said above, here on HN, mere truth is not enough to make us consider a comment to be a positive contribution. We select for interesting and directly relevant comments. Your comment is honest, but doesn't particularly add value to the discussion; you might consider it relevant, but I find it tangential and uninteresting.

Downvotes are the HN community's way of signaling that this is not the sort of comment we'd like you to make on this story.

> Downvotes are the HN community's way of signaling that this is not the sort of comment we'd like you to make on this story.

"should be the HN community's way" would be more accurate. It's not hard to find interesting comments downvoted because people disagree with them.

>"As I said above, here on HN, mere truth is not enough to make us consider a comment to be a positive contribution."

It sounds like you'd like to think your community-of-choice is unique, but get over it. There is no "we" here, nor is there some amazing comment quality optimization going on. This place goes hive-mind like any other forum on the internet. "We're" not special.

> "you'd like to think your community-of-choice is unique"

All communities are unique. This is the only community I know of that obsesses over a guy who makes bingo cards for a living. That doesn't mean we're necessarily better than other communities, just that we have our own specific approach to downvotes that people coming from other communities might be surprised by. (In particular, we usually downvote tangential/uninteresting comments, memes, and humor -- edw519 is an exception because his humor is typically both topical and side-splittingly entertaining.)

The person in question posted one of those types of comments, and then asked why it was being poorly received. He has now been educated as to what "we", in aggregate, are looking for.

IMO you're getting downvoted [sidenote: I wouldn't worry about karma so much] because your complaint is sort of analogous to complaining about higher prices at the Mom-and-Pop store across the street from the Walmart Supercenter.

Newegg's "strict" RMA policies are often compared to the much-larger Amazon, who practically allows you to set a purchased item ablaze and return it for a full refund, no questions asked. Amazon will even pay for the return shipping in most cases.

Sure, you can get better customer service from Amazon, just like you can get the same brand-name products from Walmart for cheaper than the Mom-and-Pop, but "supporting" a business typically implies sacrificing some sort of convenience (or money) because you believe in a business's philosophy. Since you were eventually reimbursed for the defective merchandise, you actually fared pretty well.

> ...but how exactly is it interesting or relevant in a discussion about their response to patent trolls?

Another comment on this thread simply states "Newegg is my hero!". How come you're not lecturing that commentator?

I found joshjdr's comment relevant. From my years on Hacker News, I've never had the impression that every comment was directly relevant to the posted link.

Most of the time someone leaves a comments that off-topic like joshjdr. Many people respond and sometimes a giant thread emerges. Those uninterested simply move on.

> "How come you're not lecturing that commentator?"

joshjdr indicated that he wanted to understand the negative response his comment was generating. I provided him with an explanation; this is a service many HN commenters have expressed appreciation for in the past. The other guy made no such indication, so I gave him a downvote without explanation.

> "I've never had the impression that every comment was directly relevant to the posted link."

Perhaps my explanation was less clear than I hoped.

The HN community has certain expectations for comment quality. Generally speaking, the less directly relevant a comment is, the more of some other positive quality it needs to have in order to be well-received. "Newegg really screwed up something unrelated to patent trolling" is both tangential and unenlightening.

It's in the context of what the original link is about.

In your example:

Another comment on this thread simply states "Newegg is my hero!". How come you're not lecturing that commentator?

"Newegg is my hero" is a comment stating that the user likes Newegg because of what is being described in the link. While not extremely useful, the comment is directly related to the subject being discussed.

Whereas, "I don't like Newegg because they screwed up a return." is both not useful and also has nothing to do with the topic being discussed. It has as much to do with the story as "I don't like Newegg because an employee once cut me off on the highway."

Not to mention that with sites like HN, it gets old fast when people use every mention of certain subjects/people/companies as a catalyst to air any unrelated grievances they have just because. Imagine (this is a fictitious scenario) that joshjdr reposted his original comment in every thread mentioning Newegg, regardless of context. That sort of stuff can be frustrating to wade through regularly so people tend to react poorly to comments that appear similar in nature.

That's one of the reasons I avoid Amazon and prefer to buy on Newegg.

Great but singing victory too soon, Newegg haven't won any money yet

They don't need to. This isn't about the money, it's about the message they're sending.

>Great but singing victory too soon, Newegg haven't won any money yet

They even said that there endgame isn't even to win money in these situations. They are just happy if they can get the other side to spend their own resources/time/money more than they normally would want to litigating cases like this.

If only they would sell stuff to me (I'm not in the USA).

> "those asshats"

Lawyered.

I hope for the patent trolls the same that happens to SCO

Newegg is my hero!

As a lawyer, I approve this message.

apparently at newegg you can say asshat on the corporate blog. I like that

We need more of this.

Pretty bold move by Newegg.

Newegg are cheapskates. The publicity from doing this pays far more than the money they'd save by settling with patent trolls.

The fact that they're being rewarded for their actions doesn't mean that those actions aren't laudable (especially when that reward consists of their being lauded).

The HN community collectively hasn't ever been able to grasp this concept; apparently if a corporation has any possible benefit from an action, it MUST be the motivation behind the action. It's a particularly delightful cop-out because any positive action (including philanthropy) can be dismissed as a PR move.

I vaguely remember reading about some philosophy where there was no such thing as a selfless act, as you always get something out of it, even if it's just a warm fuzzy feeling inside.

That's just one example of why I find most of philosophy to be a complete waste of time.

Relying on vague memories for such broad judgements. Seems like a sound philosophy to me ;)

I think you are referring to economics...

I grasp the concept perfectly well. But this is theater. Look at the title ("When Will Patent Trolls Learn Not to Mess with Newegg?") and the ridiculous picture of the lawyer!

This would seem to imply that mantis369 is representative of "the HN community" but jeorgun is not, which seems like an odd distinction.

> This would seem to imply that mantis369 is representative of "the HN community" but jeorgun is not, which seems like an odd distinction.

I thought it was evident that I wasn't basing my assessment on a sample size of two comments on one thread...

You shouldn't read an opinion about a characteristic of "the HN community" as applying to "every single person who comments on HN", but rather to "HN in general, as expressed through comments and votes on those comments, across hundreds or thousands of different threads, has historically showed this trait".

Surely you understand why I went with the much more concise "the HN community", given that it's IME almost universally understood to refer to be equivalent to the above longer definition.

Well yes, but then the same kind of thing applies to my post. A few people express this attitude, in general, but they're rapidly countered by others.

Do you make all decisions based on potential profit, or do have a principle or two that you occasionally feel like standing up for?

I have plenty of principles. However I am not a for-profit corporation. It is not cynicism on my part to assume that Newegg is motivated by economics. That is the very definition of a corporation. Maximizing return to shareholders.

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