I love the non-lawyerly language... "screw them, seriously, screw them". So refreshing to hear a corporate guy speak like a human being instead of a highly trained PR bot.
Great news. I was surprised to read that in a way similar to the Apple case against Samsung, the judge (in the Apple case, it was the foreman) told the jury to completely ignore the validity of the patents in District Court. It still makes absolutely no sense to me, so if someone could fill me in I would appreciate it.
I read that the judge said jurors would be confused... is this normal in any other type of case? Not a satisfying explanation.
No, I think you may be confusing some things here. Sometimes judges give juries instructions to ignore a particular part of a case when making findings for another part of the case. This makes it easier to rule on a case when it goes to appeal. For a patent trial, often the judge will instruct the juries to consider the issue of infringement alone, assuming that the underlying patents are valid, and then consider the validity question separately.
So on appeal, the appellate court can overturn a specific finding (i.e. one of the underlying claims are invalid) but not overrule the overall finding (i.e. the infringement finding is still valid because they found that if certain other claims were valid then the defendant did infringe).
This is obviously more complicated in practice because juries are supposed to only decide issues of fact and not issues of law - but in some cases it's difficult to say exactly what is law and what is fact. This is especially so in patent law, where the actual letters patent are supposed to be interpreted in light of the relevant patent legislation, and often turns on interpretation of words (which are questions of law).
This is, by the way, why patent trolls like jury trials. It's easy to bog down processes in these trials and confuse the jury.
As for the Samsumg case, that's complicated by a generally ignorant foreman who seems to have convinced fellow jurors that his interpretation of the law was correct.
> That was OpenMarket, a software company that originally created these patents before going out of business in 2001.
Whenever exec's talk about needing to file patents for "self defense" I always think of cases like this. I don't know anything about OpenMarket, but I'm guessing they had similar logic. Then they go belly-up and these toxic patents make their way into a trolls portfolio.
No matter the company, IMHO, it's generally best to abstain from any patent fishing expeditions.
I actually worked for Open Market briefly back in 1998. Don't blame me, though. Open Market acquired my company, ShopSite, but they were already on a downward trajectory by that time, and I left to start another company before the year was out.
But I can report that the company was quite proud of its shopping cart patent, and its patent portfolio in general, largely because they felt that it protected them and established them as a major player in the nascent but growing e-commerce market. There was a sense, though, even then, that the patent was pure bullshit. I never heard any contemplation of using the patent offensively, and from what I can recall there was a feeling that if that were to happen, the same thing would happen to Open Market that happened to this patent troll. That is to say, that it wouldn't stand up.
Indeed, this is a good cautionary tale as to the havoc that "defensive" patents can wreak once they get into the hands of trolls.
Patents are like the toxic waste of innovation. When they are created everyone is sure they will be kept contained but people move on, businesses close, and they end up getting dumped into the ecosystem where they poison everything.
It seems unfair somehow that our whole industry benefits from Newegg individually taking on the risk and expense of bringing a patent to litigation and appeal. Maybe more patents would be challenged if there were more cooperative efforts to bust bad patents.
I agree. Next time you buy something, and have a choice between Newegg who fought and put themselves at risk, and Amazon who took the easy way out, you know who deserves your money.
Yep. I quit ordering from Newegg years ago because of a customer service issue. We order an unholy pile of stuff from Amazon all the time. I think it's time to start ordering from Newegg again.
Dont worry about that: developing a reputation for aggressively fighting patent trolls has the effect of dissuading trolls from targeting newegg in the first place. Trolls are likely to target others for a quick settlement rather than risk losing their golden goose at trial (as happened here).
Isn't it odd that this is exactly what patent trolls have become? How many people (especially small company owners) are living in teror of being sued, or have already been sued, for being in violation of completely asinine patents?
They've all pretty much been reduced to "X on a computer" or "X over a network" with "X" being ideas that are in many cases decades old and if patented, long since those patents have expired.
I guess this is what we get with patent office incompetence and rubber-stamp-happy inspectors. The patent office a little while ago asked for "feedback" on the software patent issue. I had a good chuckle.
If you think "Don't negotiate with terrorists" is just overdramatizing, then you've misread. It's actually a reference to an interesting bit of theory about deterrence. A country which has a history of negotiating with terrorists will tend to get more terrorists making demands of them. Conversely, a country which steadfastly refuses to ever negotiate, even when this hurts them, will not get as many terrorist demands.
This kind of reasoning also applies to border skirmishes, contract disputes, and patent trolls.
Newegg is saving themselves millions of $ a year from being a patent-troll nightmare. I suspect many patent trolls try to avoid them, especially after this.
Maybe we should set up a tradition of patent-busting bounties.
I.e. when Victoria's Secret gets hit with $10 million a year in royalties (or whatever the number was), they can say "We're not going to fight these patents in court, but if somebody else fights them and wins, so we don't have to pay that $10 million/year royalty anymore, we'll give them a one-time $3 million payment."
Victoria's Secret has an incentive to post a bounty under these terms, because having that promise available can only improve the chance that someone else will take it on. And they only have to pay out the reward when Newegg wins -- which means setting up the bounty didn't cost them money, it saved them money (assuming the reward was what made the difference between Newegg fighting and rolling over).
This way, each business can settle or fight depending on their specific circumstances, but the companies that choose to settle can still encourage others to fight.
Great idea, but the lawyers would shoot it down immediately (if they haven't already). The terms of a settlement would just have a clause preventing them from offering such a bounty.
So just do it ahead of time. As soon as the troll approaches you, before you so much as sign an NDA, immediately set up an independent trust with the money in it which will give it to whoever invalidates the troll's patents, and if the patents expire without being invalidated the money plus interest goes back to the company. Do this immediately, for every troll, by every company. It could put a pretty good sized dent in the problem.
Hence the words "trust" and "independent" -- you set it up so that it's totally out of your control. Then you can't withdraw it any more than you could prohibit the EFF from doing the same thing if they chose to.
Every C&D can be posted to a Kickstarter-like site, which collects for the pool of funds. Other companies who receive the same C&D can join the group, basically creating a class-action in advance of the civil action being filed. Potential trolls could look at their prospects and make decisions thereby in a form of mutually-assured destruction (patents on the trolls part, the funds on the receiver's parts).
Comparing patent trolls to bacteria would be an unforgivable and entirely unwarranted insult to bacteria everywhere. Even the plague bacterium deserves better.
We need to see alot more of this happening - hopefully this will show people there is another way to go, i.e. never ever settle with a patent troll, no matter how scary the alternative may seem to be. 3 patents invalidated but thousands to go. It is disgusting that these trolls managed to collect so much money before their garbage patents were ruled as such.
I think you might be going a little far and taking this a little far... considering the black plague killed between 75 - 200 million people e.g. 30-60% of the population in europe...
I agree patients are bad, but let's not take things out of perspective ...
I wonder how many people have died because of inefficiencies caused by the patent system, or just the whole healthcare thing. I don't know if the medical patent landscape is a wasteland like the software one, but probably it's not the best we could do.
Just a thought: abolish the patent system. Pay the pharmaceutical research companies directly, by the State, like we do with military research or civil works. I prefer free markets but anything touched by patents is not a free market either.
The cost could be shared by the rich countries. Research is expensive but is a fixed cost. Manufacturing could be done by the free market, because all drugs would be generic. Rare diseases could be researched instead of just profitable ones. We would avoid all the "convincing" doctors to buy expensive patented drugs. Some companies would be specialized in research, others in manufacturing. Developing countries wouldn't have to be worried about patent fees they can't afford.
They are not robots, they make choices. If I offered money to steal babies, that's an incentive. If someone did it and tried to defend themselves by saying "I was just responding to the incentive" that does not make them any less reprehensible.
I was deliberately not talking about whether it was reprehensible. I was talking about how and whether you would succeed in inducing everyone to stop doing it.
Sadly, when people are offered money to steal babies they steal babies.[1] The moral outrage is important because it increases the cost of the action but removing the incentive is generally a more effective way to change behavior.
This is indeed true. What is needed for a long term solution is to fix incentives. In the sense that it shows patent trolls that there is at least some risk involved to their dirty game, the Newegg verdict does that a little bit. Real reform must come from (a) Washington and/or (b) multiple companies banding together into industry associations to fight the trolls.
The patent trolls have made tens of billions at this point - around $20B last year alone in fact. They have deep pockets and will not go away easily. It will take a real fight to change things, and it will require the support of many industry players.
Giving your anger a focal point can be productive, as it may inspire you to promote change.
Since IP lawsuits entered my field of awareness, starting with the Napster Trial, I've always wanted to set up a web site called "idancedonyourgrave.com" (or something with a similar sentiment). Morbid, but I want user-submitted pics of people actually dancing on the graves of people who have damaged our society through policy and abuse of the system.
My current candidates are: Lars Ulrich (Metallica, figurehead of the Napster lawsuit), Jack Valenti (former president of the MPAA -- hey, he's dead now, too!), Hillary Rosen (former president of the RIAA), and now I'll add Katherine Wolanyk (from the article, a co-founder of Soverain, patent troll).
You never know, one of those extorted licensees might not just be in it for the litigation immunity -- they might actually be using that ancient software...
Surprising that so many companies paid so much money before NewEgg found and used the Compuserve prior art.
And it's a shame there isn't much cooperation between people attacked by patent trolls. It feels like there could be benefits of scale if you have 5 firms cooperating against a troll.
Yeah, a very obvious idea comes to mind - all affected by the same patent troll should pool resources to support at least one steadfast fighter in order to bust the troll, instead of spreading resources thin.
The company won't hire law firms that take on patent troll cases, and its top lawyer, Lee Cheng, is vocal about his view that others should take the same approach.
Is there a site somewhere listing which firms represent patent trolls?
If there is a site, it will need to keep changing almost weekly. Trolls are notorious for closing up shop and starting new companies with new names and hiding behind subsidiaries. Likewise legal offices that work with them are very tight-lipped.
It's the software litigation equivalent of defending terrorists after all.
If a name is sold to another company and the index hadn't been updated, the new company and name will be at risk for misdirected rage.
These were Open Market's patents? OM tried to get us to license one of them in about 1997. They didn't try very hard though. I told the OM guy who called me that I thought the patent was invalid, and he said "ok" and then asked if we were hiring.
Yes, Soverain's patents were originally from OM. I think the path was roughly something like this: OM->Divine Interventures->(holding entities)->Soverain.
This is why I believe that the defendant of a patent lawsuit should have the right to contest the validity of any patents prior to the case beginning. It wastes time and money to do it any other way.
It seems that almost all patent troll cases are tried in the East District of Texas because that district had strongly favored plaintiffs. I'm then curious: if a US company refused to do business with Texas citizens -- citing an inhospitable litigation environment or some such -- could they still be brought to court in EDTX?
Continuing the thought experiment, what if companies continued to do business but added a surcharge to products shipped to troll-favorable districts? It seems that the jurors in those areas would be more intimately aware of patent trolls if they had to pay a 1% extra fee when they ordered Avon products.
I'm sure some companies do such a thing and just bundle it up with the cost of the product itself, but I'm curious if any companies took a more forceful stance.
It's a US district court, as in Federal court, so no, you can't just choose not to show up if you are filed against. Unless, of course, you don't want to do business in the US, or have any assets here.
I'm reminded of the time Amazon stopped its associates program with Connecticut and Colorado. Granted, that was over taxes, but I can see how it will still cause enough of a fuss to make people look at this more closely.
Most people have no concept of software patents, until a company they know or do business with is suddenly affected. So a boycott or even a threatened boycott with Texas may get a lot of attention.
Can another tactic be employed in this battle against patent trolls?...
Public education programs targeted to residents of East Texas. Documentaries, billboards, sophisticated advertising campaigns, unsophisticated advertising campaigns on 7-11 cups, etc. Whatever communicates to the residents.
i.e. don't say "you hillbillies are stupid pawns", but use a marketing campaign that speaks to the residents. For example "people claiming to hold patents are destroying freedom -- they're like people trying to take away all your gun rights".
Whatever works to enlighten.
This tactic is not intended to be a silver bullet, but part of a no holds barred effort to battle this ridiculous patent nonsense. Weaken troll's ability to exploit the Eastern District of Texas (while more directed efforts to solve this problem continue).
Won't work, most people have no concept of their freedoms and how they are threatened. They typically don't realize the problem until the freedom is already taken from them.
To get through in an immediate way you have to educate them on how much it costs them in monetary terms. For example, often it is cited that juries give ridiculous amounts at trial because it "isn't their money". I fully believe that many think this way. But if the affected party are organizations that receive money from the public for their services in return, in the end it is their money they are giving away.
It's a Federal court -- you can't avoid jurisdiction just by not doing business in TX.
My understanding is that it's the trolls that open offices in Tyler just so that they can file the suit in that district. I.e. the plaintiff is dragging the defendant into TX, and the defendant can't avoid that court.
It is a little bit more complicated than that. Transferring out of EDTX has been easier since the Fed Cir granted mandamus in In re TS Tech and its progeny (which was based on a 5th Cir decision, In re Volkswagen). The case law is still developing, but patent trolls are having a slightly more difficult time staying in EDTX. http://patently-useless.tumblr.com/
Yes, there's been a few reports where someone will investigate the "offices" of the patent troll and it becomes quite clear that no one is actually there. They are just renting the door for the address, more or less. I believe rental properties catering to this is a booming business in a few districts across the US.
Any court, federal or otherwise, has to have personal jurisdiction over the defendant (http://en.wikipedia.org/wiki/Personal_jurisdiction#Principle...). The rules are somewhat complex, but it should at least theoretically be possible to avoid being hauled into court in EDTX by not doing business there, blocking customers from there, etc.
As a counterpoint because EDTX has been used so heavily as a patent litigation court their infrastructure is uniquely tailored to handle software patent litigation. By extension the jury is also more familiar with the complexities and details of software patents.
So your choice is choosing a jury in a district that is more familiar with technology, software, and patents or choosing a jury in a district who were dumb enough not to get out of jury duty.
Based on many of the cases that have come from there, I would state that they are no more familiar with technology, software, and patents then any other district. It's just that for some reason or another they are pro-plaintiff in these cases. The articles suggests the possible cause of that lay in the judges themselves since Newegg was apparently not allowed to argue to invalidate the patents in the first place, which was stupid. A higher court agreed and reversed the decision so I fail to see how the district's supposed familiarity with such things were a benefit to anyone.
I use them all the time when I need to buy some computer hardware. Except in cases when they don't have what I need. They have excellent customer service and return policy. And seeing that they have strong stance against patent trolls gives another good reason to support them.
Someone should create a website as a meeting point for those affected by patent trolls. Anyone affected can go on this website and look for their "peers" so they can pool their resources to fight off the evils.
I founded NetMarket [1], which actually did build the first shopping cart on the web in August 1994, 5 months before OpenMarket launched and filed their application. I was deposed in the 2004 Amazon case due to an email Amazon discovered from Open Market to NetMarket demonstrating that they were aware of our site. Unfortunately, I didn't have screen shots or source code definitively demonstrating our work, and Amazon decided to settle for $40 M.
My congratulations to Newegg for their courage and resolve in standing up to Soverain. At NetMarket, we were proud of ourselves for figuring out after a few days that we couldn't put the state of the shopping cart items in the URL, since you lost it with the back button, and so we needed to use a state ID in the URL as a key to the database. The idea that this was patentable was and is absurd.
I'm interested in learning more. Are you saying that one should deliberately take and store screen shots to document the chronological use of various technologies? Would screen shots have been pivotal or simply one more checkbox item?
The lack of durable documentation of prior art is a large part of what keeps frivilous software patents valid. It would be difficult to establish the date and authenticity of screenshots, tho. You're usually looking for printed material like magazines or manuals.
Kudos to Newegg, but this system is sooo very broken and badly in need of reform.
Large established and heavily profitable organizations like Newegg might be able to pull this off, but what about all the small startups that are forced into bankruptcy by settling when the trolls come knocking? They don't have the resources to put up a fight. If larger companies tend to fight the tedious and expensive legal battles or avoid getting harassed by other companies by building up their own stash of patents that they can use to retaliate, in the long term what it really does is incentivize companies to go after larger numbers of smaller fish that can't put up a fight.
I wonder what percentage of lawyers are actually ethical and wouldn't represent these trolls? Is there any blowback for their lawyers for representing something that was obviously a sham from the very beginning?
So the patents were invalidated because CompuServe did it first. The problem doesn't seem to be in any way improved. If CompuServe held the patents, this would still be a valid lawsuit, no?
Not necessarily. 20 years from application only just became the law. Compuserve would have been working under 17 years from grant. And, IIRC, they could have been evil and kept filing follow-on claims to delay grant until a time they though was advantageous (e.g. waiting until after Amazon became big).
You'd think that's crazy, but the universal search patent Apple is bedeviling Android with has a priority date that goes all the way back to 2000 (this is why Google Desktop Search is not the vaporizing prior art it should be), but wasn't actually issued until December 27, 2011! And if I understand the rules correctly, absent successful invalidation that means we're stuck with Apple "owning" universal search until almost 2029.
I would imagine any monies that Soverain had collected have already been dispersed to benefactors and is untouchable. Newegg could possibly sue to get legal fees back but why bother? There's probably no money to be had.
A victory for common sense, the tech industry, and right-thinking citizens everywhere. May the gods of the market continue to smile upon Newegg (a prosperous Lunar New Year to them!).
Points of interest to me:
Lee Cheng: And we'll take a case through trial as a matter of principle because we want to accomplish the purpose of making good law. Like eBay did, like Quanta did when they challenged LG. It's part of our duty as a good corporate citizen to try to accelerate the rationalization of patent law.
This guy talks like a crusader for just law instead of an executive or business owner. You'd pretty never hear this from anyone in a public company, it just wouldn't be possible. More's the pity that most people can't really achieve big results like this; we have to retain ownership of our businesses in order to really live out our principles.
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A commenter on Ars, on why no one else fought Soverain to the end:
I think the problem from most defendants' perspective is that they can just pass the costs along to their customers without facing any strategic disadvantage. Compared to its competitors, does Newegg winning this lawsuit give them any competitive advantage? After all, their competitors are no longer subject to paying for the invalidated settlements either.
By paying the settlements, the companies reinforce an awful system, but they also don't need to face the volatility and potential cost of a jury-trial in districts cherry-picked by the trolls. By going to trial, the defendant only stands to maintain patent troll cost parity with their competitors (if they win and invalidate their competitors' settlements)- or they lose and get hit with a judgment that could be extremely costly.
Further, in most organizations, management risks the ire of their shareholders should they elect to go to trial and lose. They're again put in a situation where their personal risks outweigh any benefits they stand to gain. Even for executives that consider themselves ethical, they can still rationalize that minimizing risk to the shareholders is the ethical decision.
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This seems true enough - from a (rational) game-theoretic perspective, why should any victim really fight hard to overcome a troll, if in doing so they risk big losses, and don't gain any advantage over their competition even if they win? The main potential upside is that consumers and potential partners will view them more favorably and give them more business (as is happening now), but this is a very unreliable bet to make. The downsides of "doing the right thing" are very likely greater than the upsides.
The main motivator to fight the trolls has to be personal principle, and even then the principled person has to balance it against the real risks to his company and lifestyle. Newegg had the gumption and muscle to see the case to its end, but it was the lucky one, the one-in-a-hundred with the right attributes (principled owners, private ownership, deep pockets). We're not likely to see this kind of thing happen very often, with the odds stacked against what should be the right outcome.
And that's all the more reason to salute Lee Cheng, Fred Chang, and James Wu and their victory against profiteers in a flawed system. CEO Fred Chang probably deserves as many, if not more, accolades as Lee Cheng, for deciding as the major shareholder to take this battle to its end.
I understand that the recent pattern has been that settling with one troll brings more out of the woodwork.
Once that becomes common knowledge, I think it has to change the calculation. Settling is no longer about how much the troll in front of you is asking for; it's about the unknown number behind them in line, as well.
While it certainly sucks to have to bet your company to get these trolls to go away, if the alternative is for dozens of them to bleed you slowly dry, the bet may seem more worth taking.
Indeed, and this increased risk would make it an even greater imperative for potential victims to form or support a patent-busting cooperative as suggested by several commenters already - much like how some prey animals form defensive herds against hunting packs. Hopefully cases like these will push companies to band together and not remain tight-lipped like they were on the Soverain case (until Newegg broke the chain).
There's a coalition for the open Internet, why not a coalition for fair innovation in technology? (Perhaps in collaboration with the EFF's Defend Innovation initiative?)[1]
In Tuesday's decision, the Federal Circuit ruled that three of Soverain's core patents are invalid on obviousness grounds. "The district court's conclusion that a prima facie case of obviousness was not met is not explained by the court by Soverain, and does not accord with the record," the appellate panel ruled. "[T]he trial record contains extensive testimony of the experts for both sides, discussing every claimed element of the patented subject matter and the prior art system."
If I understand this right, Judge Davis simply ignored all Newegg's testimony about prior art and ruled that they hadn't even made a prima facie case for obviousness. Thankfully the Court of Appeals didn't think so. I wonder if Davis was simply leaving the issue of patent validity to a higher court to decide, or if he really had a good legal reason to ignore prior art and the evidence for obviousness. The Soverain lawyer's blogpost provides an inside view on the 2010 case: http://mcsmith.blogs.com/eastern_district_of_texas/2010/08/j...
In the end the jury's $2.5m award might not even have covered Soverain's legal costs, meaning that it wasn't a win for them either - more of a draw.
Precedent
agrees with Newegg that a person of ordinary skill[2] could
have adapted the CompuServe order command to known
browser capabilities when these capabilities became
commonplace, and that it was obvious to do so. The
product identifier message term does not distinguish the
shopping cart claims from the prior art CompuServe Mall.
Clearly sensible reasoning, not misled by technicalities and sophistry - I like it. The opinion is basically a no-nonsense slap-down of Soverain's arguments and Davis's ruling, which will no doubt restore your confidence in the justice system a little. It was surprisingly easy for a layman like me to read, too.
I think that's why many Android manufacturers decided to pay Microsoft, instead of trying to fight them like B&N - which probably would've won if Microsoft didn't give up and settled with them (they called it an "investment").
Not to mention major manufacturers have a couple of patents they could use against Microsoft
I think it's a mixture of lawyers believing their own BS about patents, lack of understanding that the patents are bogus and going for the easy way out.
"This seems true enough - from a (rational) game-theoretic perspective, why should any victim really fight hard to overcome a troll, if in doing so they risk big losses, and don't gain any advantage over their competition even if they win?"
This might be true over a single iteration, but I don't think it holds well over indefinite iterations. Developing a (credible) reputation as an entity (government, corporation, person, etc.) who doesn't "negotiate with terrorists" can be quite a valuable asset.
Just like productive companies have an incentive to give in to the demands of patent trolls, patent trolls have an incentive to avoid companies who "don't negotiate with terrorists", in part because there is a very high (> 50%) rate of claim invalidation across the industry (what does that say about the quality of the original examination?), and in part because it costs the patent trolls just as much money to go to court as it does the productive companies.
I agree. I will imagine as a company like Newegg gets a reputation for fighting patent trolls and, in many cases, invalidating patents then they will be avoided. If a patent troll only makes money from its patents then it's a huge risk to have them invalidated. Then, most likely, they will behave as the bullies that they are by going after companies they view as softer targets.
Funny thought, these patent troll cases are turning into Western movie stories. Villain terrorizes small town because group won't defend themselves because of fear of loss of life and/or property so it's easier to just give in. One to three strangers appear then save town by standing up and fighting because they realize they have nothing to lose in the long term.
Without assuming Fred Chang or his associates share my views, in my position I'd be willing to bet the whole company on a principled stand like this. In other words, I don't always take the game theoretic rational local maximum – lots of business is like that.
If for my company to survive I must pay "rent" to a patent troll, taking a stand against them would be my first choice. (Obviously this only works in a position like Fred Chang's where he can unilaterally make such a choice.)
Just like more trolls may appear out of the woodwork after settling with the first one, Newegg gets a karma boost for defeating one. But consider that it might just make it all worthwhile to go home at the end of the day smiling.
Sounds nice, but I am sure there would be some employees floating around with families and mortgages and bills that work hard and honestly, that you might feel a bit beholden to, no?
"Go Big or Go Home" is all well and good when you're the only person.. but I think you're right. Once there are a few or dozens or hundreds of people involved, hopefully it changes the decision making process.
So you would argue Newegg should have folded to the patent trolls?
I'm not saying that's your stance, but I wouldn't worry about my employees' future without my company as much, since I am worrying about my employees' future in a world dominated by rent-seeking behaviors like patent trolls.
Maybe my employees see the world like I do. Maybe they don't. I can't wait for 100% unanimous approval before making decisions. I certainly plan to try and help them if I destroy the company that was paying them, but that's entirely up to me.
> This seems true enough - from a (rational) game-theoretic perspective,
> why should any victim really fight hard to overcome a troll, if in
> doing so they risk big losses, and don't gain any advantage over their
> competition even if they win?
If prices were at a near-optimal level to begin with and then are raised across-the-board by some external factor, each firm may retain the same slice of the pie they had before but the pie will be smaller. Any given firm will see a reduction in their profits after everyone in their market starts to pay the troll-toll.
The demand curve will remain constant but the supply curve will shift to the right. Less product will be sold at a higher price and there will be dead-weight losses.
However, you bring up a very valid point--what happens if the losses for each individual firm are less than the cost of paying off the troll, but the losses as a whole are greater? Then it would be in the interests of all firms in a market to band together and fight the troll collectively.
That sounds like the definition of a public good. It costs money to create the good (defeat the troll), but once the good is created, there's no way to control access to it (once the patent is invalidated, anyone can use it). A rational actor always wants to be the one who didn't pay to create the good, so only a benevolent, irrational third party will ever create it.
The problem with a pact as you describe it is that joining is not mandatory, and a rational actor will just let everyone else join the pact, and the pact will never get formed. There needs to be an incentive for joining the pact, as well. Patent pools, ironically, may be such an incentive.
I'm just glad that New Egg decided to be irrational this time around.
I think there's something to be said for differentiation being borne of irrationality. Apple's market priorities, for example. Is there a concept of passive players constituting the majority of the beneficiaries of public goods, i.e. parasites?
Why hasn't there been a boycott of businesses in the East Texas district where all these judgments originate? Or at least some social action against Texas to try to shame them into behaving responsibly?
The U.S. needs patent law/tort reform- something to stop this nonsense without reputable companies having to pay millions to patent trolls. I'll definitely make sure to buy from newegg next Christmas.
We need more of this. A lot more. We also need to stigmatize law-firms willing to take-on patent troll clients.
Looking at the companies who got sued by these trolls one can only wonder why it is that these companies don't unite to create a legal and financial firewall of sorts to go against trolls each and every time they stick their heads out of the slime they live in. All you really need is for trolls to be summarily destroyed for a few years to create the conditions for change.
I have not bought anything from Newegg in a long, long time. Sometimes I almost instinctively just buy through Amazon. Now it will be different. Because I admire, respect and appreciate what Newegg did here I will do my small part and move whatever business I can their way. It's my own little way of saying "thank you" to a company that didn't just stand-up for themselves but rather for all of us.
Maybe if enough of us chose to vote with our cash more companies might be convinced to fight trolls rather than cave in.
"The American justice system has issues, but it fundamentally works. The jury system is sound. Juries are people of good will and have common sense."
This system "fundamentally works" if you have the money to make it work for you. Most individuals, small and medium businesses simply cannot afford the cost of seeking justice. In my opinion this is true of civil, business an criminal law.
Example:
Back when I was younger and far dumber I client stiffed me for about $125K of work. Of course, off I went to a lawyer. By the time I spent about $8,000 in legal fees I realized that all I was doing was paying for my attorney and their attorney to write what I came to call "love letters" to each other. I called them "love letters" because every time they wrote one, regardless of content, they got paid handsomely by both parties. I decided to lick my wounds and move on. Good thing I did. The client ultimately filed for bankruptcy protection and stiffed a bunch of other businesses out of hundreds of thousands of dollars. They formed a new corp pretty much in parallel and have been operating ever since.
Would money have made a difference here? Maybe. Don't know. I had a similar situation with a large (multi-billion dollar global corp) that cause us huge damage. There was simply no way to go after them without putting-up at least $500K in the bank for legal fees. Not a fight I could have considered. And so, even though they were decidedly in the wrong, they, effectively, "wrote their own laws" or were able to ignore them because they could fight a fight I couldn't even begin to consider.
What I do know is that it sure felt like there was a huge asymmetry in justice. It's almost like one can exist in this parallel universe where the practical result was that laws simply were not applied in the same way to those with less money to "buy" justice.
Does this reverse the payments made by Amazon et al to date? Or will this troll lawyer lady keep sitting on the millions and looking for another way to do the same thing? Like going after smaller potatoes, but in much large numbers.
This phrase alone makes me want to buy stuff there...
"For Newegg's chief legal officer Lee Cheng, it's a huge validation of the strategy the company decided to pursue back in 2007: not to settle with patent trolls. Ever."
How does Newegg recoup the loss of time and money involved in raising this lawsuit?
Wouldnt it make sense for Hacker News to provide an affiliate URL to Newegg? After all, you wouldnt be shopping there if it werent for YC notifying you of their noble actions - YC is driving business to them and receiving no sales commissions.
...the patent-holding company was still able to hire another top law firm: Quinn Emanuel. That same law firm has done loads of defense work for Google and has become the search giant's go-to patent-troll killer; it's the same firm that defended Samsung in its blockbuster showdown with Apple.
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