How Newegg handed a patent troll its own ass on a plate


Ars Technica's got an amazing piece on the Newegg fight against a patent troll called Soverain Software, who had been extorting a 1% royalty on all transactions from ecommerce companies with a bogus shopping cart patent. Newegg refuses to settle in cases like this, even when it would be cheaper to settle than to fight. They beat the hell out of Soverain, killed their patent, and freed not just themselves, but all the firms that faced potential extortion from them -- and all of us, who will pay higher prices to keep these ticks nicely, comfortably bloated with their parasitic gains.

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.

"We basically took a look at this situation and said, this is bullshit," said Cheng in an interview with Ars. "We saw that if we paid off this patent holder, we'd have to pay off every patent holder this same amount. This is the first case we took all the way to trial. And now, nobody has to pay Soverain jack squat for these patents."

...Newegg is unique in its willingness to take on patent troll cases and fight them through trial. 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. Cheng talked with Ars about Newegg's strategy, why they do it, and how it's going for them.

How Newegg crushed the “shopping cart” patent and saved online retail [Ars Technica/Joe Mullin]

(via Waxy)