Finally! Score one (and a big one) against patent trolls.
Newegg, an online electronics retailer, has won their patent appeal against Soverain Software.
Soverain is a patent troll, a company that has never produced anything, but has managed to extort millions of dollars against companies including Amazon and The Gap, and was in the process of suing Nordstrom’s, Macy’s, Home Depot, Best Buy, Radio Shack, Kohl’s, Wallgreen’s, and many others.
How? They bought some patents from a defunct company that claimed to cover the online shopping cart, lawyered up, and sued companies in patent-friendly West Texas. Never-mind that taking an obvious and well-known physical concept and implementing it on the Internet isn’t even vaguely deserving of patentability.
Defending against a patent suit can cost many millions of dollars and depress the market cap of a company due to uncertainty. So companies are often willing to settle even bogus claims, and once a few big companies settle it gets harder and harder for other companies to defend themselves. Soverain was working their way to collecting a stunning 1% of the gross revenue of every online retailer.
But back in 2007, Newegg decided on a new strategy: they would not settle with patent trolls, ever. As Newegg’s chief legal officer put it “We basically took a look at this situation and said, this is bullshit. 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.”
Kudos to Newegg!
Now, I’m a computer scientist and I even hold a few software patents, but I would be very happy if the federal government invalidated all software patents. They do nothing to encourage or reward inventors like me, and in fact cause lots of problems. Imagine you are trying to start an online shopping business, but nobody will invest in you because in order to sell anything online, you would run afoul of patents like those held by Soverain. Soverain could extort any amount of money they wanted from you, and could even refuse to license their patents and put you out of business. Just like that.
Other patent trolls hold patents on things as silly as drop-down menus. These trolls could basically sue the vast majority of websites and force them off the internet. Think about what that would do to our economy.
And because many judges don’t know obvious from a hole in the ground, especially in highly technical fields, lawyers can often get away with this crap.
It has to stop, and this is a great first step in the right direction.