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Jury Finds Newegg Infringed Patent, Owes $2.3 Million

Posted by Soulskill on from the battle-lost-war-continues dept.

Jah-Wren Ryel sends this quote from Ars: "Newegg, an online retailer that has made a name for itself fighting the non-practicing patent holders sometimes called 'patent trolls,' sits on the losing end of a lawsuit tonight. An eight-person jury came back shortly after 7:00pm and found that the company infringed all four asserted claims of a patent owned by TQP Development, a company owned by patent enforcement expert Erich Spangenberg. The jury also found that the patent was valid, apparently rejecting arguments by famed cryptographer Whitfield Diffie. Diffie took the stand on Friday to argue on behalf of Newegg and against the patent. In total, the jury ordered Newegg to pay $2.3 million, a bit less than half of the $5.1 million TQP's damage expert suggested. ... TQP's single patent is tied to a failed modem business run by Michael Jones, formerly president of Telequip. TQP has acquired more than $45 million in patent licensing fees by getting settlements from a total of 139 companies since TQP argues that its patent covers SSL or TLS combined with the RC4 cipher, a common Internet security system used by retailers like Newegg."

9 of 324 comments (clear)

  1. Stupid judge/jury. by JustNiz · · Score: 3, Informative

    Trolls 1, good guys 0.
    Stupid judge/jury.

    At least it sounds like NewEgg will take it higher.

    1. Re: Stupid judge/jury. by jandrese · · Score: 5, Informative

      The most amazing thing is that TQP's argument against Diffie involved them finding potential prior art to show that Diffie wasn't the inventor of public key cryptography. Even if this argument succeeded, then it should have put an even bigger nail in their coffin since it would show even more prior art for the patent.

      This really was the worst kind of patent too. So I see you're doing asymmetric crypto for key transfer...but ah ha, I got a patent for asymmetric crypto for key transfer using RC4! Checkmate! Like wow, you applied the most common (at the time) algorithm to a system that kind of resembles a SSL connection, except that it's with modems and came a few years after the big Diffie-Helmann paper.

      And of course they aren't suing the people who made the SSL offload appliances that got NewEgg into trouble, they're suing all of their customers, for using the thing with the default settings. And they're calling it willful infringement because they didn't go an explicitly disable the RC4 feature to comply with a patent they knew nothing about.

      --

      I read the internet for the articles.
    2. Re: Stupid judge/jury. by 0racle · · Score: 4, Informative

      It wasn't better marketed, it was created and made available by Diffie. That 'and' is important here. The British kept it secret that they even done it until '97. This is an example of parallel invention, only in this case one side made it known he had created it and the other didn't. For creating and publicizing Diffie is correctly attributed as the co-creator of Public Key Cryptography.

      --
      "I use a Mac because I'm just better than you are."
  2. Diffie was awesome by Gothmolly · · Score: 5, Informative

    "And how is it that you're familiar with public key encryption?"

    "I invented it."

    --
    I want to delete my account but Slashdot doesn't allow it.
  3. Newegg made its name on appeals by AnalogDiehard · · Score: 5, Informative

    Newegg lost the trial but has prevailed on appeal with past cases against patent trolls. Newegg had budgeted its legal warchest to include appeal, so the fight ain't over yet.

    --
    Eternity: will that be smoking, or non-smoking? I Corinthians 6:9-10
  4. Re:Good advertising? by keytoe · · Score: 3, Informative

    Lately, I've found that Amazon usually meets or beats Newegg's pricing for most things I buy, with free 2 day shipping (for Prime members).

    This was when I stopped using Newegg as well - the moment my wife signed us up for prime. We actually did it for the video and kindle, but once you experience free shipping like that it's pretty hard to accept anything else.

    Add in that they allow me to pay using my Discover card rewards right at checkout and it's a dangerous combo.

    Well played, Amazon.

    --

    Culture is more than commerce

  5. Re:Good advertising? by Smidge204 · · Score: 4, Informative

    Amazon.com charges a restocking fee under exactly the same circumstances that Newegg does... except Amazon can hit you for 20%-50% of the item's price instead of just 15%.

    That said, it's always worth shopping around - but I find Newegg pretty consistently has better prices, and lately they even have a price guarantee on some things.
    =Smidge=

  6. Re:Good advertising? by ArchieBunker · · Score: 2, Informative

    Prime shipping is not free. Last I checked it was $75 a year. So factor that in.

    --
    Only the State obtains its revenue by coercion. - Murray Rothbard
  7. Re:Good advertising? by MobyDisk · · Score: 4, Informative

    I assume you do this after you used Newegg to search for the item. Because Amazon's search engine doesn't have 1% of the power that Newegg's has. I can't go to Amazon and find out which video cards use a 4-pin power connector versus a 6-pin. Stuff like that is what makes newegg awesome.