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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."

13 of 324 comments (clear)

  1. Good advertising? by Anonymous Coward · · Score: 5, Insightful

    Hopefully this turns out to be good advertising for NewEgg - I know I'll be making my next computer purchase from them to help support them in fighting a patent troll.

    1. Re:Good advertising? by Chameleon+Man · · Score: 5, Insightful

      Is there anywhere else you should buy computer parts from? Their hardware all seems to be competitively price, and their customer service is outstanding. My buddy bought a mouse at Best Buy that didn't work. When they didn't take it back, Newegg did and gave them a full refund.

    2. Re:Good advertising? by larry+bagina · · Score: 5, Insightful

      NewEgg stands up to patent trolls.

      Amazon... well, one-click.

      --
      Do you even lift?

      These aren't the 'roids you're looking for.

    3. Re:Good advertising? by pspahn · · Score: 5, Insightful

      So we have an article that talks about a company "sticking it to the man" (even if they lost) and then we have some /. locals come on to talk about how great "the man" is (Amazon) because their size allows them to offer slightly cheaper prices on stuff.

      It's a bit like seeing a live performance of "Run Like Hell" and everyone in the audience is clapping because Waters said you should.

      And people thought WalMart put a lot of Mom & Pops out of business.

      --
      Someone flopped a steamer in the gene pool.
    4. Re:Good advertising? by stridebird · · Score: 5, Insightful

      Or one day, amazon will be all that's left. You want that? I agree that many small businesses are badly run, and often can't or don't get the service right, but if you end up with only one or two massive impersonal players, you will regret it. That means, noiw, today even, making a choice to stop that happening by buying from the small guys even if that means paying a couple of dollars more.

  2. Well... by TheSwift · · Score: 5, Insightful

    I need to buy a new desktop anyway. Newegg, my money's coming your way.

    --
    "With patience a ruler may be persuaded, and a soft tongue will break a bone."
  3. 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.
    1. Re:Diffie was awesome by Anonymous Coward · · Score: 5, Interesting

      Let's stop this jury are morons myth. The judges gives the jury a list of very specific questions to answer in these cases, taking 2-5 hours. It's not like 12 Angry Men, where people debate what they're heard and sway opinions.

      The judge controls the entire jury thought process and has clearly spent a long time crafting the question list beforehand. Being an expert at law, they have already determined the result and knew precisely how to ensure their verdict is the one reached, but they still need to go through the proletarians to reinforce his chosen result.

      I've been on jury duty in a bullshit patent suit, and despite the obvious sane result, the judge's contrived question list ensures you cannot come up with any result other than what (s)he has already determined. There is no "let's discuss this" based on what was presented. Any jury not doing so will be kicked out and the trial starts from fresh.

      The massive issue here is that this is all behind the scenes, none of it is allowed to become part of the public record, hence posting AC.

    2. Re:Diffie was awesome by Anonymous Coward · · Score: 5, Interesting

      I've been on jury duty in a bullshit patent suit, and despite the obvious sane result, the judge's contrived question list ensures you cannot come up with any result other than what (s)he has already determined. There is no "let's discuss this" based on what was presented. Any jury not doing so will be kicked out and the trial starts from fresh.

      Meaning a Jury could stall a verdict by doing what is right and debate the issue. correct?

  4. 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
  5. Re: Stupid judge/jury. by gstoddart · · Score: 5, Insightful

    Playing devil's advocate here... Why is this result some failure of the judge/jury of this case?

    When the guy who invented public key encryption tells you that the basis of the patent had been around for years, that is a failure of the jury in this case.

    At this point, I think people should just be suing the USPTO for lousy patents which should never have been granted in the first place.

    --
    Lost at C:>. Found at C.
  6. 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.
  7. Is it possible that patents are an undue burden? by Press2ToContinue · · Score: 5, Insightful

    As a developer of original software products, I consider it impossible - just my opinion - to determine if any software I create infringes on existing patents. There are usually thousands and often tens of thousands of ideas, algorithms and design approaches in a product that would need to be checked, and patents are so wordy that the time it would take to determine if there was infringement would always far exceed the time it takes to make the product. This seems to me to pose an undue burden, and is therefore unconstitutional?

    Does anyone have any thoughts on this?

    --
    Sent from my ENIAC