Everyday people head to the internet to shop online, whether it’s from a big box retailer or a small home business without giving a second thought to the technology behind the shopping cart. Soverain, a company that has done nothing but purchase patents has been making big bucks, by suing companies like Avon and The Gap claiming patent infringement. And until now, they have won, that is until they took on Newegg (ARS Tecnica, Jan. 27)
Soverain had previously won two lawsuits from Victoria's Secret and Avon in 2011. The companies were ordered to pay $18 million plus royalties of one percent. They won against Amazon in 2005 to the tune of $40 million. Soverain also has pending lawsuits against Macy's, Kohl's, Home Depot, Nordstrom's, Radioshack and more. The so-called patent troll had previously won against NewEgg and stood to earn $2.5 million, that is, until Newegg filed an appeal and won. The latest ruling wipes out all past rulings and pending cases.
Lee Cheng, Newegg’s lawyer said "We basically took a look at this situation and said, this is bullsh*t, 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."
Patent trolling is a fairly common practice according to Cheng because the law has not yet caught up with technology. He goes on to say “Just in our experience, we've been hit by companies that claim to own the drop-down menu, or a search box, or Web navigation. In fact, I think there's at least four that claim to 'own' some part of a search box.”
Patent holders wait until a new technology arises and clain they own all or part of it and file a suit regardless of how valid the claim is. Cheng says of the trolls “Then they pop up and say "Hello, surprise! Give us your money or we will shut you down!" Screw them. Seriously, screw them. You can quote me on that.”
This is a big win for online retailers, big and small as well as consumers. The suits had the power to shut down the big guys, which would have left the small home business owners with no chance at all to survive as an online retailer.