Newegg was able to take down one of the most pervasive and aggressive trolls on the web. Soverain Software was the company that owned the patent for online shopping cart, and its goal was not only file lawsuits against online merchandisers all around but to get one percent of the sales from all the online stores that used online shopping cart. This would jeopardize businesses of many online retailers, whose margins are very slim already.
Soverain Software was an active player in the tech industry with a lot of business deals and patents. However, it was just a shell because its main goal was to gather money from big retailers through the lawsuits.
Soverain was really successful in pursuing its mission and won cases against Newegg with $2.5 million, Amazon with $40 million. It also took a combined $17.9 million off of Victoria's Secret and Avon and a 1 percent tax on all sales.
Lawsuits Filed by Soverain Over US Patent Nos. 5,715,314 and 5,909,492
All suits filed in the Eastern District of Texas.| Case No. | Date Filed | Defendants | Case Status |
|---|---|---|---|
| 6:07-cv-00511 Case also included U.S. Patent No. 7,272,639 | 11/2/2007 | CDW Corporation, Newegg Inc., Redcats USA, Inc., Redcats USA, L.P., Systemax Inc., The Sportsman's Guide, Inc. TigerDirect, Inc. Zappos.com, Inc. | Resolved - All parties settled except Newegg. Verdict & judgment against Newegg for $2.5 million, now wiped out on appeal. |
| 6:09-cv-00274Case also included U.S. Patent No. 7,272,639 | 6/25/2009 | J.C. Penney Corporation, Inc. Amway Corp. Avon Products, Inc. Ballard Designs, Inc. Bidz.com, Inc.Cornerstone Brands, Inc. Etronics, Inc. Garnet Hill, Inc. HSN Improvements, LLC HSN, Inc. QVC, Inc. Shutterfly, Inc. Smith & Noble, LLC The Territory Ahead, Inc. Victoria's Secret Direct Brand Management, LLC Victoria's Secret Stores Brand Management, Inc. Vistaprint, Ltd. Vistaprint USA, Inc. | Resolved - Verdict & judgment against Victoria’s Secret on ’314 and ’492 in the amount of $9,200,000 plus running royalty of 1%. Verdict & judgment against Avon on ’314 and ’492 in the amount of $8,700,000 plus running royalty of 1.05% for avon.com and .875% for youravon.com. (Won't be paid in light of Newegg appeal win.) |
| 6:12-cv-00141 | 3/14/2012 | BergdorfGoodman.com, LLC, Best Buy Co., Inc. BestBuy.com, LLC, Neiman Marcus, Inc., Office Max, Inc., Oracle CorporationOracle OTC Subsidiary LLC, The Neiman Marcus Group, Inc. | Pending |
| 6:12-cv-00142 | 3/14/2012 | Fossil, Inc., Home Depot USA, Inc., International Business Machines Corporation, Quill Corporation, Staples, Inc. | Pending |
| 6:12-cv-00143 | 3/14/2012 | GSI Commerce, Inc., PayPal, Inc., RadioShack Corporation, eBay, Inc. | Pending |
| 6:12-cv-00144 | 3/14/2012 | J. Crew Group, Inc., Madewell, Inc. | Pending |
| 6:12-cv-00145 | 3/14/2012 | Euromarket Designs, Inc., Meadowbrook LLC | Pending |
| 6:12-cv-00146 | 3/14/2012 | GHC Specialty Brands, LLC, WW Grainger, Inc. | Resolved |
| 6:12-cv-00147 | 3/14/2012 | Bloomingdales, Inc., Macy's, Inc., Macys.com, Inc. | Pending |
| 6:12-cv-00148 | 3/14/2012 | Nordstrom, Inc. | Pending |
| 6:12-cv-00149 | 3/14/2012 | Kohl's Corporation, Kohl's Department Stores, Inc. | Pending |
| 6:12-cv-00150 | 3/14/2012 | Williams-Sonoma, Inc. | Pending |
| 6:12-cv-00151 | 3/14/2012 | Saks Direct LLC, Saks Incorporated | Pending |
| 6:12-cv-00152 | 3/14/2012 | Office Depot, Inc. | Pending |
| 6:12-cv-00153 | 3/14/2012 | Beauty.com, Inc., Drugstore.com, Inc., Vision Direct, Inc., Walgreen Co.Walgreens.com, Inc. | Pending |
The $2.5 million loss was the last drop for Newsegg and it decided to start a war against the troll Soverain. The reason it didn't drop the case is because Newegg is majority-controlled. Once it has got a favorable decision in the case, the majority of shareholders decided not to drop it and continue the mission of taking down the severe threat: Soverain. Even though it was a very high risk and capital-intensive activity, Newegg was able to win the case.
original source at Arstechnica
That's a really interesting case of 'patent trolling'. I didn't realize that even online vendors/retailers were affected by patent litigation - especially for something so widespread as virtual shopping cart systems. I'm sure because of this decision, a lot of other retailers will benefit besides Newegg.
ReplyDeletewow very good find. I had no idea the online shopping cart was even a patent. Its good Newegg was able to take them down because they have a lot of pending lawsuits. Now it should be easier for the other companies to take down Soverain the way Newegg did. This concept of shopping cart, i understand is something this company came up with, but its a universal thing that affects everyone who does online shopping. Instead of filing lawsuits I would've just asked the companies for royalties on shopping done online violating their patent.
ReplyDeleteWow, so patent trolls do get defeated at times. Like David implied, I think this was a very big win not only for Newegg but for other companies as well.
ReplyDeleteInteresting! I use Newegg all the time. There are a respectable company. Doesn't surprise me they would go after this type of patent troll.
ReplyDeleteI think the patent troll gets ignorant after its success against J.C. Penney Corporation. They didn't realize large companies like Newegg won't be back off easily without a fight. This patent troll clearly can point against any company with online shopping websites. This troll will get stop eventually anyway but it's nice to hear Newegg put a stop on it.
ReplyDeleteIt pretty amazing to see these patent trolls defeated, especially because Newegg is an awesome service. I hope this gets more press to scare other patent trolls.
ReplyDeleteI've never used Newegg, but I applaud their integrity and drive to getting rid of a patent troll
ReplyDeleteamazing how patent trolls can be defeated at times. good job Newegg
ReplyDeleteGreat to hear this! I've always found Newegg to be a great online-based platform for purchasing computer parts and I'm glad to see they're beating this.
ReplyDelete