Read more about how Newegg stands up to patent trolls.
Lee Cheng: cutting heads off trolls since 2005.
Newegg has spent the last several years fighting against patent trolls, and our Chief Legal Officer, Lee Cheng, has been at the helm of every courtroom battle. Thanks to his efforts, Newegg has been successful against these entities that think it’s OK to sue us for no good reason. Lee doesn’t believe in settling at any price and neither do our customers.
Yesterday, Newegg’s Chief Troll Hunter held a Reddit AMA. The no-holds-barred interview allowed Reddit users to ask Lee whatever they wanted to know about patent trolls, Newegg, and his personal life. As always, Lee didn’t disappoint.
Known for being candid about anything and everything, Lee answered hundreds of questions and received over 3,000 upvotes. If you were a part of the action yesterday, then you know how great he is. Lee doesn’t hold back!
Here are the top ten questions and answers that explain what Lee is doing at Newegg and why he hunts trolls:
What exactly is a patent troll for those of us who are uninformed and how exactly do you hunt them. Also, do you stuff and mount these trolls?
A patent troll is anyone who asserts patents abusively — i.e. poor quality patents or patents that technically pass muster but don’t add value to society. They take advantage of the fact that legal defense costs are much higher than their settlement demands to extort billions a year from honest businesses.
We don’t give in to legal terrorists. It encourages more terrorism.
What made you guys decide to take a risk and start fighting the patent trolls instead of settling like everyone else?
I ran the math after realizing the scope and extent of the problem. We just could not afford to take the “easy” way out because there are so many bad patents out there, and paying off one troll holding a craptastic search patent means you have to pay off all the rest (we were sued by at least four trolls asserting patents covering some aspect of search). We could not do so and continue to provide our customers with the best service and prices.
How many lawsuits filed by patent trolls have you smacked down at Newegg? Which was the most convoluted, and why?
We have had 30-35 claims asserted. We’ve taken three cases all the way through trial and appeal, a number to summary judgment, and most of the rest were dismissed with prejudice when we didn’t cave in. TQP was probably the most convoluted because the plaintiff’s counsel made it so to the jury. We ended up on the wrong end of a jury verdict there, but we are confident that justice will prevail on appeal. We’ve never lost on appeal of a patent case so far, because Federal Circuit judges are knowledgeable about patent law and are able to focus on law rather than advocate fluff.
For someone facing these troll patents, what first steps should they take if they want to fight them?
Say: “we do not infringe any valid patents.” Then find out who else has been sued and try to get as many co-defendants to agree to work together tightly as possible, including being represented by one good law firm. Once most outside counsel get their hands on a client, they never want to let go and when defendants are all represented by their own lawyers, their costs all run up and the troll wins.
First off, great job on being willing to face the trolls head on instead of caving as most companies do. What is the biggest change that could be made to the US legal system to help discourage or prevent patent trolling?
Finding ways — legal, judicial or market — to shift the economics of the “business.” The most effective way to eliminate trolling is to decrease the returns by increasing cost and risk for trolls and their investors. The trolling industry grew astronomically because investors and advantage-takers believe that it represents an easy, riskless way to make money.
I read something about you teaming up with GEICO’s legal department in this last battle. Are patent trolls only targeting large corporations or have they been attacking smaller businesses too? Companies have strength in numbers when battling the patent trolls, what would you recommend a small business (who doesn’t have the legal expertise or funds large corporations do) do?
Unfortunately, small businesses and even individual developers/entrepreneurs have been threatened and sued too. There are a number of different troll “species,” and bottom feeders literally send thousands of claim letters out or file hundreds of lawsuits. Their math says that it always costs less to give them the money they demand than to mount a legal defense.
We did work closely with GEICO — Eugene Kim there deserves kudos for realizing the opportunity to send a message to the troll community to leave GEICO alone by helping crush Macrosolve, which pretty much went belly up.
Here’s what we did and how we did it:
First, thanks for your work. I admire what you do. Second, what is your reaction to the setting aside of the patent troll bill which was in the U.S. Senate committee and going well just last week? That has to feel frustrating! Keep up the great work man.
I was very disappointed but not terribly surprised. Legislative reform often takes years and is very subject to influence from parties with financial interest in the status quo — in this case trial lawyers, patent trolls, and large companies who want to defend monopoly positions.
Reform is going to take a concerted judicial, legislative, and business effort — most importantly, and what will be most effective, people and companies need to stand up and say NO!
f**********
So, what got you into the troll hunting business in the first place? And why did you decide to study law?
We were sued even though we don’t make anything, and I studied the situation and realized that the claims were bull****, and that a giant scam was being perpetrated. I never liked being bullied, and I figured out a way to fight back.
I went to law school because I think that good lawyers can make a very positive impact on society. Eventually, I have plans to be more active in the civil rights arena based on some prior work I did to protect the rights of individuals.
Hi Lee! Thanks for your hard work fighting trolls, and for your willingness to call them out on their scumminess. My question is: Why did you initially decide to become a lawyer, and how (if at all) does your current work fit with that initial vision?
I wanted initially to be a lawyer to fight discrimination against Chinese kids in San Francisco public schools. The SFUSD required Chinese kids for over 20 years to score higher than kids of any other ethnic group to get into magnet schools. It didn’t matter if they were from wealthy families or the children of dishwashers. No one did anything for 20 years. I didn’t think that was right.
I’ve always been — and hope to always be — idealistic. Just because no one else has done anything about something that everyone thinks is wrong, doesn’t mean that I can’t. I’ve always enjoyed tilting at windmills, and even better, knocking them over. Fighting patent trolls was my second windmill.
What was Berkeley Law like? How did it compare with your undergraduate experience?
I don’t remember much of my first year. A lot of beer was involved. I learned about as much about how to actually practice law as I did at Harvard College. I learned the same amount in kindergarten. I met many good people and made friends, and learned more outside the classroom.
Bar exam: total waste of time. Last test I will ever take.
Lee Cheng is not only crucial to Newegg’s success, he’s also important to our customers. Without his hard work and stance against settling, it would be our customers that suffer the consequences of paying off patent trolls. Anyone that believes in the freedom of enterprise should acknowledge Lee as being a front-runner in the fight against patent assertion entities.
Despite killing off many patent trolls, there are still many that are making ridiculous claims against us and other hard-working people. One notable case is the battle Adam Carolla is going through right now regarding a patent on playlist software. Like Lee, Adam is taking a fervent stand against them and even had Lee on his podcast to offer some advice.
Our message to patent trolls is simple: MESS WITH NEWEGG, DEAL WITH LEE CHENG.
To stay current on Newegg’s battles against patent trolls, follow Lee Cheng on Twitter @leechcheng
