Newegg Joins Forces with Google to Combat the Patent Troll Problem

Patent trolls are on the rise and it's time to stop them once and for all.

Patent trolls are on the rise and it’s time to stop them once and for all.

Over the last ten years, more than 10,000 companies have been sued at least once by a Patent Assertion Entity (PAE) — most commonly known as a “patent troll.” During this timespan, more than 33,000 defendants in 14,000 litigations were forced to spend anywhere between $500,000 to $5 million on legal fees alone. And because more than 50% of these defendants make less than $10 million in annual revenue, most companies decide to settle with patent trolls instead of going to court because it’s cheaper.

For large companies such as Newegg, fighting patent trolls is not only a part of our legal team’s responsibility; it’s also a very expensive nuisance. We’ve been able to fight off several patent trolls and have even been refunded our legal fees in some cases, but the patent assertion lawsuits keep on coming. Luckily for Newegg, our Chief Legal Officer, Lee Cheng, has refused to settle with any patent troll and has been adamant about figuring out ways to stop them.

Because of Mr. Cheng and his team of uncompromising lawyers, Newegg has a strong winning record against patent trolls and is regarded as one of the few companies that are actually doing something about this problem. In our latest effort to stop patent trolls from preying on legitimate businesses, we’ve teamed up with Google – along with several other tech companies – to end these lawsuits once and for all.

“Newegg has a very strong history of successfully battling patent trolls, and the License on Transfer Network is another valuable tool that helps protect participants from frivolous patent litigation. We’re very happy to join forces with Google and other leading technology companies to preserve the spirit of innovation that’s so vital to our collective well-being.”

— Soren Mills, Chief Marketing Officer of Newegg North America

The License on Transfer Network (LOT) was created by Google in collaboration with Newegg, Asana, Canon, Dropbox and SAP. This group of forward-looking companies has taken it upon themselves to form an agreement that will drastically reduce the number of patent infringement claims received by patent trolls. By agreeing to grant each other licenses on patents we sell or transfer outside the group, we make it impossible for patent trolls to claim them as their own and seek financial gain.

This is a major milestone in the fight against patent trolls because more than 80% of patents litigated are acquired from operating companies. These companies are enablers that sell their patents for pennies on the dollar so patent trolls can then sue other companies. This is known as “patent privateering” and starts a vicious cycle where small companies benefit by being granted protection from patents sold off by big companies, and big companies benefit if small companies end up failing. Clearly, this is something that not only hurts companies, but shareholders, employees and customers as well.

By joining LOT, participants are protected by any litigation involving a patent sold off by a member. The more companies that join, the more beneficial this agreement becomes to its members. This is why we’re encouraging any company that wants to fight patent trolls to join our group, no matter what size their business is or what industry they are in.  LOT will benefit small businesses that don’t regularly sell patents and don’t want to spend money defending against patent trolls, and it will benefit large businesses that are optimistic about their future and plan to grow their revenue. In the end, only the patent troll will lose, and that is always a good thing.

The LOT Network believes in innovation and the patent system; we also believe that patent trolls are detrimental and costly to companies and consumers alike. Just last year, more than 6,000 lawsuits were filed by patent trolls, costing companies more than $29 billion in direct expenses. If we work together, we can cut down on this pointless spending and send a message to patent trolls that we aren’t going to take it anymore.

If you’re a company that shares our belief that businesses owe it to their customers to stop patent trolls, join us today.

The LOT program is the best solution so far to address a critical problem: the acquisition of patents from failed, failing, or short-sighted companies that often should never have been granted, or were never truly used to benefit society, by legal extortionists.  It also can, over time, curtail privateering, where short-sighted corporate managers who do not have enough creativity and capability to properly commercialize intellectual property by making products and services customers want to buy.  Newegg is proud to contribute to the launch of what promises to be the seed of a major industry-driven initiative to address abusive patent assertion.  Screw trolls, and people who enable them.”

 –Lee Cheng, Newegg’s Chief Legal Officer

Click here to read our press release.

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