
Lee Cheng wins again.
It’s no secret that Newegg is adamantly against patent trolls and everything they stand for. Not only are we not shy in proclaiming this to the world, we even sell t-shirts that show our disgust for these “companies” that think it’s OK to extort legitimate businesses. You would think that patent trolls would take the hint, yet there are still those that want to mess with Newegg.
Recently, a shell entity called Site Update Solutions (SUS) – a subsidiary of notorious patent troll, Acacia Research Corporation – decided to sue Newegg along with 36 other companies. SUS claimed that we were infringing on their patented technology related to the registration of websites on search engines. Of course, this was a bogus claim and many of the defendants banded together in order to pool resources against this troll.
With a strong legal team, the defense managed to move the trial out of the Eastern District of Texas, a jurisdiction that is known for favoring plaintiffs in patent suits. With the trial now being held in the Northern District of California, SUS never had a chance. And, after four years of courtroom battles, Newegg scored another win in our ongoing fight against patent trolls due to a favorable Markman claim construction ruling. Not only was SUS forced to drop their lawsuit, but every company being sued by SUS had a right to recover their legal fees.
Surprisingly, all 36 companies that were sued alongside Newegg decided to waive their rights (at the request of SUS) to receive a check for all the money that was wasted on this trial. Newegg, on the other hand, demanded our money back.
Most companies choose not to recover their legal fees in patent suits because prevailing defendants are required to demonstrate that a plaintiff acted in bad faith. This is extremely difficult to prove and it’s usually easier to just walk away and count your losses – unless your name is Lee Cheng.
“At Newegg, we’ve always believed paying off extortionists only encourages more extortion, and there had to be a negative consequence of suing Newegg without just cause. We insisted on seeking a return of our legal fees from Site Update Solutions. [Their] demand that we waive our right to seek fees for dropping a lawsuit that should not have been filed in the first place was outrageous. What a joke. We believe that trying to make a patent troll pay, no matter what amount, sends the clearest possible message to all abusive patent asserters and their contingency fee lawyers that if they file a frivolous lawsuit against Newegg, they will suffer some consequence, even if it is only making less money or having to do more work than they planned to. This case also provides an excellent template for how a well-managed and organized joint defense effort allows participants to not just bask in the glow of beating a patent troll, but also save money compared to paying off a patent troll. We hope that our work will provide a beacon of hope for real innovators and honest entrepreneurs facing demands from abusive patent asserters. We want to encourage other defendants to create as much friction as possible, rather than feeding the beast with easy settlement checks.”
–Lee Cheng, Newegg’s Chief Legal Officer
Thanks to the efforts of Lee Cheng and his legal team, the Federal Circuit Court of Appeals ordered a trial court to reconsider its earlier denial of Newegg’s request for attorneys’ fees and costs in the patent infringement lawsuit brought on by SUS. Newegg pursued justice in the matter because it is consistent with our corporate mission of bringing the benefits of technology and technology products to our valued customers. And, when defendants settle these frivolous claims, it’s always the customer that ends up paying. We care too much about our loyal customers to subject them to paying these trolls.
Don’t settle.
A hearty thumbs up to Newegg! Well done.
Make ’em pay! Good work Newegg and your team!
Go Team!!
Venture!
Get wrecked, SUS.
haha! You show them!
Love Newegg!
Patent trolls are who they are because they too realize they have no place in the future.
Well done Lee Cheng, NewEgg, and the legal team that achieved this victory. I hope to one day work for such a firm myself (I work as a paralegal)
Bleed ’em dry, Lee!
Hats off to Newegg and Lee Cheng for taking a stand. I will continue to buy from you. Newegg will always be my favorite vendor for high performance computer hardware. Bury SUS.
I hope Newegg runs these useless parasites into the ground.
Is there any way that these other companies that were sued can file suit for legal fees if and when Newegg wins, or did they waive their right to persue any further compensation already?
I’d love to see the rest of those sued by SUS clean out SUS.
KICK THEM IN THEIR TROLL ASSES!! Good for you Newegg…have my babies??
Amazing job Newegg. Keep up the good work.
I hope you shove the boot-of-consequence so far up their @** you can tickle their tonsils with your toes.
Great job NewEgg!
Way to go, congratulations to winning the trial, hope you guys teared a new one onto those disgusting parasites.
Good job Newegg! A loyal customer!
I hope you guys get the money back, it’d b e like a nice swift kick in the face to these patent asshats.
Get er done Lee, America is filled with this scummy trolls, do whatever you can to stop them!
yet one more reason i am a hearty and loyal customer of newegg for the past decade+
Lee Cheng, I never heard of you, but you are my new Hero.
If you missed this news yesterday, please send trollwhore Senator Leahy a letter expressing how you feel about his setback to patent legislation.
eff.org/deeplinks/2014/05/senator-leahy-kills-patent-reform-now
Rekt
5 eggs all the way
How do we know Acacia, or SUS are patient trolls? No explicit trial information or external links.
From the website of Acacia Research Corporation: “Acacia Research Corporation (NASDAQ: ACTG) is the industry leader in patent licensing. By partnering with patent owners, Acacia applies its deep legal and technology expertise to patent assets to unlock financial value. An intermediary in the patent market, Acacia facilitates efficiency and delivers monetary rewards to the patent owner. With this strategy, Acacia has generated over $1,000,000,000 revenue to date, and has returned more than $455,000,000 to our patent partners.”
A simple Google search will explain why they are patent trolls. I chose not to link to their website in the article because they don’t deserve free publicity.
So the patent owners don’t even get have of the rewards. Yeah, that’s pretty damning evidence,
Been there, done that. Can tell you that nobody makes money in a lawsuit like the lawyers do – and they have little at risk. No offense to Lee, but the world would be a better place if they were all florists.
this is why newegg is king. lovin their new gaming blog too.
Sounds like a episode of Suits. Congrats Newegg, Mr Cheng and team.
He should have taken that picture in front a white-screen.
Yeah… I made that for a post on ARS in a couple of minutes. http://arstechnica.com/tech-policy/2014/04/newegg-and-geico-stop-patent-troll-that-sued-dozens-over-forms-on-apps/?comments=1&start=0
Patent trolls suck.
My point for the sake of irony ….. ithas to do with amazon.com com patent trolling by just receiving a patent for pics taken in front of a white screen
Amazons patent is VERY specific about which lights, angles, etc, are used. And there is no mention that they will ever go after a regular photographer for using a setup even similar. And they are using their patent when they take product pictures. This other troll has a portfolio of patents that may or may not even be valid, and sue companies rather than try to license the patents they have.
Ah. Woosh…
I love Newegg! but keep other companies of your site please? 🙂 like if newegg shows it, it should be ONLY NEWEGG products like how it was in the past.
Love it! From a 10+ year loyal newegg customer…
I am glad you are standing up to these bullies.Keep up the good work!
Yes, I am a buyer from Newegg, and your efforts in these matters is one reason why.
MAKE THEM SUFFER!!!!!
Just signed up for Premier Membership to support the fight against patent trolls. Thanks so much for taking the time and resources to do the right thing.
I buy only from Newegg because of their integrity. Cheers to you!
Awesome job, I’ll make sure make next purchase is from you guys.
well done, newegg!
Thank you guys. I can only admire those setting the right example for legal abuse as I go into business peddling my lovely wares.
You guys sell a hearty service and for things I can buy from you, I always do, even if it costs me more, but usually at least partially because you save me a bunch.
Cheers.
No half-measures.
Bravo! Good job Newegg.
I know where I’ll be making my next hardware purchases…
This is why I will keep buying from NewEgg!! Keep up the great work! #stickittothetrolls
I had told myself that I would not order from Newegg again, after a poor experience with their customer service. This is enough to win me back, at least to give them another shot. Kudos, Mr. Cheng! Keep fighting the good fight!
In Australia, “sus” is a common shortening of “suspicious”, which I think is appropriate name for a shell company patent troll.
Newegg will always be my first place when I look for parts. Oh and thanks guys! I am loving this assortment of parts beside me, all fitted together to make a monster AMD machine. Money well spent!!!
Excellent!
Thank you!
I’m buying something soon. Great work!
And that is why I shop at NewEgg for all my electronics needs and wants. If they sold men’s shoes I’d shop there for that too.
5 Eggs – Tenacious, but not housebroken!
This review is from: The Newegg Legal Team
Pros: Aggressively pursues patent trolls with the tenacity of a chihuahua on angel dust.. Doesn’t stop at just winning, aims for long term damage and complete destruction of trolls. Slices, dices, and eviscerates even the most useless patents.
Cons: Tenacity comes at a cost; they wet my carpet a couple times in their excitement.
Other thoughts: Carpet cleaning is a small price to pay for the utter destruction of legal slime balls. Well worth the price, would buy again!
Good job!
<3
Go Newegg!! Wreck these trolls.
“We never pay any-one Dane-geld,
No matter how trifling the cost;
For the end of that game is oppression and shame,
And the nation that plays it is lost!”
Rudyard Kipling http://www.poetryloverspage.com/poets/kipling/dane_geld.html
Mr. Cheng, you deserve one of those wallets that Jules Winfield carried with him in Pulp Fiction. Thank you for your service.
https://c2.staticflickr.com/8/7085/7273007372_d1fa4346c7_z.jpg
Hells yeah newegg! From a 8-year-customer.
Thanks for doing this. Seriously, thank you very much.
Congratulations! Great work, Newegg, and Mr. Cheng!
Thank you Newegg! now you need to become a force for patent reform to stop these asshats cold.
Great, now if you guys can just get the USPTO to give examiners more power to prevent these kinds of patents maybe we all could save you some money
Espc because it’s frustrating
Just ordered a tee to show my support. Cheers, Newegg. Keep on fighting the good fight.
Congrats to NewEgg. We need more people to stand up to these scum. My company was attacked by a troll with two completely bogus patents. They demanded a royalty rate that would kill our company. We fought them, and are working on a patent invalidation petition. In court, they adopted a strategy of forcing us to defend ourselves, because in patent infringement, the costs of defending yourself makes you guilty until proven innocent. We turned it around on them and tried to force them into spending some of their own money. The case is now stayed and we will likely kill their patents.
But all of this came at a huge cost. We are north of $150K in legal bills now. One of our customers freaked out and the fall out was serious. And the trolls will walk away unscathed when this is done. They hide behind a company with no assets, so getting our fees back is really tough. We are a small company and this came close to killing us, but we will win. But the troll business model is perfect. All upside and no downside. Legalized extortion. The system is sick and needs fixing.
Awesome!
I feel better shopping with ya’ll. If I ever have two choices next time. I’ll choose ya’ll even if price might be slightly higher.
LMAO! I see what you did there! Google tried to patent the use of white backgrounds for taking pictures of products.
I think I need to make another Newegg purchase for their being awesome. Probably a good deal on something anyways.
i went ahead and made my first Newegg purchase after reading this article. Your awesomeness just won my full support as a customer.
^_^
Respect, great to see companies fight back on this type of cases.
Way to freaking go NewEgg!!!! Fight the good fight!!!!
I love this.
This is brilliant news and a blow to patent trolls everywhere. Well done Newegg and the others involved.
I’m sorry you got dragged into the “SUS” pool.
Ok, what should I buy from Newegg as a show of support for their actions… hmm….
Thank you. I usually go with Amazon because of my prime membership, but I’m going to start trying to buy stuff through newegg from now on when you have what I need.
Go Newegg! If more companies fought back like this we wouldn’t have a patent troll problem.
I’ve always enjoyed doing business with NewEgg and now there’s another reason. Keep up the good work. You are not only serving your own interests, but helping out the whole industry.
I have a new found respect for Newegg. You guys are doing it right. I hope other companies take a page from your book.
Way to go Lee! Wish more companies had the balls to do the same.
I agree with your strategy so much, I will make a conscious effort to buy stuff whenever possible from Newegg. We need more companies that do the right thing (TM) vs. just what is expeditious in the moment.
Go Newegg! Keep up the good work!
– A Longtime Loyal Customer
Can you leave a box on the newegg checkout (donate $1 to nuke patent trolls)? Next up, amazon patenting “photos against a white background”. Ridiculous.
Go go good team!
This is why I buy all my hardware through NewEgg. You guys are BAMF.
This makes me want to go buy something from Newegg. I don’t know what yet, but I’ll get there.
Support the cause (and future battles). Buy a cool shirt:
https://www.newegg.com/Product/ProductList.aspx?Submit=ENE&DEPA=0&Order=BESTMATCH&Description=patent+troll&N=-1&isNodeId=1?cm_mmc=TRA-PR-_-blog-_-na-_-na
Congrats on getting the court decision; I hope the lower court does its job right this time. And I hope Newegg & Cheng lobby the other 36 companies to reconsider *their* demurrals of costs. As Dave Jones (EEVblog) might say, “Don’t just recover legal costs, take ’em apart!”
I order a LOT of stuff from Newegg for work. Always love their service. Now I just love them even more.
We need a straight up loser pays system, period. But that will have a “chilling effect?” That’s the most lunatic legal concept ever. Bad consequences are SUPPOSED to exert a chilling effect on stupidity.
I will continue to be a loyal newegg customer, not only because of their deals, but because they are a company that shares my values. Frivolous lawsuits are terrible, and it’s thrilling to see the bad guy getting taken down. Scorched Earth Policy in full effect.
Every time I see the Newegg team get into it with these scumbags I log on and buy something. Time to go shopping! I have no idea what I need but I am sure I will find something.
I have always liked NewEgg since their early days. Here is a company that has survived Amazon AND patent trolls. I buy from them whenever i can.
Excellent! Keep it up, Newegg.
Your ethical business practices and moral stances, and awesome customer service, are the reason every computer I have constructed for myself or clients has been produced solely from NewEgg.
As much as I agree with the ideals of the article and the general purpose, I find this part hard to understand;
“Surprisingly, all 36 companies that were sued alongside Newegg decided to waive their rights (at the request of SUS) to receive a check for all the money that was wasted on this trial. Newegg, on the other hand, demanded our money back.”
Why was this? I hugely value the efforts and eventual success of newegg in shutting down this “patent troll”, but I find it strange that newegg would seek recompense whilst the other companies did not. Was this due to strong-arming that newegg was able to deflect, whilst the others weren’t, or didn’t want to?
I would like to hear from the other defendants, because they are not represented in this article and I find it hard to believe that they wouldn’t follow the precedent set by newegg.
It probably wasn’t a ‘precedent’, rather a decision made simultaneously. Going after this kind of compensation is a gamble, as the effort invested in proving bad faith generally isn’t likely to result in compensation.
If new egg’s victory had truly been a preceding event, then the other companies (see new eggs success before needing to commit themselves to a course of action) would have been more likely to follow new eggs lead.
Right on! I was a customer before, but this kind of activism keeps me a customer for life! Don’t settle Newegg, your bravery will be rewarded!
So doesn’t this mean you now have to prove ill-intent? Do you think you can? Via discovery? I’m heartened that you think you can, if you do it would really begin to pull the rug out from under patent trolls.
Someone buy this man a drink!
I have always heard good things about Newegg, they have a good word of mouth reputation where I hang out on the internet. I am additionally pleased by this action. I will definitely add Newegg to my online list of shops. Good job! Stick it to the trolls!
You guys rock
This is the way to win business.
NewEgg FTW. NewEgg FTMFW.
Knock em dead Lee…patent trolling should be made illegal. Our entire patent system needs some updating to fit in with the 21st century.
CRUSH those patent trolling scumbags!
Cheers, Newegg. You would like this story, as well, when a small independent cable manufacturer was accused on treading on patents owned by a large cable manufacturer:
http://www.bluejeanscable.com/legal/mcp/
Patent Trolling amounts to “Legal” extortion
Thank you!
And, for that, I’m going to buy something from Newegg this month. I haven’t bought for a while, but now it feels like doing so is supporting a cause, which I am.
Keep it coming! This is one more reason for me to lean towards a purchase from Newegg, even if the price is a dollar or two more than Amazon/other competitor
Newegg has my support. Thanks for your efforts. I applaud you.
The first thing everyone learns in a beginners Politcal Science class in college is to make changes you want use your resources (mainly Mone! cause yes money runs the world) and to stop ass hats like the ones who hate our beloved NewEgg is to hurt their resources and with a hit to the wallet enough times people learn and so will those who have the nerve to act as SUS did. So NewEgg you made the best decision but hitting their wallet twice (their court fees and now yours) 🙂
0s
“Respect I demand it”
“Slipped and broke the 11th commandment.”
Thou shalt not f*** with billion dollar companies.
I cant wait to see the deals on Tuesday & more happy about beating this troll. People like this would be coming after me next. Its completely ridiculous.
[…] over 100 companies and raised $45 million before taking on Newegg. Thankfully, our team, led by our great CLO Lee Cheng, ended this […]