May 6, 2010, 5:10 PM

Federal jury orders Newegg to pay $2.5 million in a patent lawsuit

Newegg.com Inc. would pay $2.5 million in damages for infringing e-retailing technology patents under a jury verdict reached late last week in U.S. federal court. The verdict appears likely to be appealed.

Newegg.com Inc. would pay $2.5 million in damages for infringing e-retailing technology patents under a jury verdict reached late last week in U.S. federal court. The verdict appears likely to be appealed.

Chicago-based Soverain Software LLC, which sells transaction management technology to e-retailers, filed suit against Newegg in November 2007. Soverain accused the online retailer of infringing on three of its patents that cover the underlying technology that e-retailers use to handle purchases and payments, as well as for their online shopping carts. A verdict was handed down on Friday after a five-day trial in the U.S. District Court for the Eastern District of Texas, a legal venue often selected by patentholders suing over alleged infringement.

Newegg, No. 12 in the Internet Retailer Top 500 Guide,said in a statement that the jury verdict represents a successful outcome of the case because Soverain was awarded only 7% of the damages it requested. The retailer also said it was pleased because the jury found that, while Newegg indirectly infringed on two patents, it did not engage in direct infringement.

The suit filed by Soverain in 2007 also included CDW Corp., No. 9 in the Internet Retailer Top 500 Guide; Redcats USA Inc., No. 31; No. 1 Amazon.com Inc.-owned Zappos.com Inc.; and Systemax Inc., No. 22. Kenneth Adamo, the lead attorney for Soverain, says those other cases were settled, with the retailers paying licensing fees for using Soverain’s technology. The other retailers did not provide immediate comment.

In 2005, Amazon.com paid $40 million to settle a patent infringement lawsuit brought by Soverain. The technology vendor granted Amazon a license to use the technology.

Soverain wants Newegg to buy a similar license, but Adamo would not say how much Soverain wants Newegg to pay. He says mediation is ongoing over the license for the technology.

Soverain says more than 40 companies have licenses for the technology. Soverain’s patents expire in 2015.

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