September 21, 2010, 5:16 PM

Newegg appeals a patent infringement decision

Newegg.com has filed in the U.S. Court of Appeals for the Federal Circuit.

Mark Brohan

Research Director

Lead Photo

Newegg.com will appeal a recent court decision that awarded an e-commerce application development company damages for Newegg’s alleged violation of several software patents, including a shopping cart.

Newegg, No. 12 in the Internet Retailer Top 500 Guide, has filed a motion with the U.S. Court of Appeals for the Federal Circuit based in Washington, D.C. to appeal a decision from a judge in the U.S. District Court for the Eastern District of Texas. That decision awarded Chicago-based Soverain Software LLC damages for violations of 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.

"Newegg did not consider the district court order entering judgment a surprise,” says Newegg chief counsel Lee Cheng. “Very significantly, in that order, the court denied Soverain’s request to enjoin Newegg from using any of the supposedly infringed-upon functionalities and the damages awarded continues to be only 7% of the amount Soverain requested from the jury. No Newegg customer or business partner will be inconvenienced or affected by this decision.”

No trial date has been set. Earlier this month the U.S. District Court for the Eastern District of Texas ruled on damages for Newegg's alleged infringement of several Soverain Software patents. Specifically the the elements of the Texas court judgement Newegg will appeal include:

  • Pay Soverain Software an ongoing royalty of 15 cents per infringing transaction for certain patents.
  • Awarded Soverain Software post-verdict damages of $2,900 per day from May 1 until the date of the final judgment.
  • Awarded Soverain prejudgment costs of court.

Newegg will fight the decision at numerous levels, says Cheng. “We have spent a considerable amount of time and resources to defend ourselves against Soverain because we believe that ultimately their claims do not have either a strong legal or factual basis,” says Cheng. “While it may be true that other defendants have paid Soverain royalties for a number of reasons, including to avoid the cost and risks of trial, we choose not to follow that course. We intend, if necessary, to take this case to the U.S. Supreme Court.”

Soverain Software has yet to respond to Newegg’s appeal.

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