January 20, 2012, 3:17 PM

Patent battles heat up

(Page 2 of 2)

With a wave of patent infringement problems now hitting more retailers, merchants need to keep abreast of changes to how patent law is changing, says Lee Cheng, general counsel, corporate secretary and vice president of human resources for e-retailer Newegg Inc. (No. 12). “The best thing to do is to fight each infringement issue when it comes up," says Cheng. “The worst thing would be to nothing and get labeled as a potentially easy mark.”

Newegg and Overstock.com Inc. (No. 27) won a patent infringement case involving e-commerce technology in October, a ruling that patent attorneys call significant, and which could make it harder for patent holders to pursue similar cases. Cheng will speak on patent infringement issues on June 6 from 1:45 p.m. to 2:30 p.m. at the Internet Retailer Conference & Exhibition in Chicago in session entitled “Fighting back against patent suits: What to do and how to do it.


Comments | 5 Responses

  • So take for example a site like LivingDirect.com that uses a third party platform. There is no possibility of infringement correct? All concerns are squarely on the solution provider correct?

    • Ultimately your third party provider will probably have to indemnify you. But you can still expect the pleasure having to retain a lawyer, shell out some cash and generally waste precious time and energy dealing with modern day extortionists. You should talk to TheEmob (theemob.org) about joining a group defense.

  • @ Searchguru, It's a nice site. What third party platform was used? Thanks, Ron

  • @Searchguru, as far as I know, no. They will send you a letter requesting that you purchase a licence to the patent and end the case right there, or proceed with court hearings. It is a legitimate filing with the U.S. District Court, but this is a scare tactic. Even though you may be using Netsol, Magento, OScommerce, etc. etc. etc., they will first send the letter to you to see if you'll settle, or fight. Most people settle, and these companies (in my case, Kelora Systems) stay afloat off of these payments. No matter who your third party provider is, in the end of things, the third party will do everything to protect itself as you must do everything to protect yourself. Each party should retain their own counsel. Since you are using the technology of the third party, your lawyer will create a Joint Defense or Common Interest Agreement with the third party, and from that point on, liability on your side of things is greatly reduced. If or when you get the complaint and it is issued to your company, you are the one liable to respond to the complaint, not the third party (hence the advice to seek your own counsel, in intellectual property law specifically). This is becoming more and more common and it is highway robbery, or should I dare say, ethernet robbery.

  • According to the estimates of how many letters sent out and what can be gathered is the average they are asking for, Kelora values their "technology," which can be expressed in six lines of code, (which I do not see any evidence of them developing for themselves) to be $75 Billion. This is the current market valuation of Facebook. "Troll" is not a term for someone who just aggressively pursues licensing fees, it's for someone who aggressively pursues licensing fees under threat of litigation for technology that is overly broad and doesn't do anything to develop the technology themselves. They patent a simple, broad idea and wait for someone to spend the money to develop it.

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