March 17, 2014, 11:39 AM

Overstock takes a stand against two patent holders

Two patent infringement lawsuits against the online retailer have been dismissed without any settlement in the past two months. ‘They just walked away,’ says Patrick M. Byrne, Overstock.com chairman and CEO.

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Patrick Byrne

Overstock.com Inc. has fought back against two patent infringement lawsuits and both cases were dismissed without any settlement or any money paid, the retailer says.

The online retailer, No. 31 in the 2013 Top 500, says that the two plaintiffs—Execware LLC and Eclipse IP LLC—in the past two months decided to dismiss their cases against Overstock. Neither plaintiff could be reached for immediate comment.

Rather than settle a suit it considered “frivolous,” Overstock pushed back hard, says Mark Griffin, Overstock.com senior vice president and general counsel.

“In abusive lawsuits, we spend our legal budget in defense, not on unjust settlements,” he says.

After Overstock said it would fight Execware’s case, the plaintiff proposed a “no-money” settlement, but insisted on confidentiality to keep the walk-away quiet, Griffin says. Overstock.com refused. “We want everyone to know they left empty-handed,” he says. Earlier this month Execware dropped the case. Eclipse took a similar position in February, Griffin says.

Overstock’s pushback led the plaintiffs to “just walk away,” says Patrick M. Byrne, Overstock.com chairman and CEO.

“While we have the highest respect for intellectual property rights, we don’t settle abusive patent suits, we fight,” Byrne says. “You can’t fork over your lunch money today, and expect a bully to leave you alone tomorrow. Patent trolls understand a bloody nose and in the long run, it’s the asymmetrical response that pays off. It is only right that we take this opportunity to make explicit this litigation strategy.”

That strong-armed approach is a position Overstock has long taken. For example, in 2011 the retailer spent about $3 million to fight a suit against Alcatel-Lucent USA Inc., a Paris-based telecommunications firm that claimed Overstock infringed upon its patents for functions such as web site drop-down boxes, text boxes, site search and tools that correct consumer misspellings and other errors. A settlement, Griffin says, would have cost a fraction of estimated defense costs, but wouldn’t established the retailer’s firm defense against companies the retailer calls “patent trolls.”

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