January 31, 2012, 3:35 PM

How to mount an effective patent infringement defense

An IRCE speaker says thinking strategically and vetting law firms are key.

Lead Photo

Lee Cheng

Web retailers can protect themselves from patent infringement litigation by taking early and detailed measures to select a qualified law firm, says Lee Cheng, general counsel, corporate secretary and vice president of human resources for Newegg Inc.

Cheng, who has defended Newegg in several patent infringement lawsuits and disputes, will speak at the Internet Retailer Conference & Exhibition 2012 on June 6 from 1:45 p.m. to 2:30 p.m. during a session entitled “Fighting back against patent suits: What to do and how to do it.

Patent infringement litigation and threatening letters from patent holders or their representatives claiming that a merchant is illegally using patented e-commerce technology are significant problems for web retailers of all sizes. Some merchants tell Internet Retailer they’ve been sent as many as 10 e-commerce technology patent infringement letters in the last 12 months.

Mounting a patent defense can be extremely expensive and cost several hundred thousand dollars to defend against just one lawsuit, patent attorneys say. But if a web retailer is involved in potential litigation or needs legal counsel to deal with a growing number of threatening letters, the merchant should find a smaller firm with experience in handling patent disputes, Cheng says.

“Hiring a big national firm right at the start is expensive and can send a signal to the patent holder or their representative that you are willing to settle,” Cheng says. “Web retailers should be very diligent in finding a smaller boutique firm.”

During his session Cheng will walk attendees through the best way to establish a program to deal with a threatening patent litigation situation. “Patent infringement is becoming a significant problem for big and small retailers, but you have to think about this problem strategically in order to figure out the best way to react,” Cheng says.

Cheng will discuss how Newegg, No. 12 in the Internet Retailer Top 500 has developed strategies and procedures for dealing with ongoing patent infringement issues and provide an overview of current litigation trends.

He also will discuss several new patent technology infringement issues, including whether merchants who purchase and use software from e-commerce platform application developers are protected by indemnification conditions in the licensing agreements with those vendors. “I will lay out the framework for how to review and respond to patent infringement complaints,” Cheng says.

Internet Retailer’s editors asked Cheng to speak because he is an experienced attorney and technology executive. In 2011, Cheng became vice president of human resources and the head of the office of the CEO at Newegg. He oversees legal, compliance, ethics, government relations and risk management, and created the Newegg Foundation to facilitate and encourage community and philanthropic activity at the company. In addition, Cheng initiated and organized the launch of Newegg Books, Newegg's entry into the textbooks category.


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