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Newegg nukes "corporate troll" Alcatel in third patent appeal win this year (arstechnica.com)
449 points by jfb on May 16, 2013 | hide | past | favorite | 115 comments



> "There's bad news and there's good news," said Cheng in an interview with Ars. "The good news is, we won this case on every point. The bad news is, we're running out of lawsuits. There are fewer trolls for us to fight. I've spent a lot of time over the last seven years figuring out what to do with these guys. There are strategies I think would be really neat and effective that I literally can't execute. I can't make good law because I don't have any appellate cases left. They [the trolls] are dismissing cases against us before any dispositive motions." - Lee Cheng

.

That's a great quote.


My fav,

""Shareholders of public companies that engage in patent trolling should ask themselves if they're really well-served by their management teams," Cheng added. "Are they properly monetizing their R&D? Surely there are better ways to make money than to just rely on litigating patents. If I was a shareholder, I would take a hard look as to whether their management was competent."


"Surely there are better ways to make money than to just rely on litigating patents."

All evidence thus far points to the opposite, except for small exceptions such as suing NewEgg. That's why patent trolls are becoming such a huge problem - the process is so absurdly profitable that companies are formed simply to take advantage of it. There's no way their management are going to change their minds.


Huh? "All evidence"? You are blathering.


He should really open a consultancy/firm to specialize in this.


That's what I was thinking. Or some sort of non-profit that individuals and tech companies could support with donations. That would be sweet.


This comment concerns me, as I would get a real "He Who Fights Monsters..." vibe off anyone who created a single-purpose legal for-profit consultancy purely to combat single-purpose legal for-profit consultancies who happen to be doing horrible things at the moment.

I really couldn't see it ending well.


Major points for Cheng.

But, look, most trolls don't want to fight it out. They want you to settle. Once word gets out that you will fight to the death, the trolls move on to the next easier target.


obsoleting oneself - the mark of the hacker ethos? :)


No, the "bad news" is not him humble-bragging about obsoleting himself. It's the fact that he doesn't have the opportunity to establish precedents with wins in court because he's out of cases and the trolls won't let it go to court.


"establish precedents with wins in court "

That's great for him personally. It won't help newegg sell any more product or make it a better company. If I was a stockholder in that company that wouldn't fly with me. It's similar (but not the same) as an ad agency doing a campaign to win an aware for their personal glory as opposed to what is best for the client.

Edit: By "sell any more product" I mean in a meaningful way. Newegg has thousands of customers. The amount that even knows about this and the amount that care isn't significant enough to move the needle. You can always make a case that doing something will increase sales or have a benefit. Would you spend money on advertising in significant dollars without analysis or oversight of the benefits?


This logic doesn't make sense.

If a kid is bullied in school, is it "more efficient" for him to give in to the bullies and just hand over his lunch money every day? Or should he take a stand over days and weeks, and then never be bothered by bullies again? Which kid grows up to be "better" at life?

I think what Newegg is doing WILL lead to bigger long-term profits in reduced license fees, reduced legal fees when the bullies stop suing them, and increased ability to compete while their competitors are restrained by restrictive licenses and license fees.


"If a kid is bullied in school, is it "more efficient" for him to give in to the bullies and just hand over his lunch money every day? Or should he take a stand over days and weeks, and then never be bothered by bullies again?"

I think that depends on the circumstances. In some cases it might be more efficient to not get the shit beat out of you (that is if there aren't other ways to deal with it at the institutional level).

By take a stand you are assuming that the person being bullied can actually stand up to the bully and make him go away.


Fighting back often all it takes, making bully pay that is.. you do not need to win every fight you just need to make people think twice about messing with you, there are always easier victims to play with.


Clearly Cheng and Newegg can pass that test.


Real life doesn't always work out like Enders Game.


As Cheng points out, by fighting these trolls, they make themselves a more frightening target for future infringement lawsuits, so to some extent you have to find a way to take that into account. You're spending more now, but you'll save in the long run.


The benefit for the company is they don't have to pay. He is a legal representative of the company who has lead a winning strategy of vigourously defending against patent lawsuits instead of by default paying a licensing fee.

Since some of the fees are between 2-12 million from the article this has real impact on the bottomline of the company.

Overall the strategy seems to have a direct monetary benefit for the company. now the question can be asked if the amount of money they are saving in licenses make up for the legal fees. apparently through these actions overall patent litigators are declining to pursue newegg for these licensing fees and going after easier targets.


So fighting a lawsuit that threatened to cost them money "forever" vs. whatever it cost to fight and win "now," that would not fly with you?

Could you invest in my company please? I like to spend money all the time.


I don't think this comment deserves to be downvoted (it's currently grey, this isn't reddit).

It's entirely a valid point to be likewise concerned if newegg investors have their fiduciary interests served by an expensive fight against injustice. This is a more general concern of tragedy of the commons where it's not in any one retailer's selfish interest to battle it out, but it's in their collective interest to solve the systemic problem.

Newegg might be heroic here in the grand scheme of things, but not necessarily for its shareholders.


What if NewEgg offered a membership for small tech businesses? The businesses would pay $x for year, and would get either a nominal discount on orders, or cheaper shipping, or faster shipping, or a super-special support contact, or whatever. But the kicker would be that it would include patent defense insurance. Then, anytime one of those small companies would get patent trolled, NewEgg and Cheng could go to bat for them.

I'm not suggesting this should be cheap. Adjust the value of x until the scheme is appropriately profitable for NewEgg, and Cheng can keep fighting the good fight.


Until they get stuck with defending someone who is bad PR for newegg.


All I could think was: "Come at me bro!"


It's a great quote but there's a problem.

Your legal officer, your attorney or anyone at your company should realize that this isn't about them nor is it about (business wise at least) protecting anyone else but the interests of your company. His quote smacks of a challenge that he liked and as such you also have to at least question whether he operated at arms length from the problem at hand.

Newegg's business isn't fighting lawsuits.


You have to admit, this is fantastic press that gives them incredible amounts of customer goodwill. See also: comment threads all over the internet with people swearing to spend money on NewEgg purchases because of their actions here.

Also, this is good long-term planning that is preventing them from being seen as easy targets by patent trolls. It could end up saving them millions.


Agreed. Personally, I had stopped using Newegg for a while because Amazon Prime made things cheaper for me overall, but Amazon is one of the companies that just pays off these patent trolls, so from now on I'm back to Newegg completely for all my hardware purchases. It's refreshing to see a company with this kind of attitude.


"incredible amounts of customer goodwill"

It gives them goodwill the question is how much and what is the amount of sales increase? Hackers tend to overestimate the importance of things like this and not take into account those in flyover country or people who aren't aware of things like this. Besides publicity gain isn't a reason to pursue a strategy like this. That's not a gamble that makes sense.

"easy targets by patent trolls. It could end up saving them millions."

Companies have used similar strategies against legal predators for the longest time. Nothing new about doing that. Yet many companies led by responsible legal teams and management also settle and move on. This is not clear cut by any means.


> Hackers tend to overestimate the importance of things like this and not take into account those in flyover country or people who aren't aware of things like this.

"Flyover country" is full of hackers, but in any case, you seem to be completely ignoring Newegg's core demographic.

> Yet many companies led by responsible legal teams and management also settle and move on. This is not clear cut by any means.

You might even say most. Which is precisely why this is so interesting.

I find it disturbing to pursue this line of thought of seriously questioning whether fighting and winning against a patent troll is irresponsible leadership in a company. Doing so plays right into the patent trolls hands. So what if the bean counters can't figure a better ROI than simply settling every time? There are gray areas in business and I think it's incredibly harmful to question whether shareholder interests are being maximally served every time a company does something that might be mistaken for altruism. Should we also denounce any company that goes beyond EPA standards or donates to charity beyond what tax law would dictate optimal?


You seem to be somewhat adamant that this obviously major victory for Newegg was actually some sort of a problem for them. And this against an adversary which managed to extract rent from the likes of Intuit, Zappos, Sears and Amazon. NewEgg's strategy was obvious born out of a principled stand to not give in to unethical patent trolls. This also makes them a much more feared opponent for any future trolls... which is a huge win for the company's investors.

"Nothing new about doing that. "

Really.. ? Did you read that article ? Could you point to another instance of a company that's been successful against patent trolls to this extent ?


I see you are getting downvoted a bit, but I think this is a legit point to debate.

Whether or not the bottom line is clear cut, I would say a few things: These lawyers are probably on retainer, and while they could be doing other things. This clearly gets them SOME amount of positive press, and certainly helps their bottom line if you believe that some future trolls will not attempt to sure them. It may also invalidate some laws that hurt their business and innovation which then allows them to potentially develop new products. Lastly, I would definitely argue it helps us a society, and corporations LOVE to buff their image with some hero bullshit story. Before these story, what did you know newegg for? Selling cheap hardware?

What is their new image? Champion of the internet. (and their lawyer is a godamn bawse.) I don't know if you could buy this kind of press.


> Hackers tend to overestimate the importance of things like this and not take into account those in flyover country or people who aren't aware of things like this.

"'Hacker News' Hackers" also tend to grossly overestimate how well they know what is in the best interests of a company that they personally have little to do with.


""'Hacker News' Hackers""

Exactly. Take Godaddy (a competitor of ours) which is one of the most hated companies ever discussed on Hacker News. Yet they continue to do great business and are clearly well liked by many others who have no clue or care about the issues that forum readers care about.

As an aside, companies that are the darling of any online forum can quickly have their name turn to "mud" if they don't continue to acquiesce to what the group thinks is the right thing to do. (Then the question is does that name turning to mud motivate those to actually take action.)


> Newegg's business isn't fighting lawsuits.

Correct. Which is why "it's a great quote." By sending the credible signal that they will fight patent trolls to the bitter end, and probably win, they avoid fights.

In terms of game theory, by making public statements of this kind, they make it harder for their future selves to settle with future trolls instead of fight. Future trolls, knowing this, will be less likely to target them. Trolls want settlements, not fights they'll probably lose.


"Future trolls, knowing this, will be less likely to target them. "

We can take strategy further though instead of the obvious implementation.

What if you settle in some cases but not all cases?

So a troll sees that you settled with company "x" but upon review you feel that you aren't going to settle with them?

This happens in personal injury cases or other legal matters. Taking a "we don't settle ever stand" sends a signal that you aren't evaluating the merits of the action just taking a flat approach. Consequently nothing can be inferred as far as how you even view the merits of the action. It's all the same. Otoh, taking a "settle when necessary" doesn't imply you will always settle and sends (I would argue) a stronger message when you do fail to roll over that you aren't because you feel particularly strongly in the case before you.

In strategy (that I use for negotiating) I have always found it best to not be predictable.


In this case, however, it's better to be perfectly predictable as always fighting trolls.

Consider the game tree, as seen by the Troll considering whether to attack Company X:

        [1.1] troll's payoff = 0
        /            
       / no          
      /              
    (1) Troll: attack Company X?
      \              
       \             
        \ yes     [1.2.1] troll's payoff = +10
         \        /     
          \      / settle
           \    /       
            (1.2) X: fight or settle?
                \          
                 \         
                  \ fight     [1.2.2.1] troll's payoff = -5
                   \         /        
                    \       / drop    
                     \     /          
                     (1.2.2) Troll: fight or drop suit?
                           \           
                            \          
                             \ fight    [1.2.2.2.1] troll's payoff = +100
                              \         /         
                               \       / Troll wins
                                \     /           
                               (1.2.2.2) Nature: Troll wins or loses?
                                      \           
                                       \ Troll loses
                                        \         
                                        [1.2.2.2.2] troll's payoff = -1000
The Troll's business model is predicated on the belief that, for almost all values of X, Company X will decide to settle, should the Troll attack. Therefore, the choice from the Troll's perspective is between outcomes [1.1] with a payoff of 0 and [1.2.1] with a payoff of +10. Strategically, the Troll chooses the +10 and attacks.

But if a Company X can credibly destroy its option to settle, the Troll's expected payoffs for attacking X change to [1.2.2.1] = -5, [1.2.2.2.1] = +100, and [1.2.2.2.2] = -1000, with the +100 payoff being unlikely (because, if it were likely, the Troll's business model wouldn't be to troll). So the most likely payoffs in the Troll's estimation are either -5 (ouch) or -1000 (OUCH!).

Therefore, the Troll's best choice becomes not to attack Company X. That choice has a payoff of 0, but it's greater than the expected payoff should they fight.


I upvoted your comment but I also note that your background and training is very different than mine is. I look at things from a human nature point of view mostly and by my gut feelings which makes me think the way I do. That has tended to work for me based on past experience. As an aside I don't have a degree in psychology or anything special that qualifies me as someone special other than just plenty of experience and observation over the years. And I happen to be exceptional at negotiation and strategy (not that I can or will prove that so take that for what it's worth). And I've certainly frustrated many attorneys over the years as well.

As a tangible example I had a case where someone wanted something from me and my lawyer said "they have a good case and you will have a really hard time etc. etc.". Legally he was right. However in my view the company that wanted the "something" also had a new facility that was opening in 3 months approx. and I realized that they would rather pay and acquire the item then they would follow a legal route (regardless of outcome or cost).

So while I am not disagreeing with the method to which you look at this it isn't the way that I think.

That said it's entirely possible that the strategy of putting up a fight each and every time could work to the advantage of someone being trolled. But I've seen enough cases of people following different legal strategies to know that it must have drawbacks because not every top legal mind seems to go that route.

As they say ask 10 get 10 opinions.

Lastly, I'm sure you would agree that a lawyer is at least somewhat biased in wanting to follow a "fight everyone" strategy as it (for lack of a better way to put it) lines his pockets.


Does that matter in this case?

Patent trolls are parasites looking for easy money. If Newegg is signaling that no money from them is easy, then that seems to be the best way to fend off all the lawsuits, no matter the level of perceived merit.

That wouldn't be true in the sort of patent lawsuit where somebody is defending against an existential threat. But when you're trying to influence a cost/benefit calculation, signaling "we will maximize your costs and maybe we will sink your whole operation" seems like a great way to get the extortionists to move on to other targets.


"If Newegg is signaling that no money from them is easy, then that seems to be the best way to fend off all the lawsuits, no matter the level of perceived merit."

I get your point but would you agree that otoh it is entirely possible that a patent troll might decide to take them on in order to show that they won't go away easy as well? (variation of a Moral hazard?)

Additionally we don't really have complete data on every demand made by trolls it's not as if someone who decides to settle (and/or the patent troll) is publicly disclosing all agreements made prior to legal action, right?

We only know about when lawsuits are filed and settled. We don't know about someone settling before a suit is filed at all.

As an example a domain owner might have a publicly stated policy that they will never turn over a domain when someone comes calling even if they file a lawsuit UDRP etc. And in fact there are people that do this (google rick schwartz domain king). But how do we know the times that Mr. XYZ gets approached and does settle? It wouldn't be in his interest to tell the world about that and he could easily have an agreement with the other company that he will only agree if they don't disclose the info.


I don't think that's the case. Trolls don't have to sue anybody in particular. But they have a strong incentive to be able to win any case they start, because, as with this story, a loss can eliminate future shakedowns.


Newegg is a private company, so its business is whatever its owners want it to be. I don't think this guy has gone rogue, I'm sure he has the full support of Newegg leadership.


He's also making a 'Dont' mess with us.' statement. I don't see anything wrong about he said. He's proud for what he did not just because it's his job but also for righteous reason.


It could be part of their portfolio. They are obviously willing to fight deeply on issues, nothing preventing someone like Amazon from hiring them for consultancy services.


I like solid companies. This looks like a solid company (to me). They hired the right guy who does the right thing (and is allowed to do so). This tells me a whole lot about the Neweggs culture and I think I like it (rather a lot).


> "Alcatel Lucent, meanwhile, they drag out some random VP—who happens to be a decorated Navy veteran, who happens to be handsome and has a beautiful wife and kids—but the guy didn't know what patents were being asserted. What a joke."

This is pathetic. You have a billion dollar company try to play legal hardball and they don't even do the most basic coaching of your executive team. They must have been getting really comfortable in East Texas to fuck up this bad.


It's not that they are good at it, but it's the others are really bad.

I've said it once and I'll say it again, say the word 'patent' and most executives (and their corporate legal representation) will shudder and think you're in the right. They have no idea of what the state of patents are, what can be done about them, and that the people suing you are most likely doing it for a quick buck.


Newegg's anti-troll stance is exactly why I bought 2 weeks ago I bought the majority of my desktop components from them, without even pricing checking on amazon/etc.


I have to admit that I feel a bit ashamed that I split my orders between Amazon and Newegg based on price last month when building my machine :(


Newegg still benefits simply from you doing business with them. Presumably they are not using a loss-leader strategy - so every sale is still profitable.

There are a lot of vendors out there, it isn't generally feasible to price shop all of them for orders of more than one or two items. So the fact that they are merely on your list of vendors to consider is a win for them.


I dont, as I've had a bad customer service experience with Newegg. But it was only once, and they did budge once I contacted google "trusted" stores team.


I did as well. I needed a few small rack servers and their name was on my mind. I wasn't spending my own money so it was just a case of "Newegg's fighting the good fight these days, have a cookie". It was only about $5k but if there's many people who think like me then it adds up.


Indeed, dollars are votes.


Nice, a win for the good guys. I'm glad to see the '131 patent die but it died last year anyway due to its expiration. Sad that it caused pain up to this point. I keep hoping we'll plateau on the silly patents as everything between '92 and '98 starts to expire.

The other interesting thing here (and it was evident in Oracle v. Google as well) is that the judiciary is coming up to speed on both the technology aspects of these patents and the general inanity of trying to "obvious" stuff.

I really hope this is another sign of the beginning of the end for this abuse of the patent system.


Change from the judiciary takes years and is usually piecemeal at best. And small wins like this undercut the urgency for legislative action. Ugh.


Patience chasb, patience. Legislative action is not always the desired outcome, pushing for legislative action on Copyright reform got us DMCA, a mixed blessing at best. Legislative action informed by judicial review of key concepts and organizing principles makes for better laws in my experience. Time will tell of course. Change does happen.


Newegg and Rackspace are definitely building a reputation for pushing back against patent trolls and even borderline-legitimate (maybe?) cases like this one. I wonder how we as outsiders can go about assessing the impact of building this reputation (ex: a troll going after various retailers but not Newegg, for instance)


As soon as that happens it will validate Newegg's strategy, and only further incentivize other companies to adopt it.


Other companies that can afford the first six patent lawsuits necessary to build up a reputation? Maybe.

Other companies that can't even afford to win once? Hardly.


It's like feeding the troll...in reverse.


Starving the troll. :) Nothing lasts forever. I think this immoral money-making tactic is on its way out.


More apt perhaps would be: "curb-stomping the troll, desecrating the remains, and then mailing the whole mess in a bucket to its mother"?


I doubt it. There's still money to be made shaking people down for IP.


I'm surprised more companies don't do this, because it seems to me that the impact is clear: Like ambulance chasing, patent trolling relies on the simple principle that it's much, much cheaper to settle than to go to court -- for both sides. It's huge that they won, but they didn't need to. By sending the message that they will always go to court, my guess is they'll stop being sued.

On the other hand, the trolls know this, and may react by targeting companies that do this to demonstrate that it's not an effective strategy.


It's basic game theory. A single company standing up to the trolls is unlikely to make any difference (or at least looks unlikely in the absence of an example like Newegg), and may incur costs far greater than if they simply folded. If everybody stood up to the trolls together, then everybody would be better off, but the better strategy for the individuals is to fold. Prisoners' Dilemma writ large.


I continue to wonder why more companies being threatened by patent trolls don't band together to share legal expenses of a defense. Is there something in the legal rules and procedures that prevents a shared defense?


Yes, except that what we're starting to see is once a company settles with one troll, others hear they're an easy mark and show up with more demands. So even for a single company, settling is starting to become a bad strategy. As soon as you settle with one, that's that much less money you have to fight the next one with... and there will be a next one.


Some one has to throw the first blow to the trolls, now they lead and others will follow.


"Newegg and Rackspace are definitely building a reputation "

I can assure you that the overwhelming majority of their customers don't care about this and of the ones that do any a portion of them would be able to even change buying decisions over it.

If you are the IT director explaining to your boss that you want to deal with Rackspace or Newegg (and pay higher prices or get not as good of a product) because of this just won't fly. If anything it even makes your judgement suspect in the same way that wanting to give business to your brother in law might. It's not an arms length decision process.


Larry, I normally agree with you quite a bit. But you're not seeing how much this helps them in the future. You're totally discounting the value of (a) not being sued as often and (b) not having to pay license fees that directly take away from profits.

How much did they spend on this trial? How much was Alcatel asking for a license fee ($19 million). Did they litigate this for less than $19 million? I bet they did.


People seem to misunderstand that the point I am making (sorry if this is not clear) has nothing to do with whether they should or should not have settled this case. Only the attitude of the legal officer and the statement that he made.


The statement he made will have the effect of further reducing the number of cases that he has to fight...

If he were really interested in troll-stomping over all other interests he would be better off saying "We may have won this one, but most of the time we like to settle".


Newegg's strategy here is basically applied game theory, where they loudly and publicly state that they will never pay licensing fees to trolls, and then they loudly and publicly show that to be the case. Worse, they're actually winning their court cases, and destroying the value of their opponent's patent portfolio.

Nobody in their right mind would waste time trying to troll them now - unless they have a really rock-solid case, which is unknowable before litigation.


I'm always torn apart when buying electronics.

In one hand newegg kills trolls and I'd love to buy from them... But to get close to amz prices you have to give in to mail rebates and other forms of marketing trolling.


Perhaps this is a good demonstration of why buying based on price is not in your long-term best interest?


and yet even when we understand this, it is still very hard to buy the more expensive option. That demonstrates how hard this dilemma is to solve.


And within this one microcosm, you've captured the entirety of the problem that we now face with the US government. No one is willing to sacrifice their vote for the greater good or long-term viability. All they care about is THEIR pocketbook, RIGHT NOW. "More stuff" is going to break the federal government, as surely as it has some countries in Europe, and now some of the largest cities in the US. Paying a little more from Newegg over Amazon is an easy call for me to make. I wish more people valued the benefit to society the extra $50 or $100 could bring over the few grande triple-shot mocha frappachinos it represents to them personally.


You're absolutely right and I admit fault and guilt on all counts. I even made multiple "selfish" votes last fall even though I knew it was bad for the country (ex: voting for that idiotically unfair car insurance price segregation proposition in California).

It's as if I'm an addict. I know I have a problem but I can't stop.


With the Newegg vs Amazon debate for a purchase there's another factor to consider beyond price: customer service. That's something that Amazon has won me on countless times now. Slight problem with a product that they ship me? They'll pay for the return fee and send a replacement out on the fastest available shipping. Newegg has proven slightly more difficult in that regard so in this I still find myself leaning more towards Amazon.


I believe my company has purchased somewhere around $100k+ from Newegg by this point. I would suggest not always buying on price and look at what the company is offering... and one of those things has been always eggcellent (ha-ha) customer service. Also, they're not Amazon. They have that going for them as well.


I could have gotten them from Amazon for cheaper with free next-day delivery, but I bought my last set of parts from Newegg specifically because they shat on a patent troll's parade. I'm totally willing to pay a premium for that, I have not a single regret.


NewEgg is worth giving your business to. In addition to all this, they have better filtering for electronics product-finding, an excellent reputation for customer service, and the most helpful reviews database I've ever found.

(Amazon is a close second on reputation and reviews)

Prices are usually very close from what I have seen- only a dollar or three different.


What's the difference, $100 for an entire system?

That little bit every three years is probably worth it to reward a company that cares.


Its interesting to observe that Alcatel Lucent is the successor to certain ATT R&D operations, most notably Bell Labs.


At this point, the "Bell" part of AL's Bell Labs is little more than the name and the patents. It's mostly ALs's telecom-related research.


Does anyone remember when plan 9 was released (I certainly don't, I'm too young) under a pseudo-open source license that contained a clause to the effect of "If you sue lucent in an ip case you lose your right to use plan 9". Imagine if people had actually adopted plan 9, since unlike real NPEs, victims could probably sue alcatel for infringing on patents of their own, although this doesn't seem to be the case yet.


A question for any lawyers out there: if you licensed a patent that is later invalidated, are you entitled to a refund of your licensing fee?


I would imagine that it would vary from license contract to license contract, but I'm not a lawyer, nor do I play one on TV.


I'll be making a point to make a couple purchases at newegg that I probably would have gone to amazon for.


Sad to see they're Bell Labs patents. We owe a lot of innovation from the work done there. Dammit, and to think I was going to work for Alcatel.

edit: wow, spelling.


Alcatel sure has fallen. My father worked for them in France in the mid-90s. He said at the time, they were one of the best run and most exciting companies in the world. They had research labs in all sorts of things all over the place. Eventually, new management was established and Alcatel began falling apart, and then they merged to form Alcatel-Lucent in 2006. I don't think anyone even knows who they are anymore.


Even Lucent was one of the tech darlings of the first .com bubble. How fan they have fallen...


Yeah, but no one ever accused Lucent of being "one of the best-run... in the world". I worked there, and I saw management do some jaw-droppingly stupid things.


The patent in question is pretty absurd. If I understand it correctly, Alcatel patented the concept of using an ID to reference an object:

"referencing... an object that is to be displayed on the terminal display with a particular identifier"

If I understand it correctly, I've violated this patent hundreds of times. But in Alcatel's defense, they patented it a couple years before I started using IDs.


New York City has taken a similar approach. They have now started fighting many more lawsuits even though the settlement amount would be less than the cost of defense. The problem with settling is that it emboldens others to come in as they can threaten a costly fight, while knowing that the city is not going to do that and make easy money. So while it may save money in the beginning, settling gets more people to sue you. Now that lawyers know that their bluff may be called and they may have to fight in court, they will be much more selective of what cases they take in to fight. Of course it can sometimes backfire as in Research in Motion's case, but you cannot always give in to threats.

http://www.nytimes.com/2013/02/26/nyregion/new-york-to-stem-...


Newegg is winning the hearts and minds of the "Tech Influencers" here. People like us who follow the news and understand the importance of supporting endeavors like this are more likely to recommend and influence the buying decisions of others.

You go from being a customer, to an evangelist.


With trolls being such a problem, why haven't companies formed alliances to defend each other against lawsuits? Wouldn't the tech world be better off if suing one company meant taking on most of the industry?


Because the only way to do that is put yourself in the crosshairs. If 3 of the 20 companies are being sued, the other 17 could ask for a summary judgement and allow everyone to pool resources, but then 17 companies had to put the result of the lawsuit on their own heads too.

You are correct that it would be better for the system as a whole, but each individual is better off not participating.


Can someone put in layman's terms the patent and how it was being applied in this case? They say in the article it was an "old cell phone patent being applied to the internet" but don't explain how/what. thx


The patent (US #5649131, there's a link in the article) covers a general scheme for standardized communication between a server and client (the patent refers to 'host' and 'terminal').

Specifically, the server and client agree on a set of defined 'objects' (in this case including text boxes, drop-down menus, and images). The client then displays said objects to the user by following instructions from the server. The claimed innovation seems to be that the server and client talk about the aforementioned objects rather than sending exact descriptions of the client's display back and forth.

Alcatel-Lucent intended to apply the patent very broadly - consider a web server as the 'host' and a web browser as the 'terminal', for example.


So that's basically every interactive site ever? It certainly includes AJAX but it probably includes basic HTML over HTTP.


More or less. NewEgg are calling it a patent on menus and they're not far off.


I'd say the patent, at least the beginning, is fairly readable. I don't see any way that it could be applied to suing any of these companies though... perhaps that's the point: http://www.google.com/patents/US5649131?dq=5649131&hl=en...

From a quick read, it appears to be about a server keeping track of menus and clicks on those menus that happen on some client (e.g. smartphone?) app. That seems like absolute nonsense to me, but I may be getting tripped up by the use of the term "host computer."


It doesn't look like anyone knew... "Alcatel-Lucent's corporate representative, at the heart of its massive licensing campaign, couldn't even name the technology or the patents it was suing Newegg over."


When I ran a hardware oriented business, I spent tens of thousands of dollars every year at Newegg. Since moving exclusively to software, I buy a lot less hardware. But, I know where I'm buying my computers and electronics from now on.

My livelihood depends on not being targeted by trolls, and companies that fight back against trolls help me avoid the damned near certain destruction of my company that a patent troll could cause me (I'd, ethically, be compelled to fight...but I simply don't have the resources to win such a fight).


Hopefully this will provide some motivation to other companies that have been faced with similar threats by trolls and have caved. It doesn't take a lot of wins to start turning the tide in our favor.

The trolls will certainly be back after they regroup - and their tactic may shift to coming after increasingly smaller companies that can't afford to go to court in the first place, much less actually stand up a fight. Nonetheless, any movement in the right direction is a good thing as far as I'm concerned.

Way to go Newegg!


Going after increasingly smaller companies also means attempting to get increasingly smaller amounts of money from a larger number of defendants. Eventually this will become untenable, at least for larger operations like Alcatel-Lucent, because there is still an overhead of running such an operation.


It seems the only one way to battle against patent trolls is to forbid them to use their patent infringement card if they do not use it themselves.


I always laugh a little when I hear a professional use the term "troll." It really reminds of video games. Tra la la la.

Excerpt from the article: "There are fewer trolls for us to fight."


Thank God for Newegg having a backbone to stand up for what is right. Let the market deliver to them their just rewards - customer loyalty and increased profits!


This just highlights how much it pains me that Bell Labs is now in the hands of a foreign firm like Alcatel, which has also been quick to hijack its history.


What does the "foreign" have to do with it?


Bell Labs was one of the country's greatest resources and the model of what a corporate research facility should be. It was a decidedly domestic phenomenon, and also could work on sensitive topics freely. Its now being foreign has everything to do with it, which is why they had to spin off a small segment to continue with government contracts.


Newegg just won my heart for what they did!


Yeah! I feel like when in saving private Ryan the panzer at the last scene is blown by a mustang. Give'em hell!


Now if someone would only kill off Rambus, a true scourage to our industry would be eliminated.


Unfortunately that just makes a bigger target of the smaller businesses who can't afford such a vigorous defense.




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