Posts Tagged: "Soverain Software v. Newegg"

Federal Circuit rules Soverain collaterally estopped despite obvious due process concerns

Apparently, despite the fact that there are strict page limits imposed at the Federal Circuit, Soverain was somehow supposed to fully brief all of the issues directly raised by Newegg, as well as all of the issues an activist Federal Circuit could possibly imagine. To call this a ridiculous burden doesn’t begin to scratch the surface. The Federal Circuit is depriving Soverain of property rights without due process, period. The lack of process afforded Soverain both in the Newegg case and in the Victoria Secret case should shock everyone.

SCOTUS: Public Enemy Number One for Patent Owners

The consequences of SCOTUS decisions are really severe. The U.S. is no longer a favorable jurisdiction for many biotech patents, medical devices and software. What that’s going to mean is companies are going to move. We’ve known this throughout history. Companies locate where the laws are the best for them. If you’re an innovator you’re going to go where the patent laws are the strongest. And that’s why the U.S. has dominated in these industries. We’re number one in biotech is because of Chakrabarty, which has basically been overruled. Prior to Myriad you would have said the ruling of Chakrabarty was this: if there’s human intervention it’s patent eligible, but now you can’t say that because there was human intervention in Myriad, which they acknowledged, and still the claims were patent ineligible. We know companies will move to jurisdictions with more favorable laws…

It’s All a Game to Newegg’s Lee Cheng

It seems that this article caught the attention of Newegg’s Chief Legal Officer, Lee Cheng, who proceeded to contact me through LinkedIn and berate me in bizarre fashion throughout the day yesterday… Cheng first reached out to me with a simple message: “You are hilarious.” I responded: “Thanks for reading I hope you learn something.” And then I got a real look into the top legal mind of Newegg. The only word I can use to describe Cheng, at least based on this exchange, is schizophrenic. He went from telling me I was “a smart guy ” that he wanted to meet to someone who was nothing more than an incompetent patsy on the patent troll payroll. This occurred over the span of only several e-mails.

Supreme Court Refuses Soverain v. Newegg

Everyone who has objectively looked at the case knows that the Federal Circuit made a terrible mistake, but not that won’t be corrected and a serial patent infringer that has made a business practice of ignoring patent rights gets to use the Soverain technology for free. And just when you think things couldn’t get more strange, Newegg makes a bizarre comment with misogynistic undertones. “The witch is dead, hurray,” said Lee Cheng, Newegg’s Chief Legal Officer. It doesn’t take a rocket scientist to realize that Cheng is calling Wolanyk a witch. Of course he will denied such a charge and he and his supporters will proclaim their innocence. But this is no different than liberals working “weight” into every comment or tweet they make about New Jersey Governor Chris Christie. This type of not so subtle dig is what those familiar with Newegg have come to expect. It is this juvenile, over the top, holier-than-thou attitude that Newegg personifies.

Who is a Patent Troll?

Frankly, the term patent troll has evolved to mean nothing more than this: You are a patent owner who is suing me. Essentially, whether one is a patent troll is in the eye of the beholder. If I’m on the receiving end of a patent lawsuit then you are a patent troll, regardless of whether you are an innovator, regardless of whether you are an operating company, regardless of how you acquired the patents. But why then isn’t Google rightfully considered a patent troll… Lets be clear, acquiring patents, in and of itself, cannot make you a patent troll, period! To the extent Google is properly characterized as an adjudicated patent troll it is because they engaged in abusive behavior. As Mueller explained: “found to have breached the duty of good faith and fair dealing flowing from Motorola’s FRAND licensing pledges to standard-setting organizations.” It is bad action that makes one a patent troll, nothing else…

The CAFC Got it Wrong in Soverain v Newegg

Open Market grew rapidly, went public, made acquisitions, and outlived about 15 of its competitors, but was hit hard by the bursting of Internet Bubble 1.0 in 2000. The eCommerce software part of Open Market’s business, called “Transact”, and the related patents were acquired in 2003 by Soverain Software, which still develops and supports Transact and its customers today. Soverain also filed a number of patent lawsuits, and settled or won all of them, up until this year. On September 4, the United States Court of Appeals for the Federal Circuit (CAFC), which is the appeals court responsible for patent cases, confirmed its January opinion that certain claims of the ‘314 patent (and some others) were invalid as obvious. Soverain has filed a petition for the case to be heard by the Supreme Court, and I hope it is accepted, because I think the CAFC got it really wrong.

Newegg Opposes Soverain’s Petition for Certiorari

Seth Waxman, of Wilmer Cutler Pickering Hale and Dorr, a former Solicitor General and Soverain’s lead attorney, says, “Newegg is taking this case seriously and so should the Supreme Court. Newegg’s attempt to reargue the facts only confirms that this case should have gone to the jury.” Waxman says, “The judicial overreach that occurred in this case is not an isolated incident, but rather the acceleration of a trend in the Court of Appeals that presents a broader threat to all who rely on the stability and predictability of the patent system.”

Soverainv. Newegg: Not an Ordinary Obviousness Dispute

The absolute truth known to everyone in the innovation community is that pioneering innovations become commonplace. What was revolutionary at the time the invention was made becomes taken from granted. In hindsight pioneering innovations look insignificant because they have become ubiquitous. The public, judges and critics find it difficult (assuming they try) to determine whether that which is commonplace today was really, truly obvious decades earlier as of the critical date. Even when an honest and fair obviousness inquiry is undertake it can be exceptionally difficult to put yourself back to before the invention was made in order to determine what was known and what was obvious at the time. But let’s dispense with the ridiculousness, shall we? The overwhelming majority of the world was not at all knowledgeable about or clued into the World Wide Web at the time this innovation was first made. So let’s dispense with the histrionics.

Patent System Under Attack

This ruling cannot stand, and the CAFC needs to step back from the brink. The CAFC has vastly overreached in Soverain v. Newegg, and it is imperative that the Supreme Court hear the case and that Soverain prevail. This attack on patent-holders and the adverse implications from the change proposed by Newegg are unprecedented, and would deal a devastating blow to any U.S. patent-holder, large or small. The proposed change would alter the law and effectively eviscerate the patent system.