A Patent Troll Meets the Third Billy Goat

While reading about Newegg’s victory over patent troll Soverain Software over the weekend, I was reminded of the Three Billy Goats Gruff fairy tale I read to my children just a week ago.

Soverain claimed three patents it owns gave it intellectual property rights over the “shopping cart” technology that virtually every e-commerce site depends upon. Sorverain filed lawsuits against Nordstrom’s, Macy’s, Home Depot, Victoria’s Secret, Avon and even e-retailing giant Amazon.com.

While Soverain successfully extorted millions of dollars from these e-commerce companies, it picked one last fight that would prove to be the patent’s troll’s undoing. That fight was with Newegg and its Chief Legal Office Lee Cheng, who was recently interviewed by Ars Technica:

We basically took a look at this situation and said, ‘This is bullshit.’ We saw that if we paid off this patent holder, we’d have to pay off every patent holder this same amount. This is the first case we took all the way to trial. And now, nobody has to pay Soverain jack squat for these patents.

Newegg successful efforts to invalidate Soverain’s patents provide some hope for America’s broken patent system, but it requires that companies step up to the challenge of being the proverbial third billy goat. Small and large companies alike are all to often faced by the hard arithmetic that settling patent lawsuits is easier — and cheaper — than pursuing the path Newegg chose to follow. To successfully defeat patent trolls once and for all, more companies need to take the “don’t negotiate with terrorists” tack that Newegg has pursued.

The full interview with Newegg’s Chief Legal Officer, Lee Cheng, is well worth reading.

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