Newegg Wins Appeal Against Shopping Cart Patent Troll

Online retailer Newegg took the road less traveled, deciding to go to court and fight rather than pay a royalty to patent troll Soverain. The ruling is important news for all e-commerce companies, since Soverain had been making claims that could have required royalty (and damage) payments from virtually any site using a “shopping cart.”

The January 22 Federal appeals court ruling was unanimous and invalidated all patents that Soverain had asserted against Newegg. That ruling reverses a trial result in Soverain’s favor, and while Soverain may appeal, it seems unlikely that the appeals court ruling would be overturned.

Soverain had sued Newegg and other well-known e-commerce retailers in 2007, claiming infringement of three patents allegedly covering the online checkout process, including the online “shopping cart.” The other defendants settled, but Newegg, which has a history of not rolling over for patent trolls, took the case to trial. Soverain won a partial victory at trial, getting a fraction of the damages it sought, but Newegg was firm in its belief that no damages should have been awarded. So they appealed.

Assuming this ruling holds, and it looks like it will, all of us involved in e-commerce owe a debt of gratitude to Newegg.  In the near term, the validity of the dozen or so lawsuits filed by Soverain last year may now be in questions, as are the $18 million in judgments Soverain already had won, including those against Avon and Victoria’s Secret.

Ars Technica has an excellent piece detailing the time line and arguments that led up to the ruling, if that interests you. In the meantime, let’s take a moment and think kind thoughts of Newegg. They just may have saved our industry.

About Lee Stral

Lee is a marketing consultant who has specialized in Internet marketing and Web site development since the Internet first showed promise as a marketing channel. Prior to founding Essential Presence, he was partner in an integrated marketing communications agency working with technology, professional service and non-profit organizations.