(Source: Sodahead)
Corporate rep. for "patent troll" Alcatel-Lucent couldn't even name the technology or patents it was suing over

Late last week in the Federal Circuit Court of Appeals,, Inc. -- a top independent computer parts and electronics e-tailer -- dealt the finishing blow in a critical case against a "corporate troll" who most other e-tailers were too timid to fight in court.  Joining Newegg in the fight was only one other feisty e-tailer --, Inc. (OSTK).

I. A Couple Good E-Tailers

France's Alcatel-Lucent SA (EPA:ALU) holds over 29,000 patents, many of which were acquired when luminary U.S. research institution Bell Labs went belly up in 2006.  Alcatel-Lucent produces little in the way of actual product; instead it boasts of "providing solutions" (patent licensing) to companies.  And when companies refuse to pay it (royalties) for its proposed solution, it sues them.

In other words, this "solutions provider" is termed by critics as a "patent troll".

But the company's elite legal team came up against a brick wall when they faced the stubborn duo of Newegg and Overstock in federal court of appeals over a lawsuit regarding U.S. Patent No. 5,649,131 and two other patents

The e-tailer pair was seemingly was fighting a losing battle., Inc.,, Inc. (AMZN), Sears Holding Corp. (SLHD) (Sears and Kmart), QVC, Inc., and Lands' End Inc. had all settled over the '131 patent which was titled "Communication Protocol" and whose contents were nearly as ambiguous, describing "object identifiers".  The other patents were similarly ambiguous, but were considered less valuable.

The passive majority had paid around $10M USD in protection money to Alcatel-Lucent.  Such payments in and of themselves aren't catastrophic for a company with billions in revenue.  But Newegg Chief Legal Officer Lee Cheng vowed long ago never to settle with trolls, seeing that by itself one leech might be harmless, but once blood was in the water, a company could easily die a slow death of a thousand blood suckers.

So Newegg and its partner Overstock chose a patent gun battle when all the other e-tailers caved.  And in a typically plaintiff-friendly East Texas court, a jury found Newegg innocent of infringement and invalidated the '131 patent.  

II. The Appeal

The death of the '131 patent was particularly stinging -- now Alcatel-Lucent stood to lose hundreds of millions in licensing fees.  So it doubled down looking to revive the patent.  It dropped its other two claims, focusing on the '131 patent and enlisting a new high power legal firm -- Wilmer Hale whoses lawyer Mark Fleming presented an appeal to a three-judge panel on May 10, asking them to invalidate the invalidation.

Then Newegg and Overstock's lawyer Ed Reines had his say.  Mr. Reines had distinguished himself previously when he led Newegg to a defiant Jan. 2013 victory over "patent troll" Soverain whose "shopping cart patent" had long terrorized other e-tailers.

[Image Source: Minding the Media]

Whille some appeals cases take months or years to wrap up, this one was over in just three days.  And the judges ruled unanimously in Newegg and Overstock's favor without comment.

Mr. Cheng, in an interview with ArsTechnica, gives some insight as to why the end came so fast, commenting, "Successful defendants have their litigation managed by people who care.  For me, it's easy. I believe in Newegg, I care about Newegg. 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."

Apparently, when asked to name the patents and technology in question during cross-examination during the appeals hearing, Alcatel-Lucent's corporate representative was unable to name the patents or technology that his company was suing over.

III. Newegg -- Trolling is "Sad" and "Offensive"

This isn't Alcatel-Lucent's only major loss of late.  The company in 2007 saw a $1.5B USD verdict against Microsoft Corp. (MSFT) over MP3 patents unravel in the appeals phase.

Bell Labs
Newegg calls the bastardization of Bell Labs' remains a tragedy. [Image Source:]

Mr. Cheng, who once called patent troll lawsuits "bullshit", makes it clear he has tremendous respect for Bell Labs and its Legacy, but precious little for the firm that's (in his opinion) bastardizing its remains, commenting:

These are the Bell Labs patents.  It is truly, truly tragic how the mighty have fallen. This company was once the pride of American innovation, a company that has roots going back to Alexander Graham Bell. And it ended up selling off its patents for a few bucks. What Alcatel-Lucent did was really offensive.

He concludes, "The general counsels of publicly traded companies have started to wake up—we don't feed trolls."

Source: ArsTechnica

"We are going to continue to work with them to make sure they understand the reality of the Internet.  A lot of these people don't have Ph.Ds, and they don't have a degree in computer science." -- RIM co-CEO Michael Lazaridis

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