In this latest round of Newegg vs. the patent trolls, Newegg went against a company that claimed its patent covered SSL and RC4 encryption, a common encryption system used by many retailers and websites. This particular patent troll has gone against over 100 other companies, and brought in $45 million in settlements before going after Newegg. We won. Winning against these trolls has become a national pastime for us.
Why is Winning So Important?
Winning these court cases is great for business. It means we don’t have to pay huge settlements that hurt our ability to keep prices low. It also means other vendors are a little safer, as these trolls tend to eat their way up the food chain, picking on the smaller businesses first and then using their winnings to take on the larger ones.
What is a Patent Troll?
These are usually individuals or companies who have purchased very loosely written patents, and try to use it against any store. An example of this is Sovereign who bought the rights to a shopping cart. Every web site uses a shopping cart to keep track of customer products while they shop. So Sovereign filled lawsuits with many retail companies. Incidentally, Newegg beat Sovereign, too. Patents like these are so vague they could apply to thousands of businesses and this is where the problem really becomes an issue for all of us.
It’s Killing Small Businesses
Patent trolls are bad for any business out there. They often prey on smaller companies, who would rather pay out than take them on directly in court. These trolls hurt innovation and end up costing everyone. It’s a sad situation as many of these small businesses end up in million dollar lawsuits that force them to close before they can even make it in today’s economy.
But you don’t have to take my word for it, here is what Lee Cheng has to say about this directly:
“Unfortunately, small businesses and even individual developers/entrepreneurs have been threatened and sued too. There are a number of different troll “species,” and bottom feeders literally send thousands of claim letters out or file hundreds of lawsuits. Their math says that it always costs less to give them the money they demand than to mount a legal defense,” Lee Cheng, Newegg CLO.
How Do You Win?
While these cases are costly for us to fight, victory helps us save money. And it helps us provide better deals to you. Every time we score a victory, we all win. #WeWinYouWin
Here at Newegg we will continue to fight the good fight to keep everyone safe from these types of trolls, and hope that you will support us along the way. How do you feel about Patent trolls and these victories? Let us know in the comments below.