It’s often said that a dog’s bark is worse than its bite. Such is the case with patent trolls. Case in point: In mid-March, notorious patent troll Macrosolve voluntarily dismissed all claims against Newegg. This action follows its 2011 filing of more than 75 lawsuits in the Eastern District of Texas against companies in a wide range of industries, including Newegg. Macrosolve claimed that anyone who distributes electronic forms over the Internet or to mobile devices and then collects and reviews the responses could be liable for patent infringement. With this broad a definition, virtually no company is immune to Macrosolve’s baseless allegations.
Macrosolve’s business plan involved filing lawsuits against 10-20 companies at a time, with offers to settle for “modest” amounts. This netted Macrosolve more than $4M in settlements, while only two defendants, Newegg and Geico Insurance Company, fought back.
Lee Cheng, Newegg’s Chief Legal Officer stated, “In a sense, we are disappointed because we were robbed of an opportunity to prove in court that Macrosolve was and is nothing more than a serial, shameless abuser of patent rights, with a poor-quality patent that has not even survived its first reexamination. Macrosolve failed to create products and services that real customers found valuable, whose principals decided to turn it into a corporate parasite. It is not a coincidence that faced with its first real opposition in Newegg and Geico, Macrosolve folded like a cheap suit, and dismissed its lawsuits against all defendants.”
Cheng continued, “I could never figure out how Macrosolve would not be required to publicly and timely disclose the fact that its primary asset, the ‘816 Patent,’ was the subject of a final rejection in reexamination or that it dismissed almost all pending lawsuits with prejudice. What was most bizarre was how Macrosolve’s stock price traded up the day that the USPTO issued the final rejection of the ‘816 Patent’. Curious. Definitely worth someone’s attention.”
Newegg intends to seek all of its fees and costs against Macrosolve for its abusive litigation tactics. However, it is highly likely, in yet another example of how the patent law system is unfairly tilted against defendants, that even if Newegg were to prevail in court in its fee motions, that Macrosolve will simply file for bankruptcy after collecting and distributing over $4M in “licensing” revenue to its principals and its contingency fee lawyers.