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Fed. Cir. Clarifies Newegg Opinion, Crushes Patent Troll

By William Peacock, Esq. on September 06, 2013 | Last updated on March 21, 2019

Ever used an online shopping cart? Of course you have. We all have. Nearly every e-commerce site uses the ubiquitous digital representation of the real-life counterpart, yet a so-called patent troll, Soverain, alleged that its patents (purchased from the original "inventor") covered the technology, as well as related the related technological innovation of a unique session identifier.

Their claims worked. According to Ars Technica, they squeezed tens of millions of dollars worth of settlements out of heavyweights like Amazon, and obtained verdicts and ongoing royalties against Victoria's Secret and Newegg.

Newegg fought back, however. And crushed them.

Taking the settlement-is-a-slippery-slope tack, the Internet retailer fought through a trial in East Texas, where the district court refused to allow the question of obviousness to go to the jury, and lost, though the $2.5 million verdict was only a fraction of what Soverain was seeking.

In the Federal Circuit, the court reversed, finding claim 34, the "shopping cart" claim, to be invalid, as it was obvious based on prior art in the form of CompuServe's pre-Internet online shopping mall. However, the court's initial opinion was vague as to claim 35, a separate, yet dependent claim involving payment.

Soveraign sought an en banc rehearing, arguing that the court's ruling was vague, that the Federal Circuit engaged in fact-finding rather than deciding the issue as a matter of law, and that if the district court was indeed in error in refusing to send the question of obviousness to the jury, that the correct remedy was remand and a retrial, as Newegg had requested. Newegg also sought clarification on the prior holding.

Not buying the "fact-finding" argument, the Federal Circuit earlier this week denied rehearing en banc, yet they did issue an opinion clarifying its prior panel's holding:

"Claim 35 was not separately argued to the district court. When a dependent claim and the independent claim it incorporates are not separately argued, precedent guides that absent some effort at distinction, the claims rise or fall together."

Though the shopping cart trolling operation is now dead, PatentlyO reports that Soverain still has a number of patents left in its arsenal, and it expects that the company will petition for certiorari with the U.S. Supreme Court. We can't wait.

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