Newegg, Geico Scalp Another Patent Troll in Ongoing Crusade - In House
In House - The FindLaw Corporate Counsel Blog

Newegg, Geico Scalp Another Patent Troll in Ongoing Crusade

We like Newegg's style. When confronted with patent trolls in the past, the company has refused to settle, even when the cost of doing so would've been miniscule in comparison to fighting the case all the way through the Federal Circuit.

The company previously took down Soverain's "shopping cart" patent through litigation. This time, it's part of a coalition of companies, including Geico Insurance, that has taken on Macrosolve, a company that allegedly turned troll when other revenue channels collapsed. According to Newegg's Chief Legal Officer Lee Cheng, Macrosolve received more than $4 million in settlements before the coalition banded together and refused to pay even the miniscule amounts requested ($50,000 to $100,000) as a matter of principle.

Geico dealt the death blow, initiating an ex parte re-examination of the patent, which covered using questionnaires on a mobile app. The patent claims were rejected, and now Macrosolve is dismissing defendants, reports Ars Technica.

Reverse Trolling

A common trolling tactic is to send demand letters to small businesses with limited resources. They'll pay because they can't afford not to, as the cost of legal defense is too great.

In an interview with Ars Tecnica, Cheng told the blog that he looked at the company's financials, which reflected limited cash on hand and high overhead. It wouldn't be able to afford discovery, claim construction, and a trial.

Yet, companies were forking over $50,000 checks, keeping the troll afloat. Cheng encouraged the remaining defendants to stop paying, and most of them did. When Macrosolve offered to drop Newegg from the suit, as long as the company dropped its request for fees, Newegg refused.

It could have paid. It could have walked away last year. And so far, according to Cheng, it has cost the company $450,000.

It's been a costly battle, but one that looks like it'll end with a victory. Macrosolve told Ars Technica that the company had until May to respond to the USPTO's rejection of its claims, and that it could still bring suit if and when the USPTO changes its mind.

Unless it runs out of cash, of course.

Principles or Ledgers?

Yesterday, we talked about Adam Carolla's war on a podcasting patent troll, a war that he's hoping will be funded by crowdsourced donations.

Newegg, here, has spent nearly half a million dollars on fighting an alleged troll, and the case isn't over. Add in the handful of other patent battles it's fighting, and that's a lot of money wasted on frivolous patents.

In both cases, even if they win, it's a drop in the bucket of patent trolling. The solution isn't a case-by-case war of attrition -- it's systematic reform.

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