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Patent Troll's 'Frivolous' Appeal Gets Punished $15K in Legal Fees

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By Jonathan R. Tung, Esq. on November 23, 2015 11:59 AM

Newegg received vindication at the Federal Circuit last week when the court ruled that the case never should have been brought on appeal in the first place for want of jurisdiction, ArsTechnica reports.

Newegg will receive $15,000 in legal fees from AdjustaCam in the ruling, about half of the cost of defending the appeal to the Federal Circuit. But that doesn't even touch the $200,000 in legal fees already billed for the case at Texas District Level. Maybe patent trolling really does pay after all?

At the District Level

AdjustaCam LLC sued Newegg and a litany of other defendants in 2010, alleging that the defendants infringed on its patent (no. 5,855,343), a technical description for a movable camera clip that affixes small cameras to laptop screens.

As Adjustacam no doubt anticipated, many companies simply opted to settle rather than go through the time and expense of litigating the issue. This is standard in the patent troll business model. However, Newegg decided to take the case to court. If initial review of the case does not look favorable, then no problem: the patent troll contingency plan B is to simply drop the case and sign a "covenant not to sue." You can't catch 'em all. However, courts have slowly caught on to this trick and have made trollers pay.

The Frivolous Appeal

Despite the case having been settled without ever being decided "on the merits," AdjustaCam filed an appeal with the Federal Circuit and conveniently neglected, "forgot," or intentionally omitted any mention of the signed covenant not to sue. Fortunately, these seeming shenanigans came to light and the Federal Circuit awarded Newegg $15k in legal fees.

Newegg's Chief Legal Officer Lee Cheng maintains a dim view of patent trolls and was happy with the Federal Circuit's decision. However he has openly described AdjustaCam's tactics as "egregious and abusive." As mentioned above, the total bill thus far associated with AdjustaCam's dubious claims against Newegg equal $230,000, now minus $15,000. This means that even if the culture against patent trolls is turning sharply negative, it is quite profitable for patent trolls to continue frivolous litigation, and still quite expensive to defend against.

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