Newegg Gets Patent Troll Macrosolve To 'Fold Like A Cheap Suit'

from the a-win dept

Wed, Apr 2nd 2014 3:54pm — Mike Masnick

Among the worst of the worst patent trolls out there, Macrosolve had quite a reputation -- described as "worse than Lodsys" it took a sue tons of companies first, demand settlements later approach, based on an obviously ridiculous patent (7,822,816) for a "system and method for data management" that the company insisted, hilariously, covered any mobile app that used online forms where users could submit data. Yes, forms. For a patent filed in 2003 and granted in 2010. In a bit of a "cute" move, the company tried to pretend it wasn't a troll by doing a deal with... Donald Trump, which apparently suckered some in the press to claim that it wasn't a troll.

But it is a troll, and ended up filing over 75 lawsuits in (of course) the eastern district of Texas, following up the lawsuit filings with demands for licenses. In typical troll behavior, it made the licensing terms much cheaper than actually fighting the lawsuit (even if one were to win), so nearly all of the companies sued sucked it up and settled. However, Macrosolve included electronics retailers Newegg in its bundle of lawsuits, and, as we've noted in the past, Newegg has taken a clear "screw patent trolls" stance, where it absolutely refuses to negotiate with trolls.

Newegg has announced today, somewhat gleefully, that when faced with actually having to go to trial, Macrosolve has "folded like a cheap suit" dismissing its lawsuit against Newegg (and Geico, the one other company who 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.”

Yes, Macrosolve is a "public" company, in that it's an over-the-counter penny stock, so not only was the company looking to abuse the patent system to cash in, it appears that perhaps it was abusing the public equity markets as well. Either way, by demanding much less than it would cost to fight it in court, the company took in at least $4 million in settlements. Newegg is hoping to get back some of its own costs, though it expects Macrosolve to do everything possible to avoid that:

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.

Congress is, once again, promising to pass new legislation to stop patent trolls, and here's yet another example (in a very long list of them) why help is needed now.

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Filed Under: eastern district, forms, patent troll, patents, texas, trials
Companies: geico, macrosolve, newegg

14 Comments

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Anonymous Coward, 2 Apr 2014 @ 4:10pm

Geico is a surprising name to hear among the companies fighting patent trolls. Maybe it's just because the insurance business doesn't normally cross over with bad over broad tech patents, but kudos to them for fighting back rather than settling.
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That One Guy (profile), 2 Apr 2014 @ 5:13pm

Funny that
Funny how patent trolls always insist that their patents are legitimate and worth the price they demand from others, yet they always seem to settle and duck out when it comes time to actually go to court and prove it.

Also funny how so many of them operate in east Texas, almost like that particular area is really friendly to patent trolls, though I'm sure it's just a pure coincidence, and other courts would be equally accepting of their actions. /s
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Anonymous Coward, 2 Apr 2014 @ 5:16pm

Patent drawing for this "system and method for data management" is just sublime.

Those patent dudes must have been high on som'ting that day.

I want it?
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Anonymous Coward, 2 Apr 2014 @ 7:16pm

Re:
Insurance companies are used to fighting back regardless, but especially if they are obligated to pay up. They already have the team at hand anyway. Not paying *anything* if it can be helped is their core business.

yes, I had to deal with insurance companies before. The contracts are not worth the paper they are printed on if you actually need them.
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Anonymous Coward, 2 Apr 2014 @ 7:16pm

Oh, boy, bob's not going to like this one bit.
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Ninja (profile), 3 Apr 2014 @ 3:01am

On individual copyright trolling it's about the same. Show a minimum of knowledge and will to put a fight and they will let you go. The trolling business only survives if there's no awareness in this case. With patents it may be a little harder but maybe if much more companies stand against those trolls they will fold eventually. I highly doubt they'd go to court with too many small companies, the costs would be prohibitive.

Maybe it's about time we set up a "Chilling Effects" for patents?
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Paul Renault (profile), 3 Apr 2014 @ 4:52am

I like Newegg's stance on patent trolls.
It's giving them some of the best advertising not-paying-money can buy!

/Yeah, I know, it sometimes costs them more.

//but they get my business because of it.
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Anonymous Coward, 3 Apr 2014 @ 7:02am

Re: Re:
Insurance companies are well versed in two things: try to low-ball a settlement and smelling something fishy. In many cases, they will low ball to settle the claim. But there is also enough insurance fraud they see daily that are very well aware what fraud looks like. I suspect GEICO's legal team looked at the claims, did a little homework, and concluded: fraud.
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PRMan, 3 Apr 2014 @ 7:07am

Re: Re:
Yeah, Progressive sued their own account holder.

http://mattfisher.tumblr.com/post/29338478278/my-sister-paid-progressive-insurance-to-defend- her

I used to have 21st Century (before they got bought by Farmers) and they were great to us but weren't going to pay anything they didn't have to. In the last accident (starting from a red light at 3 MPH), they told the lady that if she claimed an injury, they would prosecute her for fraud to the full extent of the law. That nonsense dropped quick.

But now, they got bought by someone who won't treat you as well.
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Eric, 3 Apr 2014 @ 9:42am

Time to make patent examiners liable
I think patent examiners should have some liability in granting these non-patents. Would make them probably a bit more cautious in what they approve!
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JackOfShadows (profile), 3 Apr 2014 @ 10:42am

Re: I like Newegg's stance on patent trolls.
And with the best market demographic that they sell to. Works for me and why yes, I do spend thousands there ;-).
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Guest, 3 Apr 2014 @ 8:46pm

Dumb
Ask Cheng about the $2.3M it owes TQP and spangenberg. Theyre all frivolous suits if you're the one that's been sued.
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Lee Cheng, 6 Apr 2014 @ 10:37am

Re: Dumb
Dumb--we don't take all patent cases to trial. Only the ones involving dumb patents asserted by dirt bags. We were assessed a $2.5m damages award in ED TX in the Soverain shopping cart case. Got it all back on appeal. We are seeking costs now against Soverain. Douchebags don't file frivolous lawsuits against us anymore. Trial is not final adjudication. The war is more than one battle.

Answer your question?

Cheng (my last name)
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Guest, 9 Apr 2014 @ 2:01pm

Re: Re: Dumb
Not really. You just said you only take "Dumb patents asserted by Dirtbags to trial," and then said "douchebags don't file suit against you anymore." Are you making a distinction between douchbags and dirtbags? Otherwise your comments make no sense. If douchbags don't file suit against you anymore, why are you still taking dirtbags to trial?

Also, the patent can't be dumb if you are being assessed damages by a jury. Obviously a few folks see merit in those cases. And have you had the tqp judgment reversed? Not yet. I hope your lawyers make better arguments for you in court than in the comments section!!!
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