Newegg Given The Go Ahead To Pursue 'Douche Bag' Patent Troll For Fees

from the go-for-it dept

Thu, May 22nd 2014 7:46am — Mike Masnick

A few weeks ago, the Supreme Court smacked down the Federal Circuit (CAFC) for its made up rules that made it almost impossible to enable victims of patent trolls to get the courts to order the trolls to pay legal fees. As the Supreme Court noted, CAFC seemed to set up arbitrary rules for no reasons at all. And this is important, because courts almost never award legal fees, and with the untimely death of patent reform, hopefully this small change will at least help in the meantime.

Because of that Supreme Court ruling, CAFC has already sent one case back to the lower court to see if fees should be awarded. It's a case involving Newegg, the online retailer who has put a firm stake in the ground concerning its unwillingness to deal with patent trolls. In this case, a company called Site Update Solutions sued a bunch of companies, including Newegg. Newegg got out of the case and then sought to recover legal fees, but had that rejected... under the old rules. Now a chastened CAFC has sent it back to the district court to review.

Newegg is certainly happy about this -- putting out a press release with a quote from their top lawyer, Lee Cheng, about how they want to make life as difficult as possible for patent trolls who get in the way of innovative companies:

At Newegg, we've always believed paying off extortionists only encourages more extortion, and there had to be a negative consequence of suing Newegg without just cause," Cheng added. "We insisted on seeking a return of our legal fees from Site Update. We [believe] Site Update's demand that we waive our right to seek fees for dropping a lawsuit that should not have been filed in the first place was outrageous. What a joke. We believe that trying to make a patent troll pay, no matter what amount, sends the clearest possible message to all abusive patent asserters and their contingency fee lawyers that if they file a frivolous lawsuit against Newegg, they will suffer some consequence, even if it is only making less money or having to do more work than they planned to. This case also provides an excellent template for how a well-managed and organized joint defense effort allows participants to not just bask in the glow of beating a patent troll, but also save money compared to paying off a patent troll. We hope that our work will provide a beacon of hope for real innovators and honest entrepreneurs facing demands from abusive patent asserters. We want to encourage other defendants to create as much friction as possible, rather than feeding the beast with easy settlement checks."

In talking to Cheng directly (who is not known for holding back his opinions), he was even more direct in his feelings about patent trolls and having to deal with these lawsuits:

People who assert bad quality patents or demand ridiculous amounts of money for patents that do not add any value to society are douche bags. They have gotten away with their abusive practices far too long. I think I can safely say that our customer base approves of the spankings we administer.

As a Newegg customer, I can safely say I agree with that.

13 1458 Order 5 12 2014 1 (PDF)13 1458 Order 5 12 2014 1 (Text)

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Filed Under: cafc, fee shifting, lee cheng, patent trolls, patents, supreme court
Companies: newegg, site update solutions

32 Comments

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Anonymous Coward, 22 May 2014 @ 8:07am

Where are you, Mark Syman? I'd like to hear you defend the douchebag in this case...
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OldMugwump (profile), 22 May 2014 @ 8:16am

"Don't settle" T-shirts
You can buy a "Don't Settle - Settling Feeds Trolls" T-shirt from Newegg.

Just $9.99 with free shipping. :-)

http://www.newegg.com/Product/Product.aspx?Item=N82E16800996221

I got mine!
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Vidiot (profile), 22 May 2014 @ 8:16am

Reward them!
It is precisely because of their stance that Newegg has become my retailer of first choice.
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OldMugwump (profile), 22 May 2014 @ 8:18am

Re: "Don't settle" T-shirts
BTW - that link is for the Large. Search Newegg for "Fight Patent Trolls T-Shirt" for the other sizes.
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Baron von Robber, 22 May 2014 @ 8:35am

Where to shop
Today, I was going to get some parts for my home theater. Then this article reminded me that I can wait a while by ordering them thru Newegg. :)
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Anonymous Coward, 22 May 2014 @ 8:44am

Funny, a "scam" site that fights extortionists but will force you to go through the courts to get your warranty honored.

Priorities!
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Anonymous Coward, 22 May 2014 @ 8:52am

Re: Reward them!
Where would you take your business?

a) Company with best price
b) Company with best shipping
c) Company with best products
d) Company with best customer service
e) Company that has similar values to yourself
f) Newegg, who does all of the above

I've spent over $80,000 with newegg and will continue to do business with them. Yes, I approve of the spankings!
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OldMugwump (profile), 22 May 2014 @ 8:54am

Re: Warrenties
I don't know what your problem with a warranty was, but I've ordered hundreds of times from Newegg over about 15 years, and have never experienced anything but great customer service.

And they a have 9.0/10 score on ResellerRatings.com.
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Rich, 22 May 2014 @ 8:57am

Re:
I've never had an issue with getting a warranty honored by Newegg.
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Anonymous Coward, 22 May 2014 @ 9:00am

Re: Re: Warrenties
In Canada, they sell products they are not allowed to. So when the product is defective, you have to harass them and threaten them on their forums (which they conveniently delete) to even get any service... just to be told they won't help you.

Since the manufacturer does not offer the warranty in Canada, and Newegg decided to sell the product anyway, you have to go legal on them. The courts usually help out due to consumer protection laws but it takes a long time during which you cannot use paid product.

This is par for the course for a few US-based manufacturers, like SANS Digital for instance. So you end up buying a 500-2000$ product that, if it becomes defective, you'll have to fight to get fixed.

Not to mention that when you RMA a product, even if it's accepted online, it's likely to be refused at the warehouse for any stupid reason which they usually do not disclose.

This is overall, in Canada, one of the worst online stores. Might be good in the USA but us Canucks have the worst possible experience, cannot get replacement or refund, get our RMA/replacement refused for undisclosed reasons and have to go legal. Great indeed.
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Anonymous Coward, 22 May 2014 @ 9:22am

Re: Re: Re: Warrenties
I have never had those problems with NewEgg before and I have purchased a ton of stuff from them. Sounds like they need to fire the management at NewEgg Canada.
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Berenerd (profile), 22 May 2014 @ 9:28am

Re: Re: Reward them!
My self, I have done near that much business with them. With the company I currently work for, our business account has spent nearly $120k this year alone and we are ramping out a pushout of new hardware and will be ordering Monitors, keyboards, mice, and adapters through them, currently the price is around 30k. My boss and I are happy with them and have each ordered shirts from them.
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Feldie47 (profile), 22 May 2014 @ 9:29am

One more reason the Egg Rocks!
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Berenerd (profile), 22 May 2014 @ 9:30am

Re:
Warranties are usually through the manufacturer and not Newegg. Unless you are talking the extended warranties and then that would be NewEgg and even then I have not had an issue getting something replaced even if it was something I screwed up on.
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Anonymous Coward, 22 May 2014 @ 9:46am

Re: Re: Warrenties
I ordered a SATA drive from them that was DOA. When I returned it to them, they asserted that I had damaged the drive and pointed to a tiny (
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Anonymous Coward, 22 May 2014 @ 9:48am

Re: Re: Re: Warrenties
(to continue the post that I should have previewed)
less than 0.5 mm indentation on the SATA connector as proof. I've installed a lot of drives, know how to handle them, and most certainly did not damage the drive. Yet, I paid for a drive that isn't even a great paperweight.

That was my last NewEgg customer experience.
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Anonymous Coward, 22 May 2014 @ 10:11am

Re: Re:
Exactly. Manufacturers clearly state they only offer a warranty in the USA. Newegg still decides to offer the product to Canadians, who are then stuck with a dead product and legal hoops. Newegg then refuses to honor the product's warranty even though they had no right to sell it in the first place. Massive scam.
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ofb2632 (profile), 22 May 2014 @ 10:25am

Question for legal authorities
Will Companies that have been sued or have paid off the patent trolls, be allowed to go back to court and attempt to recoup losses? If so, this may wipe out patent trolls once and for all.
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Mason Wheeler (profile), 22 May 2014 @ 10:47am

Re: Re: Re:
Apparently I'm missing something. How do you get from "manufacturer does not offer a warranty in Canada" to "Newegg has no right to sell product in Canada"?
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Anonymous Coward, 22 May 2014 @ 11:00am

Re: Re: Re: Re:
Warranty is a legal requirement in most of Canada. You cannot sell a product without being able to honor the warranty. It's illegal. Especially when the manufacturer clearly states that the warranty is void in the country where you offer it.
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Michael Whitetail, 22 May 2014 @ 11:03am

Re: Re: Re:
I do not understand your line of reasoning:

If the Manufacturers "Clearly State" that the warranty is only good in a country other than yours, why would you buy the item in the first place? If its not spelled out on the Newegg page itself, they do link to the manufacturers product page, no?

As the item is not illegal to sell in your country, why would you assert "they had no right to sell it in the first place?"

If you bought an item and had to attempt to get repair/replacement by warranty, outside of the re-sellers RMA period, why would they honor the manufacture's warranty?

How can you seriously call the retailer a scammer when its the manufacturer that refuses to cover THEIR product in YOUR country?
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Michael Whitetail, 22 May 2014 @ 11:09am

Re: Re: Re: Re:
Doh! Forgot the link for my 2nd point:

As the item is not illegal to sell in your country, why would you assert "they had no right to sell it in the first place?"
http://www.ic.gc.ca/eic/site/oca-bc.nsf/eng/ca02478.html#warranties
This clearly spells out the exceptions to Warranties and As Is sales. I belive your willingness to purchase a product that is "Clearly Stated" by the manufacturer would constitute an agreement in which "...the seller and buyer both lawfully agree that the warranty does not apply)
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Anonymous Coward, 22 May 2014 @ 11:51am

Re: Re: Re: Re: Re:
The retailer must be able to honor the manufacturer's warranty?
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Anonymous Coward, 22 May 2014 @ 12:25pm

Re: Re: Re: Re: Re:
If the manufacturer clearly states that the warranty is void in Canada then...don't buy it?
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Newegg_Support (profile), 22 May 2014 @ 2:03pm

Re: Re: Re: Re: Warrenties
Dear Valued Customer,

We are very concerned about your experience with us and we would like to review the options to get this situation resolved. Would you email us your account information to wecare@newegg.com and reference this forum?

Know that we are on your side and we will do everything we can to address your concerns. We look forward to hearing from you.

Thank you,
Newegg Support
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Eldakka (profile), 22 May 2014 @ 5:32pm

Re: Re: Re: Re:
Not sure how it works in other countries, but in Australia the RETAILER is REQUIRED by law to offer a warranty, usually 12 months, sometimes more. Therefore in the legislated minimum warranty period, it is irrelevant whether the manufacturer offers a warranty or not (such as if the product is sold outside the manufacturer's warrantied countries by the retailer) as it is the retailer that is responsible for that warranty.

The retailer must honour the warranty and, if the retailer still has a warranty on it's purchase from the manufacturer, it can return the product to the manufacturer to get it's warranty honoured.

If the manufacturer offers a warranty greater than the statutory minimum, and the problem arises outside the statutory period but within the extended warranty period, then the consumer needs to go back to the manufacturer for that component of the warranty.
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Coyne Tibbets (profile), 22 May 2014 @ 6:33pm

Emergency correction required
It would not surprise me a bit if, next week, Congress overcomes its political differences to pass a law preventing recovery of fees.
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Anonymous Coward, 23 May 2014 @ 3:10am

Re: Re: Re: Re: Re: Re:
So you go read the 50 page warranty deal when you buy from a "local" store? Yeah, right. Good spin trying to blame the customer for the store's inability to follow basic legal requirements.
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Anonymous Coward, 23 May 2014 @ 3:13am

Re: Re: Re: Re: Re: Re:
The retailer is not allowed to sell a product that has no warranty. It's commonly referred as the "legal warranty". It's mandatory for every and all products you buy. The consumer automatically gets that legal protection upon purchase.

But since the manufacturer was clear to the store that they did not offer the warranty to the country of sale, the store is now legally obligated to provide said warranty; either with a refund, a replacement, or other arrangements.

Courts, at 99%, will side with the customer, after a lengthy process that sometimes takes a couple of years.
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Anonymous Coward, 23 May 2014 @ 3:17am

Re: Re: Re: Re:
The manufacturer does not sell the product in my country. A store that refuses to follow basic legal requirements does. It's not FooBar Inc's responsibility to make sure everyone selling their product does it legally outside their own country.

I don't understand YOUR line of reasoning. Why would the manufacturer be forced to offer a warranty in a region if they do not want to? And why would stores selling products without warranty be off the hook?

The laws in place were created because of stores scamming customers this way.
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Michael Whitetail, 23 May 2014 @ 6:20am

Re: Re: Re: Re: Re:
You missed (or ignored) my point, which I went through the trouble of finding the applicable law in your country and posted the link to as proof, which showed how, when, and why a retailer can sell a product without an implied warranty in Canada.

Keep in mind, the law specifically says that "...[if]the seller and buyer both lawfully agree that the warranty does not apply" then the item is sold without the implied warranty. Therefore, if you agreed to the terms of service and bought a product in-which the manufacturer "Clearly States" the warranty does not apply in your country, why is the retailer to blame?

Why is the retailer, who very visibly posts their RMA restrictions, responsible to honor the Manufacturer Warranty on the defective / broken / worn out product, outside of their own RMA / Return policy time frame, when the maker of the product isn't held to account at all?
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fjpoblam, 23 May 2014 @ 3:53pm

Hear, hear, Newegg!
Almost makes me want to go to their site and ==>find<== something to buy ;) �Gitter done.
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