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How Newegg crushed the “shopping cart” patent and saved online retail

Soverain isn’t in the e-commerce business; it’s in the higher-margin business of filing patent lawsuits against e-commerce companies. And it has been quite successful until now. The company’s plan to extract a patent tax of about one percent of revenue from a huge swath of online retailers was snuffed out last week by Newegg and its lawyers, who won an appeal ruling [PDF] that invalidates the three patents Soverain used to spark a vast patent war.

Soverain will lose the $2.5 million it stood to gain from Newegg, as well as two much bigger verdicts it won against Victoria’s Secret and Avon. Those two companies were ordered to pay a total of almost $18 million, plus a “running royalty” of about one percent, after a 2011 trial. The ruling in the Newegg case is a total wipeout for a patent troll that had squeezed many millions from online retailers, was backed by big-firm lawyers, and was determined to collect hundreds of millions more.

I found the winning piece of evidence to be rather delightful. I won’t spoil it for you; click through and read.

(via @jaygarmon)