Newegg Wins Key Shopping Cart Patent Lawsuit

Newegg Wins Key Shopping Cart Patent Lawsuit 
Federal Circuit Issues Unanimous Ruling Invalidating Soverain
Software's Patents 
CITY OF INDUSTRY, CA -- (Marketwire) -- 01/28/13 --  Newegg Inc., the
leading electronics e-tailer in the United States, is pleased to
announce a victory in its long-running legal battle against "patent
troll" Soverain Software. On January 22, 2013, the Federal Circuit
Court of Appeals issued a unanimous ruling invalidating all patents
that Soverain had asserted against Newegg, completely overturning the
initial victory Soverain claimed at trial. The victory is a win not
only for Newegg, but for e-commerce as a whole, which was threatened
by Soverain's attempts to assert patents supposedly covering basic
online processes used by virtually all e-commerce retailers. 
Soverain had sued Newegg and other well-known e-commerce retailers in
2007, claiming that the defendants infringed three patents allegedly
covering the online checkout process, including the online "shopping
cart." While all other defendants settled with Soverain, Newegg took
the case to trial. At trial, a jury awarded Soverain about 7% of the
damages it sought. Although the jury's decision in large part
vindicated Newegg, Newegg appealed, confident that it had not
infringed Soverain's patents and that no damages should have been
On appeal to the Federal Circuit, the court concluded "that the prior
art... by clear and convincing evidence, rendered obvious the
'shopping cart' claims... These claims are invalid." Soverain's
argument that obviousness of all of the claims was negated by
"favorable market response" of commercial success of products based
on the asserted patents was also solidly defeated. In fact,
Soverain's own President Katherine Wolanyk testified that its
software was abandoned by almost all of its initial licensees, and is
not used by those who bought licenses simply to settle litigation.
Thus, the court found, the "assertions of commercial success as here
presented do not support non-obviousness."  
Not only does the Federal Circuit's decision eliminate all damages
awarded against Newegg, but the decision also calls into question
Soverain's ability to collect $18 million in judgments won asserting
the same patents against Avon and Victoria's Secret last year.
Likewise, nearly a dozen other lawsuits filed by Soverain in 2012
asserting the now-invalidated patents are also in question now. 
Newegg's Chief Legal Officer, Lee Cheng, issued the following
"We are pleased and delighted that the Federal Circuit has recognized
that all of the patents Soverain asserted against Newegg are invalid.
The appellate court's decision exposes Soverain's litigation campaign
for what it was: a scheme designed to squeeze money from honest
businesses whose hard work and innovation truly benefit society. As
an innovator in the field of online commerce, Newegg has great
respect for inventors and for valid intellectual property rights.
However, as the Federal Circuit has ruled, Soverain's patents, and
others like it, do not represent 'true innovation.' 
"We are proud to add this victory against Soverain to our prior wins
against Kelora in 2012 and Alcatel-Lucent in 2011. The tide finally
appears to be turning against these opportunists and their
contingency fee lawyers. We hope this decision sends a message to
investors in patent trolls who think that this type of parasitic
behavior is easy money. Sue Newegg, lose money. This is not only a
victory for Newegg, but also for all companies opposed to the racket
being operated in the name of 'monetizing' junk patents and for
consumers who will not have to pay higher prices because companies
pay off patent trolls. 
"Our founder and CEO, Fred Chang, takes the approach that making
money, which we do, should be the result of doing what is right
rather than the primary focus of our business. He has expressed to me
often that if we do the right thing, money will be made. We apply his
philosophy in our daily operations in the way we treat our customers,
and in how we deal with legal opportunists, and our results speak for
themselves. Our CTO and COO, James Wu, wrote our system nearly from
scratch, and his creativity and ability to sincerely convey that our
systems did not infringe Soverain's patents were instrumental to our
successful outcome at trial. 
"We are thankful to Ed Reines of the Weil Gotshal firm and Kevin Fong
of the Pillsbury Winthrop firm for their outstanding work on our
appeal, to Dick Sayles of Sayles & Werbner for his excellent trial
advocacy, and to Rick Frenkel of Latham & Watkins for his advice and
counsel through both trial and appeal. We reserve particular
gratitude for our good friends and advocates at The Webb Law firm,
led by Kent Baldauf, Jr. They have been in the trenches fighting the
good fight with Newegg since the very beginning, and were critical
difference makers at trial and on appeal. We are confident going to
trial anytime, anywhere, with principled legal counsel who share our
views about right and wrong. It is our strong belief that taking
principled stands is the only way that businesses can achieve
sustainable success." 
About Newegg Inc.
 Newegg Inc. is the leading electronics-focused
e-retailer in the United States. It owns and operates
( and (, and
regularly earns industry-leading customer service ratings. Newegg
delivers a world-class e-commerce platform and is committed to
serving the online technology community, from tech-enthusiasts to
small and medium-sized businesses. Both and feature a comprehensive selection of the latest
computer hardware and consumer electronics products, detailed product
descriptions and images, as well as how-to information and customer
reviews. Newegg Inc. was founded in 2001 and is headquartered in City
of Industry, California. 
Jenny Chai 
Newegg Inc. 
(626) 271-1420 x23369 
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