Evan Schuman's StorefrontBacktalk

Major electronics E-tailer Newegg received some good news Tuesday (Jan. 22), when a federal appellate panel overruled a $2.5 million patent ruling against the retailer. The most interesting part of the case, though, was when Soverain Software—the software firm trying to protect its E-Commerce patent—tried to argue that its success is proof that its patents are worthwhile. The Appellate judges looked into that claim.

“Soverain argues that obviousness of all of the claims in suit is negated by the favorable market response that was achieved by Open Market’s Transact product, which Soverain states received ‘widespread recognition in the general media,’ ‘an excellence award from the industry’ and was ‘widely licensed.'” Sounds good. So it would appear that the wide licensing meant it had a lot of fans, right?

The Appellate judges’ written decision continued: “Newegg responds with evidence that the Transact system was abandoned by its developers and almost all of its original users. Newegg points out that licenses were taken to avoid the costs of litigation, and not to use the flawed Transact system embodied in its software.”

Picky, picky. These judges probably don’t believe hostage videos, either.

The panel then looked at what Soverain’s own people testified. “At trial, former Open Market employee and inventor Alexander Treese testified that Open Market had attempted to license its patents apart from the software, but without success,” the panel wrote, adding that Treese said the licensing effort “went not very well. The record shows that the software was abandoned by almost all of its initial licensees.”

If these judges are going apply facts and evidence to software marketing claims, this is not going to be pretty.

A tiny side note. In case any of your programmers are curious what litigators today consider E-Commerce “ordinary skill,” the lawyers tried to accommodate: “The parties agreed that the level of ordinary skill in the field of this invention is a Bachelor of Science degree in computer engineering or computer science, or equivalent education, with two to three years of practical experience developing or operating software and systems
that relate to commerce on the Internet.” They should be reminded that “ordinary skill” rarely translates into respect. That requires bolder action, such as having the chutzpa to force companies at lawsuit-point to buy a license and then to tout it as proof of product quality.