Newegg Defeats a Patent Troll in Battle Royale over Encryption Technologies

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Online electronics retailer Newegg is having a sale tomorrow to celebrate its victory in its patent lawsuit against TQP Development. I’ll let other articles explain the background of the case, but the basics are that Newegg was sued by TQP, whom Newegg calls a “patent troll,” over several patents on encryption technologies. Last week the judge finally declared those patents invalid.

Newegg’s post-victory sale reminds us how patent lawsuits have real effects for consumers; the high costs of fighting such lawsuits translate to higher costs on all the products that we buy. Sure, Newegg can offer discounts on its laptops temporarily because it beat this one patent suit, but Newegg probably spent hundreds of thousands, or even millions, to get there. And Newegg has spent millions more on all the other patents it has defended itself against. To make up for these costs, Newegg ultimately has to charge all of us more for the laptops and other devices that it sells.

But these sorts of invalid patents don’t just raise prices for consumers; they directly harm people like you and me. Technology is pervasive in all of our daily lives. The encryption technologies that were supposedly covered by TQP’s patents aren’t just used by big companies like Newegg; they are used in ordinary web browsers by ordinary people. That means that leaving overbroad, invalid patents on the books turns all of us into infringers of patents and breakers of the law. And it means that we might not be allowed to do the sorts of things, like use Internet encryption, that are necessary to our ordinary, technologically-infused lives.

As I explained a few years ago in the Los Angeles Times:

As a user of technology, you are a player in the patent system.

Have you connected computers to a wireless network? There are patents on doing that. Have you scanned a document and emailed it? There are patents on that too. Have you used a smartphone app to purchase something? Then there are a few more patents you should look at.

These are no mere hypotheticals. All three examples represent real cases in which consumers of technology — albeit small businesses, not individuals — have been caught up in patent fights just because they used a product as it was designed to be used. In fact, the patent owners have turned from attacking big companies to threatening mom-and-pop stores, Internet cafes, and hobbyist app developers too small to put up the requisite million-dollar defense, and that are likely to cave in and pay on demand. In this race to the bottom, it's not hard to see that individual consumers — you — could be the next victims.

Tomorrow, let’s look for deals on Newegg. And every day after that, let’s fight for patent reform, so that companies like Newegg can lower their prices for good, and so that technology users like you and me don’t become the next targets of bad patents.

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