US Supreme Court declines to hear appeal by patent troll
A few thoughts:1. The Supreme Court declined to hear an appeal by Soverain from an adverse ruling by the Federal Circuit Court of Appeals that had determined the Soverain "shopping cart" patent to be invalid on grounds of obviousness.2. The Federal Circuit's holding by a 3-judge panel had been remarkable and had shocked patent lawyers generally in that the parties before the court had not even raised the issue on appeal as a ground for invalidating the jury's verdict below. The court raised the issue on its own, concluded that the patent was obvious and invalid, and gave judgment for Newegg in spite of the fact that the jury at the trial court level had found that Newegg infringed.3. This particular patent had been the original shopping cart patent, dating back to 1994 (well before Amazon began) and it had had a formidable history by which its holder had gotten massive licensing fees from major players over many years for the privilege of using online shopping carts on the web.4. It is easy to say today that everyone knows what the concept of a shopping cart is and that anyone could have come up with the idea of applying that concept to online shopping. That is all well and good but consider this: not only had this patent passed muster as being non-obvious with the USPTO on its original filing but it had also been found to have been non-obvious on two separate patent re-examinations before that same body and by a string of U.S. district court judges before whom the issue had arisen. In other words, Newegg faced a huge challenge on this issue (the legal standard required that it be able to prove that it was obvious by "clear and convincing" evidence, which is often a tough standard to meet) and this is why Amazon and virtually all other major other online retailers had long since caved and agreed to pay royalties for use of the patent. In the patent community, the Soverain patent was seen as rock solid and one whose shopping cart idea was deemed far from obvious. The top judges and lawyers in the nation, not to mention the USPTO, had all so concluded. The chances of upending it seemed slim to none. And, as noted, even the parties themselves had not raised the issue on the key appeal as a ground for potential reversal. Thus, everyone was stunned when the Federal Circuit reversed the judgment against Newegg on that ground, invalidated the patent, and threw the case out.5. All that said, when Soverain petitioned the Supreme Court for review of the Federal Circuit's decision, it was trying to undo what it perceived as an injustice done to it as a private litigant ("this is so unfair to us and to our valuable patent"). However, from the Supreme Court's point of view, the kind of petition filed by Soverain is to be granted, and a case heard, only when it has significance far beyond whatever impact it might have on any private litigant. The Court's role in hearing such discretionary appeals is to step in and decide important questions of federal law or to determine who is right when the various lower federal appellate courts may have reached conflicting decisions on such points of law in way that cries out of definitive resolution by the highest court. The Court will not hear cases merely because they might have been wrongly decided unless some such extraordinary factor exists. Thus, in denying Soverain's petition, the Court did nothing more than say that this particular petition did not present important issues of the kind that warranted its attention. It did not validate the Federal Circuit's reasoning or analysis. It did not weigh in against patent trolls. It did not add its authority to the fight against frivolous patents. It simply did what it does on over 99% of such discretionary petitions: it used its discretion to deny it. The legal significance of its decision goes no farther than that.6. Is Soverain a patent troll that deserved this outcome? Well, its CEO had been a law partner at a major law firm (Latham & Watkins) and the company's business was clearly driven by a legal licensing scheme that had little or nothing to do with active business operations or innovation. It had simply acquired the original company that had come up with the patent back in the day. So, it is a troll if you want to call it that or it is not if you want to use some different definition. But this distinction does underscore how difficult it becomes to analyze patent issues simply by placing labels on the parties. The problem with modern software patents is that too many are too easily granted over trivial "innovations" and this has given vast incentives to those who would package them into shakedown licensing ventures and thereby gum things up for true innovators. It is a situation that calls for action by Congress to rein this in. Otherwise, every party trying to defend itself will find itself, as Newegg did, having to go to extraordinary efforts at massive expense to avoid claims of infringement. Very few litigants can do that and, indeed, Newegg is to be commended for fighting this all the way against tough odds. Let us only hope that systemic fixes can help correct the problem so that this is not the only way available for dealing with such patents. Whatever else this system does, it hardly promotes true innovation.