Overstock.com: 'Patent trolls' gave up fighting, decided to drop lawsuits

SALT LAKE CITY (Legal Newsline) -- Overstock.com, a discount online shopping retailer that sells furniture, bedding, electronics, clothing and jewelry, said last week that the plaintiffs in two patent infringement lawsuits have decided to dismiss their cases against the company.


The popular online retailer, based in Salt Lake City, said Thursday the plaintiffs dropped the cases without any settlement or any money paid.


"They just walked away," Patrick M. Byrne, chairman and CEO of Overstock.com, said in a statement.


"Patent trolls find us unappetizing. While we have the highest respect for intellectual property rights, we don't settle abusive patent suits -- we fight."


Mark Griffin, Overstock.com's senior vice president and general counsel, agreed.


"In abusive lawsuits, we spend our legal budget in defense, not on unjust settlements," he said.


Griffin noted that the most recent plaintiff to dismiss first proposed a "no-money" settlement, but insisted on confidentiality to keep the walk-away quiet.


Overstock.com refused.


"We want everyone to know they left empty-handed," Griffin said.


Griffin said the company "re-doubled" its defenses in that case, and the plaintiff, Execware LLC, called Overstock.com's lawyers saying it had had enough and was dismissing the case.


Last month, another so-called "patent troll," Eclipse IP LLC, came to a similar conclusion and dismissed its case against the company.


Generally speaking, a patent troll, or non-practicing entity or patent assertion entity, purchases groups of patents without an intent to market or develop a product.


In some cases, but not all, the entity then targets other businesses with lawsuits alleging infringement of the patents it bought.


Griffin said the company classifies Execware and Eclipse as patent trolls because of the "extortionate nature" of the suits they filed.


"Many companies settle frivolous suits because it is much cheaper than fighting," said Jonathan Johnson, executive vice chairman of Overstock.com. "That's shortsighted.


"The best practice is to never settle frivolous troll suits at all."


According to court records, an order of dismissal was filed in the Eclipse case Feb. 24 in the U.S. District Court for the Eastern District of Texas.


A stipulation of dismissal was filed in the Execware case March 7 in the U.S. District Court for the District of Delaware.


Eclipse and Execware could not immediately be reached for comment on the lawsuits.


Given its own experiences with patent trolls, Overstock.com said it is very much supportive of the patent litigation reform measures pending before Congress.


U.S. Sen. Claire McCaskill, D-Mo., introduced her own legislation, the Transparency in Assertion of Patents Act, earlier this month.


The bill would empower the Federal Trade Commission by requiring minimum disclosures in letters sent by trolls to businesses that allege patent violations and make various demands -- often referred to as "demand letters."


McCaskill's legislation also would allow the FTC to specify for businesses exactly what constitutes a deceptive demand letter.


So far, the Innovation Act, introduced by U.S. Rep. Bob Goodlatte, R-Va., has gained the most traction in Congress.


In December, the House passed it with overwhelming bipartisan support. However, it has been lingering for months in the Senate, where lawmakers are carefully considering it.


U.S. Sen. Patrick Leahy, D-Vt., introduced his own measure, the Patent Transparency and Improvements Act.


The bill, considered by some to be a "less ambitious" version of the Innovation Act, was assigned to a congressional committee in November but has failed to move.


Still, "with the proposed bills, there is hope that the era of abusive patent troll litigation is nearing its end," Johnson said.


From Legal Newsline: Reach Jessica Karmasek by email at patents@legalnewsline.com.

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