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Newegg, Overstock win patent fight with Alcatel-Lucent

Visitors walk at the Alcatel-Lucent booth at the Mobile World Congress in Barcelona February 28, 2012. REUTERS/Albert Gea
Visitors walk at the Alcatel-Lucent booth at the Mobile World Congress in Barcelona February 28, 2012. REUTERS/Albert Gea

WASHINGTON (Reuters) - The online shopping sites Newegg and Overstock Inc won a patent battle on Wednesday with telecom equipment maker Alcatel-Lucent SA, which had accused the companies of infringing its patented technology.

The U.S. Court of Appeals for the Federal Circuit, which hears all patent appeals, upheld a lower court decision which found that Newegg and Overstock did not infringe on a software patent that allows computers to adapt the shopping web sites to their own screen size rather than having a server do the work.

The lower court had invalidated the patent as obvious, a decision that the federal circuit also upheld.

Newegg's chief legal officer, Lee Cheng, said the ruling vindicated a decision made about six years ago to fight infringement lawsuits that Newegg found frivolous.

"Patent trolling is a scam. We didn't do anything wrong," he said, using the derisive industry term for companies that file large numbers of patent infringement lawsuits.

Cheng said that fewer infringement lawsuits were being filed against his company because they have been aggressive about fighting them and about recouping legal fees.

The strategy works for Newegg, which sells electronics and computer parts, because of its size, he said.

"We are a patent troll's worst nightmare. We're large enough to defend ourselves but we're not large enough to be viewed as (having) deep pockets," he said.

Mark Griffin, the general counsel at Overstock, said that he had begun to consider Alcatel-Lucent a "patent troll." "They took an old cell phone patent and tried to say that it applied to the Internet," he said. "We're very pleased."

Griffin also said that he disagreed with companies like Sears Holdings and Amazon.com, which settled.

"There's the classic risk management strategy which only in my estimation engenders more litigation. The general counsels of publicly traded companies have started to wake up. We don't feed trolls," he said.

In January, Newegg won a victory with Soverain Software. In that case, the Federal Circuit also invalidated Soverain patents. Newegg won a similar fight with Kelora in 2012.

Paris-based Alcatel-Lucent did not immediately respond to requests for comment.

The case is Alcatel-Lucent USA Inc v. Overstock.com, Inc and Newegg, Inc. It was originally filed in the U.S. District Court for the Eastern District of Texas, case No. 09-CV-0422. At the Federal Circuit, the case number is 2012-1629.

(Reporting by Diane Bartz; Editing by Tim Dobbyn)

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