“Shopping cart” patent rolls to a halt at the Supreme Court

Soverain is keeping up its claim to be a “real” company, but it’s going nowhere.

Joe Mullin – Jan 14, 2014 12:16 pm | 66

The company that pushed an “online shopping cart” patent into the courts—and successfully made tens of millions of dollars off it—has finally been stopped.

Despite losing on appeal last year to online retailer Newegg, Soverain Software pushed ahead with an attempted en banc appeal, and then, surprisingly, a Supreme Court petition. In its petition (PDF), Soverain argued that the US Court of Appeals for the Federal Circuit had inappropriately usurped the jury’s power, considering not just legal standards but actually ruling on the fact. That deprived Soverain of its Seventh Amendment right to a jury trial, its lawyers argued.

Newegg responded (PDF) that while facts were considered on appeal, they weren’t really in dispute. “Petitioner’s argument that its patents describe non-obviousness advances by applying century-old shopping conventions to the Internet is tone deaf,” wrote Newegg lawyers.

While the Supreme Court has displayed great interest in patents this year, it didn’t show much interest in Soverain’s case, turning it down without notice. That means that Newegg’s victory holds and that other companies that had lost millions to Soverain at trial, including Avon and Victoria’s Secret, won’t have to pay.

In a press release on the win, Newegg Chief Legal Officer Lee Cheng took a final swipe at an organization he has fought for years—and its lawyers. “Patents held by organizations like Soverain are like vampires—unproductive, undead, unholy, and intent on sucking economic and entrepreneurial lifeblood out of society,” said Cheng. He continued:

Soverain and its allies likely spent several million dollars in legal fees and on PR agencies to try to revive its franchise. Soverain even hired former US Solicitor General Seth Waxman of the famed Wilmer Hale firm, who has apparently become the go-to counsel of last resort for patent trolls and David Nelson of the Quinn Emanuel firm, who has represented both plaintiffs and defendants against Soverain, to keep its franchise on life support. However, even famous, brilliant, and expensive lawyers ultimately could not make the facts what they are not.

Newegg had high-powered appellate lawyers of its own in the form of Ed Reines, who told Ars that Soverain’s campaign to “improperly tax” Internet shoppers was finally over.

“Newegg’s lengthy fight against the shopping cart patent has withstood the fire power of an all-star legal team,” he wrote in e-mail. “Lee Cheng’s leadership in fighting junk patents is a matter of principle and is further solidified by the High Court’s rejection of Soverain’s petition.”

Soverain’s statement on the denial of the petition emphasizes its trial court victories. “Until the Federal Circuit’s contrary decision, our patents had been repeatedly validated by the courts, the US Patent & Trademark Office, and the market,” said the company.

The idea that Soverain experienced success in the “market” requires a very particular interpretation of history. Soverain has never acquired a new customer, and of the thousands of online shopping carts spread across the Web, Soverain does not contribute to any of them. The company describes its product Transact as having been in “continuous use for 18 years, used by over 1,000 companies” and then names big companies that were actually historical customers of OpenMarket, a company that was booming in the 1990s—and is where the patents originated.

In an interview with Ars, one of Soverain’s co-owners, Katherine Wolanyck, was only able to name one US customer that uses Transact, Thomson Reuters. While there is clearly some legacy use at Thomson Reuters, a company spokesperson wasn’t familiar with the product and said it isn’t used in any of its “strategic” systems.

Despite its loss, the owners of Soverain—whoever they are—are walking away very wealthy. Soverain collected a $40 million settlement from Amazon back in 2005, and millions more from other companies that settled. Newegg estimates the company’s total take was more than $70 million. While Wolanyck is the public face of what she touts as a “woman-owned software company,” she is a minority owner. She won’t disclose either the extent of her holdings or the identity of the majority owner(s).

Wolanyck’s statement concludes: “Our nation’s patent system was created so that inventions could be protected by patents, and patent owners would have the right to license those inventions. It is a travesty that an infringer can wholly fail to meet its burden of proof at trial and then an appellate court can nonetheless invalidate those same patents. It is a tough time to be a patent owner.”