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Federal Circuit reverses $2.5 million patent infringement judgment against Newegg

The US Court of Appeals for the Federal Circuit [official website] on Tuesday reversed [opinion, PDF] a $2.5 million judgment against Newegg [corporate website] in what could be a significant software patent ruling. The US District Court for the Eastern District of Texas [official website] had ruled that Newegg violated patent numbers 5,715,314, 5,909,492 and 7,272,639 [texts] owned by Soverain Software [corporate website]. All three patents were related to electronic commerce and disclosed a system where a merchant computer could accept purchase requests from consumers and process payments. Newegg argued that its system was materially different from the one disclosed by the three patents because it relies upon cookies and that Soverain's patents were invalid because they were obvious in light of electronic commerce systems known before the patented system. The Federal Circuit agreed and found all of the asserted claims in the three patents to be invalid due to obviousness. The decision also represents a victory for other e-retailers [Internet Retailer report] against whom Soverain has asserted its patents, including Avon and Victoria's Secret [corporate websites], which had been ordered to pay $18 million in damages to Soverain. Newegg was the only one of seven e-retailers sued by Soverain not to enter a licensing agreement. In August 2005 Amazon [corporate website] paid $40 million to settle [CNET report] with Soverain for allegedly infringing Soverain's e-commerce patents.

Patent law is currently in a state of flux. Apple and Samsung [corporate websites] have been embroiled in continuous patent litigation [JURIST report] in courts around the world. Last month the US Supreme Court [official website] granted certiorari [JURIST report] in Association for Molecular Pathology v. Myriad Genetics, Inc. [cert. petition PDF; JURIST report], which deals with the issue of whether human genes are patentable. In September 2011 President Barack Obama signed [JURIST report] the America Invents Act (AIA) [text, PDF; HR 1249 materials] into law. The AIA changed the patent system from first-to-invent to first-to-file, allowing the US Patent & Trademark Office [official website] to keep all of the fees generated from patent filing rather than having them diverted by Congress, allowing third parties to introduce relevant material to patent examiners during the patent application review process and removing the "best mode" requirement from patents.

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