Newegg Does Not Infringe the ’730 Patent After All

Look at that S car go.

Wait for it…

In the Eastern District of Texas, Judge Rodney Gilstrap issued a ruling over turning the jury’s verdict in the TQP v Newegg case that came before him in November 2013. In that case the jury found that Newegg did infringe the asserted patent ( U.S. Patent No. 5,412,730) and that the patent was valid. It was a disappointing loss after a long, bumpy road for Newegg. Though TQP had already collected over $45 Million in settlements from other companies, Newegg’s policy is not to settle with companies it deems to be patent trolls. Although the jury awarded TQP less than half of what they asked for, the jury still awarded them $2.3 Million in damages.

Then came a nearly two year gap (due to a clerical error) between the jury’s verdict and the Judge’s ruling on Newegg’s post-trial motion for summary judgement, which prevented Newegg from appealing the verdict. But in a surprising turn, Judge Gilstrap granted Newegg’s motion, reversing the jury’s decision on infringement. From the decision:

The Court finds no substantial evidence that this action of the RC4 cipher is directly coupled to (or directly depends on) when, if, or the manner in which enciphered blocks are transmitted or received. In other words, regardless of whether the claim is viewed from the perspective of the transmitter or the receiver, the Court finds no substantial evidence that “a new key value . . . is used each time a predetermined number of blocks have been sent from the transmitter over the communication link.”

Overturning a jury’s verdict and granting a motion for judgment as a matter of law requires a strong belief that reasonable jurors could not reach a different conclusion. That is a bold position, and should be noted by defendants who might be reluctant to go to trial East Texas. Though we strongly believe that East Texas juries are fair to all parties, on the rare occasion when they may miss key evidence (or miss that key evidence is missing)  East Texas judges will step in and correct the error. 

photo credit: PWK_20120524-1040611_DMC-LX5 via photopin (license)