O.co (aka Overstock.com) Announces East Texas Trial Victory Invalidating Alcatel-Lucent "Communication Protocol" Patent

SALT LAKE CITY, Oct. 17, 2011 /PRNewswire/ -- O.co (also known as Overstock.com, Inc., NASDAQ: OSTK) today announced victory in its two-year patent infringement lawsuit with behemoth Alcatel-Lucent USA, Inc.  The East Texas jury deliberated for less than two hours before returning a defense verdict.  The jury found that O.co and co-defendant Newegg did not infringe any of the three patents Alcatel asserted against them.  The jury also rendered a verdict of "invalidity" on an Alcatel communications protocol patent, United States Patent 5,649,131 ('131 patent), that has been the subject of numerous lawsuits around the country.  

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"This is a great day for O.co, and marks the second time we've invalidated key patents asserted against us," said Patrick Byrne, O.co Chairman and CEO.

Evidence at trial showed Alcatel's patent application to the U.S. Patent Office that resulted in the issuance of the '131 patent was faulty because the claimed invention was both anticipated and rendered obvious by technologies from the 1980's that preceded Alcatel's patent application by years.

Byrne continued, "When companies sue on inapplicable and out-dated patents they are often called 'patent trolls' because they sit under the bridge of entrepreneurship and scare passing firms with threats of mammoth legal defense costs, intimidating them into paying huge license fees for technologies that are, in fact, ubiquitous."

Alcatel-Lucent USA is a subsidiary of a France-based company which has amassed a portfolio of 27,000+ patents through mergers and acquisitions with firms like Bell Labs. The lawsuit began with more defendants than just O.co and Newegg; the Alcatel lawsuit originally included a number of companies, including Amazon.com and its subsidiary, Zappos, who each settled on undisclosed terms on the eve of trial. Defendants Sears, Kmart and Lands End also settled the day the trial commenced.  Other defendants, including Netflix and QVC, had settled previously. Only O.co and Newegg fought Alcatel to the verdict rendered on Friday.

"When Alcatel comes asking for millions to license a patent that doesn't remotely apply to your business, there is no choice but to fight," said Jonathan Johnson, O.co President. "Several ecommerce companies called before the trial to wish O.co well."

Mark Griffin, O.co General Counsel said: "The fine American citizens of Tyler, Texas know what is fair and right and remained focused throughout a difficult trial concerning complicated and unfamiliar technologies."

O.co was ably represented by the patent litigation team of Bracewell & Giuliani, LLP, a Texas- -based law firm, led by John H. Barr, Jr., Alan D. Albright and Christopher A. Shield throughout the case and the four-day trial.

Some ecommerce companies are fighting back against litigation-promoting business practices, claiming they are a lawyer's tax on innovation and the U.S. economy. The group was successful in getting Congress to include in the recently enacted America Invents Act a provision calling on the General Accounting Office to study the litigation tactics of "non-practicing entities," a polite term for "patent trolls."  President Obama signed the patent reform law on September 16, 2011.  The group expects the GAO study and report to be followed up with Congressional hearings and legislation.  "These companies don't care about innovation, inventing or jobs—they just want to tax legitimate businesses by demanding licenses for out-dated technologies," remarked Sam Peterson, Senior Vice President, Technology of O.co, who testified at the Alcatel trial.  

Non-practicing entities filed a flurry of new lawsuits against a who's who of ecommerce companies, including O.co, in the days between Congress passing the American Invents Act and President Obama signing it.  "These serial litigants should remember that we will continue to fight these types of cases brought against us, hammer and tongs, and continue to try to invalidate meritless patents that are asserted against us," said Byrne.

About O.co (also known as Overstock.com) O.co, also known as Overstock.com, is Your Savings Engine offering brand-name products. The company offers its customers an opportunity to shop for bargains conveniently, while offering its suppliers an alternative inventory distribution channel. O.co, headquartered in Salt Lake City, is a publicly traded company listed on the NASDAQ Global Market System and can be found online at http://www.overstock.com and http://www.o.co. O.co regularly posts information about the company and other related matters on its website under the heading "Investor Relations."

Overstock.com® is a registered trademark of Overstock.com, Inc. O.co™ and Your Savings Engine™ are trademarks of Overstock.com, Inc., Inc. All other trademarks are the property of their respective owners.

This press release contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such forward-looking statements include, but are not limited to, statements regarding the future and pending patent litigation and GAO and Congressional action. Our Form 10-K for the year ended December 31, 2010, our subsequent quarterly reports on Form 10-Q, or any amendments thereto, and our other subsequent filings with the Securities and Exchange Commission identify important factors that could cause our actual results to differ materially from those contained in our projections, estimates or forward-looking statements.

Media Contact:
Roger Johnson, Overstock.com, Inc.
+1 (801) 947-4430
[email protected]

Investor Contact:
Kevin Moon, Overstock.com, Inc.
+1 (801) 947-3282
[email protected]

SOURCE O.co