Soverain Software Petitions For Supreme Court Review

CHICAGO, Oct. 17, 2013 /PRNewswire/ -- Soverain Software LLC filed a petition for a writ of certiorari in the U.S. Supreme Court yesterday, seeking review of the Federal Circuit's decision in the appeal of Soverain Software LLC v. Newegg Inc., case no. 2011-1009.  That decision reversed a district court's judgment of the validity of the asserted claims of three patents on the grounds of obviousness and vacated a judgment of infringement and damages.

"We are petitioning the Supreme Court in defense of our inventors' and Open Market's legacy, and in support of all entrepreneurs who seek patent protection as a cornerstone of building their business," said Soverain President Katharine Wolanyk. "The Federal Circuit improperly assumed the role of the jury, in contravention of the Seventh Amendment and the Supreme Court's precedent, and gave Newegg a windfall invalidity ruling when all they had requested was a remand for a jury trial.  Left to stand, the decision puts all patents at risk and creates significant uncertainty for businesses with intellectual property," Wolanyk said.

Without a reversal, this decision makes it far more likely that patents will be invalidated on appeal – even where the accused infringer has not requested a judgment of invalidity and there are disputed factual issues, such as happened here.  It increases the uncertainty of the patent system and thus encourages litigation.  It also undermines the burden of proof recently reaffirmed by the Supreme Court, giving accused infringers a free pass when they have not proven invalidity by clear and convincing evidence.  The result is particularly treacherous for pioneering patents, where the long-standing procedural safeguards were intended to protect against the distortion of hindsight bias years after the invention occurred.

The patents at issue originate from applications filed in 1994 and 1995 at the dawn of the Internet age, before the launches of Amazon, eBay, Internet Explorer and Google.  The patents were based on the pioneering work of Open Market, Inc., whose software commanded the number one global market share in the late 1990s, used by over 1,000 customers in 25 countries, and whose business was later acquired by Soverain.  Soverain's engineering team continues to support and maintain Transact, releasing Transact version 8.5 earlier this year.

The three patents involved in the Newegg case are part of a patent portfolio that has been extensively vetted.  Amazon settled on the eve of trial in 2005 and took a license.  A first round of reexaminations concluded in 2007 with all claims confirmed.  A dozen other major retailers have litigated and then licensed the portfolio.  At trial in 2010, the judge who heard the evidence ruled that Newegg had not met its burden of proof.  And, in the 17 months it took the Federal Circuit to issue its decision, the patents were found non-obvious by a jury in another trial over the same references and were reaffirmed in a second round of reexaminations by the U.S Patent Office, where Newegg's prior art was also asserted.  The Federal Circuit's decision thus stands in stark contrast to outcomes where independent fact-finders – reviewing the actual evidence and not just the cold record – found the asserted patents non-obvious.

Larry Stewart, Open Market's Chief Scientist and one of the inventors of the patents, said, "The Federal Circuit's decision was made without understanding the technical issues, and compounded by the court's refusal to let the technical questions even be argued.  I think we deserve better from the judicial branch."

Soverain is represented by the firms of Wilmer Cutler Pickering Hale & Dorr LLP, Quinn Emanuel Urquhart & Sullivan LLP, and Sterne Kessler Goldstein & Fox PLLC.

ABOUT SOVERAIN SOFTWARE

Soverain Software LLC provides ecommerce software and services for enterprises, focusing on the publishing, news syndicate and digital content industries, and its flagship product Transact has been deployed to customers in 25 countries.  With a patent portfolio of over 50 issued and pending patents covering key aspects of ecommerce, Soverain continues to develop and support its technology which was pioneered by Open Market, Inc.  More information about Soverain's products and services is available at www.soverain.com.  Soverain Software, Soverain and Transact are trademarks of Soverain Software LLC.  All rights reserved.

SOURCE Soverain Software LLC