A jury has ordered online retailer Newegg to cough-up $2.3 million as part of a closely watched patent dispute with a company called TQP Development.
Newegg plans to appeal, according to Ars Technica, which first reported the decision.
TQP Development is a patent assertion entity, aka a patent troll -- a company that owns patents and asserts them against others but doesn't actually use them in products of its own. But this isn't just any patent troll. The company is owned by notorious patent lawyer Erich Spangenberg, the man behind IPNav, a firm that has sued over 1,638 companies for patent infringement, according to the New York Times.
TQP Development itself has sued a hundreds of tech companies -- including Apple, Google, Intel and Samsung -- over the same encryption patent, which was filed in 1989 by a man named Michael Jones.
All of these companies have settled out of court, and Spangenberg told Ars Technica last summer that the suits have made TQP around $40 million dollars.
Newegg was the only company to challenge the patent claim in court, and experts such as Whitfield Diffie, the creator of public key encryption, testified on its behalf. Diffie says that the patent in question wasn't relevant to type of encryption used by web companies such as Apple and Google, who relied on techniques older than the Jones patent. Experts like Lotus Notes creator and former Microsoft CTO Ray Ozzie also testified in support of Newegg, presenting examples of prior art, such as the algorithms underlying Secure Socket Layer -- the encryption system most commonly used on the web -- and Lotus Notes.
But the jury in Marshall, Texas -- a district well known for its friendliness towards patent litigators -- wasn't convinced. The court ordered Newegg to pay $2.3 million, just less than half of what TQP Development asked.
This isn't the first time Newegg has faced down a patent troll. In 2010, the company lost a case against patent troll Soverain in East Texas, but won its appeal earlier this year in circuit court.
Newegg did not immediately respond to a request for comment. TQP Development could not be reached for comment.
