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Overstock plans to appeal a patent-infringement loss

January 20, 2015 03:30 PM
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Web-only retailer Overstock.com Inc. and retail chain Sears Holdings Corp. plan to go another round in a patent-infringement case they lost last week in a federal court in Texas.

Texas-based software firm Droplets Inc. in 2011 sued both Overstock and Sears for infringing on three e-commerce technology patents. On Friday, a jury in the U.S. District Court for the Eastern District of Texas-Marshall Division ruled in favor of Droplets, awarding it $15 million in damages: $11 million from Sears and $4 million from Overstock. Overstock is No. 31 in the Internet Retailer 2014 Top 500 Guide and Sears is No. 5.

“We respectfully but strongly disagree with the jury’s verdict and we intend to appeal," says a Sears spokesman. "We believe we have strong grounds to overturn the verdict under well-established case law.”

The technology in question enables software on a remote server to transmit data to a consumer’s computer so information can be updated on the screen without the consumer refreshing the web page, according to Overstock.

Droplets never approached Overstock about paying any fees for the technology covered by the patents, says Mark Griffin, the e-retailer’s general counsel. “The first time we heard of Droplets is when they filed the lawsuit” in 2011, he says, adding that the first of the Droplet patents at issue was filed in 2000 and issued in 2004. Droplets declined to respond to Overstock’s allegation or any aspect of the case.

Griffin says Overstock’s appeal will focus on what he calls Droplets’ “highly inflated and improper damage model and … license comparisons that were also improper.”

Overstock’s promise to appeal echoes the strong-arm approach the Utah-based e-retailer has typically taken against companies it considers “patent trolls"—the pejorative term often used to describe a person or company who buys and enforces patents against infringers in a way considered to be extremely aggressive. Last year, for instance, Overstock fought back against two patent infringement lawsuits and both cases were dismissed without any settlement or any money paid. 

 

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