Shopping Cart Patents Voided in Court Case

If you own an e-commerce site that uses a shopping cart, you may not be aware that you could have been liable for paying a licensing fee to a group of attorneys who claimed the rights to three patents that literally gave them the rights to the technology used in all shopping carts. For several years this group of attorneys battled large e-commerce sites in court and managed to extract millions of dollars from Amazon.com, Victoria’s Secret and Avon. Several other companies were engaged in legal battles with Soverain Software, the company who claimed the rights to shopping cart technology.

The company who saved the day for all e-commerce site owners is my favorite source for PC components, NewEgg.com. NewEgg initially lost the patent suit to the tune of $2.5 million, but won on an appeal that provided proof of previous use of all the shopping cart technologies covered in the three patents. The previous use cited was by an early e-commerce system called the CompuServe Mall. CompuServe was a company that provided a dial-up information service in the early 1990s prior to the opening of the Internet for non-government and non-academia use. CompuServe was also one of the first companies to offer Internet access for home users. Proof of prior use invalidates a patent because a patent is required to be unique at the time of its filing.

I found an article named How Newegg crushed the shopping cart patent and saved online retail that provides excellent coverage of the patent battle.

If I remember correctly, the issue of the shopping cart patents arose around 2003 or 2004. At that time the “patent trolls”, as these types of law firms are called, planned to eventually charge a licensing fee to all web sites using shopping carts. I believe I read somewhere that they had successfully extracted modest licensing fees from a few smaller e-commerce sites, but then decided to move upscale to larger sites. One a law firm successfully wins a few patent battles against the big dogs, their case against other e-commerce sites is greatly strengthened–unless one of their victims manages to invalidate the patents, as was successfully done by NewEgg.com’s internal team of attorneys.

What Soverain Software was doing was all legal and within the law, but just because something is legal does not make it right. They may have eventually raked in hundreds of millions of dollars if their patents had held up to legal scrutiny. They may have also prevented thousands of small e-commerce sites from starting up due to the cost for licensing.