Encryption patent that roiled Newegg is dead on appeal | Ars Technica – Ars Technica

Enlarge / A figure from the patent that has been asserted against Intel, Google, and hundreds of other companies providing SSL and TLS on their websites.

Patent-holding company TQP Developmentmade millions claiming that itowned a breakthrough in Web encryption, even though most encryption experts had never heard of the companyuntil itstarted a massive campaign of lawsuits.Yesterday, thecompany's litigation campaign was brought to an end when a panel of appeals judges refused (PDF) togive TQP a second chance tocollect on a jury verdict against Newegg.

The TQPpatentwas invented by Michael Jones, whose company Telequip briefly sold a kind of encrypted modem. The companysold about 30 models before the modem business went bust. Famed patentenforcer Erich Spangenbergbought the TQP patent in 2008 and beganfiling lawsuits, saying that the Jones patent actually entitled him to royalties on a basic form of SSL Internet encryption. Spangenberg and Jonesultimately made more than $45 million from the patent.

TQP appealedits case, and oral arguments were heard at the US Court of Appeals for the Federal Circuit on February 8. Yesterday, thethree-judge panel found in Newegg's favor, issuing a short two-pageorder that did not explain its reasoning. While TQP could theoretically still appeal to the full Federal Circuit or to the Supreme Court, it's far from clear there's anylegal issue in the case that would compel either of those bodies to take the case.

Newegg and its former chief legal officer, Lee Cheng, have long taken an uncompromising view on the necessity offighting what they term "patent trolls" in court. The TQP Development trial, in which Cheng faced off against Spangenberg, may end up being Newegg's last high-profile patent trial. In October, Cheng left Newegg for Nashville-based guitar maker Gibson Brands.

The Newegg win did not invalidate theTQP patent, which expired in 2012. Nonew cases have been filed since2014.

After the trial against Newegg, the TQP patent was sold, according to former owner Spangenberg. The new entity's ownership is unclear, but it is still represented by the same lawyers from Los Angeles-based Russ, August and Kabat. TQP lead attorney Marc Fenster didn't respond to a request for comment on the appeals court ruling.

"Neweggs e-commerce encryption systems never infringed TQPs patent, which is directed to outdated modem technology from the 1980s," Newegg lawyer Dan Brean told Ars via e-mail. "The differences are clear and fundamental in terms of how and when data is encrypted and transmitted. That is why Judge Gilstrap entered judgment in Neweggs favor despite the jurys verdict, and the Federal Circuit has now affirmed that judgment."

"Im glad that this is finally over," added Newegg lawyer Kent Baldauf. "We have lived with this a long time as it was filed in 2011. This patent troll case was particularly troubling as it not only involved an antiquated technology that has never been used by modern Internet retailers such as Newegg, but it was also asserted to cover the foundational developments of luminaries in the field of encryption such as Ron Rivest and Whit Diffie.We are thankful that Newegg once again stood up to a patent troll and refused to settle based upon a patent that it did not infringe."

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Encryption patent that roiled Newegg is dead on appeal | Ars Technica - Ars Technica