How Newegg crushed the shopping cart patent and saved online retail

Anyone who visited Soverain Software’s website could be forgiven for believing it’s a real company. There are separate pages for products, services, and solutions. There’s the About Us page. There are phone numbers and e-mail addresses for sales and tech support. There’s even a login page for customers.

It’s all a sham. Court records show Soverain hasn’t made a sale — ever. The various voice mailboxes were all set up by Katherine Wolanyk, the former Latham & Watkins attorney who is a co-founder and partial owner of Soverain. And the impressive list of big corporate customers on its webpage? Those are deals struck with another company, more than a decade ago. That was OpenMarket, a software company that created these patents before going out of business in 2001. It sold its assets to a venture capital fund called divine interVentures, which in turn sold the OpenMarket patents to Soverain Software in 2003.

Thank you for calling Soverain technical support, says Wolanyk, if you press option 2. If you are a current customer and have a tech support question, please call us at 1-888-884-4432 or e-mail us at support@soverain.com. That number, like the customer support number on Soverain’s contact page, has been disconnected.

Soverain isn’t in the e-commerce business; it’s in the higher-margin business of filing patent lawsuits against e-commerce companies. And it has been quite successful until now. The company’s plan to extract a patent tax of about one percent of revenue from a huge swath of online retailers was snuffed out last week by Newegg and its lawyers, who won an appeal ruling [PDF] that invalidates the three patents Soverain used to spark a vast patent war — via redwolf.newsvine.com