I've been fighting patent trolls for a while. I wanted to explain why and how we do what we do. Or anything.

Feel free to ask me anything. Will start at 2:15 pm Pacific Time.

Much fun!

Proof: https://twitter.com/Newegg/status/469586098381803521

Comments: 320 • Responses: 44  • Date: 

GoldenIvan208 karma

First, thanks for your work. I admire what you do.

Second, what is your reaction to the setting aside of the patent troll bill which was in the U.S. Senate committee and going well just last week?? That has to feel frustrating?

keep up the great work man.

leecheng168 karma

Was very disappointed but not terribly surprised. Legislative reform often takes years and is very subject to influence from parties with financial interest in the status quo--in this case trial lawyers, patent trolls, and large companies who want to defend monopoly positions.

Reform is going to take a concerted judicial, legislative, and business effort--most importantly, and what will be most effective, people and companies need to stand up and say NO!

GoldenIvan35 karma

Thanks for answering Mr. Cheng.

in this case trial lawyers, patent trolls, and large companies who want to defend monopoly positions.

Being a realist, do you really see any way to erode these interests' influence? I don't. I hope you do.

Also, I meant to ask, how do you convince the bean counters at Newegg to fight some of these, when in fact it could be cheaper in the short term to just settle some of them? My impression is somehow you've managed to convince them that the principle is worth fighting for always? Do you wish other companies would be willing to fight more like Newegg does? Maybe share your costs?

leecheng125 karma

I built a decent business case to fight and fortunately, the first troll we hit was so damned greedy that they helped me out. They wanted millions. I'm pretty good at controlling legal cost and we never spent more in any year than the troll demanded up front. Dumbasses.

Businesses and consumers need to work together and to let the corproate interests supporting trolls know that they customers are aware of what they are doing and that their activities are not appreciated. Boycotts. Protests. Bad, bad PR.

J0hntheg0d104 karma

What exactly is a patent troll for those of us who are uninformed and how exactly do you hunt them. Also do you stuff and mount these trolls?

leecheng196 karma

A patent troll is anyone who asserts patents abusively--ie poor quality patents or patents that technically pass muster but don't add value to society. They take advantage of the fact that legal defense costs are much higher than their settlement demands to extort billions a year from honest businesses.

We don't give in to legal terrorists. It encourages more terrorism.

nickmerulla76 karma

How do you guys at newegg manage to stay so awesome for so long? Also, I recommend your site to anyone any chance I get. You all are amazing!

leecheng91 karma

We are very grateful for your support and loyalty. Believe me, we value every single customer, and there's nothing more important to our founder and each executive than making good customers happy. We were the first internet retailer to really live that concept, and we're glad everyone else has also seen what it takes to remain sustainably successful. Always looking to be better and would welcome any of your thoughts.

sdsendoh55 karma

was the a decision to fight back made by the team as a whole? or the head hancho at newegg?

leecheng100 karma

A team decision, supported by our founder and controlling stockholder, Fred Chang, who is a very principled person. Our Board was behind the strategy as well. When results started to come in, ie paying nothing where our major competitor paid a troll millions, and not getting sued anymore, support was even more enthusiastic!

Zakn4fein51 karma

I read something about you teaming up with GEICO's legal department, in this last battle. Are patent trolls only targeting large corporations or have they been attacking smaller businesses too?

Followup: Companies have strength in numbers when battling the patent trolls, what would you recommend a small business do (who doesn't have the legal expertise or funds large corporations do)?

leecheng95 karma

Unfortunately, small businesses and even individual developers/entrepreneurs have been threatened and sued too. There are a number of different troll "species," and bottom feeders literally send thousands of claim letters out or file hundreds of lawsuits. Their math says that it always costs less to give them the money they demand than to mount a legal defense.

We did work closely with GEICO--Eugene Kim there deserves kudos for realizing the opportunity to send a message to the troll community to leave GEICO alone by helping crush Macrosolve, which pretty much went belly up. Here's what we did and how we did it:


Giltheryn34 karma

First off, great job on being willing to face the trolls head on instead of caving as most companies do. What is the biggest change that could be made to the US legal system to help discourage or prevent patent trolling?

leecheng58 karma

Finding ways--legal, judicial or market--to shift the economics of the "business." The most effective way to eliminate trolling is to decrease the returns by increasing cost and risk for trolls and their investors. The trolling industry grew astronomically because investors and advantage takers believe that it represents an easy, riskless way to make money.

Kyle259533 karma

Hi Lee! What is the most rewarding part of your job? Also, why are you so awesome? :)

leecheng64 karma

I get to help build a great company, one that stands for something very wonderful--really really caring about every customer. We don't get everything right all the time but I can assure you that we always want to and will always try our best.

dremic23 karma

How do you feel your customer service holds up as opposed to Amazon?

I know on HardOCP they often refer people to Amazon now because of reports of bad customer service as far as returns go from Newegg.

Would love to hear your side of things.

leecheng42 karma

We built our business on treating customers right--from Day 1. Amazon deserves a lot of credit for raising their game tremendously around 2005--I still remember not being able to get a book I ordered for weeks. A tremendous amount of effort and thought are still put into making sure our customers feel loved and treated like family. I'm disappointed to hear about what HardOCP is doing but as many savvy customers know, there are many reasons web sites send customers to one site over another...

leecheng28 karma

If any customer has any issues with returns that we can accommodate, our CS crew will literally move mountains to make them happy.

beernerd22 karma

What made you guys decide to take a risk and start fighting the patent trolls instead of settling like everyone else?

leecheng55 karma

I ran the math after realizing the scope and extent of the problem. We just could not afford to take the "easy" way out because there are so many bad patents out there, and paying off one troll holding a craptastic search patent means you have to pay off all the rest (we were sued by at least 4 trolls asserting patents covering some aspect of search). We could not do so and continue to provide our customers with the best service and prices.

DerzKing19 karma

Hi Lee, do you praise Gaben?

leecheng28 karma

If Gaben is a cool human being, yes, I praise him.

partyprillan16 karma

If Gaben is cool? He is our lord and saviour!

leecheng63 karma

Then Praise, High Praise, be to Gaben! And the PCMasterRace.

RogueNinja6414 karma

As a beginning software developer I am already starting to find find that the fears of patent trolls to be crippling to development. Any advice on the subject besides lawyer up?

leecheng28 karma

Focus on making a great product and building a great business. Don't be paralyzed by fear.

Really_getting_angry14 karma

What would you say to those that say that these trolls are a necessary evil if we are to keep inventor motivation high?

leecheng66 karma

As the named inventor on 3 pending patents, and knowing so many more truly innovative people, I don't think getting rich quick, and winning windfalls by taking advantage of legal system deficiencies, motivates inventors. True inventors invent because they love to do something uniquely positive. The patent system was not created to make people rich. Getting rich was supposed to be the positive by product of inventing something that benefitted society.

therealjeffbezos13 karma

Hi Lee, huge fan of your work. One question, do you have an Amazon Prime Membership?

leecheng52 karma

Love it! Have 4 Kindles, 2 Paperwhites (for the kiddos) and just got my Fire TV. Happy stockholder too.

Amazon is a competitor but it's stupid to not praise awesomeness and try to learn from a great competitor, and try to do what that competitor can't or won't do.

labelbuddy13 karma

For someone facing these troll patents what first steps should they take if they want to fight them?

leecheng42 karma

Say: "we do not infringe any valid patents." Then find out who else has been sued and try to get as many co-defendants to agree to work together tightly as possible, including being represented by one good law firm. Once most outside counsel get their hands on a client, they never want to let go and when defendants are all represented by their own lawyers, their costs all run up and the troll wins.

leroyjenkins6913 karma

What was Berkeley Law like? How did it compare with your undergraduate experience?

leecheng54 karma

Don't remember much of my first year. A lot of beer involved. I learned about as much about how to actually practice law as I did at Harvard College. I learned the same amount in kindergarten. Met many good people and made friends, and learned more outside the classroom.

Bar exam: total waste of time. Last test I will ever take.

synthparadox10 karma

What are the most common arguments that patent trollsnonpracticing entities use incorrectly to assert their portfolios? What (if anything) do you and/or Newegg do to avoid infringing on actual patents?

leecheng17 karma

You (defendant) are infringing a valid patent. So full of crap.

fakkuhentai10 karma

So what got you into the troll hunting business in the first place? And why did you decide to study law?

leecheng30 karma

We were sued even though we don't make anything, and I studied the situation and realized that the claims were bullshit, and that a giant scam was being perpetrated. I never liked being bullied, and I figured out a way to fight back.

I went to law school because I think that good lawyers can make a very positive impact on society. Eventually, I have plans to be more active in the civil rights arena based on some prior work I did to protect the rights of individuals.

diilemmaz10 karma

First off I'd like to say I love the work you guys do, second I have question I feel I might know the answer to.

This may not be one you would know or could answer, but will Newegg ever become a standalone electronics store instead of just online? I can see costs of running them would possibly drive up prices, but I sure wouldn't mind being able to just walk into a Newegg store and browse.

leecheng20 karma

We have a brick and mortar concept connected to our warehouse in the City of Industry and we are always thinking about better ways to better serve our customers.


dannymac17849 karma

How hard is it to prove in court without reasonable doubt that you arent infringing on a certain patent? Do other companies who join you in the fight, end up using your services in other patent cases?

leecheng20 karma

The standard isn't actually beyond reasonable doubt. The troll actually has to prove infringement by a preponderance of evidence (ie a majority). Not hard in certain venues with slick-talking, truth challenged lawyers. Defendants get a much fairer shake on appeal, but it costs so much to get through trial that most settle. We've invalidated every single patent we have taken through trial and appeal, generally after the troll involved made tens of millions in settlements. Tells you about the quality of asserted patents generally...

Arararagi-kun8 karma

Just wanted to say I love you and the work you're doing. Best of luck!

leecheng10 karma

Mucho gracias!

Megusta998 karma

Hey Lee, big newegg fan here. Thanks for doing this AMA. Do you build PC's? What are the specs of your current rig(s)?

leecheng20 karma

I retired from PC building when I was about 14. Built it in 1984. Cost like $4K. We got a 10MB hard drive (Seagate) for $400 and I remember asking my brother how we could ever use all that memory! I now just use a commercial laptop. Travel too much.

Thanks for your loyalty! Please let us know what else we can do to make you happy.

Tr11pod8 karma

What is the most difficult part of going after patent trolls? What do you do to try to get around these problems?

leecheng28 karma

They are slippery bastards. Since they are shell companies, even when you win, it's hard to collect costs and fees because they can just take the shell into bankruptcy after distributing out all their ill-gotten settlement gains.

SarcasticAssdick8 karma

What is the most ridiculous patent that someone tried to sue you over?

Thanks Lee.

leecheng19 karma

Shopping cart. Drop down menu. App. Pretty much any patent we decide to take to trial is monumentally stupid. Should not have been granted and/or stretched in scope beyond any reasonable boundaries.

Banner_Free7 karma

Hi Lee! Thanks for your hard work fighting trolls, and for your willingness to call them out on their scumminess.

My question is: Why did you initially decide to become a lawyer, and how (if at all) does your current work fit with that initial vision?

leecheng40 karma

I wanted initially to be a lawyer to fight discrimination against Chinese kids in San Francisco public schools. The SFUSD required Chinese kids for over 20 years to score higher than kids of any other ethnic group to get into magnet schools. Didn't matter if they were from wealthy families or the children of dishwashers. No one did anything for 20 years. I didn't think that was right.

I've always been and hope to always be idealistic. Just because no one else has done anything about something that everyone thinks is wrong doesn't mean that I can't. I've always enjoyed tilting at windmills, and even better, knocking them over. Fighting patent trolls was my second windmill.

Pants_187 karma

Do you think that this is only the first wave of trolls, or will this set a precedent and no others will follow in fear of losing and being publicly humiliated?

leecheng29 karma

Patent trolling is an industry. It grew quickly because the early entrants achieved so much financial success so quickly. With more "competitors" and more defendants becoming savvier about fighting them, the returns are starting to drop. I'd say we are about in the 4th or 5th inning. Abusive patent assertion is never going to go away but its societal cost, if this country wants to stay competitive, will need to drop to a genuine nuisance value.

Yes, I do think that smashing trolls keeps them away. They and their greedy ass plaintiff lawyers want to make as much money as possible and they will target the sheep, not the rams.

leecheng16 karma

Like any bullies.

sevaul6 karma

Lee, I don't have much for you other than keep up the good fight and make those bastards pay and hopefully stop their actions. Other than that I would love to win an SSD on your facebook giveaway haha. Seriously though, great work and this is why we stick with newegg over the rest!

leecheng6 karma

Good luck on that giveaway! Troll haters have good karma.

Bored20016 karma

Do you think George Yang, candidate for California LT. Governer can do the litigation reforms he is running for?


leecheng17 karma

Not with trial lawyers able and willing to donate huge amounts of money to protect their livelihoods.

chooter6 karma

Favorite sandwich?

leecheng14 karma

Fried egg and bacon. White bread. Toasted. With chocolate malted milk shake.

Dabaer774 karma

How do you guys manage to have cheaper prices than literally anywhere else on computer parts'

leecheng14 karma

We are incredibly frugal--I am working now in our global HQ, a converted warehouse, which we converted ourselves. I work in a cube. We don't pay off patent trolls. All for your benefit, my friend.

RacerX27273 karma

Hi Lee! Thanks for your patent troll work. In an alternate universe, let's say the patent trolls won. How do you think that would change the Internet from how we know it now?

leecheng8 karma

Remember dial up modems? Might make more sense to communicate with a heliograph network...

needsomehelp063 karma

what's your favorite thing to do after a long day at work?

leecheng19 karma

Hug my kids.

bdog733 karma

How do you keep going back into the same cases for so long? They seem to last quite long because you guys are a big company. It seems like a lot of work and that it would tire you guys out.

leecheng7 karma

Justice is very very slow. Litigation is so not like Perry Mason. More like a 15 round fight that lasts anywhere from 2-5 years, including appeals. That is why trolls can exist and thrive--costs relatively little to file a lawsuit, and there's very little risk or consequence.

SarcAfterDark3 karma

Hi Lee! Do patent trolls live under bridges? Or have I been lied to my whole life? Have you ever had problems with Apple? Are they the notorious patent troll they are portrayed as by the tech media? Thanks for doing this!!

leecheng18 karma

Patent trolls usually live quite well. Luxury highrises and estates. Robber barrons did the same. Do not know where their consciences reside.

Apple is...aggressive...about enforcing its IP rights. Hope they get back on the innovation track. Seem to be milking their past success a bit.

MyMixedNuts3 karma

What is the worst troll you've had to deal with other than the recent patent troll?

leecheng14 karma

Anyone who abusively asserts patents is a douche.

Knarf03 karma

Hi Mr. Cheng,

What changes or reforms do you think should be made at the United States Patent and Trademark Office in order to combat patent trolls?

leecheng11 karma

Improve patent quality. Better training for examiners, more transparency and opportunities for people who do not want to see ideas taken out of the public domain for private benefit to weigh in early and inexpensively to protect the public interest.

apimpnamedswitchback2 karma

Hi Lee - What kind of outcome from CLS in Newegg hoping for?

YouNeedToStopPosting2 karma

Hi Lee, I appreciate your AMA.

1.) If you could choose a number which makes you laugh the most, what would it be?

2.) Would you rather be three or eight feet tall?

leecheng12 karma

  1. 69, man.
  2. Tough. 3 feet likely gets to live longer. 8 feet gets more respect and easier to make big bucks. I guess 8 feet. Can become 3 feet easier than vice versa.

dankity2 karma

Hey Lee, huge fan, thanks for taking the time to do this AMA! My question is this, if you were not CLO at Newegg, where would you see your self now?

leecheng5 karma

Probably tilting at another windmill.

catman929-6 karma

I've purchased a ton of pc parts in the past 5 years on newegg. Any way I can get some free stuff?

leecheng3 karma

That I do not know...Free is not my department. Ask my good friend Soren Mills, CMO.