Minero wants to tax every USB hub sold, but it will skip Newegg’s house brand.
by Joe Mullin
A shell company that sued dozens of computer peripheral makers has quickly dropped Newegg house brand Rosewill from its list of defendants. The motion to dismiss, filed yesterday, comes just days after Newegg’s lawyers filed notices of their appearance in the case.
Minero Digital LLC dismissed its case against Rosewill one day after Newegg Chief Legal Officer Lee Cheng authorized his outside lawyer to try to settle the case in exchange for a “nominal donation to charity.” During that conversation (the attorneys’ first discussion about the case), Newegg’s outside counsel said that although the proposed agreement wouldn’t pay Minero anything, it was likely to be Newegg’s best and final offer. He suggested Minero search the Internet for news articles about Newegg’s policies on settling “patent troll” type cases. (The short version: Newegg doesn’t pay patent trolls.)
The next day, Minero dismissed the lawsuit against Rosewill. The dismissal is without prejudice, which means it could be re-filed in the future.
It’s impossible to know exactly what the thought process was behind the dismissal. Minero’s lawyer, Ronald Burns, declined to comment, and Minero’s principal, attorney Daniel Perez, didn’t return a call from Ars. But the timeline strongly suggests that Minero either had sudden second thoughts about going toe-to-toe with Newegg—or, more likely, it had no idea that it had sued Newegg at all.
Rosewill, created in 2004, is a private-label brand wholly owned by Newegg. The company specializes in computer peripherals like power supplies, cases, memory, and cables. In 2008, the company began selling on a variety of websites, and the Rosewill.com website doesn’t make its connection to Newegg obvious.
Minero Digital filed a lawsuit in September against more than two dozen tech manufacturers and retailers, including Walmart, Best Buy, and Amazon. The suit demands royalties be paid on various forms of USB hubs, which link together USB-powered devices. Those hubs allegedly infringe US Patent No. 5,675,811.
The patent, which originated at Apple spinoff General Magic, was filed in 1995. In 2003, it was passed to a holding company connected to Intellectual Ventures before being sold to Minero last year. The Minero litigation is still in its early stages. Only two defendants, Targus and SIIG, have been dismissed. Those dismissals are with prejudice, suggesting the companies reached settlement deals with Minero.
Minero Digital’s president is Daniel Perez, a former big-firm attorney who controls several other patent-holding companies headquartered at the same address in Allen, Texas. Asked by Ars about the speedy dismissal, Cheng seemed disappointed that he would lose an opportunity to spar in court with a patent troll. Since word of his no-settlement position has spread, Newegg doesn’t see many lawsuits.
“I never get invited to parties anymore,” Cheng said in an e-mail. “Now I keep getting kicked out.”