News

Newegg files opposition to Soverain Software’s Supreme Court petition

BY Dan Berthiaume

Los Angeles – Newegg has filed an opposition to Soverain Software’s petition for the Supreme Court to review a January 2013 ruling by the Federal Court of Appeals in the Eastern District of Texas that found Newegg and other e-commerce retailers did not violate a patent on e-commerce shopping cart technology held by Soverain. In district court actions in the Eastern District of Texas, Soverain had obtained settlements and won jury verdicts estimated at more than $70 million.

On appeal, the Federal Circuit found all of Soverain’s shopping cart patent claims invalid as being obvious, citing the fact that the concepts articulated in Soverain’s patents were all present in the popular CompuServe Mall used in the dial-up internet era. Soverain has requested the Supreme Court hear the case, citing alleged infringement on the Seventh Amendment and longstanding Supreme Court precedent.

"We believe that the Federal Circuit correctly invalidated all of Soverain’s patents and that there is absolutely nothing that should serve as the basis for

Supreme Court review of this case,” said Lee Cheng, Newegg’s chief legal officer. “Soverain’s Supreme Court petition is a desperate attempt to continue its lawsuit factory and extract even more money than it already has from every person who shops online. Should the Supreme Court wish to send its own message to the abusive patent assertion community, we are confident that justice will prevail. Justice must prevail, if the American economy is to be free from the uniquely American burden of unjust patent litigation."

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News

Razor credits YouTube for product success

BY CSA STAFF

Razor USA said it set holiday sales records this year due to the surging popularity of a $399 ride-on product called the Crazy Cart that YouTube helped make a hit.

Despite the hefty price, sales of the toy increased 14-fold in just four weeks making it one of the top-selling items this season, according to the company. Razor didn’t disclose sales or unit volumes of the item. Crazy Cart became a viral sensation this summer when its introductory YouTube video was viewed by more than one million people in just a few days. That helped it land on several major hot holiday toy lists.

"The Crazy Cart’s success is an amazing metaphor for the incredible ride we’ve experienced since we first introduced the original Razor kick scooter to America," said Razor’s founder and president, Carlton Calvin. "Razor’s goal is to find innovative toys with break-out appeal and the Crazy Cart is absolutely living up to our hopes as one of the hottest toys of the year."

Characterized as the most-talked about electric ride-on to hit the market in years, the Crazy Cart has two driving modes — go cart and Crazy Cart mode — allowing the driver to choose on the fly. The Crazy Cart can drive forward, reverse, sideways, diagonally and everything in between. The Drift Bar permits variable back-end drifting. Crazy Cart can travel at speeds up to 12 miles per hour and run for up to 40 minutes on a single charge.

The Crazy Cart was created by Ali Kermani, a long-time Razor employee who went on to develop the Crazy Cart as the showcase for his MBA thesis at UCLA’s Anderson School of Management.

The company was founded in 2000 with the introduction of its kick scooter which became immensely popular and ignited the company’s growth.

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FINANCE

Michaels prepares for IPO

BY Dan Berthiaume

Dallas – Michaels Stores Inc., which has been privately held since 2006, is planning to launch an IPO in 2014. According to a regulatory filing with the Securities and Exchange Commission (SEC), private equity owners Bain Capital Partners and Blackstone Group will retain control of the retailer after the public stock sale.

Michaels, which currently operates 1,259 stores in the U.S., and Canada, said in the filing it expects new stores and an e-commerce site it plans to launch in 2014 will produce growth. The retailer’s current site does not allow transactions. It expects to open 40-50 new stores during 2014 and opened 54 stores averaging 19,000 sq. ft. during the nine months ended Nov. 2, 2013.

In the filing, Michaels said its growth strategy includes broadening the appeal of stores to DIY projects as well as crafters, making stores more shoppable with flexible formats, launching a new e-commerce site, marketing efforts that include print, digital, direct mail, broadcast and community events, and improving merchandising and sourcing to better identify and source new trends, merchandise and categories.

J.P. Morgan and Goldman, Sachs & Co will lead the offering. Michaels, whose annual revenue is $4.4 billion, will not receive proceeds from the IPO but remain holding $3.7 billion in debt.

“We expect our new e-commerce platform will allow us to sell much of our current assortment while also expanding into e-commerce-only products,” the company said in the filing. “Although we expect this channel will produce a more limited sales penetration than more commoditized retail categories, we believe it will augment our multichannel strategy to broaden our customer base and improve the shopping experience.”

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