Furnace Brook asked the U.S. Court of Appeals for the Federal Circuit in Washington, D.C., to overturn a district court-level ruling that threw out the company's suit against Overstock.com. The plaintiff alleged Overstock.com helped build its online retail-sales company by improperly taking advantage of one of Furnace Brook's Internet-related patents.

The Court of Appeals rejected that argument last week.

Overstock.com attorneys called the suit frivolous and characterized Furnace Brook officials as "patent trolls."

"We respect legitimate intellectual property rights of others, but patent trolls are another matter. This federal court's decision validates our decision to fight patent trolls. Furnace Brook can no longer use this patent to try to hold up Internet retailers," said Overstock's chief attorney, Jonathan Johnson.

Added Overstock.com Chairman and CEO Patrick Byrne: "Patent trolls file spurious infringement claims assuming their targets will calculate that fighting is more costly than paying them off. This court's decision is a clear warning that such protection-racket mentality has no place in our economy."

Furnace Brook could not be reached for comment.