Feeds

Supreme Court to hear eBay's patent challenge

Case divides biz community

Security for virtualized datacentres

The US Supreme Court will hear eBay’s appeal tomorrow against an injunction imposed in a patent dispute over the auction site's fixed-price 'Buy it Now' service. eBay is challenging the same court practices that nearly shutdown the BlackBerry email service recently.

eBay has asked the Court to review the question of whether an injunction should always be imposed in cases where one party is found to infringe the patent of another.

At present, US courts may impose an injunction when infringement is proved – but have often taken the view that they must impose an injunction. The rule of the Federal Circuit is that an injunction should follow a finding of infringement unless there are "special circumstances".

eBay argues that patent holder MercExchange does not make use of its own patents and exists only to sue others. It says MercExchange should therefore not be entitled to an injunction, and a damages award should suffice. MercExchange denies the claims about its own business model; but regardless of the facts, the issue raised by eBay has divided the business community.

Oracle, Microsoft and Intel have supported eBay, filing a joint brief that argues that courts must have discretion to grant or refuse injunctions in patent disputes. The patent may relate to only a tiny part of a company's product or service, they point out; injunctions can be a disproportionate remedy. They say the injunction rule "has transformed patents into a powerful tool for litigation abuse".

The recent battle between BlackBerry-maker Research In Motion and patent holder NTP Inc put the issue in focus.

Following a patent infringement ruling, an injunction looked likely that would have closed the BlackBerry service for millions of US users; yet NTP makes no rival product and the validity of its patents had already been questioned by the US Patent Office. The risk was averted when RIM agreed to pay $612m to NTP. Critics see such payments as ransom money.

MercExchange and its supporters, including the Department of Justice, General Electric, and Proctor and Gamble, argue that too much discretion will chill innovation and drive up costs. They believe the ability to exclude others from using a patented invention is one of the fundamental reasons for patenting that invention.

A ruling is not expected for several months.

Background

The dispute between eBay and MercExchange has been running since October 2001, and hinges on an auction site patent application that was filed a few months before eBay was launched in 1995.

It relates to the 'Buy It Now' service on the eBay site, which deals with fixed-price sales, and a facility to search other online auction houses. In May 2003, a jury decided that these services did infringe on the patents, and ordered the online auction leader to pay $35m in damages.

The case then went back to the trial judge, who had the option of increasing the damages awarded – up to three times the existing award – and issuing a permanent injunction against the company, preventing eBay from using the patented technology.

In the end he did neither, and in August 2004 he reduced the award to $29.5m and refused to grant an injunction.

eBay appealed, and in March 2005 the US Court of Appeals for the Federal Circuit found that the comparison shopping patent was invalid. It reduced the damages imposed on eBay to $25m. But it imposed an injunction on the firm finding that, unless there were exceptional circumstances, a district court should issue a permanent injunction after a finding of infringement. The injunction was stayed pending the appeal to the Supreme Court.

eBay has previously reported that it changed its 'Buy It Now' service after the ruling in 2003 to avoid future infringement, so the Supreme Court's decision on the injunction may not affect the operation of its business.

See: Coverage of this case – with links to all the briefs – at Dennis Crouch's Patently-O Patent Law blog

Copyright © 2006, OUT-LAW.com

OUT-LAW.COM is part of international law firm Pinsent Masons.

Choosing a cloud hosting partner with confidence

More from The Register

next story
The 'fun-nification' of computer education – good idea?
Compulsory code schools, luvvies love it, but what about Maths and Physics?
Facebook, Apple: LADIES! Why not FREEZE your EGGS? It's on the company!
No biological clockwatching when you work in Silicon Valley
Happiness economics is bollocks. Oh, UK.gov just adopted it? Er ...
Opportunity doesn't knock; it costs us instead
Ex-US Navy fighter pilot MIT prof: Drones beat humans - I should know
'Missy' Cummings on UAVs, smartcars and dying from boredom
Yes, yes, Steve Jobs. Look what I'VE done for you lately – Tim Cook
New iPhone biz baron points to Apple's (his) greatest successes
Lords take revenge on REVENGE PORN publishers
Jilted Johns and Jennies with busy fingers face two years inside
Sysadmin with EBOLA? Gartner's issued advice to debug your biz
Start hoarding cleaning supplies, analyst firm says, and assume your team will scatter
Doctor Who's Flatline: Cool monsters, yes, but utterly limp subplots
We know what the Doctor does, stop going on about it already
prev story

Whitepapers

Forging a new future with identity relationship management
Learn about ForgeRock's next generation IRM platform and how it is designed to empower CEOS's and enterprises to engage with consumers.
Cloud and hybrid-cloud data protection for VMware
Learn how quick and easy it is to configure backups and perform restores for VMware environments.
Three 1TB solid state scorchers up for grabs
Big SSDs can be expensive but think big and think free because you could be the lucky winner of one of three 1TB Samsung SSD 840 EVO drives that we’re giving away worth over £300 apiece.
Reg Reader Research: SaaS based Email and Office Productivity Tools
Read this Reg reader report which provides advice and guidance for SMBs towards the use of SaaS based email and Office productivity tools.
Security for virtualized datacentres
Legacy security solutions are inefficient due to the architectural differences between physical and virtual environments.