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Supreme Court to hear eBay patent case plea
From: David Farber <dave () farber net>
Date: Tue, 29 Nov 2005 07:22:42 -0500
Begin forwarded message: From: Barry Ritholtz <ritholtz () optonline net> Date: November 29, 2005 7:15:04 AM EST To: David Farber <dave () farber net> Subject: Supreme Court to hear eBay patent case plea Hey Dave, Interesting patent discussion re: eBay Supreme Court to hear eBay patent case plea ------------------------------------- You are subscribed as lists-ip () insecure org To manage your subscription, go to http://v2.listbox.com/member/?listname=ip Archives at: http://www.interesting-people.org/archives/interesting-people/
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The U.S. Supreme Court has agreed to hear a patent dispute between online auctioneer eBay and a Virginia inventor, setting the stage for a ruling next summer that could reverberate through the technology, pharmaceutical and other industries.
The court granted eBay's request to review the original ruling in the case, in which a district court judge concluded that eBay's ``Buy It Now'' feature violated a patent held by a small e-commerce company called MercExchange.
An appeals court upheld the ruling in March, saying that an injunction forcing eBay to halt its patent infringement might be warranted.
In taking on the case, the Supreme Court is wading into the question of whether trial courts should be compelled to automatically order injunctions against companies found to be infringing on patents.
The answer to that question -- also being debated in Congress as part of patent reform -- is crucial to technology and pharmaceutical companies. If eBay prevails, pharmaceutical companies might find it harder to persuade courts to halt infringements of their patents. Tech companies, on the other hand, worry that a tougher stance on injunctions would require them to modify their products because of companies or individuals who file opportunistic patent suits.
``It's by far the most important patent case the court has agreed to hear in years,'' said Harold Wegner, an intellectual property attorney with Foley & Lardner based in Washington, D.C. The case dates back more than four years to a lawsuit brought by Thomas Woolston, a former Central Intelligence Agency technology officer who had applied for several technology patents six months before Pierre Omidyar launched eBay in 1995.
Woolston accused eBay of infringing on several patents. But just one is at the center of the current dispute. Woolston alleges that eBay is using his invention to power its fixed-price feature, called ``Buy It Now,'' which allows its members to buy an item at a certain price instead of competing in an auction.
Injunction suggestedA federal jury in Virginia sided with Woolston in 2003, but the court declined to issue an injunction against eBay. A federal appeals court in March threw out one of Woolston's patent claims but upheld the fixed-price patent. It also suggested an injunction against eBay, arguing that permanent injunctions should be granted as a ``general rule'' in patent cases.
EBay petitioned the Supreme Court in July to take the case, a long shot because the court receives thousands of petitions each year.
``We're really gratified that they have agreed to hear this,'' eBay spokesman Hani Durzy said. ``We're going to make the strongest case we can.''
Scott Robertson of Hunton & Williams, the lead attorney representing MercExchange, said the company ``remains confident in its view that it will ultimately prevail in its struggle against this infringer.''
The case has already attracted the attention of big business interests. The Business Software Alliance, the Computer & Communications Industry Association, America Online and Qualcomm all filed briefs with the Supreme Court, as did 35 intellectual property professors and the San Francisco digital rights group Electronic Frontier Foundation.
So far, tech and pharmaceutical companies have lined up against each other on the issue.
Patents are the life-blood of drug makers, and they want to see their intellectual property rights enforced as strictly as possible.
Many tech companies, however, have been on the receiving end of costly and disruptive patent lawsuits. In some cases, the industry charges, the suits are brought by ``patent trolls,'' people who only want money and have no intention of using their patent.
Use of injunctionsCourts have generally ordered injunctions against companies that infringe on patents, the assumption being that patent-holders are suffering irreparable harm.
``As a matter of course, you're entitled to an injunction,'' said Dave Ashby, an attorney with the IP Strategy Group in Cupertino.
But eBay is arguing that patent law gives courts wide discretion in deciding to grant injunctions. It's arguing that the appeals court in this case took that discretion away from the trial court.
Unilaterally imposing injunctions against companies imposes ``substantial unwarranted costs'' on companies, eBay argued in its brief.
The appeals court ``has evolved to where it has taken away all the discretion from the trial judges,'' eBay deputy general counsel Jay Monahan said Monday.
EBay has argued that an injunction would be pointless, claiming that it has modified its technology so as to not infringe on MercExchange patents.
But Woolston said he has consistently monitored eBay's site since he filed his suit and is convinced that eBay is still infringing on his patent.
Woolston has been working with a much smaller eBay competitor, Chicago online auctioneer uBid.com. He says uBid needs an injunction against eBay to be successful.
``The injunction is critical to the competition,'' he said.A hearing on the case could take place in March with a ruling sometime in June
Barry L. Ritholtz Chief Market Strategist Maxim Group 405 Lexington Avenue, New York, NY 10174 (212) 895-3614 (800) 724-0761 ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~The Big Picture: Macro perspectives on the Capital Markets, Economy, and Geopolitics
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