Patent litigation

Patents are once again headed to the Supreme Court for review. This time it is eBay’s “Buy it Now” option, which a patent-holding company – MercExchange LLC – claims infringes on their patent. The U.S. Court of Appeals for the Federal Circuit issued an injunction last March and, according to the Wall Street Journal, “EBay says the court’s reasoning could result in the more frequent issue of injunctions in patent disputes by lower courts.”
According to the Washington Post, the issue is just that of the injunction.

EBay was found to have violated MercExchange’s patent and was ordered to pay $25 million in damages. The Supreme Court is not taking up that issue, only whether there should be an injunction to prevent eBay from continuing to use the technology.
EBay’s appeal asks to overturn a U.S. appellate court’s ruling that it should be customary to issue a permanent injunction when a company is found to have violated a patent. In an earlier ruling, a district court decided not to issue an injunction against eBay, despite finding it in violation of a MercExchange patent. EBay argues that judges should have leeway to consider hardship on a company before prohibiting the future use of technology through injunctions.

As is usually the case for Supreme Court review, the issue involves differing interpretations of the law. The New York Times explains:

But Judge Jerome B. Friedman of Federal District Court [where the case began], noting that MercExchange “exists solely to license its patents or sue to enforce its patents, and not to develop or commercialize them,” refused to issue an injunction that would have barred eBay from continuing to use the patented methods in its Web operations.
. . .
The United States Court of Appeals for the Federal Circuit, a specialized court here that hears all appeals in patent cases, overturned the district court’s decision this year and ruled that MercExchange was entitled to the injunction it sought.
The appeals court said that injunctions were the “general rule” in patent infringement cases, and should be withheld only in such “rare instances” as “the need to use an invention to protect public health.”
. . .
The Supreme Court, in its order granting the case, said it would reconsider a precedent from 1908, which suggested that injunctions were always an appropriate remedy for patent infringement.

All of this is going on as patent reform legislation stalls in the Congress. As I understand it, the bill is hung up in a disagreement between the biotech/pharma industry (which wants the law changed one way) and the software industry (which wants it changed another way). There is also a fight over whether or not injunctive relief should be weakened. Given that the role of injunctions is the issue before the Court, maybe the actions of the activist justices of the Supreme Court might spur lawmakers (and lobbyists) to find a compromise.

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