[IP] Supreme Court to hear eBay patent case plea
Begin forwarded message:
From: Barry Ritholtz <ritholtz@xxxxxxxxxxxxx>
Date: November 29, 2005 7:15:04 AM EST
To: David Farber <dave@xxxxxxxxxx>
Subject: Supreme Court to hear eBay patent case plea
Hey Dave,
Interesting patent discussion re: eBay
Supreme Court to hear eBay patent case plea
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ONLINE AUCTION FIRM FIGHTS LOWER COURT'S RULING THAT IT SHOULD BE  
FORCED TO HALT INFRINGEMENT
By Michael Bazeley
Mercury News
http://www.mercurynews.com/mld/mercurynews/13281956.htm
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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 suggested
A 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 injunctions
Courts 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
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