[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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