TELECOM Digest OnLine - Sorted: Supreme Court to Hear E-Bay Patent Appeal

Supreme Court to Hear E-Bay Patent Appeal

Tim Dobbyn (
Mon, 28 Nov 2005 11:33:36 -0600

By Tim Dobbyn

The U.S. Supreme Court said on Monday that it would consider an appeal
by online auctioneer eBay Inc. in its patent battle with MercExchange,
a developer of e-commerce technology.

At issue for the justices is whether an appeals court erred in finding
that a permanent injunction barring use of a technology must generally
be issued once infringement of a valid patent has been determined.

In its appeal, eBay said the ruling reduced a trial court judge's
discretion to exceptions involving national health and handed a club
to companies that buy patents to make infringement claims.

The justices will hear arguments in the case most likely in March or
April, with a decision expected by the end of June. The high court
said it would reconsider its precedents, including one from 1908, on
when it is appropriate to grant an injunction against a patent

MercExchange had argued against Supreme Court review, saying the
principles involved in the case were well established.

In 2003 a federal court ordered eBay to pay Virginia-based
MercExchange $29.5 million for infringing two e-commerce patents that
MercExchange charged were key to eBay's "Buy it Now" feature, which
handles fixed-price sales.

Such sales accounted for about 31 percent of the total value of goods
sold on eBay in the fourth quarter of 2004.

But the U.S. District Court for the Eastern District of Virginia
declined to issue a permanent injunction.

In March, the U.S. Court of Appeals for the Federal Circuit ruled one
of MercExchange's patents was invalid and trimmed the damages against
eBay to $25 million but reversed the lower court's denial of
MercExchange's request for a permanent injunction against eBay.

In addition, eBay says the U.S. Patent and Trademark Office has issued
an initial ruling rejecting all of the claims of the patents at the
center of the case.

The eBay case has attracted interest among those who believe it has
become too easy to hold businesses hostage through patent suits.

A group of 35 patent law professors filed a friend of the court brief
arguing that an entitlement to an injunction allows unscrupulous
patent owners to threaten products that are predominantly
noninfringing. A computer chip, they noted, may include 5,000
different inventions.

(Additional reporting by James Vicini)

Copyright 2005 Reuters Limited.

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