posted on April 1, 2006 05:30:06 PM new
From the looks of it ebay may win the case before the Supreme Court. The US Patent office has stated the original patent should not have been issued. And from the sounds of the arguments in the Supreme Court it's sounding good to.
By Reuters
Published: March 30, 2006, 7:22 AM PST
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Online retailer eBay on Thursday said the U.S. Patent and Trademark Office had upheld an earlier decision that a patent recorded by MercExchange was "obvious" and should not have been issued.
eBay and MercExchange are embroiled in a patent battle that reached the U.S. Supreme Court this week. eBay was found by a district court to have infringed on two e-commerce patents that MercExchange said were key to eBay's "Buy it Now" feature, but instead the court awarded monetary damages in the case instead of issuing an injunction.
The case has thrown a spotlight on complaints by technology companies that the frequent imposition of injunctions in patent-infringement cases leaves them at the mercy of the owners of questionable patents who have no plans to actually make a product.
eBay said it learned on March 27 that the Patent Office had dismissed arguments raised by MercExchange to a prior rejection of that company's claims.
update WASHINGTON--In a dispute that's part of a broader debate over the future of the patent system, some U.S. Supreme Court justices suggested Wednesday that the patent at the heart of a suit against eBay may be too vague and trivial to even be taken seriously.
During oral arguments that lasted about an hour, Justice Stephen Breyer suggested that if eBay's "Buy it Now" feature could be patented, "then maybe A&P could patent its process for a supermarket."
Patent holder MercExchange sued eBay in September 2001, accusing it of patent infringement through the "Buy it Now" feature, which allows shoppers to halt the auction process and purchase items at a fixed price. A federal appeals court sided with MercExchange and granted it an injunction against eBay. The injunction is currently on hold.
Chief Justice John Roberts drew laughter from the usually taciturn court audience when he made a quip about his interpretation of MercExchange's patent. "It's displaying pictures of your wares on a computer monitor and picking the ones you want. I might be able to do that.
"It's not (like the patent describes) the internal combustion engine," he added. "It's very vague."
The case has drawn an unusual amount of attention because it could have a profound influence on the way patent injunctions are issued. That question assumed a high profile in recent months when Research In Motion's wildly popular BlackBerry service, which was itself at the center of a heated patent dispute, faced the threat of a shutdown.
Many of the nation's largest software, hardware and Internet companies have sided with eBay in their own briefs, warning that "near automatic" injunctions threaten day-to-day business operations and give too much power to owners of patents of dubious quality.
Individual inventors and pharmaceutical giants, on the other hand, have opposed the online auctioneer, arguing that patent holders have an exclusive right to keep others from using their inventions and that allowing judges broader discretion to withhold injunctions will "water down" the entire system.
It's nearly impossible to discern how the justices will vote based on their remarks during oral arguments, and whether they agree with the validity of the disputed patent may not even come into play. Some members of the court did express sympathy with MercExchange's position, and most of them indicated that injunctions are an important right for inventors.
MercExchange a patent troll?
Justice Antonin Scalia questioned eBay's argument that companies should be treated differently if they don't actually use the patents they own in business--such companies are often derisively called "patent trolls."
"Why should we draw a distinction between the solo inventor who needs a patent speculation firm to market his invention and somebody else?" Scalia asked. "We're talking about a property right here, and a property right is the exclusive right to exclude others."
Because MercExchange was in the business of licensing, not commercializing, its patents, money damages are "a completely adequate remedy," eBay attorney Carter Phillips argued.
The appeals court ignored relevant information, Phillips said, including the fact that patent holder MercExchange does not actually use, but only licenses, its various patents related to electronic sales.
MercExchange attorney Seth Waxman rejected any claim that his client was simply stockpiling patents and using them to extort money from e-commerce companies.
"This is no patent troll," Waxman said, referring to MercExchange founder Thomas Woolston, who received the patent in question in 1998 after initial rejections. "He really did spend years of effort trying to build and license it himself."
But when licensing negotiations broke down, eBay "stole the technology" and willfully infringed on Woolston's patents, Waxman argued.
The question of whether infringers should escape injunctions only "absent exceptional circumstances," as the appeals court ruled, is now in the Supreme Court's hands.
Phillips argued for eBay that the U.S. Appeals Court for the Federal Circuit considered only whether an injunction against the auctioneer would harm the public interest and essentially ignored a "four-factor test" prescribed by patent law. That test involves weighing not only the public interest but also other circumstances of the case, such as whether the patent owner would experience irreparable harm if an injunction weren't granted and whether monetary compensation would be sufficient.
All eBay and its allies want is for the Supreme Court to clarify that all the factors must be considered before granting an injunction, Phillips said.
eBay was not alone in making that suggestion. Jeffrey Minear, assistant to the U.S. Solicitor General, said the government thought it "useful for this court to make clear there's a four-factor test" that should be applied in deciding patent injunctions. Despite that position, the Bush administration supported the injunction issued in eBay's case.
MercExchange, for its part, argued that any changes to the appeals court's ruling would "dramatically destabilize" the patent system. "It is so critical that the judgment be affirmed, not vacated, because this is a real inventor; this is somebody who did try to put the invention in place," Waxman said.
The injunction question before the high court may seem obscure, but it's actually one of several major points of contention in a larger debate about state of the U.S. patent system. Reform proposals under way in Congress have stalled amid fractures primarily along high-tech and pharmaceutical or biotechnology industry lines, which have surfaced again in this case.
A jury decided eBay had infringed on two of the patents in 2003, though one of the patents was later thrown out. The trial court ordered eBay to pay $35 million in damages, an amount that was later decreased to $25 million, but decided against issuing a permanent injunction. It cited several factors for justification, including MercExchange's "willingness to license" and non-practice of its patents and what it termed a "growing concern" from the public over key aspects of the current patent system.
The Federal Circuit found flaws in that reasoning. It ruled that a permanent injunction must follow all infringement findings unless cutting off the patent in question "frustrates an important public need," such as protecting public health. But the injunction remained on hold pending eBay's Supreme Court appeal.
The disputed patent, Patent No. 5,845,265, describes a "virtual presentment of goods to market and establishes a two tiered market of retail and wholesale sales."
posted on April 1, 2006 05:40:05 PM new
I for one is on ebay 's side on this one after reading the patent. It is an idea not a product.
**************
Some minds are like concrete,
thoroughly mixed up and permanently set.
posted on April 1, 2006 06:50:13 PM new
We all better hope Ebay wins this one. This is not the only infringement case they face from Mercexchange. It appears that Mercexchange is claiming several other infringments, including the online auction model. That patent is potent, having been affirmed by the U.S. Patent Office clearing the way for another lawsuit challenging Ebay's very existence. This best case/worst case scenario was published earlier this week in Auctionbytes.
posted on April 1, 2006 08:38:01 PM new
If eBay is infringing on a patent then Sears should get a ton of money from everyone that have done a mailorder catalogue business through the years.
posted on April 1, 2006 09:20:19 PM new
Bill, don't forget about all the toilet paper companies that have sprung up throughout the years since Sears catalog was first read in outhouses around the country. Sears would really be able to clean up against all of them.
posted on April 1, 2006 09:22:53 PM new
:espite that position, the Bush administration supported the injunction issued in eBay's case.::
Not exactly shocking. When has this administration ever taken a stance that contridicted the drug industry's?
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Never ask what sort if computer a guy drives. If he's a Mac user, he'll tell you. If he's not, why embarrass him? - Tom Clancy
posted on April 1, 2006 09:40:30 PM new
I was thinking about applying for a patent for the concept of menus for restaurants. Wonder how many clerks I would have to hire to send bills to every restaurant, cafe, greasy spoon and hot dog stand in the U.S.?
If Murphy's law is correct, everything East of the San Andreas Fault will slide into the Atlantic
posted on April 2, 2006 04:21:29 PM new
The problem is how the patent law is written. IMHO, in order for you to have a patent, you must actually produce, use, operate said product. Simply patenting an idea needs to be excluded unless you put it into service within a reasonable time.
Personally, I support the patent and ebay is in violation as the law is presently written. But also think that MercExchange cannot move on with the suit as they did not act on the patent.
In this case, if I were the judge, I would have to side with MercExchange, but award zero dollars in damages.
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[ edited by stonecold613 on Apr 2, 2006 09:29 PM ]
Only two things are infinite, the universe and human stupidity, and I'm not sure about the former. - Albert Einstein
espite that position, the Bush administration supported the injunction issued in eBay's case.::