Update: Supreme Court takes on eBay patent dispute

Justices peppered one lawyer about why eBay should be protected from a patent injunction

U.S. Supreme Court justices today peppered a lawyer for eBay Inc. with questions about why they should protect the company against a patent injunction requested by a small inventor. They also questioned why small inventors should have less chance of an injunction than wealthy companies that release products based on their inventions.

Oral arguments in the eBay v. MercExchange LLC case lasted an hour, during which Chief Justice John Roberts asked eBay lawyer Carter Phillips why the lower courts should have discounted MercExchange patents when considering an injunction against eBay.

The court is looking at whether near-automatic injunctions should be granted in cases when a company is found to be infringing a patent. Much of the tech industry is siding with eBay, which was found guilty in May 2003 of infringing a "buy it now" patent held by MercExchange, a small auction site.

The U.S. District Court for the Eastern District of Virginia declined to issue an injunction after a US$35 million jury award, but the U.S. Court of Appeals for the Federal Circuit reversed that decision, saying an injunction against eBay using the "buy it now" feature was appropriate.

At the Supreme Court today, Phillips argued that the district court correctly rejected an injunction -- even though U.S. courts have traditionally issued injunctions in nearly all patent cases. Phillips said the district court in 2003 weighed several factors when it rejected the injunction, including the fact that MercExchange hadn't used its patent for buy-it-now features in online auctions.

But Roberts seemed to disagree, saying, "Is that an appropriate consideration to take into account? Isn't that just saying that the [invention] is going on in a garage?"

MercExchange lawyer Seth Waxman disputed eBay's suggestion that company founder Thomas Woolsten is a nonpracticing patent holder.

"This is a real inventor," Waxman said. "This is somebody who really tried to put it into practice."

The justices, however, did not spare Waxman, suggesting that district courts should weigh several factors when deciding whether or not to issue injunctions. Roberts noted that the district court questioned the practice of issuing software patents involving business methods, suggesting at one point that he himself could have thought up the methodology involved in the MercExchange patents.

Waxman suggested the software involved in the patent may be more complicated than Roberts implied. "I'm not a software developer and I have reason to believe that neither is your honor," Waxman said to Roberts.

Waxman noted that courts have long recognized the right of patent holders to obtain injunctions in all but "extraordinary circumstances." Because the District Court found that eBay had willfully infringed MercExchange patents, eBay did not deserve to have the district court look at extenuating factors when considering an injunction.

Roberts, however, questioned Waxman about an ongoing U.S. Patent and Trademark Office (PTO) proceeding to invalidate the MercExchange patent. Roberts questioned whether courts should consider PTO actions.

Waxman said the PTO's proceeding isn't part of the Supreme Court's case.

Copyright © 2006 IDG Communications, Inc.

7 inconvenient truths about the hybrid work trend
Shop Tech Products at Amazon