Reports: Supreme Court sides with eBay in patent case

The U.S. Supreme Court has set aside a lower court decision to stop eBay Inc. from using a prominent feature on its Web site because of a patent dispute, according to news reports.

The Supreme Court decision effectively overturns a long-term U.S. court practice of issuing injunctions against infringing products in nearly all patent cases. Much of the U.S. tech industry had sided with online auction site eBay, which, in May 2003, was found guilty of infringing a "buy it now" patent held by MercExchange LLC, a small auction site.

The Supreme Court on Monday unanimously ruled against an appeals court decision saying injunctions must be generally issued against companies found guilty of infringing patents, according to newswire reports and the online edition of the Wall Street Journal. The case now goes back to a lower court, which will consider several factors in weighing whether it should grant the injunction requested by MercExchange.

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.

Siding with MercExchange in the case were independent inventors and many pharmaceutical companies, which spend millions of dollars developing new drugs and want to protect their patents.

The ruling will likely shift the balance of power between inventors -- some of them one-person operations or small businesses -- and large companies that sell products such as software and hardware, said observers of the case. A court ruling for eBay could make it harder for inventors to collect patent damages and easier for large vendors to market their products without fear of a court shutting them down.

Copyright © 2006 IDG Communications, Inc.

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