Supreme Court Weighs eBay Patent Case

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WASHINGTON -- U.S. Supreme Court justices today peppered a lawyer for eBay with questions about why they should protect the company against a patent injunction requested by a small inventor.

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

The justices today 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 case lasted an hour, during which Chief Justice John Roberts asked eBay lawyer Carter Phillips why a lower court should have discounted MercExchange patents when considering an injunction against eBay.

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

Today's Arguments

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.

Philips referred to U.S. patent law, which says that a district court "may" issue injunctions in patent infringement cases. That wording suggests that district judges have some discretion, he said.

Phillips said that 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's Position

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

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

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.

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