EcommerceBytes-NewsFlash, Number 1117 - September 28, 2005     1 of 4

New Developments in eBay - MercExchange Patent Suit

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On Monday, two organizations filed briefs supporting eBay's petition of the Supreme Court in its patent fight. The EFF (Electronic Frontier Foundation) went so far as to claim the Appeals Court ruling "threatens free speech," and the CCIA claimed it could "undermine the legitimacy of the patent system as a whole."

The patent-holder, MercExchange, also responded on Monday by filing an opposition to eBay's July petition.

eBay's petition to the Supreme Court complains about the Federal Circuit's reversal of the district court's denial for a permanent injunction against eBay. The Federal Circuit addressed the District Court's reasons for denial, and said in summing up, "We therefore see no reason to depart from the general rule that courts will issue permanent injunctions against patent infringement absent exceptional circumstances."

eBay said when the Federal Circuit Court of Appeals made its ruling that patentees who prove their case have a right to permanent injunctions unless the injunction poses a risk to "public health," it was an automatic injunction rule that would deprive judges of their traditional discretion. (The Federal Circuit actually said courts have discretion to deny injunctive relief in order to protect the "public interest.") MercExchange argued in its brief the ruling does not make it an automatic injunction rule and say eBay erected "a strawman argument."

What seems to be playing a key role in this specific case is the societal concern over business-method patents (is the Patent Office issuing patents appropriately?). eBay says it worries over the ruling's impact on innovating companies.

The MercExchange brief stated, with a hint of indignation, "It is somewhat startling to hear petitioners purporting to importune the court on behalf of the nation's "innovators." The innovator in this case, as the jury clearly found, is MercExchange, and petitioners are willful infringers on its patents."

If anyone thought a jury verdict would end this drawn-out, contentious legal battle, they have been sorely disappointed. It was over 2 years ago that a federal jury in Virginia found eBay guilty of patent infringement and ordered eBay to pay $35 million in damages.

Dennis Crouch, patent attorney at McDonnell Boehnen Hulbert & Berghoff LLP, has been following the patent implications of the case and has links to key developments on his blog (http://patentlaw.typepad.com/patent/2005/09/ebay_v_mercexch.html)

Crouch included a link to Peter Zura's blog about the Patent Office's reexamination of MercExchange's patents. Apparently eBay got over-eager in its USPTO filings, with Zura ending the post with the comment, " I really have to wonder what EBay was thinking here . . ." (http://digbig.com/4eskg).


About the author:

Ina Steiner is co-founder and Editor of EcommerceBytes and has been reporting on ecommerce since 1999. She's a widely cited authority on marketplace selling and is author of "Turn eBay Data Into Dollars" (McGraw-Hill 2006). Her blog was featured in the book, "Blogging Heroes" (Wiley 2008). Follow her on Twitter at @ecommercebytes and send news tips to ina@ecommercebytes.com.


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