EcommerceBytes-NewsFlash, Number 1234 - March 10, 2006     0 of 10

The eBay Patent Wars: U.S. Government Weighs In

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The U.S. government filed an amicus brief supporting MercExchange in its battle with eBay over patents. The Supreme Court is set to hear oral arguments in the case on March 29th. eBay filed with the Supreme Court last year after an appeals court overturned the District Court's decision to deny a permanent injunction against eBay after it was found to have willfully infringed on MercExchange's patents.

eBay argued to the Supreme Court that the Appeals Court did not consider the four factors traditionally considered in deciding whether to issue an injunction: irreparable injury; inadequacy of legal remedies; balancing of parties' hardships; and whether an injunction would adversely affect the public interest. It also said the Court of Appeals' overturning of the District Court's decision to deny injunction makes it an "Automatic injunction rule" that "will have a significant and detrimental impact on innovating companies."

In its brief, the government stated that, "although the Court of Appeals did not invoke the traditional four-factor test, it correctly recognized that the District Court had improperly relied on inappropriate considerations, which amounted to an abuse of discretion, and the court of appeals therefore properly reversed the District Court's denial of MercExchange's request for an injunction." The government then addressed each of those four factors in its brief.

The government also addressed other areas, including the issue of the public's "growing concern" over business-method patents and the issue of whether MercExchange's willingness to license its patents should be a factor in denying its request for an injunction against eBay.

A key factor in the case before the Supreme Court is whether it should overrule its 1908 decision that a federal court may grant a patentee an injunction even if that patentee fails to practice its own invention, decided in the "Continental Paper Bag Co. v. Eastern Paper Bag Co." case. The government stated, "there is no warrant for this Court to overrule its decision" made in the Continental Paper Bag case.

The eBay v. MercExchange case has garnered much attention, with briefs filed by companies, legal scholars and professors and trade associations. Dennis Crouch, a patent attorney at the law firm of McDonnell Boehnen Hulbert & Berghoff LLP, has been following the case and has a summary of the briefs filed as of January 31, 2006 on his blog site (

The government brief was filed this month by attorneys representing the U.S. Patent and Trademark Office and the U.S. Department of Justice.

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

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