EcommerceBytes-NewsFlash, Number 1247 - March 29, 2006     0 of 5

eBay and MercExchange Have their Day in Court

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The nine justices of the Supreme Court fired questions at attorneys representing eBay, MercExchange and the United States government today in the eBay-MercExchange patent case. At issue was whether the Appeals Court was correct in overturning the District Court denial of an injunction against eBay's "Buy It Now" feature.

eBay's lawyer, Carter Phillips, spent much of his time answering questions about why this case was special. Justices brought up issues of patents as property, the right of patentees to exclude others from practicing their patents, and why it mattered whether a patentee practiced the patent versus licensed the patents to others. Chief Justice Roberts asked why should the sole inventor lose the leverage of the injunction.

The U.S. government lawyer Jeffrey Minear focused on the traditional four-factor test used to weigh decisions involving patent injunctions. Roberts asked Minear what if by the time they get to the injunction stage, the patent and trademark office has rejected the patent. Can the District Court take that into account when ruling on the injunction?

Roberts seemed very interested in the actions of the Patent Office, which is reexamining the '265 patent at the request of eBay. Minear said the patent office would not rule until the judicial process is finished. Later, MercExchange's lawyer argued that eBay had waited until midway through the appeals process to ask for a re-exam, instead of doing it before the District Court heard the case.

Roberts was also concerned about the issue of business method patent, and even light-heartedly suggested he could have come up with the drawings for the MercExchange patents without being a software engineer.

Justices Scalia and Ginsberg focused on patents as property. After eBay's lawyer used the term "patent troll" in referring to non-practicing patent holders, Scalia asked if the term troll came from the scary thing under the bridge, or a fishing term. Phillips joked back, in his experience it was the scary thing under the bridge.

MercExchange's lawyer Seth Waxman firmly rejected the idea that MercExchange was a patent troll, saying it really did invent and really did spend years trying to build out the patent. He said a jury found eBay had willfully infringed on the patent.

The Supreme Court justices will have to weigh the concerns of innovators and what losing injunctive relief would mean to them, versus concerns over the validity of business method patents. But the ruling may come down to the four-factor test and whether the Appeals Court, set up specially to focus on patent cases, was correct in overturning the lower court's rejection of a permanent injunction against eBay's Buy It Now feature. And as Scalia said, this is all about money.

For a timeline of the events leading up to this case, go to http://www.auctionbytes.com/cab/pages/patent


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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