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Supreme Court to hear eBay patent appeal

The Supreme Court said Monday that it would consider an appeal by eBay Inc. in a case that could determine when it is appropriate to grant an injunction against a patent infringer.
/ Source: Reuters

The Supreme Court said Monday that it would consider an appeal by online auctioneer eBay Inc. in a case that could determine when it is appropriate to grant an injunction against a patent infringer.

EBay, found to have infringed an e-commerce patent held by MercExchange for fixed-price sales, is asking whether an appeals court erred in deciding a permanent injunction must generally be issued once infringement of a valid patent has been determined.

In its appeal, eBay said the ruling reduced a trial court judge’s discretion to exceptions involving national health and handed a club to companies that buy patents to make infringement claims.

The justices will hear arguments in the case most likely in March or April, with a decision expected by the end of June.

The high court said it would reconsider its precedents, including one from 1908, on when it is appropriate to grant an injunction against a patent infringer.

Experts said the case would give the Supreme Court a chance to define when an injunction should apply and comes as the patent community is debating to what extent patent holders who do not intend to practice their inventions should be allowed to extract profitable licenses from others.

“There are more and more situations where people are arguing the old circumstances just don’t fit any more,” said Steve Maebius, a former patent examiner and a partner at Foley & Lardner in Washington, D.C.

MercExchange had argued against Supreme Court review, saying the principles involved in the case were well established.

In 2003 a federal court ordered eBay to pay Virginia-based MercExchange $29.5 million for infringing two e-commerce patents that MercExchange said were key to eBay’s “Buy it Now” feature, which handles fixed-price sales — about a third of eBay’s business.

But the U.S. District Court for the Eastern District of Virginia declined to issue a permanent injunction.

In March, the U.S. Court of Appeals for the Federal Circuit ruled one of MercExchange’s patents was invalid and trimmed the damages against eBay to $25 million but reversed the lower court’s denial of MercExchange’s request for a permanent injunction against eBay.

MercExchange said in a statement that it remained confident it would prevail against eBay. “Since eBay’s argument requires overruling long-established legal precedent, we look forward to the consideration of the Supreme Court in this matter,” said Scott Robertson of Hunton &Williams, the lead attorney representing MercExchange.

EBay also welcomed the review by the highest court. “We are gratified that the Supreme Court has agreed to hear this important case,” eBay spokesman Hani Durzy said.

The eBay case has attracted interest among those who believe it has become too easy to hold businesses hostage through patent suits.

A group of 35 patent law professors filed a friend of the court brief arguing that an entitlement to an injunction allows unscrupulous patent owners to threaten products that are predominantly noninfringing. A computer chip, they noted, may include 5,000 different inventions.