RealTime IT News

Feds Side Against eBay in Patent Case

The United States government is siding with a Virginia patent holder that eBay willfully infringed on its patents and should be barred from using its popular "Buy It Now" feature, which allows a buyer to purchase an item at a set price.

In a Supreme Court brief supporting MercExchange, the U.S. Solicitor General said that an appeals court did not err when it ruled an injunction was in order against eBay, reversing a district court decision to not impose an injunction.

The Supreme Court will hear the case on March 29.

"In this case…the court of appeals…correctly recognized that the district court had improperly relied on inappropriate considerations, which amounted to abuse of discretion," the Solicitor General's brief states. "The judgment of the court of appeals should therefore be affirmed."

Ebay contends injunctions are at a judge's discretion and the original trial judge was correct in ruling that an injunction was not needed as part of the infringement remedies against eBay.

The law generally dictates that a permanent injunction be issued once infringement and invalidity are established, except in cases of public safety.

In 1995, MercExchange filed for patents on an online marketing technology months before eBay was organized. According to MercExchange, eBay approached it in June 2000 in hopes of buying MercExchange's business method patents.

"When negotiations for the sale of [the] patents broke down, eBay began using MercExchange's technology without authorization," MercExchange's brief states.

MercExchange filed a patent infringement suit against eBay in September of 2001. By May of 2003, a district court ruled in MercExchange's favor and a jury ordered eBay to pay $35 million in damages.

Significantly, the district court did not order an injunction against eBay's use of the technology.

The district court ruled that a denial of the injunction would not irreparably harm MercExchange since it was willing to license its technology. Also, the court noted MercExchange did not have a commercial product competing against eBay's Buy It Now System and, in its public comments, did not seek to shut eBay down.

MercExchange appealed that ruling, contending that the law dictates an injunction when willful infringement and damages have been determined. The appeals court reversed the district court and ruled that MercExchange was entitled to an injunction against further infringement by eBay.

"The [appeals court] correctly ruled that the district court abused its discretion in denying a permanent injunction…because the reasons relied on by the district court were either illogical, unreasonable or irrelevant," MercExchange argues in its Supreme Court brief.

According to the appeals court, the "generalized" concern of the lower court over the desirability of business method patents was "not the type of important public need" that could justify the "unusual" step of denying injunctive relief.

In its brief to the Supreme Court, MercExchange argues, "This case provides no occasion for this Court to revisit its precedents regarding the standard for entering permanent injunctions in patent cases…In short, there are no legitimate interests, public or otherwise, that could justify denying a permanent injunction."