Supreme Court Sides With eBay

UPDATED: The U.S. Supreme Court ruled today that both a district and a federal
appeals court erred in determining whether a permanent injunction is due to
MercExchange in its patent-infringement battle with online auction giant
eBay.

The justices ordered the case back to a lower court to determine if a
permanent injunction is justified, a victory in the short-term for
eBay. MercExchange had hoped the court would uphold a permanent injunction
ordered by an appeals court in 2005.

A district court in 2003 ruled eBay infringed on MercExchange’s patents and
awarded $29.5 million in damages. The district court did not impose a
permanent injunction against using the infringed technology.

Two years later, a U.S. appeals court upheld the infringement decision and
the monetary damages, but imposed a permanent injunction against eBay.

“Just as the district court erred in its categorical denial of injunctive
relief, the court of appeals erred in its categorical grant of such relief,”
Justice Clarence Thomas wrote in the unanimous decision.

“We take no
position on whether permanent injunctive relief should or should not issue in
this particular case, or indeed in any number of other disputes arising
under the Patent Act.”

Thomas wrote that both courts failed to apply the traditional “four-factor”
test applied by courts of equity when considering a permanent injunction.

“MercExchange is pleased that the Supreme Court has ordered the district
court to reconsider MercExchange’s request for an injunction to force eBay
to stop infringing MercExchange’s valid patent,” MerecExchange said in an
e-mail statement to internetnews.com.

The statement added, “We are confident that the district court, when it
fairly applies the traditional principles of equity set forth in the Supreme
Court’s opinion, will grant the injunctive relief to which MercExchange is
entitled.”