March 13, 2006 10:55 AM PST

Feds oppose eBay in Supreme Court case

The U.S. government may have stood up for Research In Motion when its BlackBerry service was facing a shutdown, but it's not supporting eBay as the company prepares for Supreme Court arguments.

In a 43-page brief filed Friday, the U.S. Department of Justice's Office of Solicitor General sided with MercExchange, the Virginia-based patent-holding company that sued eBay for infringing on patents tied to its "Buy It Now" feature.

In 2003, a federal jury found eBay guilty of willfully infringing on two MercExchange patents related to that feature, which allows shoppers to purchase items without participating in an auction, and ordered it to pay $25 million in damages. That court, however, decided against issuing an injunction--that is, forcing a company to stop using a patent in question. It cited several factors, including what it deemed a "growing concern" from the public over key aspects of the patent system.

The U.S. Appeals Court for the Federal Circuit reversed that ruling, deciding that eBay should be subject to an injunction--and correctly so, the government wrote in its brief. The injunction was put on hold pending eBay's next round of appeals.

The government in its brief--which also counted support from the U.S. Patent and Trademark Office--argued that the court handling eBay's appeal did not stick to a "general rule," as critics have suggested, but instead used ample "discretion" in issuing an injunction.

The government said no special exemptions should be made in cases involving companies like MercExchange that do not make products using their patents but instead simply license them--a practice that in some cases has earned companies the disparaging title of "patent troll." The government said a 1908 high court decision correctly established that injunctions can occur even if the patent holder itself has "'unreasonably' failed to practice its own invention."

The Supreme Court will begin taking up the general merits of that ruling on March 29, when it is scheduled to hear arguments from both companies. The central question it faces could have wide repercussions: If patent infringement has been determined, under what circumstances is it appropriate for a court to issue an injunction?

eBay has argued that the appeals court's reading is far too narrow. It said the court's decision that a permanent injunction must follow all judgments of infringement unless such a decision would "frustrate an important public need," such as protecting public health, leads to nearly "automatic" injunctions that could disproportionately threaten a company's well-being. A number of patent-dependent high-tech companies and trade associations have also filed briefs in support of eBay's position.

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39 comments

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Nice income transfer scheme.
One should be forgiven for having the impression that the U.S,
courts exist for no other reason than to imprison marijuana
smokers and transfer massive wads of cash from productive
companies to unproductive one.
Posted by nicmart (1829 comments )
Reply Link Flag
What??
Could you explain that statement please? It went over my head.
Posted by Turnabuck (21 comments )
Link Flag
Someone Stop eBay!
If a company STEALS someones idea, then uses it to make money, they should be punished like a common criminal that stole a purse from an old lady.

In addition they should be ordered to cease and desist imediately. Should they continue to use that same idea, they should be punished double.
Posted by Turnabuck (21 comments )
Reply Link Flag
Take a chill pill.
This is one of the most asinine statements I've heard in a while. So, eBay is criminal for doing electronically what merchants have been doing for thousands of years?

You can either give the seller the money he's looking for or, if the seller is open to it, provide an "Or Best Offer" scenario in the form of bidding. This is no different than trying to buy a house. You can pay the asking price (aka "Buy It Now") or you can go into a bidding war with other potential buyers of that house. News flash. This has been done for centuries if not milenniua. No difference, except eBay uses an electronic format.

In fact, EVERY on-line retailer uses the same concept every time you make a purchase, except there is no auction. You either "Buy It Now" or you don't. So, now this company, which is very clearly a PATENT TROLL, is going to demand licensing payment for every e-trailer, I would assume.

This is EXACTLY why the U.S. patent system is completely f***ed up and why it needs to be totally overhauled.
Posted by JLBer (100 comments )
Link Flag
YOU stole my statement...I'm suing
You're statement was exactly what I was going to say and since I had it in my mind to say it (but didn't) I think I'm gonna sue you.


Is this the justice you seek?

;)
Posted by KsprayDad (375 comments )
Link Flag
eBay gets absolutely no sympathy from me
eBay is very much an arrogant profit making venture, who treats
the buyers like dirt. Buyers are the basic reason for eBay's success,
but buyers rate very low on the scale of importance with the
powers of eBay. The arrogant and cavalier handling of eBay
buyers...inexplicably removing them from the buyer pool on a
whim...will eventually come back to haunt eBay. They are truly
controlling and arrogant, and anything that happens to them...they
deserve. No sympathy at all from me...
Posted by dand3 (3 comments )
Link Flag
I would agree except...
That what this company and others are doing is patenting every little thing. Then never do anything with it except sell licenses to make money. This should be illegal. When you file a patent you should have 2 years to do something with it. Or, you loose it.

What these "Patent Trolls" are doing is similar to people registering web site domains like www.PepsiColaSucks.com, sitting on them and then when the company wants it charging large amounts of money. Courts for this country and others have said this is illegal and now in my example Pepsi can file a bit of paper work and take the domain with very little muss or fuss. This should also apply to Patents.

Robert
Posted by Heebee Jeebies (632 comments )
Link Flag
Another example of Software Patent's gone wild
It's long past time for patent reform. Software patents need to go away.
Posted by ejryder3 (39 comments )
Reply Link Flag
Bah
Patent reform is fine... eliminating patents for inventions based upon the medium used to create them is ignorant and short-sighted. I fully support reform that reduces the number of honestly illigitimate patents... but to suggest that we just eliminate the patent system for inventors working in software is ridiculous.

This happens every time a patent issue is raised... somebody yells "The patent system sucks - abolish it!" Suggesting that software should not be patentable is saying the exact same thing, but limits the argument to one particular market/medium.

The arguments is favor of the patent system have consistently won debates for hundreds of years. It is a valuable system that provides far reaching benefits. It has been argued since its inception and the anti-patent arguments have never won. Today is no different... but some people want to claim that software is some mystical invention medium that can't survive with patents in place. Absurd.
Posted by David Arbogast (1709 comments )
Link Flag
I'm confused, but that's normal
Exactly what is patentable, the end result or the mechanism used to get there? I know this is not the subject of this article and this may not be the right place to question the validity of the patent in the first place. But, does this mean that all auctions that provide a "Buy It Now" or simlar option are in violation of the patent, regardless of the method used to get there?

I can see the need to copyright written works and to patent inventions. But where is the dividing line between the two? I always thought patents were for mechanical devices. What's mechanical about software?

Can I now start filing for patents on great ideas I have, even if I don't know how to achieve the desired result?

Can I file for patents on someone else's ideas if no patent already exists?

Then there is the other great ambiguity--just because the patent office grants a patent, it doesn't necessarily mean it is valid!

Maybe eBay should just move to Korea.
Posted by Pete Bardo (687 comments )
Reply Link Flag
More freedom loss...
Can we just throw out the current government and start over? We have 98% of the government that is using our tax dollars for such garbage. And, many people (like the patent trolls) that are just taking advantage of the people...
Come on Supreme Court... Throw out the patent office! Free the people!
Posted by chhooks (21 comments )
Reply Link Flag
Typical
This is a typical response... when something isn't 100% perfect somebody will always suggest throwing it away and starting over. I've heard it about the patent system, operating systems, bank machines, automobile engines, the UN....

I'll be the first to admit that every "system" has flaws. Progress is made by finding the weaknesses and recognizing them as opportunities for improvement. Starting over simply introduces more flaws and discards any improvements that have been made to date. It is very rarely the best approach. The successful approach is usually one of continuous improvement.

Think about it... its the same arguement anti-patent people are using... "Software builds on software, they say. If its patented, we can't improve it or use it the way we want." Every system works that way... with or without patents. The patent system can be improved... government processes can be improved... and software can be improved... without any need to "throw out and start over."

Of course, if you want to "throw out" the courts and the patent system, then you should try building complex software after you "throw out" Java, C, compiler technology, Linux, and Windows.
Posted by David Arbogast (1709 comments )
Link Flag
Let us buy it now!!!
Honestly, I think eBay should be allowed to kep the Buy it Now feature. Who are these MercExchange people anyway? I never heard of them. Chances are it is a single person with a few good patent lawyers, their product: senseless lawsuits crowding the court system. Does MercExchange have an auction site with Buy it Now feature? Are they even using this patent? Chances are they aren't. Or maybe they are, but they are nowhere near as popular as eBay, even if they manage to win this thing. eBay deserves to own this patent more than MercExchange does, because at least eBay actually uses a Buy it Now feature.

I for one have no interest in participating in online auctions. I much prefer to buy things at the moment rather than risk loosing them. If there is one thing eBay should be sued for is there auto matic bidding system. This makes participating in actual auctions next to worthless, as there is very little chance of winning an item when someone has set up a bidding that automatically increases their bid five cents every time they are outbid.
THAT deserves a lawsuit. Well, MercExchange should be sued for trying to use the law and the patent system to try to make a quick buck.

Just think, if they really patented "Buy it Now", they own very commerce on the planet, or at least in US where the patents apply. Because you can "buy things now" on every e-store and supermarket from here to kingdom come!
Posted by Sentinel (199 comments )
Reply Link Flag
Please understand eBay's proxy bidding
You indicated that you are outbid by eBay's proxy bidding system (automatic as you called it). The person entering a bid puts in their 'maximum' bid. The lowest bid that it takes to win will be entered automatically. If someone else bids (yourself), but the original bidder's maximum was higher than yours, their bid will be incremented to be the winning bid. This system allows people to win items without sitting at their computer all the time.

Moral of the story... if you want to win, enter a higher maximum bid.
Posted by napershop (1 comment )
Link Flag
Its their patent, they can do whatever they want...
It doesn't matter if they use the patent or not, its was patened. You can't start using something that someone else came up with and expect to not get sued.

Hello... microsoft, blueberry.. read the news lately?
Posted by aSiriusTHoTH (176 comments )
Link Flag
How is this not an obvious idea
I thought one of the tests for patentability was tha t the invention couldn't be obvious to someone else in the field.
Posted by unknown unknown (1951 comments )
Reply Link Flag
KNOW YOUR LAW
It seems to me that only a few people really understand the working of the law. For patents and copyrights here is what the law reads:

Congress is also authorized (Art.I ss8,cl.8) "to promote the progress of science and useful arts, by securing for limited terms to authors and inventors the exclusive right to their respective writings and discoveries." This power was first exercised by Congress in 1790. The copyright term was first fixed at fourteen years, but by the act of 1831 it was extended to 28 years, with the privileges of renewel for 28 years longer by the author, widow, widower, children, or next of kin. Books, periodicals, newspapers, lectures, dramatic and musical compositions, maps, works of art, drawings, photographs, and prints are some of the objects that may be copyrighted. The copyright secures to the author the exclusive right to print, publish, tanslate, and sell the same. The copyright law has been amended frequently but a major overhaul is overdue, because of problems encountered as a result of new forms of communication and the desirability of protection on an international basis.

The law in relation to patents secures to inventors for a term of seventeen years, the exclusive right to manufacture and sell their invention(s).

There is much more the law concerning patent and copyright, but if you invent, and you patent, this according to the united states constitution is soley your right. It says exclusive. eBay, please take your seat now.
Posted by Eskiegirl302 (82 comments )
Reply Link Flag
Setting up business
Remind me to offshore my next business to Hong Kong...
Posted by tryoneon (26 comments )
Link Flag
Patent Update
They really need to update the rules at the patent office, a "patent troll" should not be able to exist. If you invent something and you want to patent it, the party wanting the patent should be using it and have a working model. Thinking of things and patenting them stalls creativity for others, and hurts the system as a whole. If these guys are using it or were using it, then they should have ebay pay for it by licensing it.
Posted by rtuinenburg (171 comments )
Reply Link Flag
Did anyone bother to read the article?
FeeBay was found guilty of STEALING someones idea, then using it to make money. They knew they were doing it. They contacted the holder of that idea to negotiate it's use in 2000.

Together they couldn't come to terms on the price to use it. So they used it anyway.

They got sued, they lost. They faced a $100M judgement and injuction to cease and desist. They ended up getting a $25M judgement against them but no injunction.

The injunction was appealed, it was then overturned. eBay appeals again and the injunction goes on hold.

No matter what issues you have about the patent system, it's what we have in place. The article and issue at hand that remains unanswered, is should the court make exception to the rule and allow this company to continue to use the idea, even though they were found guilty of infringement?
Posted by Turnabuck (21 comments )
Reply Link Flag
Did anyone bother to read the article?
FeeBay was found guilty of STEALING someones idea, then using it to make money. They knew they were doing it. They contacted the holder of that idea to negotiate it's use in 2000.

Together they couldn't come to terms on the price to use it. So they used it anyway.

They got sued, they lost. They faced a $100M judgement and injuction to cease and desist. They ended up getting a $25M judgement against them but no injunction.

The injunction was appealed, it was then overturned. eBay appeals again and the injunction goes on hold.

No matter what issues you have about the patent system, it's what we have in place. The article and issue at hand that remains unanswered, is should the court make exception to the rule and allow this company to continue to use the idea, even though they were found guilty of infringement?
Posted by Turnabuck (21 comments )
Reply Link Flag
Yes...
I read the article, I simply don't see how the buy it now feature is not an obvious idea.
All they are doing is allowing someone to buy something by interacting with an interface. Last time I checked this has been around for a very long time, and you don't even have to be "skilled in the art" to see the obviousness of this patent.
We have been able to buy things over the phone by pushing a button for at least 25 years, I don't see how it is now magically different because it uses the internet. There were even phone auctions that allowed this very thing, you call in bid by phone, and there are options to buy outright by pushing a button.
But I guess clicking is different to some people. When you pick and choose sections of the patent law Ebay looks bad, when taken as a whole, it looks a whole lot different.
Posted by schubb (202 comments )
Link Flag
Yes...
...on two fronts. The government made an exception for RIM, why not eBay? Because its not a government vendor or provide the government service? RIM was found guilty and continue to use the technology they infringed upon, until they had to pay up.

They second yes is if they just lisence the software after they pay the damage then they should be able to use it. If not what was the point of having a court case to say they stole it.
Posted by VI Joker (231 comments )
Link Flag
Let's focus on the real issue here...
DJ's using old records to make new music.
Posted by George W Christ (7 comments )
Reply Link Flag
 

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