Supreme Court hears eBay's patent appeal

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MercExchange attorney Seth Waxman rejected any claim that his client was simply stockpiling patents and using them to extort money from e-commerce companies.

"This is no patent troll," Waxman said, referring to MercExchange founder Thomas Woolston, who received the patent in question in 1998 after initial rejections. "He really did spend years of effort trying to build and license it himself."

But when licensing negotiations broke down, eBay "stole the technology" and willfully infringed on Woolston's patents, Waxman argued.

The question of whether infringers should escape injunctions only "absent exceptional circumstances," as the appeals court ruled, is now in the Supreme Court's hands.

Phillips argued for eBay that the U.S. Appeals Court for the Federal Circuit considered only whether an injunction against the auctioneer would harm the public interest and essentially ignored a "four-factor test" prescribed by patent law. That test involves weighing not only the public interest but also other circumstances of the case, such as whether the patent owner would experience irreparable harm if an injunction weren't granted and whether monetary compensation would be sufficient.

All eBay and its allies want is for the Supreme Court to clarify that all the factors must be considered before granting an injunction, Phillips said.

eBay was not alone in making that suggestion. Jeffrey Minear, assistant to the U.S. Solicitor General, said the government thought it "useful for this court to make clear there's a four-factor test" that should be applied in deciding patent injunctions. Despite that position, the Bush administration supported the injunction issued in eBay's case.

MercExchange, for its part, argued that any changes to the appeals court's ruling would "dramatically destabilize" the patent system. "It is so critical that the judgment be affirmed, not vacated, because this is a real inventor; this is somebody who did try to put the invention in place," Waxman said.

The injunction question before the high court may seem obscure, but it's actually one of several major points of contention in a larger debate about state of the U.S. patent system. Reform proposals under way in Congress have stalled amid fractures primarily along high-tech and pharmaceutical or biotechnology industry lines, which have surfaced again in this case.

A jury decided eBay had infringed on two of the patents in 2003, though one of the patents was later thrown out. The trial court ordered eBay to pay $35 million in damages, an amount that was later decreased to $25 million, but decided against issuing a permanent injunction. It cited several factors for justification, including MercExchange's "willingness to license" and non-practice of its patents and what it termed a "growing concern" from the public over key aspects of the current patent system.

The Federal Circuit found flaws in that reasoning. It ruled that a permanent injunction must follow all infringement findings unless cutting off the patent in question "frustrates an important public need," such as protecting public health. But the injunction remained on hold pending eBay's Supreme Court appeal.

The disputed patent, Patent No. 5,845,265, describes a "virtual presentment of goods to market and establishes a two tiered market of retail and wholesale sales."

[Bill Dautrive]

wow

Sense from the justices? Of course all software patents need to be invalidated, which will likely never happen, to the detriment of everyone, even those abusing software patents. Copyright is all software needs.

[Jackson Cracker]

Breath of fresh air

Some of these justices sound like they actually have a clue about the
current silly state of the patent system.

But unfortunately, as the article notes, this particular case is about
a narrow issue of how and when injunctions can be imposed, and may not
even get into the issue of whether this patent is any good to begin with.

[Heebee Jeebies]

Patent life spans...

Besides the fact that the patent office seems willing to allow any one to patent anything including how one picks their noses or how a knat farts the other issue that needs to be dealt with is the length of time something can be patented. A patent should only be good for 10 years. Once that time expires it is open for anyone to use at no charge.

But, the copyrights should work the same way. They should be good for 20 years and then it goes in to the public domain.

Both of these things would keep inovation alive instead allowing companies and people to keep milking the same old dead rotting cow.

But, then greed and stupidity always wins out when you deal with business, government and lawyers.

Robert

[hadaso]

What's patentable about "virtual"?

The patent in question includes the word "virtual". Does that make it new? Does removing the "virtual" or "automatic" ascpect from the patent description make it something that existed before? If so, patent should not have been granted.

Turing proved in 1936 that any process that can be described can be automated on a "universal computer". If an existing process (perhaps allowing a buyer in an auction, not an online one, to buy the same product for a fixed price) is implemented using a computer, the result should not be granted a patent, since the "added" element of automation using a general purpose computer is trivial: it is well known that a general purpose computer can be used to automate any process. It was the reason computers were invented (the discovery that a universal computer is possible and can actually be built and told to do anything that can be described using language), and no one should be granted exclusive rights on applying this well known fact in particular settings. Any computer "expert" knows that a general purpose computer with appropriate software can replace any component that acts on input in a well defined way. This is standard practice nowadays.

So any patent that refers to implementation of anything using a computer should be subject to this kind of check: does the same thing or similar thing existed before without the general purpose computer element? If so patent should not be granted!

[hadaso]

The parmaceuticals are shooting their own feet

BY comparing the development of new drugs or any other invention process that requires extensive research and real innovation with the mere trivial automation of well known processes using computers the parmaceuticals are shooting their own feet!!!

[fgoldstein]

A&P did patent a supermarket

Funny comment from the bench... but IIRC, A&P did originally patent the supermarket. Trouble is, as I have heard it told, their patent had the aisles connected at alternate ends, so you had to walk the entire length back and forth in order to get through it. Competitors left the ends of the aisles open so you could walk around freely, thus avoiding the patent, and having a better store at the same time.