March 29, 2006 11:40 AM PST
Supreme Court hears eBay's patent appeal
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During oral arguments that lasted about an hour, Justice Stephen Breyer suggested that if eBay's "Buy it Now" feature could be patented, "then maybe A&P could patent its process for a supermarket."
Patent holder MercExchange sued eBay in September 2001, accusing it of patent infringement through the "Buy it Now" feature, which allows shoppers to halt the auction process and purchase items at a fixed price. A federal appeals court sided with MercExchange and granted it an injunction against eBay. The injunction is currently on hold.
Chief Justice John Roberts drew laughter from the usually taciturn court audience when he made a quip about his interpretation of MercExchange's patent. "It's displaying pictures of your wares on a computer monitor and picking the ones you want. I might be able to do that.
"It's not (like the patent describes) the internal combustion engine," he added. "It's very vague."
The case has drawn an unusual amount of attention because it could have a profound influence on the way patent injunctions are issued. That question assumed a high profile in recent months when Research In Motion's wildly popular BlackBerry service, which was itself at the center of a heated patent dispute, faced the threat of a shutdown.
Many of the nation's largest software, hardware and Internet companies have sided with eBay in their own briefs, warning that "near automatic" injunctions threaten day-to-day business operations and give too much power to owners of patents of dubious quality.
Individual inventors and pharmaceutical giants, on the other hand, have opposed the online auctioneer, arguing that patent holders have an exclusive right to keep others from using their inventions and that allowing judges broader discretion to withhold injunctions will "water down" the entire system.
It's nearly impossible to discern how the justices will vote based on their remarks during oral arguments, and whether they agree with the validity of the disputed patent may not even come into play. Some members of the court did express sympathy with MercExchange's position, and most of them indicated that injunctions are an important right for inventors.
MercExchange a patent troll?
Justice Antonin Scalia questioned eBay's argument that companies should be treated differently if they don't actually use the patents they own in business--such companies are often derisively called "patent trolls."
"Why should we draw a distinction between the solo inventor who needs a patent speculation firm to market his invention and somebody else?" Scalia asked. "We're talking about a property right here, and a property right is the exclusive right to exclude others."
Because MercExchange was in the business of licensing, not commercializing, its patents, money damages are "a completely adequate remedy," eBay attorney Carter Phillips argued.
The appeals court ignored relevant information, Phillips said, including the fact that patent holder MercExchange does not actually use, but only licenses, its various patents related to electronic sales.
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