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Supreme Court weighs in on patent fightBy TONI LOCY Associated Press Writer The Associated Press A dispute between eBay, the popular Web-based marketplace, and a small Virginia patent holder over an idea for selling products on the Internet has divided some of the nation's biggest innovators. For high-tech businesses and the pharmaceutical industry, the patent fight between eBay and MercExchange that has landed at the Supreme Court is about the ability to protect their ideas and expand on the innovations of others. The justices are not being asked Wednesday to decide who is right in the dispute over the fixed-price feature of eBay's Web site. Rather, the issue before the high court is whether trial judges must automatically impose court orders barring continued use of a technology after juries find a patent violation. The case is one of several high-profile disputes that are calling attention to the nation's patent laws, which some critics -- including Amazon.com, Yahoo! and Xerox Corp. -- say need updating to keep up with rapidly changing technology. eBay and several high-tech companies said in court filings that they already are being victimized by "patent trolls," small companies that sue larger firms over ideas they have never developed into products. If judges are required to issue automatic permanent injunctions, eBay and the others said, patent-holding companies could use the threat of the court orders to coerce larger firms into settling lawsuits for huge sums of money. Earlier this month, a $612 million (euro506.45 million) settlement by Research in Motion (News - Alert) Ltd., maker of the BlackBerry wireless e-mail service, occurred under threat of an injunction that could have barred use of technology that is essential to the popular device's operation. "Under such circumstances, injunctions do not serve the goal of the patent system to promote innovation but turn that system on its head," lawyers for Time Warner Inc., Amazon.com, Xerox and others wrote in a friend-of-the-court filing. The high-tech companies hold thousands of patents, so they know what it is like to be on MercExchange's side of an infringement case, their lawyers said. But the high-tech companies do not want judges to be forced to issue injunctions for minor patent violations that could force a manufacturer to shut down completely to retool a technological component. Pharmaceutical and biotechnology companies disagree. In court filings, their lawyers said developers of drugs or technology need protection not only for their ideas but also to recoup costs of their investments in developing new medicines. If judges are not required to impose permanent injunctions, such a ruling would "significantly undermine the confidence of innovators," lawyers for the Pharmaceutical Research and Manufacturers of America wrote. MercExchange, founded by patent lawyer Thomas Woolston, sued eBay and its subsidiary Half.com Inc. in 2001, alleging infringement of patents dating to 1995, shortly before eBay's launch on the Web. Woolston's idea was to use an electronic network of consignment stores that would ensure legitimacy of sales by taking possession of goods being offered. eBay's system was based on the belief that buyers and sellers could trust each other and deal directly. A jury sided with MercExchange, finding that its business method patents had been infringed, and awarded the patent-holder $35 million. The judge later reduced the award by $5.5 million and refused to grant a permanent injunction, ruling that MercExchange would not suffer because it had not used its inventions commercially and had expressed an interest in licensing its patents to eBay. The case is eBay Inc. v. MercExchange, 05-130. __ On the Net: Supreme Court: http://www.supremecourtus.gov |