Rapoza of eWeek gets an F on eBay v. MercExchange
The flowery rhetoric prize on eBay v. MercExchange has been captured by Jim Rapoza of eWeek for the words: By far, the biggest news on the patent front was a recent decision by the Supreme Court that basically drove a bright, gleaming sword right through the heart of that most-hated beast—the patent troll.
Jim wrote: That's the best part of this decision: The court isn't saying that injunctions should never be granted, just that there must be some actual harm happening to the patent holder (for example, if the patent holder was actually making a product with its patent and facing competition from the infringer).
Geee, Jim, let's look to see what Justice Thomas actually wrote in eBay v. MercExchange, 126 S. Ct. 1837; 164 L. Ed. 2d 641 (2006):
For example, some patent holders, such as university researchers or
self-made inventors, might reasonably prefer to license their patents, rather
than undertake efforts to secure the financing necessary to bring their
works to market themselves. Such patent holders may be able to satisfy the
traditional four-factor test, and we see no basis for categorically denying them
the opportunity to do so. To the extent that the District Court adopted
such a categorical rule, then, its analysis cannot be squared with the
principles of equity adopted by Congress. The court's categorical rule is also in
tension with Continental Paper Bag Co. v. Eastern Paper Bag Co., 210 U.S. 405,
422-430, 28 S. Ct. 748, 52 L. Ed. 1122, 1908 Dec. Comm'r Pat. 594 (1908), which
rejected the contention that a court of equity has no jurisdiction to grant
injunctive relief to a patent holder who has unreasonably declined to use the patent.
Jim, you got it wrong. Of course, the Los Angeles Times got it wrong too.
Separately, the words "actual harm" don't appear in the eBay opinion. The four factor test requires a plaintiff to demonstrate: (1) that it has suffered an irreparable injury; (2) that remedies available at law are inadequate to compensate for that injury; (3) that considering the balance of hardships between the plaintiff and defendant, a remedy in equity is warranted; and (4) that the public interest would not be disserved by a permanent injunction.
Also, of Jim's text:
Other welcome news came from—I almost can't believe it—the U.S. Patent and Trademark Office. In May, the USPTO finally put an end to the long and embarrassing saga of Forgent Network's patent claims to the JPEG image format by invalidating Forgent's patent.
The USPTO rejected SOME of the claims in an Office Action (to which Forgent gets to respond). The USPTO did NOT invalidate Forgent's patent. [IPBiz is not taking a position on what should or will happen in the re-exam; IPBiz is stating that Rapoza misstated what happened.]
Jim also mentioned Peer to Patent:
On the subject of prior art, the USPTO also made a nice move by introducing the Peer to Patent program, which will solicit community assistance in finding prior art on patents.
I believe many in the technology community will be motivated to stop bad patent ideas. Hopefully, posting prior art in the Peer to Patent site will do more good than posting it in forums and on Slashdot.
Jim, Peer to Patent isn't happening till January 2007 at the earliest. And, it's the art given to the Examiner that counts.
***
An attempt at posting on eWeek of the following text was made on 12 June 2006:
When Jim wrote --The court isn't saying that injunctions should never be granted, just that there must be some actual harm happening to the patent holder (for example, if the patent holder was actually making a product with its patent and facing competition from the infringer),-- he is misunderstanding an important part of the decision in eBay v. MercExchange, 126 S. Ct. 1837; 164 L. Ed. 2d 641 (2006).
Justice Thomas wrote: For example, some patent holders, such as university researchers or
self-made inventors, might reasonably prefer to license their patents, rather than undertake efforts to secure the financing necessary to bring their works to market themselves. Such patent holders may be able to satisfy the traditional four-factor test, and we see no basis for categorically denying them the opportunity to do so. To the extent that the District Court adopted
such a categorical rule, then, its analysis cannot be squared with the principles of equity adopted by Congress. The court's categorical rule is also in tension with Continental Paper Bag Co. v. Eastern Paper Bag Co., 210 U.S. 405, 422-430, 28 S. Ct. 748, 52 L. Ed. 1122, 1908 Dec. Comm'r Pat. 594 (1908), which rejected the contention that a court of equity has no jurisdiction to grant
injunctive relief to a patent holder who has unreasonably declined to use the patent.
The US Supreme Court criticized the District Court (which had denied MercExchange's request for a permanent injunction) as being in tension with Continental Paper, which had said a patentee could get a permanent injunction even if patentee did not make a product within the scope of the patent claims. The 1908 Continental Paper case is still good law.
It should be noted that the District Court used the four factor test for assessing the grant of an injunction, and found this was a close case in its first analysis. Given that the Supreme Court has explicitly stated the District Court made a mistake in its analysis, one suspects that, on remand, the District Court will find it difficult NOT to grant MercExchange a permanent injunction. Moreover, even if the District Court reached the same conclusion as before (no injunction), the fact that the Supreme Court endorsed key aspects of the previous appellate decision on the four factors, the appellate court would now have an easier time than before reversing the district court and granting an injunction. If MercExchange does get a permanent injunction, one recognizes that the injunction landscape has not changed all that much.
I make no comment on whether this is a good thing or a bad thing. I do state that Jim Rapoza's commentary is not an accurate interpretation of what Justice Thomas wrote; it is not a good predictor of what will happen on remand in this case; and it is not a good predictor of what will happen in the future in other permanent injunction cases.
Separately, keep in mind that the question of a permanent injunction only arises after there has been a determination of infringement of a valid patent. The fact that the RIM's and eBay's of the world may have done a poor job in demonstrating invalidity or noninfringement is a separate question from that of a permanent injunction.
Jim wrote: That's the best part of this decision: The court isn't saying that injunctions should never be granted, just that there must be some actual harm happening to the patent holder (for example, if the patent holder was actually making a product with its patent and facing competition from the infringer).
Geee, Jim, let's look to see what Justice Thomas actually wrote in eBay v. MercExchange, 126 S. Ct. 1837; 164 L. Ed. 2d 641 (2006):
For example, some patent holders, such as university researchers or
self-made inventors, might reasonably prefer to license their patents, rather
than undertake efforts to secure the financing necessary to bring their
works to market themselves. Such patent holders may be able to satisfy the
traditional four-factor test, and we see no basis for categorically denying them
the opportunity to do so. To the extent that the District Court adopted
such a categorical rule, then, its analysis cannot be squared with the
principles of equity adopted by Congress. The court's categorical rule is also in
tension with Continental Paper Bag Co. v. Eastern Paper Bag Co., 210 U.S. 405,
422-430, 28 S. Ct. 748, 52 L. Ed. 1122, 1908 Dec. Comm'r Pat. 594 (1908), which
rejected the contention that a court of equity has no jurisdiction to grant
injunctive relief to a patent holder who has unreasonably declined to use the patent.
Jim, you got it wrong. Of course, the Los Angeles Times got it wrong too.
Separately, the words "actual harm" don't appear in the eBay opinion. The four factor test requires a plaintiff to demonstrate: (1) that it has suffered an irreparable injury; (2) that remedies available at law are inadequate to compensate for that injury; (3) that considering the balance of hardships between the plaintiff and defendant, a remedy in equity is warranted; and (4) that the public interest would not be disserved by a permanent injunction.
Also, of Jim's text:
Other welcome news came from—I almost can't believe it—the U.S. Patent and Trademark Office. In May, the USPTO finally put an end to the long and embarrassing saga of Forgent Network's patent claims to the JPEG image format by invalidating Forgent's patent.
The USPTO rejected SOME of the claims in an Office Action (to which Forgent gets to respond). The USPTO did NOT invalidate Forgent's patent. [IPBiz is not taking a position on what should or will happen in the re-exam; IPBiz is stating that Rapoza misstated what happened.]
Jim also mentioned Peer to Patent:
On the subject of prior art, the USPTO also made a nice move by introducing the Peer to Patent program, which will solicit community assistance in finding prior art on patents.
I believe many in the technology community will be motivated to stop bad patent ideas. Hopefully, posting prior art in the Peer to Patent site will do more good than posting it in forums and on Slashdot.
Jim, Peer to Patent isn't happening till January 2007 at the earliest. And, it's the art given to the Examiner that counts.
***
An attempt at posting on eWeek of the following text was made on 12 June 2006:
When Jim wrote --The court isn't saying that injunctions should never be granted, just that there must be some actual harm happening to the patent holder (for example, if the patent holder was actually making a product with its patent and facing competition from the infringer),-- he is misunderstanding an important part of the decision in eBay v. MercExchange, 126 S. Ct. 1837; 164 L. Ed. 2d 641 (2006).
Justice Thomas wrote: For example, some patent holders, such as university researchers or
self-made inventors, might reasonably prefer to license their patents, rather than undertake efforts to secure the financing necessary to bring their works to market themselves. Such patent holders may be able to satisfy the traditional four-factor test, and we see no basis for categorically denying them the opportunity to do so. To the extent that the District Court adopted
such a categorical rule, then, its analysis cannot be squared with the principles of equity adopted by Congress. The court's categorical rule is also in tension with Continental Paper Bag Co. v. Eastern Paper Bag Co., 210 U.S. 405, 422-430, 28 S. Ct. 748, 52 L. Ed. 1122, 1908 Dec. Comm'r Pat. 594 (1908), which rejected the contention that a court of equity has no jurisdiction to grant
injunctive relief to a patent holder who has unreasonably declined to use the patent.
The US Supreme Court criticized the District Court (which had denied MercExchange's request for a permanent injunction) as being in tension with Continental Paper, which had said a patentee could get a permanent injunction even if patentee did not make a product within the scope of the patent claims. The 1908 Continental Paper case is still good law.
It should be noted that the District Court used the four factor test for assessing the grant of an injunction, and found this was a close case in its first analysis. Given that the Supreme Court has explicitly stated the District Court made a mistake in its analysis, one suspects that, on remand, the District Court will find it difficult NOT to grant MercExchange a permanent injunction. Moreover, even if the District Court reached the same conclusion as before (no injunction), the fact that the Supreme Court endorsed key aspects of the previous appellate decision on the four factors, the appellate court would now have an easier time than before reversing the district court and granting an injunction. If MercExchange does get a permanent injunction, one recognizes that the injunction landscape has not changed all that much.
I make no comment on whether this is a good thing or a bad thing. I do state that Jim Rapoza's commentary is not an accurate interpretation of what Justice Thomas wrote; it is not a good predictor of what will happen on remand in this case; and it is not a good predictor of what will happen in the future in other permanent injunction cases.
Separately, keep in mind that the question of a permanent injunction only arises after there has been a determination of infringement of a valid patent. The fact that the RIM's and eBay's of the world may have done a poor job in demonstrating invalidity or noninfringement is a separate question from that of a permanent injunction.
posted by Lawrence B. Ebert at 4:22 AM
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