Thursday, March 17, 2005

News reports on CAFC decision in eBay/MercExchange

A U.S. Appeals Court ruling in a long-running patent dispute between online marketplace eBay and MercExchange has saved eBay some money, but left the door open for more litigation.

from the Washington Post:

The court in Washington threw out part of the patent-infringement verdict won in May 2003 by MercExchange , and let the company seek more damages on a third patent claim. MercExchange claimed eBay's unit infringed patents related to "fixed price" sales. One patent lawyer predicted the ruling will lead to an order blocking some eBay functions.

The court gave MercExchange a new chance to argue in a lower court that eBay infringed a third patent. The Federal Circuit, which specializes in U.S. patent law, also said MercExchange can seek a court order blocking eBay from using software that infringes the patents.

MercExchange lawyer Scott Robertson said the portion of the verdict upheld by the court relates to fixed price sales. The patent claim revived by the appeals court concerns online auctions, which might affect all of eBay's business, Robertson said.

MercExchange founder Thomas Woolston, when asked if he was willing to license his technology, said it would be "up to eBay." Woolston owns a stake in UBid Inc., which says it's the second-biggest online auction house. Chicago-based UBid is owned by privately held Petters Group LLC.

**The CAFC decision***

The CAFC found that substantial evidence supported the jury verdict of validity and infringement (by eBay) of US 5,845,265 (--> eBay loses). However, eBay not guilty of inducing ReturnBuy to infringe '265 (-->eBay wins on that point). Of arguments on the '265, MercExchange argued UNSUCCESSFULLY that eBay waived its right to argue anticipation because eBay's initial argument was solely on obviousness. The CAFC cited to Connell v. Sears, 722 F.2d 1542, 1548 (CAFC 1983) for the proposition "anticipation is the epitome of obviousness." [However, something can be anticipated, but not obvious.] The CAFC also cited Hopkins v. CellPro, 152 F.3d 1342, 1357 n. 21 (CAFC 1998). Of 271(b) on inducing, the CAFC noted that proof of intent is required, citing to Insituform v. CAT, 385 F.3d 1360 (CAFC 2004). Here, the CAFC noted the alleged inducer must have knowledge of the infringing acts.

The claims of US 6,085,176 invalid for anticipation. (--> eBay wins on that point).

Of 6,202,051, because the district court improperly granted summary judgment, there is a remand (--> procedurally, eBay loses on that point). An SJ on invalidity through lack of written description was improperly granted because of the existence a dispute of material fact.

Significantly, the CAFC reversed the district court's denial of a permanent injunction requested by MercExchange against eBay. An issue was the different standards for preliminary and permanent injunction, and the CAFC cited Lermer v. Lermer, 94 F.3d 1575, 1577 (CAFC 1996).

The case has much discussion of Markman hearings and Markman rulings.


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