Sunday, February 05, 2006

The importance of eBay v. MercExchange[?]

MARCIA COYLE: [The Supreme Court] will hear two more patent cases this spring, including what many patent law experts believe is the most important patent case in
years--eBay Inc. v. MercExchange. [Connecticut Law Tribune, 19 Dec. 05]

Dariush Keyhani: In its petition for certiorari, eBay spells out the traditional four-factor test for injunctive relief and argues that the four-factor test should apply to patent cases rather than the de facto per se test applied by the Federal Circuit Court of Appeals. [New Jersey Lawyer, December 26, 2005]

IPBiz Query: didn't the Federal Circuit allow for exceptional circumstances, special reasons, etc., so that one does not have a "per se" rule?

Dennis Crouch (Patently-O): In what could easily be the most important patent case in the past five years, the Supreme Court will hear eBay’s arguments on March 29, 2006. Injunctions form the bedrock of traditional patent law, and changes in this area will send waves through virtually every technology-centered business.

In its brief on the merits, eBay argues that, like any equitable relief, courts should apply the traditional four-factor test that includes consideration of (i) irreparable harm from not issuing an injunction; (ii) whether an adequate remedy exists in law (damages); (iii) whether the injunction would be in the public interest; and (iv) whether a balance of hardships would tip in the plaintiff’s favor.

EBay also takes the stance that the field of technology covered by the patent should effect the likelihood of an injunction. Here, because MercExchange’s patent is related to a business method — a less favored technology. In addition, eBay presents other questions of patent quality and cites the largely questioned assertion that 97% of patents are approved.

Section 283 of the Patent Act supports eBay’s position by providing that a court “may grant injunctions in accordance with the principles of equity to prevent the violation of any right secured by patent, on such terms as the court deems reasonable.” This statute, according to eBay requires the courts to judge the equities before issuing such an injunction.

IPBiz comment: The CAFC did review the district court's four factor analysis and found the reasons not exceptional, so that the CAFC reversed the district court and stated that an injunction should issue. While the wording of the CAFC decision in MercExchange v. eBay (an in earlier CAFC decisions, such as Gore and Richardson) may not track the four factor analysis, it is simply not the case that there is a per se rule for permanent injunctions following a finding of infringement.

Of the 97% patent approval remark, it is simply not the case that Quillen even estimated that the patent approval rate was 97%. The 97% issue, previously discussed in papers not cited in the eBay brief, will be the subject of a publication in the March 2006 issue of Intellectual Property Today.


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