Monday, March 27, 2006

With oral argument on March 29, eBay/MercExchange case in the newspapers

With oral argument scheduled for March 29, various newspapers are starting to talk about eBay v. MercExchange, on the use of injunctions after patent infringement is established.

From the San Jose Mercury News: "This isn't just this niche area of the law and a problem in that niche area. It's a problem for the U.S economy and the U.S. worker,'' said Noreen Crall, vice president and chief patent counsel at Sun Microsystems. ``It's having a chilling effect on innovation."

Those nasty-grams [letters by patentees to possible infringers] help illustrate the problem. Each forces tech executives to make some unpleasant choices.

Tech companies can assign lawyers and engineers to research the claim, which is a pricey proposition. A legal opinion can cost between $50,000 and $200,000. Cisco, for example, is paying an outside firm ``hundreds of thousands of dollars a year'' just to respond to the letters, Chandler said.

Another option is for firms to buy off the patent holder by agreeing to a monetary settlement or licensing agreement. Or they can ignore the letter, which often comes from a so-called ``patent troll'' -- a company that owns a minor or questionable patent and whose sole business is to try to wring money from companies that may infringe on the patent.

But here's the real nasty part for Silicon Valley companies: If the patent holder takes them to court and wins, a judge almost certainly will issue an injunction, forcing the entire product off the market. It almost happened with the BlackBerry earlier this year until the device's maker, Research in Motion, agreed to a $612.5 million settlement with NTP, a small, intellectual property firm, to end a patent dispute.


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