Sunday, May 21, 2006

More on Supreme Court decision in eBay: uncertainty created?

Of the eBay case, PCAdvisor wrote:

The Supreme Court unanimously ruled against the US Court of Appeals for the Federal Circuit's practice of granting near-automatic injunctions in patent infringement cases. But it also ruled that a lower court had used flawed judgment when it refused to grant an injunction requested by patent holder MercExchange.


In the case, the US District Court for the Eastern District of Virginia had attempted to weigh four long-neglected factors in rejecting an injunction, but the Supreme Court, in a decision written by Justice Clarence Thomas, said the district court considered eBay's arguments against an injunction too broadly.

One notes that the factors are not long-neglected. When the CAFC reviewed the district court decision in MercExchange v. eBay, the CAFC did not say that using these factors was wrong. In fact, the CAFC went through each of the four factors as analyzed by the district court. The CAFC got into trouble for stating that an injunction should normally issue absent exceptional circumstances, an empirical position that got only three votes on the Supreme Court.

In February 2006, IPBiz posted text from both the district court and CAFC opinion in MercExchange v. eBay.

PCAdvisor continued:

The Supreme Court left patent lawyers with a confusing middle ground between the near-automatic injunctions and the district court's refusal to grant the injunction for the wrong reasons, said Erik Puknys, a patent lawyer in the office of the Finnegan, Henderson, Farabow, Garrett & Dunner law firm.

"[The decision] says what the wrong approach is," Puknys said. "The answer is somewhere in between."

IPBiz notes that a court saying "injunctions are near automatic" is now deemed a wrong approach. However, once "what are" and "what are not" appropriate factors are established, it may still be that "injunctions are near automatic," even if a court can no longer say that. Recall that the district court observed that this was a close case on the injunction issue. If one of the factors was misapplied (as even the Supreme Court suggests), then injunctions may, in most cases, issue.

One of the issues that troubled the district court was that MercExchange didn't make product. That may have been the telling factor in its decision. Although the Supreme Court ordered briefing on Continental Paper (which pertains to this issue), the Supreme Court did not speak to the issue of whether "not making product" is a legitimate factor weighing AGAINST patentee in the four-factor calculus. An opportunity missed.

PCAdvisor continued:

The Supreme Court action could eventually have a large impact on patent lawsuits, but it's too early to tell, Puknys added. "What the Supreme Court did, at least, is get rid of that [near-automatic injunction] threat," he said. "But it's replaced that with the threat of uncertainty."

The eBay case continues a string of Supreme Court decisions that leave significant major issues undecided.


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