Monday, May 15, 2006

Sup Ct vacates CAFC decision in eBay and re-affirms traditional 4 factor text

eBay won a major procedural victory at the Supreme Court. The CAFC decision in MercExchange v. eBay is vacated, and the case goes back to the district court for analysis under the traditional 4 factor test for a permanent injunction.

PromoteTheProgress had noted a prediction: In the latest version of The List, Hal predicts that eBay v. MercExchange will be decided by a 6-3 (or possibly a 7-2) margin in favor of confirming the availability of injunctive relief for "non-working" patentees. He expects negative votes from Associate Justices Breyer and Stevens. His prediction is based on hearing the oral arguments and extensive study of the pleadings.

And, injunctive relief is available (in theory) to nonworking patentees. Trouble is, permanent injunctive relief is not necessarily available to working patentees.

The Supreme Court's mention of Continental Paper in eBay was interesting, as was the discussion of the district court decision in the eBay case, which did employ the 4 factor test. Wonder how the balance will come out the second time around?

This is the Supreme Court's effort on the "patent troll" issue. Permanent injunctions are no longer a given (absent exceptional circumstances) after the patentee shows validity and infringement. In the balance of hardships, will the infringer who has been very successful commercially, and who will lose lots of money if there were an injunction, prevail against the nonworking (nonproducing and nonselling) patentee? If so, does that amount to a compulsory license? The district courts will wrestle with this.


Post a Comment

<< Home