Supreme Court: We'll review eBay's patent case

Auctioneer cheers court's decision to question ruling that OK'd a permanent injunction.

The U.S. Supreme Court will review a patent infringement case against eBay, granting the online auctioneer's petition on Monday.

The matter under review is whether to allow MercExchange, the plaintiff in the case, to obtain a permanent injunction against eBay related to the way it handles fixed-price sales. A district court in 2003 found that eBay's "Buy It Now" feature infringed on two MercExchange patents. Buy It Now allows consumers to purchase an item without participating in an auction.

A federal appeals court later ruled in favor of a permanent injunction and awarded MercExchange $25 million in damages. The appeals court also ruled that eBay had infringed on only one of MercExchange's patents.

The nation's highest court rejects a vast majority of petitions for review, so the decision to grant eBay's request for cert , or writ of certiorari, was somewhat unexpected.

"We're gratified that the Supreme Court has agreed to hear this important case," eBay spokesman Hani Durzy said.

The Supreme Court's decision in this case could hold broad implications for patent holders and those accused of infringing on them. Judges commonly issue injunctions against companies found guilty of infringement while their cases are on appeal. eBay wants the high court to question that practice, which has hamstrung numerous high-technology companies. Microsoft and Cisco Systems filed a joint brief with the Supreme Court in support of eBay's petition.

"I am not surprised that the Supreme Court agreed to grant cert, as this is a very hot issue with lots of amicus interest expected," said E. Patrick Ellisen, an intellectual-property attorney at Foley & Lardner. "This issue has also been central in the Congressional debate over patent reform."

MercExchange appeared to be undeterred by the decision.

"MercExchange remains confident in its view that it will ultimately prevail in its struggle against this infringer," Scott Robertson, an attorney representing MercExchange, said in a statement. "Since eBay's argument requires overruling long-established legal precedent, we look forward to the consideration of the Supreme Court in this matter."

eBay must file a brief with the Supreme Court by mid-January. The company expects a hearing after that, eBay's Durzy said.

In the meantime, eBay has revised the way it conducts fixed-price sales on eBay and subsidiary Half.com that avoids the disputed technology. "Any injunction would not have an effect on our operations at all," Durzy said.

Fixed-price sales account for nearly a third of the trading that takes place on eBay in terms of dollar volume, he said.

In addition, the U.S. Patent and Trademark Office is currently re-evaluating the validity of the MercExchange patents related to the case.

 

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