eBay seeks patent ruling from Supreme Court

Online auction house seeks relief from injunctions it says could hamstring the tech industry.

Paul Festa Staff Writer, CNET News.com
Paul Festa
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Paul Festa
3 min read
E-commerce giant eBay has asked the U.S. Supreme Court to decide a patent issue currently pitting the computer technology and pharmaceuticals industries against one another in Congress.

The petition, disclosed Wednesday in an eBay regulatory filing, asks the Supreme Court to hear an appeal on whether eBay and other companies held liable for patent infringement should be routinely subject to injunctions while such cases are on appeal.

eBay and its Half.com subsidiary urged the Supreme Court to consider the matter, saying the stakes go beyond the interest of patent infringement defendants.

"This case presents an important question of federal patent law with significant implications for the nation's economy," eBay wrote in its Monday request to the Supreme Court. "A permanent injunction in the context of patent law is a potent remedy. The enjoined defendant is faced with tough choices: redesign its product or the product's functionality to eliminate reliance on the patent, negotiate a license on possibly onerous terms, or cease production or use altogether."

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The issue of patent infringement injunctions is before the U.S. Congress as it seeks to draft patent reform legislation. Computer technology companies like eBay, which have to contend with the possibility that they might be infringing myriad patents in the course of their business, want Congress to clarify existing rules they say give district court judges discretion in deciding whether to issue injunctions while patent cases wend their way through the appeals process.

The pharmaceuticals industry, by contrast, wants the legislation to reflect recent federal circuit court decisions--particularly the one eBay is appealing--which say injunctions against patent infringers should be standard during appeal except in extraordinary circumstances. Pharmaceuticals and biotech companies tend to face fewer patents in the course of developing a particular product.

eBay's patent woes stem from its May 2003 loss at the district court level in a patent infringement case brought by MercExchange. eBay lost crucial points of its appeal on the federal circuit level, which reversed the district court's decision not to issue an injunction against eBay.

The federal circuit did, however, grant eBay a stay of that decision while the company petitioned the Supreme Court.

Citing Sec. 283 of the Patent Act, eBay said in its petition that Congress had explicitly let district courts grant injunctions on a case-by-case basis.

"The Federal Circuit has decided to ignore this rule," eBay wrote.

One patent expert said eBay's petition had the potential to turn the tables on warring high-tech parties on Capitol Hill.

"The hardware and software industries have been at loggerheads with the pharmaceutical industry over including a provision in draft patent reform legislation that would limit injunctive relief," said Joshua Sarnoff, assistant director of the Glushko-Samuelson Intellectual Property Law Clinic at American University's Washington College of Law.

"If the Supreme Court grants certiorari to review the case, it is likely to reverse the Federal Circuit's interpretation and reassert that district courts may refuse to issue injunctions based on general equitable considerations. This would flip the legislative calculus, as the pharmaceutical industry would then seek to reverse the Supreme Court's decision by codifying a requirement to issue injunctions in all but exceptional circumstances," Sarnoff said.