Financial Times FT.com

Ebay in court to defend patent charges

By Chris Nuttall in San Francisco

Published: March 29 2006 10:55 | Last updated: March 29 2006 10:55

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The state of US patent law will be put on the block again today as eBay, an online auction company, argues before the Supreme Court that it should not suffer an injunction for patent infringement.

Its case echoes that of Research in Motion, maker of the BlackBerry e-mail device, which settled out of court after facing a shutdown of its service in North America this year when a judge threatened an injunction over alleged patent violations.

Ebay was found by lower courts to have infringed two e-commerce patents owned by MercExchange, a small technology company. They concern the “buy it now” feature on its site, which allows users who do not want to take part in an auction to buy an item at a fixed price.

A district court declined to issue an injunction and awarded MercExchange damages instead.

The federal court of appeals overturned this decision and said patent holders had the right to an injunction barring exceptional circumstances.

Technology companies have supported eBay’s case before the Supreme Court arguing that patent cases are stifling innovation.

Pharmaceuticals companies have been arguing the opposite. In a brief to the court, they say limiting injunctions and weakening patent laws would drive up the cost of innovation.

MercExchange denies it is a “patent troll” – a company that makes nothing itself but buys up patents with the intention of earning money from those companies it suspects are infringing them.

But eBay is arguing that this is a case of trolling and that injunctions are giving such companies a power that was never intended by lawmakers.

Whatever ruling emerges from the hearing, eBay does not face a shutdown of its website – the company has already redesigned its “buy it now” feature to avoid continuing to infringe the patent.