If lawyers and businessmen were hoping for a clear-cut ruling from the US Supreme Court on the landmark patent case involving Ebay, they were disappointed. For what the Justices gave, they also took away.
The most significant outcome was a moderating of the near-automatic injunctions typically granted to plaintiffs who were able to establish that their patent had been infringed. This should be good news for tech companies, which argue that such a threat effectively puts a gun to their heads. They have to pay high settlements for fear of having their businesses shut down.
Certainly, the injunction threat is a powerful one, and it is possible to see how it can be abused: consider a technology of huge public interest – an effective vaccine or a crucial everyday gadget – brought to a halt by an uncontrollable gatekeeper. The public interest loss would arguably outweigh the harm done to the rightful owner of the patent.
But the tech industry has not won all the arguments: the Justices also reiterated the possibility of a “mere” patent-holder, who does not actually make anything, obtaining an injunction. And rightly so. For the threat of injunctions also serve their own public interest: keeping powerful companies honest.
Without them, it is conceivable a big company could wilfully ignore a patent, its delaying tactics weakening the resolve and resources of small patent-holders.
Furthermore, it is far from clear that patent litigation is damaging US innovation, as has been claimed. US industry’s R&D spend rose to a new record in 2004 – as has the investment by the software industry specifically. And if settlements for such cases are high, they may reflect the increased market value of new inventions, rather than extortionist-like power.
