The US Supreme Court has decided to re-examine one of the most fundamental rules of innovation in America, the power of patent owners to use court injunctions in battles over intellectual property.
The court said on Monday it would hear a case involving eBay, the world's largest internet auctioneer. But legal experts said the case could have implications well beyond the auction world, potentially changing the course of US patent law and affecting the value of patents owned by US and foreign companies.
The justices will be confronting one of the most controversial issues involving high-technology businesses in America: does US patent law require courts to impose injunctions against businesses that violate other people's patents - often leading to a total shutdown in production - or are such injunctions discretionary?
“There has been lots of controversy surrounding the power of patents, particularly in the software realm,” says Stephen Maebius, a patent expert at the law firm Foley & Lardner. He says the case could affect the issue of permanent injunctions, after a finding of patent infringement, and even preliminary injunctions issued before such a finding.
The long-running legal dispute involving the popular Blackberry communications device, which could lead to the shutdown of Blackberry operations in the US, also involves a court injunction.
The pharmaceutical industry largely favours manda-tory injunctions. But they hit the technology industry hard: many of its products rely on thousands of different technologies, so courts imposing injunctions on any one technology could shut down production entirely. EBay says the law gives courts broad discretion on whether to stop production, but the federal patent court, the Court of Appeals for the Federal Circuit, has made injunctions mandatory.
In the eBay case, the court will review a decision by the federal patent court saying trial judges who find a violation of patent rights should almost always act to bar future infringements. That reversed a decision by a trial judge who refused to restrict eBay's use of patented technology owned by MercExchange, a Virginia company.