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=DJ Supreme Crt To Hear EBay Case, Steps Up Patent Law Review
By Mark H. Anderson Of DOW JONES NEWSWIRES
WASHINGTON (Dow Jones)--When the U.S. Supreme Court hears arguments in eBay Inc. v. MercExchange LLC later this month, it will be the third patent-law case granted this term, a trend indicating the high court's renewed interest in patent law.
What's at issue is whether a federal judge should have handed down an immediate injunction barring eBay (EBAY) from infringing on patents held by MercExchange, a Great Falls, Va., patent-holding company. The two companies have been fighting over patent rights to software processes for instant purchase - or Buy It Now - functions used in online auctions.
But the eBay case is also significant because the underlying issue - federal patent injunctions - is an area of patent law that cuts across the corporate world and has, amid a lot of publicity, become the poster child for patent reforms.
"There is a very legitimate debate here because a lot of companies rely on patents as their lifeblood," said Mitchell Stockwell, an Atlanta intellectual property attorney with Kilpatrick Stockton LLP.
The issue of patent injunctions - most recently on display in the highly publicized battle over BlackBerry email service patents - has eBay and other technology companies calling for more flexibility on injunctions in the court system, while manufacturers, particularly pharmaceutical companies, believe the threat of an immediate patent injunction protects their valuable products from infringement.
The Supreme Court is reviewing almost 100 years of legal precedent in this area, indicating when it granted eBay's appeal that it will specifically try to decide whether the current standard for patent injunctions should be changed or, at a minimum, clarified.
Patent Injunction Standards Split Corporate Sector
How the Supreme Court rules has sparked an intense debate in the business world.
The Pharmaceutical Research and Manufacturers of America, in a friend-of-the-court brief, urged the high court to keep a "general rule that injunctive relief will be granted against patent infringers absent exceptional circumstances."
The U.S. Solicitor General's office, which filed a brief for the Patent and Trademark Office, took a similar position and urged the Supreme Court to uphold the ability of federal courts to easily issue injunctions in patent cases. "There is no basis for withholding injunctive relief," Solicitor General Paul Clement wrote, urging a high-court ruling that gives judges discretion based on the facts of each case.
A group of technology companies, including Time Warner Inc. (TWX) and Amazon.com Inc. (AMZN), said in a brief supporting eBay that the current rules on injunctions invite abuse of the system. "The availability of automatic injunctive relief can enable holders of dubious patents to use them to extract lucrative fees through threats of litigation," the companies said.
EBay has already been slapped with $25 million in penalties after being found guilty of patent infringement in a U.S. District Court, but a federal judge refused to issue an injunction. On appeal, the Washington-based Federal Circuit Court of Appeals, a special appeals court set up to handle patent cases, said legal precedent required an injunction to be issued.
The power of the patent injunction was recently on display in Research In Motion Ltd.'s (RIMM) fight with another patent-holding company from Virginia, NTP Inc., that had patent claims on technology RIM uses for its popular BlackBerry wireless email devices. After fighting the patent claims for years in federal courts and losing, RIM recently settled with NTP for $612 million to avoid an injunction being issued by a federal judge in Richmond, Va., which could have shut down the service.
Patent experts say it will be a close call to anticipate how the court might rule on eBay's appeal. "I think the Supreme Court will end up ameliorating the rule somewhat," said Stockwell, the Atlanta intellectual property attorney. He added that the justices are likely to reinforce the assumption that the winner in a patent dispute is predisposed to getting an injunction but also reaffirm that federal judges may exercise discretion.
The Supreme Court's Role In Reviewing Patent Law
The Federal Circuit was set up in 1982 by Congress to handle the highly specialized area of patent law. Since then, the Supreme Court's involvement in patent cases has been more limited. The Federal Circuit, in many instances, is virtually the final legal word on patent matters.
The Supreme Court has only rarely gotten involved, but a trend is emerging where the high court takes on the most significant patent law issues that come before the Federal Circuit. "It's been a banner year for intellectual property cases at the Supreme Court," said Alan Fisch, a Washington intellectual-property attorney with Kaye Scholer LLP.
The justices granted three patent cases this year, have already accepted one appeal for next year and have additional important patent appeals waiting in the pipeline.
One reason for the renewed interest may stem from a boom in patent approvals and other intellectual-property activities stemming from ongoing technology and biotechnology revolutions. "I think it's the case that structurally they have to pay more attention because of the economic importance of these issues," Stockwell said.
Another reason for the sudden increase in granted patent appeals could be turnover at the Supreme Court. Chief Justice John Roberts Jr. was confirmed to the court last October and participated in decisions to grant the eBay case, among others. Roberts was recently joined by new Justice Samuel Alito.
Whatever the reason, patent attorneys are watching closely to see if a patent revolution is beginning at the Supreme Court.
A Growing List Of Patent Matters At The High Court
Other patent cases at the Supreme Court are:
- Illinois Tool Works Inc. (ITW) v. Independent Ink, 04-1329. The justices, in an 8-0 ruling, made it easier for companies with a valuable patented product to tie-in the sale of a related unpatented product. This case turned on interpretation of civil antitrust laws.
- Laboratory Corp. v. Metabolite Laboratories. Arguments will be heard March 21 in a case that reviews the extent to which scientific processes can be patented.
- MedImmune Inc. (MEDI) v. Genentech Inc. (DNA), 05-608. This appeal will be heard in the fall of 2006. The court will review whether a company must refuse to pay royalties to another company before challenging a patent claim.
- Microsoft Corp. (MSFT) v. AT&T Corp. (T), 05-1056. This appeal, part of a patent dispute between the two companies over digital speech processing software, was recently filed at the Supreme Court and has yet to be reviewed by the justices. The legal question deals with the extent to which U.S. patent laws apply to patent infringement in computer products sold abroad. The case is being closely watched by patent experts.
- SmithKline Beecham v. Apotex Inc., 05-489. The justices have asked the federal government to comment on whether it should hear this drug patent case and a brief is expected mid-2006. At issue is whether a patent on a drug ingredient is invalid because it was discovered by accident.
-By Mark H. Anderson, Dow Jones Newswires; 202-862-9254; [e-mail]

(END) Dow Jones Newswires
03-17-06 0800ET
Copyright (c) 2006 Dow Jones & Company, Inc.