The case is being closely
watched to see if the high court will scale back the right
of patent holders to get an injunction barring infringers
from using their technologies.
Software companies complain they can be held to ransom by
owners of questionable patents while drug makers oppose any
weakening of patent rights, which they say would chill their
investment in new medicines.
Patent experts said that, depending on how the high court
rules, the case could have a profound impact on the way the
courts treat intellectual property in the United States.
"Any time we talk about altering injunctions we really are
talking about altering the fundamental balance of power,"
said Steve Maebius, a patent lawyer with the firm Foley &
The arguments come on the heels of a recent court fight by a
small patent-holding company seeking an injunction to shut
down of Research In Motion's popular BlackBerry wireless
e-mail devices. RIM settled the case after a judge made it
clear that he would impose an injunction.
At issue in the current case is a decision by a federal
court of appeals upholding an injunction imposed on eBay at
the request of MercExchange. eBay was found to have
infringed on two e-commerce patents that MercExchange said
were key to eBay's "Buy it Now" feature, which handles
fixed-price sales. But a U.S. District Court refused to
issue an injunction and awarded MercExchange a small amount
of damages instead.
The U.S. Court of Appeals for the Federal Circuit, which
hears most patent case appeals in the U.S. courts, reversed
the decision, citing legal doctrine that gives patent
holders the right to an injunction "absent exceptional
Hopeful the Supreme Court will overturn the doctrine, some
of the largest U.S. software companies have filed
friend-of-the-court briefs supporting eBay.
"Money that could go to productive investments is instead
diverted to legal fees and settlement payments. The costs of
these practices are less innovation or a slower rate of
innovation and higher costs for consumers," a group of
computer technology companies wrote in a friend-of-the-court
eBay has argued that federal judges should have more
discretion to deny an injunction and instead issue a
monetary award to the patent holder.
But drug makers oppose watering down the rights of patent
holders. They say the right to an injunction is at the core
of the U.S. intellectual property system, much like a
landowner's right to evict trespassers.
"Limiting the availability of an injunction after a judge or
jury have found a patent to be valid and infringed would
severely undermine the patent system and drive up the cost
of innovation," the industry trade group Pharmaceutical
Research and Manufacturers of America said in a
friend-of-the-court brief filed with the Supreme Court.
The prospect of change also provoked opposition from a group
of U.S. inventors, which said in its court brief that large
companies want to support intellectual property rights "only
for themselves and companies like theirs."
Separately from the Supreme Court case, the software
industry has pressed a campaign on Capitol Hill to weed out
illegitimate patents and rein in the power of patent
Lobbying efforts center on legislation being drafted by Rep.
Lamar Smith, a Republican from Texas who chairs a key House
subcommittee. Smith introduced a patent reform bill last
year to modernize and overhaul patent laws and help the
Patent and Trademark Office do a better job of vetting new
Smith's bill originally included a provision making it more
difficult to get an injunction, but it was removed from the
bill after running into opposition from drug makers and
Smith is expected to introduce a similar bill soon and has
been trying to find a compromise on several matters that
would be acceptable to the software and pharmaceutical
industries, lobbyists said.
The Supreme Court is expected to issue its ruling in the
eBay case in several months.