The United States Supreme Court on Monday delivered a victory to internet giant eBay in a closely watched case seen as a test for high-tech disputes over patent infringement.
The court’s unanimous ruling does not exonerate eBay in the patent dispute with a company called MercExchange. But it does allow judges flexibility in avoiding a calamitous injunction after an initial finding of patent infringement.
Justice Clarence Thomas, writing for the court, said that an injunction should be issued only after a “four-factor” test is passed.
This means a plaintiff must suffer “irreparable injury”, that other remedies are not available, that the balance of hardship is weighed and that public interest “would not be disserved” by an injunction.
The justices overturned a lower court decision that an injunction is nearly automatic once a violation of a patent is found. The case was sent back to a lower court for reconsideration.
“The decision whether to grant or deny injunctive relief rests within the equitable discretion of the district courts, and that such discretion must be exercised consistent with traditional principles of equity, in patent disputes no less than in other cases governed by such standards,” Thomas wrote.
The case centres around software used by eBay on its so-called “Buy It Now” feature on its website that concludes an auction. A lower court in 2003 found eBay in violation of a patent by MercExchange.
Although the lower court stopped short of issuing an injunction that could shut down a part of eBay’s operations, an appeals court said the lower court erred and that the judge should have applied a “near automatic” injunction rule.
Some in the high-tech industry said the case, like a similar one involving Canadian-based Research in Motion’s Blackberry e-mail device, highlighted flaws in the patent system and opened the possibility of “patent trolls” that use the system to win big settlements from technology companies. — AFP