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Mar 14, 2006

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» Ebay v. MercExchange: The Law of Patent Injunctions from AuctionWire
Later this month, the Supreme Court will hear this case to determine when a patentee should have a right to stop an infringer from making or selling unlicensed products once the patent has been found valid and infringed.  Because this issue is so fundamen [Read More]

» MercExchange: Ya Can't Tell the Players Without a Scorecard! from IPcentral Weblog
PatentlyO (Dennis Crouch) does his usual excellent job of sorting and listing and linking to the briefs filed in eBay v. MercExchange and summarizing some of the major ones. He notes: "Because this issue is so fundamentally important to patent... [Read More]

» The Most Important Patent Case? from madisonian.net
Dennis Crouch at Patently-O calls eBay v. MercExchange the most important patent case for the past decade. (I think that he means that its the most important patent case to come along in the last 10 years.) He writes that as an ... [Read More]

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What do you mean Qualcomm "used-to manufacture products, but now they primarily invent, design, and license."?? Qualcomm sells about 50 million chips every single quarter. These are the CDMA chips that a CDMA cell phone uses to communicate on the CDMA cell network. They also sell base station chips as well.

The Supreme Court has specifically referred to Continental Paper Bag v. Eastern Paper Bag case. What the Court wants to decide is probably under what circumstances should there be equitable relief from injunctive rights. The Court quoted the eloquent words of Judge Aldrich, but artfully dodged that question in 1908.

It's the right time to answer that question. For startups in industries that requires complex integration, e.g., computer, communication, financial, it's becoming almost impossible to survive in US under repressive patent licensing schemes. When a large IP licensing shop comes knocking, what can a startup do, other than paying up? Which patent do you want to fight against – among the 5000?!

There need to be an equitable relief against abusers of the system. At least make them "practice" their "inventions" before they can shake others down. If nothing else, that would drive up their cost and slow them down a bit.

P.S. I'm a founder of a software startup, in case you are wondering about my bias.

Is the Supreme Court able to say something about the patent in this case, eg: finding it invalid because it's a business / software patent? (State Street did not reach the Supreme Court IIRC)

MercExchange may win this case on their particular facts. If MercExchange loses it is likely to be because the Court of Appeal went too far in overturning a trial judge's exercise of discretion and not because the Supreme Court agrees that the trial decision was correct.

In terms of the bigger issues which the Supreme Court apparently wants to address the Intel/Microsoft submission should be given a lot of weight. The problem of hold-ups is real and growing and the "rubber stamp" granting of injunctions is the cornerstone foundation for hold-ups.

The protective measures which large corporations have to take to protect themselves from hold-ups is making the problems worse. We have seen an explosive growth in patent applications as Micorsoft and other large corporations try to patent every idea any employee has to prevent them from being shaken down in the future by patent licencing firms.

The notion that there can exist a “usual rule” in equity is antithetical to the notion of equity itself. First, the history of equity instructs that it exists to provide unique remedies where the law failed to adequately do so. Legal remedies provide usual rules; equitable remedies are special. Second, the positive law that bestows courts with the power to issue injunctions demands that they are issued according to the traditional principles of equity, which have always included the standard four-factor test. Finally, the history of the word “equity” itself destabilizes MercExhange’s position. The word derives from the Latin aequitas, which, in it most basic form, means universality, or, as Professors Lewis and Short write, “the uniform relation of one thing to others.” It’s absurd, therefore, to issue an equitable remedy without actually considering the balance of harms and the public interest. I agree that the nature of patent law will undoubtedly (as it always has) result in frequent injunctions, but that provides all the more reason to actually consider the traditional factors; the presumptions are unnecessary and can only conceivably do harm.

Dennis,

There are two issues here - one is a rule of law, which you have covered quite well. The other is the defects in the US Patent system, and you have filed to address those.

This Patent should not have been issued, it fails the "obvious" test. The issueance of patents like this will destroy innovation in my opinion. And of course they are damaging to the repute of the Patent Office.

Hey, Ryan McLeod, did you actually read what you just wrote ?

You can talk some obscure language all you want, but the truth is this:
if somebody *willfully* violates a *valid* patent the actual owner of that patent should have the right to stop violation. Period.

Well, "small inventor," if there is in fact a willful violation of a patent, there will likely be irreparable harm, and in the VAST majority of cases the balance of the equities and the public interest will favor the patent holder. I'm not suggesting we do away with injunctions in patent law (nor is that the issue in the case); I'm simply pointing out what the “principles of equity” are. And, I remind you, that those are the guidelines Congress instructed courts to use when issuing injunctions in patent law. Patent Act, 35 U.S.C. § 283 (2000). I apologize if you thought the Latin was obscure, but the Supreme Court has many times looked at the derivation of words to aid its analysis. See, e.g., Coy v. Iowa, 487 U.S. 1012, 1016 (1988) (“Simply as a matter of Latin as well, since the word “confront” ultimately derives from the prefix “con-” (from “contra” meaning “against” or “opposed”) and the noun “frons” (forehead).”).
Thus, while you may normatively believe that injunctions should issue as a matter of course, that belief contradicts the law. Write to your local representative if you don’t like it.

Any news about this case?

when will the supreme court give its conclusion?
it's been more than a year since the hearing... does it usually take that long between hearing and conclusion? does that point o "behind the scene" negotations between the parties and the Justices???
the problem being for us VC's are that now we are more aware than ever that the value of patents might be lower than appearing in due-dilligence, but how much credit can we place on them if injunction are not longer an option to stop a bigger and wealthier competitor...
this decision will definitely have very large impact on start-up valuation at both side of our game (investing in and reselling them) if patents now become only a mean to negotiate without any much clout than the goodwill of large infringer

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