eBay goes to the Supreme Court

By Steve Malone

Posted on 30 Mar 2006 at 10:39

The long running court case between online auction company eBay and MercExchange reached the US Supreme Court yesterday. At issue is whether the current US law is stifling innovation by allowing opportunistic companies to register business methods and software patents in the hope they can extract huge licensing fees from big technology companies at a later date.

MercExchange claims a patent on a technology that allows customers to buy products online at a fixed price. While eBay made its name as an auctioneer with people bidding for goods, the alleged infringement occurred when it introduced the 'Buy It Now' button. A court in Virginia had sided with MercExchange and a Federal judge awarded $29.5 million in damages. The money itself is not an issue.

That kind of cash is small change to a company the size of eBay. The case being presented to the Supreme Court is that courts are too quick to grant injunctions on alleged patent infringements from intellectual property companies or 'patent trolls' as they have been dubbed, which effectively holds the big company to ransom.

eBay is backed by many in the technology business who fear that the US may lose its competitive edge if companies are continually having to go to court to fight off patent infringement suits.

'What we're asking the court to say is, 'No, enough is enough,' eBay's attorney, Carter Phillips told the Supreme Court Justices, arguing that a fine should be settlement enough.

MercExchange disagreed arguing that making injunctions harder to come by would force the smaller companies to licence their technology at a much lower price than they would otherwise obtain. 'eBay stole the technology' declared its attorney Seth Waxman. 'This is no patent troll. This is a real inventor. This is somebody who really did try to put it in place'.