RIM Watching eBay Patent Appeal

28 Nov ’05

The U.S Supreme Court is to hear an appeal from a decision of the U.S. Court of Appeals for the Federal Circuit concerning whether or not permanent injunctions should always flow automatically from an infringement finding. eBay has argued in the case that a permanent injunction against using an invention is not appropriate when the patent holder does not use the invention. This is of course the situation in the RIM – NTP case. Simon Avery covers some of the ground in a Globe article, quoting one expert as follows:

“If a patent owner isn’t practising the invention himself, it’s always sounded somewhat unreasonable to say they are irreparably harmed” without an injunction, Mr. Maebius said. “Why isn’t money enough?”

A finding of irreparable harm is of course an essential element of the test for the applicability of injunction as a remedy. It’s worth noting that opponents of the view point to the patent as a property right, and note that the injunction is the equivalent of a right to eject someone for trespass, and that without that right, the opportunity to negotiate terms that reflect the value of that right is much diluted. The NYT highlights this point in its coverage:

The nearly automatic injunction, eBay argues, is a “powerful and coercive remedy” that “produces tremendous leverage” for plaintiffs in patent litigation.

The Court is not expected to rule in the eBay case until early spring at the earliest, long after Judge Spencer is expected to rule in the RIM – NTP case. AP notes:

The Supreme Court will hear eBay’s appeal next spring. Meanwhile, a bill in Congress, inspired in part by this case, would make it harder for patent holders to get court orders to stop the sale of products that potentially infringe on their patents.

Finally, eBay is also arguing that the fact that many patents are successfully challenged well after they are issued and any injunction might issue points to the excessiveness of injunction as a remedy (from the NYT) – another issue faced by RIM in the NTP litigation:

EBay and its supporters also argue that the full dimensions and even the validity of a patent are often not clear. In fact, after the adverse district court judgment, eBay went back to the federal Patent and Trademark Office to challenge the MercExchange patents. The federal office’s re-examination of the patents is continuing.

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