Posted on 03/30/2006 10:12:04 PM PST by Ernest_at_the_Beach
WASHINGTON (AP) - The Supreme Court debated the rights of inventors Wednesday, weighing in on a dispute between eBay and a small Virginia patent holder.
The case's outcome could mean millions of dollars for inventors working in their garages or in large pharmaceutical labs - including those who develop a product and those who opt only to patent ideas.
The dispute between eBay, the Web-based marketplace, and MercExchange is one of several high-profile legal battles that are calling attention to the nation's patent laws, which some critics - including Amazon.com, Yahoo! and Xerox Corp. - say need updating to keep up with rapidly changing technology.
Justices won't decide whether eBay stole MercExchange's idea for selling goods over an electronic network. Rather, the high court is being asked whether trial judges must automatically issue orders prohibiting use of an idea after juries find a patent violation.
eBay and other high-tech companies warn that patent-holding companies could use the threat of court injunctions to coerce larger firms into settling lawsuits for huge sums of money.
Lawyers for the two sides traded barbs during the argument, with MercExchange accusing eBay of stealing its idea for selling goods in cyberspace and eBay calling the Virginia firm a "patent troll," a company that hoards patents for products it never develops.
"Is the troll the scary thing under the bridge," asked Justice Anthony M. Kennedy, "or is it a fishing technique?"
"For my client," attorney Carter Phillips said, "it's the scary thing under the bridge."
Phillips, who represents eBay, urged the court to level a playing field that he said favors patent-holders who sit on inventions and file lawsuits when someone stumbles across similar ideas.
The eBay lawyer also complained that patent-holders file lawsuits in certain parts of the country, such as Marshall, Texas, where they know they are likely to win big-money verdicts against larger companies.
"Everybody's in this for money," said Justice Antonin Scalia. "Why can't we let the market take care of the problem?"
Scalia also said the high court shouldn't rewrite patent laws "because we have renegade jurisdictions."
Chief Justice John Roberts signaled his concern for protecting "the guy in his garage" who can't - or doesn't want to - build his invention. But he also seemed perplexed by the idea covered in patents that eBay and MercExchange are fighting over.
MercExchange's founder, patent lawyer Thomas Woolston, came up with the idea of using an electronic network of consignment stores that would ensure legitimacy of sales by taking possession of goods being offered. eBay's system was based on the belief that buyers and sellers could trust each other and deal directly.
A jury sided with MercExchange, finding that its business method patents had been infringed, and awarded the patent-holder $35 million.
A trial judge later reduced the award by $5.5 million and refused to grant a permanent injunction, ruling that MercExchange would not suffer because it had not used its inventions commercially and had expressed an interest in licensing its patents to eBay.
MercExchange lawyer Seth Waxman told Roberts he was not a "software developer" and could not explain the technical aspects of the disputed patents, adding, "I have reason to believe neither is your honor."
Roberts conceded as much. But displaying pictures of goods for people to pick what they want to buy didn't strike the chief justice as anything special.
"I might have been able to do that," he said.
The case is eBay Inc. v. MercExchange, 05-130.
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On the Net:
Supreme Court: http://www.supremecourtus.gov
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Didn't the Supreme Court already rule that software is a matter of Copyright laws and not Patent laws.
Utter garbage. It has about as much validity as a patent on addition.
Microsoft has been busy acquiring patents, but I know not the nature of what they are getting approved.
I am just not sure that what the patent described is really innovative concept.
it is certainly not your call to make.
The last time I checked its the USPTO that decides.
whew, talk about armchair quarterbacks.
Lurking'
Are you saying we cannot even discuss decisions of the Patent Office? Can we discuss decisions of the Supreme Court? What about the FEC? The FCC? The SEC?
This is a discussion board, and I don't think there are any rules against armchair quarterbacking. If there were, threads would be fairly empty.
Both the type of, and the manner of granting patents are important points for debate. Legally issued patents that are too broad or cover obvious ideas can hamper progress and enrich not creators but people with good legal skills. I do not believe that enriching lawyers instead of inventors was the idea of granting patents.
[BTW, this is not meant to be a slam against lawyers]
If the patent was legally granted (even if it was "bad") then I can see a judge wanting to enforce it. I am not sure that it means for sure that the judge thought it a worthy patent (as you pointed out that is the job of the USPTO).
There's a reason companies are often willing to license really stupid patents rather than fighting them: such patents help keep down competition.
If a malpractice insurance company decides to settle a frivolous claim, it will only encourage more frivolous claims; the side-effects from such action are almost all bad. On the other hand, if a company agrees to license a dubious patent, it's a pretty safe bet that the patent holder will attempt to go after any other companies that might compete with the first one. The first company gets many of the benefits it would receive from owning the patent, but none of the downside publicity it might get from trying to enforce it.
Is there any evidence that eBay actually received any benefit from the former company's patent, rather than having developed the ideas independently?
In theory, the patent system was designed so that people would patent their ideas in useful fashion and, as a reward for doing so, receive temporary exclusive rights to them. In practice, I think the primary effect of publishing patents is to prevent any sort of "independent derivation" defense, even in cases where it would and should be applicable.
Although there are times when it can be useful to look through expired patents to see how earlier products work (e.g. Activision's Pitfall II cartridge for the Atari 2600), I don't think very many people look through current patents for new ideas. While I don't know about this particular case, it's not uncommon for some companies to patent ideas they have no idea how to do anything useful with but which might become obvious due to technological developments. When the ideas become obvious, the "inventor" then gets to go after anyone who independenly comes up with the same idea.
The key to eBay isn't the "idea". It's the investment of time and effort into implementation and marketing.
I will grant that there are some ideas which are, by their nature, sufficiently non-obvious but self-fulfilling that the mere act of thinking them up has value. My practical method for interfacing a RAM to an Atari 2600 bus connector (which has neither the phi2 nor r/w signals) might qualify (at least if such ability were useful outside the Atari 2600 homebrewing community). If I were to offer a short verbal explanation for the method, anyone knowledgeable in CPLD design would be able to impement it; I can relate from experience that it works beautifully. I would posit that the idea is non-obvious as evidenced by the fact that nobody else has done it even though all necessary technologies have existed for well over a decade (someine in 1984 would have had to have used custom silicon rather than a CPLD, but some cartridges of that area use more complicated custom silicon than what would be required here, so it would have been feasible).
In most cases, however, an idea is worth little until all the gaps necessary to implement it are filled in. Even in the case of my game cartridge memory design, I doubt anyone in 1983 would have been interested in paying me for my idea without proof that it would actually work.
The 'inventers' learned that most of the patents had been filed more than 50 years earlier by Tesla.
>>>> MercExchange's founder, patent lawyer <<<<<
Says it all. Read your history. eBays right, there a "patent troll,"
I used the word TV only for convenience. The word it self wasnt invented yet in 1873
You may want to check out Albert Robida
From 1882
Everything in that "list" was done by others long before.
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