MercExchange v. eBay: Injunction Hearing

MercExchange v. eBay (E.D.Va 2007).

Using a typical defense strategy, eBay has slowed MercExchange’s infringement case to a virtual crawl. Over three years ago, a jury found that eBay willfully infringed MercExchange’s patent. Part of the verdict was eventually picked-up by the Supreme Court who held that injunctive relief in patent cases must be determined through the traditional four-factor test of equity.  After the verdict, eBay also filed for a reexamination of the asserted patent. That reexamination is still pending, although all of the claims have been rejected by the PTO.

On Tuesday, the issue of injunction will once again return to the Virginia district court (Norfolk).  EBay has asked for a stay of relief pending conclusion of the reexamination process to "prevent enforcement of invalid patents." On the other side, MercExchange argues that injunctive relief is proper even under the Supreme Court’s more stringent requirements.

MercExchange provides several reasons for not staying final adjudication pending reexamination, including eBay’s delay in seeking the reexamination and eBay’s unclean hands before the court (for allegedly submitting false authentication).

25 thoughts on “MercExchange v. eBay: Injunction Hearing

  1. MM,

    Better yet, what are your views on the Constitutionality of the Supremes’ Merc v eBay Decision?

    Better still, how would you go about undoing the Supremes’ mistake? I’m just and ordinary inventor, but I’ll do what I can to help you – I hear you are an attorney, an Officer of the Court. It would be my pleasure to assist and do something constructive.

  2. “How would you explain comment to our children who still have nightmares and wake up crying?”

    I’d say: I know exactly how you feel but President Bush has only two more years in office.

  3. Malcolm,

    I was taking a little poetic license with the facts of Kelo. As it involves my hometown I follow(ed) it with a little more interest as a native than an attorney, but that doesn’t change my opinion of the decision.

    JD

  4. MM,

    You want to compare “privacy,” such as searching my backpack when I board a subway, to the BigBusinessMen who manage to infiltrate government and succeed in taking away homes from We the People?

    Perhaps you could explain what you mean to the thousands of New Yorkers who still shudder every time a plane flies near by. How would you explain comment to our children who still have nightmares and wake up crying?

    Please stick to funny.

    As Rodney said, Can’t we all just get along?

  5. “maybe I am a reactionary moron.”

    Maybe. But nothing you’ve said in this thread would indicate that.

  6. “taking away somebody’s house so Pfizer can pave a parking lot for its new research facility hardly strikes me as a “public use.”

    As I recall, the facts weren’t quite so simple.

  7. Small inventor, you are behaving like the fundies who claim to be “offended” by the fact that life on earth evolved. This country is filled with special interest groups who go bananas every time they perceive the mildest threat to their turf. Kelo was perceived as an “attack” by folks who, as far as I can tell, have sat in relative silence while their OWN rights were ACTUALLY taken away or simply ignored by the current president’s and his subservient congress. In other words, the hypothetical threat of the government taking my house from me to build a Starbucks is evidently perceived to be more “serious” than what the government is actually doing with respect to my right, e.g., to privacy.

    Kelo did not create new law. Rather, it was an example of old law being applied thoughtfully and carefully.

    Anyway, like Janet Jackson said, I’m really really sorry you were offended to learn that the US population comprises reactionary morons. You really should read some public comments about the Sopranos finale. Weird.

  8. I’m one of the few who enjoys Malcolm’s posts, but I’m not sure if he’s saying he agrees with the Supremes in Kelo. That was a terrible decision. No matter how crappy those houses were, and I was born and raised in New London so I can tell you they were pretty crappy, taking away somebody’s house so Pfizer can pave a parking lot for its new research facility hardly strikes me as a “public use.” But maybe I am a reactionary moron.

  9. MM said: “US is populated with a lot of reactionary morons”

    Dear Michael L. Slonecker,

    if you think the above sentence by MM is not offensive, but my M* word is, then sorry… but I must respectfully disagree…

  10. Small Inventor,

    While I would have stated Mr. Mooney’s comment in much more genteel (sp?) terms, I do have to ageee with his basic premise.

    BTW, the term you attempt to equate him with is totally out of line. Disagree if you must, but temper your words.

  11. Yeah, right, MM, time to mention the m* word

    I have another one for you: “MUDAK”

    Ask your foreign friends what it means first and then see if you fit the definition… You most certainly do…

  12. “Remember their Kelo vs. New London real property decision ?
    That decision resulted in much public outrage all over US. ”

    So did the finale of the Sopranos. But that’s because the US is populated with a lot of reactionary morons who have strange ideas about what they are entitled to.

  13. It reminds me of my favorite war story.

    Battle weary and out of ammunition, Lt. Col. Chamberlain’s officers assumed it was time to retreat. However, Lt. Col. Chamberlain Ordered – Fix Bayonnet, CHARGE. Thus, he saved the day.

    The moral is, you only lose when you quit.

    BATTLE OF GETTYSBURG link to en.wikipedia.org
    Chamberlain achieved fame at the Battle of Gettysburg, where his valiant defense of Little Round Top became the focus of many publications and stories. Sent to defend the southern slope of Little Round Top by Col. Strong Vincent, Chamberlain found himself and the 20th Maine at the far left end of the Union line, with the 83rd Pennsylvania, 44th New York, and 16th Michigan infantry regiments to their right. He quickly understood Vincent’s insistence of the tactical significance of Little Round Top, and thus the need for the 20th Maine to hold the Union left at all cost. The men from Maine waited until troops from the 15th Alabama regiment, under Col. William C. Oates, charged up the hill, attempting to flank the Union position. Time and time again the Confederates struck, until the 20th Maine was almost doubled back upon itself. With many casualties and ammunition running low, Col. Chamberlain recognized the dire circumstances and ordered his left wing (which was now looking southeast, compared to the rest of the regiment, which was facing west) to initiate a bayonet charge. From his report of the day: “At that crisis, I ordered the bayonet. The word was enough.”
    The 20th Maine charged down the hill, with the left wing wheeling continually to make the charging line swing like a hinge, thus creating a simultaneous frontal assault and flanking maneuver, capturing many of the Confederate soldiers and successfully saving the flank. Chamberlain was slightly wounded in the foot at that battle by a spent bullet. For his tenacity at defending Little Round Top he was known by the sobriquet Lion of the Round Top. Later in 1863, he developed malaria and was taken off of active duty until he recovered.

  14. Yeah, this SCOTUS knows how to take property from little people to give it then to large corporations.
    Remember their Kelo vs. New London real property decision ?
    That decision resulted in much public outrage all over US. Some activists even attempted to evict one of the SCOTUS judges from his own farm house to build a hotel “Lost Liberty”, no more and no less…
    link to en.wikipedia.org

    Funny as it sounds, it’s not funny at all, for all of us, little law-obeying private citizens of this great country.

  15. Dear anonymous,

    Here is the point from above:

    “However, three Clauses of Article I, Section 8 of the Constitution contain SPECIFIC, ENUMERATED LIMITS. The limits in these three Clauses have never been amended.
    The limit in Clause 17 is: “100”:
    The limit in Clause 12 is: “two”;
    The limit in Clause 8 is: “one”;
    It has never even been suggested that the Framers of the Constitution meant for these three specific limits to be interpreted in any way other than plainly, naturally, by the numbers; and so, historically, until the eBay ruling, they have been interpreted literally.”

    Even so, of course, you are right – it is an uphill battle. That’s why we should all pitch in. This is the kind of thing you have to keep picking at.

    Even the Supremes can screw up, and screw up they did, bigg time!

  16. JAOI, you’re assuming that the right to exclude others is absolute. Much like other property rights, it’s not.

    Unless you want to expand the reach of the Takings Clause to include every government action that results in a diminution in the value of someone’s property, then I think you’re fighting an uphill battle.

  17. Dear JAOI:

    Maybe you could write this up as a paper and just link to it instead of copying and pasting the same arguments with updates each time this issue is brought up.

    Just a suggestion.

  18. Dear Steve,

    You got that right – In pursuit of a witness, eBay initiated proceedings in four other District Courts.

    Here is an excerpt from the December 18, 2006 Document #641 in the on-going MercExchange v eBay case, No. 01cv0736 VAED, regarding post-discovery proceedings:

    “In summary, both of eBay’s motions seeking to strike newly submitted evidence are DENIED. As a result of such denial, the court PERMITS both parties until March 2, 2007, to perform additional discovery into eBay’s knowledge and representations regarding the Newman video as well as all relevant factual developments occurring subsequent to August 6, 2003. As previously discussed, in recognition of the already well-developed record, there will be no interrogatories or requests for admission; however, both parties are permitted to conduct five depositions, each lasting no longer than six hours. Additionally, document requests may be served by both parties no later than January 12, 2007, and objections or responses to such requests are due no later than February 2, 2007. Finally, each party is afforded until March 16, 2007, to submit a single supplemental brief in support of its motion and in opposition of the opposing party’s motion; such brief is limited to 20 pages in length.

    “The court GRANTS eBay’s motion for leave to submit the protective order motion and GRANTS in part, and DENIES in part, the substantive protective order motion. Specifically, the court GRANTS the portion of the motion requesting that experts that viewed eBay’s confidential information be prohibited from further involvement in the PTO reexamination of the patents at issue in this litigation and DENIES the remainder of such motion.”

  19. Dear Brian,

    From what I know, MercExchange is entitled to an Injunction notwithstanding the USSC’s eBay Decision. Merc’s stronger argument is supported in well founded case law precedent and need not follow the conceptual Constitutional issues I, just an ordinary inventor (I’m sure readers realize that I say that proudly) discuss below.

    THE CONSTITUTION AND THE UNITED STATES SUPREME COURT’S EBAY DECISION (Part II)

    The Patent Clause 8, which has never been amended, in Article I, §8, of The Constitution reads:

    “The Congress shall have Power …
    “To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries;”

    As referred to by another Patently-O contributor (I wish I had made the observation), above the red ribbon and gold seal on the cover of every United States patent “granted under the law” by the Director of the USPTO, the following is printed:

    “Therefore, this United States Patent
    Grants to the person(s) having title to this patent THE RIGHT TO EXCLUDE OTHERS FROM MAKING, USING, OFFERING FOR SALE, or selling the invention throughout the United States of America or importing the invention into the United States of America for the term set forth below, subject to the payment of maintenance fees as provided by law.” (my emphasis added)

    Thus, a patent does not grant the patentee the right to make, use or sell his invention. Rather, a patent grants the patentee THE RIGHT TO EXCLUDE EVERYONE ELSE from making, using or selling his invention. Under the Constitution, traditionally, when a District Court found that a patent was valid and was infringed, the Judge granted a patent injunction to stop the infringement. The exposure, for any infringer who did not obey the court injunction order, was contempt.

    Most of the 18 Clauses of Article I, Section 8 of the Constitution allow Congress discretion to set the limits for the Powers given to it. For example, the limits of the following Powers granted to Congress are left to Congress’s discretion: taxes; duties; pay debts; borrow money; regulate commerce; rules for naturalization and bankruptcies; coin money; punishments; rules governing military bodies; and to make laws as necessary to fulfill its “Powers, and all other Powers vested by this Constitution in the Government of the United States, or in any Department thereof.” (Clause 18).

    However, three Clauses of Article I, Section 8 of the Constitution contain SPECIFIC, ENUMERATED LIMITS. The limits in these three Clauses have never been amended.
    The limit in Clause 17 is: “100”:
    The limit in Clause 12 is: “two”;
    The limit in Clause 8 is: “one”;

    It has never even been suggested that the Framers of the Constitution meant for these three specific limits to be interpreted in any way other than plainly, naturally, by the numbers; and so, historically, until the eBay ruling, they have been interpreted literally.

    Clause 17: “The Congress shall have Power …
    “To exercise exclusive Legislation in all Cases whatsoever, over such District (not exceeding ten Miles square) as may, by Cession of particular States, and the Acceptance of Congress, become the Seat of the Government of the United States, …”
    Washington, D.C. is 68 sq. miles; “ten Miles square” = 10 x 10 = 100 sq. miles.

    Clause 12: “The Congress shall have Power …
    “To raise and support Armies, but no Appropriation of Money to that Use shall be for a longer Term than two Years;” (emphasis added).
    Congress’s military appropriations (which may include appropriations to pay for patent royalties, discussed below) have never exceeded two years.

    Clause 8: “The Congress shall have Power …
    “To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries;” (emphasis added).
    The “exclusive Right” means the Right to exclude all but “one,” the inventor (please see a patent’s cover).
    Congress, by permissible statute, i.e., 35 USC 261, gave inventors the further right to formally assign their patents.

    The Exclusive Right Yes, But Only for a Limited Time …

    The Framers give Congress the means and the Power UP FRONT to regulate the “exclusive Right.” By including in Clause 8, “securing for limited Times,” Congress can pass patent statutes that grant more or less time to a patent, and, by statute, Congress has done so. And, also by statute, Congress has the Power to create different types of patents with different lifetimes, as they have done for Design Patents. Congress has also created Trademark statutes that live somewhere between Copyrights and Design patents.

    (I personally, or my companies, had and have numerous Utility patents, Design patents, Trademarks [some registered] and Copyrights [none registered, but I was instrumental in formulating the 1974 Copyright Revision Bill which incorporated design protection].)

    Thus, Congress has absolute Constitutional Power to administer our patent system, and it has rightly done so. Further, within the Constitution itself, one finds authority for Congress to exercise its Power to moderate “the exclusive Right” under certain constitutionally certified circumstances:
    (A) To regulate Commerce,
    (B) provide for the common defense, and to
    (C) promote the general Welfare.

    Article I, §8, Clause 3: “The Congress shall have Power … To regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes;”
    Thus, in its body of antitrust statutes, Congress imposes certain limits when exercising a patent’s “exclusive Rights” in order to regulate Commerce.

    The Preamble: “We the People of the United States, in Order to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defence, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity, do ordain and establish this Constitution for the United States of America.”

    Eminent domain power, when exercised over a patent’s “exclusive Rights,” for national security and defense, is absolutely consistent with the Preamble, i.e., to “provide for the common defence.” Thus, military appropriations bills in peacetime and wartime routinely include allocations for patent royalties.

    If an independent inventor discovered and patented a vaccine for Anthrax, but refused to license or manufacture it for his anti-American religious reasons, eminent domain could absolutely and reasonably be asserted to “promote the general Welfare.”

    FAULTY ARGUMENT: I refer below to this excerpt from the USSC’s Merc v eBay decision, page 3:

    “To be sure, the Patent Act also declares that ‘patents shall have the attributes of personal property,’ §261, including ‘the right to exclude others from making, using, offering for sale, or selling the invention,’ §154(a)(1). According to the Court of Appeals, this statutory right to exclude alone justifies its general rule in favor of permanent injunctive relief. 401 F. 3d, at 1338. But the creation of a right is distinct from the provision of remedies for violations of that right. Indeed, the Patent Act itself indicates that patents shall have the attributes of personal property ‘[s]ubject to the provisions of this title,’ 35 U. S. C. §261, including, presumably, the provision that injunctive relief ‘may’ issue only “in accordance with the principles of equity,” §283.”

    35 USC 154 is explicitly consistent with Article I, Section 8, Clause 8: “… the right to exclude others from making, using, offering for sale, or selling …”

    35 USC 261 is also consistent with Clause 8: “Subject to the provisions of this title, patents shall have the attributes of personal property … patents … shall be assignable”.

    35 USC 283, however, stinks – it is in direct conflict with Clause 8: “The several courts … may grant injunctions in accordance with the principles of equity to prevent the violation of any right secured by patent, on such terms as the court deems reasonable.”

    §283 would cede discretion to courts to diminish the Power the Constitution gave Congress. You could, of course, make this change by formal amendment in accord with Article V, but certainly not by mere statute. When such conflict exists, the Supremacy Clause, Article VI, says there is no contest — the Constitution wins – therefore, 35 USC 283 shall be ignored. Our Supremes’, however, in their eBay Decision, made the mistake to rely, essentially solely, on 283! Remarkable, but this is truly sad for the US economy.

    Brian, my eBay précis above is somewhat focused. Your Constitutional studies posted on the other thread
    link to patentlyo.com
    are far more studious and much broader.

    I’d like to add one thought that has nothing to do with Constitutional or other legal arguments: Whether intended or not intended, it is merely the pragmatic by-product of the eBay Decision. However, the implications of the by-product are horrific and could plague American innovation and the IP profession for decades.
    Put simply in 25 words, in essence:

    The Supremes’ eBay ruling reserves a patent’s “exclusive Right” for big businesses while denying a patent’s grant of “the exclusive Right” to independent non-manufacturing inventors.

    THE EXCLUSIVE RIGHT IS A SETTLED EXPECTATION:

    In a NYS Supreme Court law suit, my first case pro se, I recently brought a law suit against a government agency. Opposing counsel cited an interesting case, Connolly v. Pension Benefit Guaranty Corp. 457 U.S 1, 222, 106 S.Ct. 1018, 89 L.Ed.2d l66 (1986) against me. I find it has relevance here.

    Historically, every patentee’s exclusive Right to his invention, via a patent injunction, has been a well “settled expectation.” The USSC’s MercExchange v eBay decision lacks authority to change this. Connolly held that:

    “… legislation readjusting rights and burdens is not unlawful SOLELY because it upsets otherwise settled expectations.” (emphasis added)

    The eBay decision is not “unlawful solely because it upsets” many inventors’ settled expectation of “the exclusive Right to their…Discoveries.” However, the eBay ruling lacks any prerequisite Amendment for authority to alter the Constitution which unequivocally provides for an Inventor to have the exclusive Right to his invention, meaning the right to exclude, just as the Director of the USPTO says on the cover of United States patents:

    “Therefore, this United States Patent
    Grants to the person(s) having title to this patent THE RIGHT TO EXCLUDE OTHERS FROM MAKING, USING, OFFERING FOR SALE, or selling the invention throughout the United States of America or importing the invention into the United States of America for the term set forth below, subject to the payment of maintenance fees as provided by law.” (emphasis added)

    The Supremes’ MercExchange v eBay ruling is a corruption of our Constitution.
    The Supremacy Clause in the Constitution mandates that it should not stand.

    In attempting to defend the Supremes’ Merc v eBay Decision, some have pointed out that other corruptions to our Constitution have also occurred, as if there is precedent for such corruptions. Hogwash! Those corruptions also are a damn shame. Each corruption becomes more threatening to our way of life. Our country is on a slippery slop, but democracy is no easy trip, and it never has been. Our Constitution is the best in the world – few would deny that. It is our job, every American’s job, especially Officers of the Court, to tackle those corruptions, even when the Supremes screw up. We all should fight to regain our Constitutional footing every time we see a slip. (I originally posted thoughts in this closing paragraph as George Washington, my alter ego.)

    * * * * *

  20. It seems like the actions of both parties’ attorneys in this case show the worst of our profession. Pathetic.

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