MercExchange v. eBay: Injunction Denied

All Elements, Patent,

TomWoolstonMercExchange v. EBay (E.D.Va 2007)

For the second time, Judge Friedman (E.D. Va.) has denied MercExchange’s request for permanent injunctive relief.  Judge Friedman notes that injunctive relief is only available when a plaintiff is suffering current irreparable harm that threatens future irreparable harm. In other words, past injury is not a variable in the injunction calculus — willful or not, what’s done is done and cannot be fixed by an injunction.

No Presumption: As a starting point, the Court found that willful infringement of a patent creates no presumption of irreparable harm.

Irreparable Harm: Although the Court agreed that MercExchange has suffered harm do to the infringement — the harm is not irreparable.  This finding is based on MercExchange’s “consistent course of seeking to maximize the money it can obtain from licensing its patents to market participants.” In particular, after the trial, MercExchange licensed its patents to UBid. (Note: post-trial activity alters decision — focusing on eBay’s media reports).

Suspect Patents = No Injunction?: As a secondary factor, the Court continued its assertion that the potential suspect nature of the MercExchange patents also leads to a denial of injunctive relief:

Furthermore, KSR reveals the Supreme Court’s reservations regarding patents similar to the ’265 patent, the PTO twice issued interim actions rejecting all claims in the ’265 patent as obvious prior to the issuance of KSR.

Monopolist <> Injunction: Finally, the court rejected MercExchange’s argument that eBay’s de facto monopoly position necessarily leads to entry of a permanent injunction.

Injunction Denied

Notes:

  • EBay’s motion for stay pending reexamination was also denied.
  • There is more to this opinion. Including a further discussion of public interest…

Patent Reform: Damage Apportionment

All Elements, Damages, Patent

The influential Intellectual Property Owner’s Association continues to push for patent reform. In particular, the IPO board has voted to support a modification of the rules on damages. The change would explicitly require apportionment of damages. In other words, damages for patent infringement would never be more than the economic value attributable to the innovation.

Proposed amendment:

Upon finding for the claimant the court shall award the claimant damages adequate to compensate for the infringement but in no event less that a reasonable royalty for the use made of the invention by the infringer, together with interest and costs as fixed by the court.

Where an infringer shows that an apportionment of economic value is necessary to assure that damages based upon a reasonable royalty do not exceed the economic value properly attributable to the use made of the invention, such apportionment shall exclude from the reasonable royalty calculation the economic value shown by the infringer to be attributable to the infringer’s incorporation into the infringing product or process of features or improvements, whether or not themselves patented, that contribute economic value to the infringing product or process separately from the economic value properly attributable to the use made of the invention.

Where the claimant shows that the use made of the invention is the basis for market demand for an infringing product or process, the royalty may be based upon the entire market value of the products or processes provided to satisfy that demand.

The court shall identify all factors relevant to the determination of a reasonable royalty under this section and the court or the jury, as the case may be, shall consider such factors in making the determination.

When the damages are not found by a jury, the court shall assess them. In either event the court may increase the damages up to three times the amount found or assessed. Increased damages under this paragraph shall not apply to provisional rights under section 154(d) of this title.

The court may receive expert testimony as an aid to the determination of damages or of what royalty would be reasonable under the circumstances.

IPO also supports changes to the inequitable conduct jurisprudence:

IPO supports legislation to (1) limit or eliminate the unenforceability defense based upon inequitable conduct in patent litigation, (2) eliminate the requirement to disclose the best mode contemplated by the inventor of carrying out the invention, and (3) allow enhanced patent infringement damages to be awarded for “willful” infringement only in limited circumstances, such as those set forth in IPO’s Amicus Brief filed in In Re Seagate Technology LLC.