Technology groups win patent law turnround
Yesterday’s ruling, which involved the online auctioneer Ebay, could profoundly change the balance of power between companies that use patents primarily for litigation – sometimes called patent trolls – and high tech companies that make products based on thousands of different bits of patented technology.
The recent wave of litigation involving patent trolls – including the recent case involving Research in Motion, maker of the BlackBerry e-mail device – has been driven largely by the fact that courts almost always issue an injunction to force companies to change the design of their products once they are found to have infringed a patent.
Yesterday, the justices ruled unanimously that there should be another option: courts should have discretion on whether to allow companies to continue making their product and compensate for the infringement with monetary damages rather than forcing them always to stop using the infringed technology.
"This decision is a clear victory for innovation and for consumers and a defeat for patent trolls and others who are abusing the legal system," said Robert Holleyman, president of the Business Software Alliance, whose members include Microsoft and Intel.
The ruling came in a case involving the patent for fixed-price auctions on Ebay. The company was found to have infringed a patent held by MercExchange, viewed by many in the technology industry as a patent troll. The justices yesterday sent the issue of whether an injunction should be issued in the Ebay case back to the lower court, to be decided in line with yesterday’s guidelines.
Legal experts say that, since such cases usually settle rather than go to court, the ruling could have most effect on the dynamics of settlement negotiations.
Bruce Sewell, general counsel of Intel, said: "There will now be a greater willingness to take cases to trial . . . (since) if you lose a case there is a potential you can compensate the plaintiff in dollars rather than having your whole company shut down."
The decision is a setback for drug companies, which rely on near-automatic injunctions to protect the value of their patents. But it is not a total victory for technology companies: though the court agreed unanimously that injunctions should not be automatic, it disagreed about when they should be issued.
Three of the justices – including the chief justice – made clear injunctions would still be issued in most cases where infringement had been proved. But four justices said high-tech cases were different. Technology companies are focusing on that four-judge concurring opinion.
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