ebay
Post on 29-Nov-2014
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Bryan Trinh
Background
• MercExchange, a small Virginia based company, held two patents on ecommerce granted in 1998 at the time when the company tried to establish itself as an online auction site.
• They left that market because of competition in 2000 and adopted a new business plan
Current state of MercExchange
The First Case
• MercExchange filed two cases of infringement, one of which was tried.
• The “Buy it Now” feature in eBay went to court in 2001.
• In 2003 the district court found that eBay did in fact infringe upon their patent and was granted $25million.
Injunction
• MercExchange then filed for a permanent injunction against eBay.
• This would prevent eBay from further using the “Buy it Now” feature on their website.
The First Verdict
• The district court claimed that the injunction was uncalled for and that monetary compensation would be adequate.
Second Verdict
• An appeals court overturned the decision
• This was potentially important because it would set a precedence that would lead to other such injunctions when a patent was infringed upon.
• At the time injunctions commonly followed when a patent was found to be infringed upon.
Third Verdict
• eBay applied for an appeal before the Supreme Court on the basis that, automatically ordering an injunction once a patent is infringed would cripple the high tech companies.
• The Supreme Court ruled in favor of eBay under the four-factor test. All four of which must be satisfied in order to grant a permanent injunction.
Four Factor Test
• Plaintiff must demonstrate:– That it has suffered an irreparable damage – Remedies available at law are not adequate
to compensate for the injury. (ie. money)– A remedy in equity is warranted in light of the
balance of hardships between the plaintiff and defendant
– The public interest would not be disserved by a permanent injunction.
Final Verdict
• Supreme court ruled unanimously that in order for a party to gain the right of permanent injunction they must be able to meet the four factor test.
Brief
• Before this case the current state was that many injunctions were handed out after a patent was found to be infringed upon
• The system somehow created a market in which companies built their businesses off of proactively searching for technologies that infringed their own patents.
• Some went to the extent of buying patents just to press charges.
Closing Remarks
• Questions ?
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