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 ?