Significance of eBay case from a practitioner’s perspective …

When I read eBay v. MercExchange in isolation, I did not appreciate its significance. I found this article (copied below) that helped me understand that the eBay case represented a significant departure in previous practice. The Court recognizes, and this article emphasizes, that it was a general rule in the lower courts to grant injunctive relief after the patent-holder makes his case for infringement. The author describes it as “virtually unheard of for a district court to deny a victorious plaintiff a permanent injunction in patent infringement case.”

After the eBay case, from May 2006 to April, 2011, there were 131 cases where a permanent injunction was issued and 43 cases where a permanent injunction was denied (25% denial rate). The author, writing on the 5th anniversary of the case, explains what negative effects replacing this general rule with the four-factor test has had on patent practice.

The Court’s decision may have been motivated by the need to deal with ‘patent trolls.’ The District Court’s application of the four-factor test in eBay seemed to be concerned with this. It held that the patent-holder’s “willingness to license its patents” and “its lack of commercial activity in practicing the patents” would be sufficient to establish that the patent holder would not suffer irreparable harm if an injunction did not issue. The Supreme Court said that this application was incorrect, and noted that such a rule would affect parties like university researchers and independent inventors. Justice Kennedy, in his concurrence, expressed a concern over the growing industry of ‘patent trolls,’ and flagged the issue for district courts to consider the nature of the patent and the patent-holder when applying the four-factor test.

The author admits that the decision had effects on ‘patent trolls’: “removing the presumption of irreparable injury from the equitable balancing creates the near-impossibility that a company focused solely on monetizing its patents through licensing could not be made whole through money damages alone.

He argues, however, that the decision also has unintended effects.

The biggest effect is increased cost for patent-holders. The author explains one possibly nonobvious advantage of a permanent injunction over an award of damages is the district court’s continuing jurisdiction over the case when a permanent injunction is granted. Redressing a subsequent infringement is cheaper and quicker when a permanent injunction is in place than having to bring a new case. Just satisfying the four-factor test is more expensive for all parties because it requires proof of non-economic factors such as loss of goodwill or loss of market share.

According to the author, the change to the four-factor test and the fact that district courts’ decisions are reviewable only for abuse of discretion caused an increase in parties’ desire to find alternative means for dispute resolution where it is available. He asserts that the International Trade Commission (ITC) has become a far more desirable forum for patent owners, both non-practicing entities (includes ‘patent trolls’) and practicing entities alike. This is due to the ability to obtain an exclusion order. This option, however, is only available for patent-holders when infringing-goods are being imported into US.

While, the author is probably a little biased because his firm represents patent-holders (presumably some ‘big players’), I found it helpful in explaining the effects of the eBay case.

Where is the line:

I know it was briefly discussed last class (someone brought it up) but there is a case with major patent implications, currently in the oven. Monsanto v. Bowman. The media is trying to make this a “David v. Goliath” case but the truth is, this case all comes down to a patent holders scope of control. If the SC sides with Bowman it could severely hinder innovation in areas with high barriers to entry and intense R&D. As mentioned in the articles included below, it cost hundreds of millions and over a decade of work to create something like a genetically engineered soybean. If control over such a patented product ceases to exist at some secondary level like a grain elevator, then will the line for some software be drawn in some cyber marketplace? It will be interesting to follow and I believe (even in the face of skeptical questioning at the hearing) the Supreme Court will side with Monsanto.

“Not so long ago, in a District Court far, far away ….”

Notwithstanding the protracted nature of the NTP v. RIM litigation, the ungodly expense, the out-of-control jury verdicts and the (inevitable?) settlement, the patent wars proceed apace.  Here are some links to just a few of the ongoing disputes.

(If you don’t like the “Star Wars” reference, the size of the companies involved has inspired some to characterize these suits as “Clash of the Titans.”

Or maybe James Bond???

apple_vs_samsung James Bond image

Pick your movie metaphor of choice.)

First, there are the “patent trolls,” following in the footsteps of NTP????

Patent infringement suits graphic

Then there are the suits involving Apple, which almost deserve a class of their own:

Apple sues Samsung for the “slide to unlock” feature (among others).  And wins.  (Note the quote here:  “”I don’t know if $1 billion is hugely significant to Apple or Samsung,” [investment banker Christopher] Marlett said. “But there is a social cost here. As a company, you don’t want to be known as someone who steals from someone else. I am sure Samsung wants to be known as an innovator, especially since a lot of Asian companies have become known for copying the designs of innovators.”)

Really?  Well, check out today’s headline: “Samsung patent lawsuit would have left blind iPhone users in the dark.”  Samsung holds a German patent on the text-to-voice technology that Apple puts in its iPhone.  Samsung requested an injunction in a German court, and didn’t get it.  And the headlines come out overwhelmingly against Samsung.  So, I guess it’s OK if Apple uses someone else’s patented technology, but not OK if another company does it?  Or does it just prove that Apple does a better job with p.r.?

Android v. Apple

Google suing Apple

Apple countersuing Google

But wait!  There’re more!  The other big players are also involved ….

Yahoo sues Facebook

Facebook v. Yahoo image


i4i sues Microsoft and wins …

Google (Motorola Mobile) sues Microsoft

Microsoft v. Motorola

Oh, hell, let’s just show ’em all……

Oh hell lets just show em all

And then there are those who blame the system….

Breaking:  Could some of the “big boys” finally be tiring of the game????

Napster to Spotify

Access to Music:
I attached some different articles that talk about Sean Parker’ s involvement with Spotify and how Metallica and other music artists are more interested in getting involved with Spotify.

Finally I found another article that shows how Spotify pays back the artists and record labels through royalties.

Online sales tax legislation gaining steam …

This article describes recent efforts to impose state sales taxes on online retailers.  As you might imagine, “bricks-and-mortar” retailers are complaining that their having to pay state sales tax, while many online retailers remain effectively exempt, is unfair.  There is also strong opposition to the bill, not least because the complexity of complying with 50 different jurisdictions’ sales tax laws can be confusing and oppressive.

Would it make more sense to have one flat tax paid by online sellers that have no geographic presence?  Are there alternative ways to fairly allocate tax responsibilities between online retailers and those with a physical presence?  Should online retailers not have to pay taxes at all?