IP News

On Nov. 28, 2005, the U.S. Supreme Court granted certiorari and will review the decision in MercExchange, LLC v. eBay Inc., 401 F.3d 1323 (Fed. Cir. 2005). The question presented by the petition was:

Whether the Federal Circuit erred in setting forth a general rule in patent cases that a district court must, absent exceptional circumstances, issue a permanent injunction after a finding of infringement.

In granting the petition, the Court also directed the parties to brief and argue the following question:

Whether this Court should reconsider its precedents, including Continental Paper Bag Co. v. Eastern Paper Bag Co., 210 U.S. 405, [28 S. Ct. 748, 52 L. Ed. 1122] (1908), on when it is appropriate to grant an injunction against a patent infringer.

MercExchange is the assignee of three patents, U.S. Pat. Nos. 5,845,265 (“the '265 patent”), 6,085,176 (“the '176 patent”), and 6,202,051 (“the '051 patent”), which relate to e-commerce technology. Petitioner eBay Inc. is the owner and operator of a Web site that allows buyers and sellers to exchange goods by participating in live auctions or by purchasing at a fixed price. This case involves the fixed-price purchasing feature of eBay's Web site. The other defendants named in the lawsuit were Half.com, Inc. (a wholly owned subsidiary of eBay) and ReturnBuy, Inc. Prior to trial, ReturnBuy entered into a settlement agreement with MercExchange. At the conclusion of trial, a jury found that eBay had willfully infringed claims 8, 10-11, 13-15, 17-18, 20-22, and 26 of the '265 patent and had induced ReturnBuy to infringe claims 1, 4, 7, and 23 of the '265 patent and that Half.com had willfully infringed claims 8, 10, 11, 13, 15, 17-18, 20, 22, and 26-29 of the '265 patent and claims 1, 5-6, 29, 31-32, and 34-39 of the '176 patent. The jury also found that neither the '265 patent nor the '176 patent was invalid. As a result, the jury found eBay liable for $16 million and Half.com liable for $19 million.

Following the verdict, eBay and Half.com moved for judgment as a matter of law that the asserted claims were not infringed and were invalid. In the alternative, eBay and Half.com moved for a new trial. eBay also moved to set aside the jury's award of damages for inducing ReturnBuy to infringe the '265 patent ($5.5 million). The district court denied the defendants' JMOL motions and Merc-Exchange's motion for a permanent injunction, but granted eBay's motion to set aside the damages award for inducement of infringement.