IP News

Supreme Court to Review Century-Old Precedent on Injunctions in Patent Cases

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.

The district court justified its denial of MercExchange's motion for a permanent injunction arguing that: 1) the public interest favored the denial in light of a growing concern over the issuance of business-method patents; 2) the defendants would attempt to design around the injunction, resulting in numerous contempt hearings to determine if changes to the defendants' systems violates the injunction; 3) MercExchange had made public statements regarding its willingness to license its patents; and 4) MercExchange had not moved for a preliminary injunction.

On appeal, the Federal Circuit, inter alia, reversed the denial of the permanent injunction. The Federal Circuit found that the “general rule is that a permanent injunction will issue once infringement and validity has been adjudged.” 401 F.3d at 1338. In so ruling, the Federal Circuit rejected the reasoning of the district court, finding that the district court's justifications did not warrant departure from the general rule.

USPTO to Issue Re-Exam Certificate for Lipitor Patent

The U.S. Patent and Trademark Office (“USPTO”) is planning to issue a re-examination certificate for U.S. Pat. No. 5,969,156 (“the '156 patent”), which concerns the crystalline version of atorvastatin, the active ingredient in Pfizer, Inc.'s Lipitor'. Lipitor, a cholesterol-lowering treatment, is currently the world's best-selling drug. The request for re-examination was filed by the Public Patent Foundation (“PUBPAT”), a small non-profit organization located in New York. In its request, PUBPAT argued that the '156 patent was anticipated by the Roth and Mills patents, both of which were not considered by the patent examiner during prosecution of the '156 patent. In granting PUBPAT's request, the USPTO found that a “substantial new question of patentability” was raised by the two prior art references.

The re-examination certificate comes after the USPTO rejected all 44 of the claims of the '156 patent on June 13, 2005, finding that the '156 patent was anticipated by U.S. Patent Nos. 5,273,995 and 5,686,104. Included in the allowed claims are 21 of the original claims, 13 amended claims and 73 newly presented claims. In the Statement of Reasons for Patentability and/or Confirmation, the Examiner stated that: “Claims 1-117 are allowed because they are directed to crystalline forms of atorvastatin which are not found in the prior art. More specifically, the prior art form of atorvastatin found in Mills et al (US 5,686,104) and Roth (US 5,273,995) are amorphous compared to the instant claims which are crystalline forms of the same compound.”

Judge Does Not Enforce Settlement in BlackBerry Case

Judge James Spencer of the U.S. District Court for the Eastern District of Virginia threw out the $450 million settlement between Research in Motion Ltd. (“RIM”) and NTP, Inc. that was reached in March 2005. When the agreement began to unravel, RIM asked the court to enforce the agreement. Judge Spencer also denied RIM's request to stay proceedings in the case until the USPTO completed a re-examination of the patents at issue.

On the same day of Judge Spencer's rulings, the USPTO rejected all claims in U.S. Pat. No. 6,067,451 (“the '451 patent”) in a “non-final” action. RIM had requested re-examinations of the patents involved in its dispute with NTP, including the '451 patent. So far, the USPTO has rejected all of the patent claims in the case, some of which are still pending final action. The USPTO stated that the present action “would have been a final rejection but for a new rejection based on a strongly anticipatory printed publication (Norwegian Telecommunications Administration report) (also known as “Telenor”) that was recently disclosed by the patent owner. … ”

Supreme Court to Review Century-Old Precedent on Injunctions in Patent Cases

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.

The district court justified its denial of MercExchange's motion for a permanent injunction arguing that: 1) the public interest favored the denial in light of a growing concern over the issuance of business-method patents; 2) the defendants would attempt to design around the injunction, resulting in numerous contempt hearings to determine if changes to the defendants' systems violates the injunction; 3) MercExchange had made public statements regarding its willingness to license its patents; and 4) MercExchange had not moved for a preliminary injunction.

On appeal, the Federal Circuit, inter alia, reversed the denial of the permanent injunction. The Federal Circuit found that the “general rule is that a permanent injunction will issue once infringement and validity has been adjudged.” 401 F.3d at 1338. In so ruling, the Federal Circuit rejected the reasoning of the district court, finding that the district court's justifications did not warrant departure from the general rule.

USPTO to Issue Re-Exam Certificate for Lipitor Patent

The U.S. Patent and Trademark Office (“USPTO”) is planning to issue a re-examination certificate for U.S. Pat. No. 5,969,156 (“the '156 patent”), which concerns the crystalline version of atorvastatin, the active ingredient in Pfizer, Inc.'s Lipitor'. Lipitor, a cholesterol-lowering treatment, is currently the world's best-selling drug. The request for re-examination was filed by the Public Patent Foundation (“PUBPAT”), a small non-profit organization located in New York. In its request, PUBPAT argued that the '156 patent was anticipated by the Roth and Mills patents, both of which were not considered by the patent examiner during prosecution of the '156 patent. In granting PUBPAT's request, the USPTO found that a “substantial new question of patentability” was raised by the two prior art references.

The re-examination certificate comes after the USPTO rejected all 44 of the claims of the '156 patent on June 13, 2005, finding that the '156 patent was anticipated by U.S. Patent Nos. 5,273,995 and 5,686,104. Included in the allowed claims are 21 of the original claims, 13 amended claims and 73 newly presented claims. In the Statement of Reasons for Patentability and/or Confirmation, the Examiner stated that: “Claims 1-117 are allowed because they are directed to crystalline forms of atorvastatin which are not found in the prior art. More specifically, the prior art form of atorvastatin found in Mills et al (US 5,686,104) and Roth (US 5,273,995) are amorphous compared to the instant claims which are crystalline forms of the same compound.”

Judge Does Not Enforce Settlement in BlackBerry Case

Judge James Spencer of the U.S. District Court for the Eastern District of Virginia threw out the $450 million settlement between Research in Motion Ltd. (“RIM”) and NTP, Inc. that was reached in March 2005. When the agreement began to unravel, RIM asked the court to enforce the agreement. Judge Spencer also denied RIM's request to stay proceedings in the case until the USPTO completed a re-examination of the patents at issue.

On the same day of Judge Spencer's rulings, the USPTO rejected all claims in U.S. Pat. No. 6,067,451 (“the '451 patent”) in a “non-final” action. RIM had requested re-examinations of the patents involved in its dispute with NTP, including the '451 patent. So far, the USPTO has rejected all of the patent claims in the case, some of which are still pending final action. The USPTO stated that the present action “would have been a final rejection but for a new rejection based on a strongly anticipatory printed publication (Norwegian Telecommunications Administration report) (also known as “Telenor”) that was recently disclosed by the patent owner. … ”