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Supreme Court Chooses the Middle Ground in the eBay Case

By Alexander Poltorak
June 28, 2006

The landmark decision of the Supreme Court in MercExchange LLC v. eBay, 547 U.S. __ (2006), has left many inventors and patent owners disappointed, as the Supreme Court sided with eBay and set aside the prior decision of the Court of Appeals for the Federal Circuit ('CAFC'). A closer reading of the decision, however, seems to indicate a balanced approach that gave both sides something to brag about.

A jury in the Eastern District of Virginia found that MercExchange's patent for an electronic exchange was valid, and that online auctioneer eBay and its affiliate Half.com had willfully infringed it though eBay's fixed-price 'Buy-it-Now' feature. They awarded MercExchange damages in the amount of $35 million. Following the jury verdict, the judge denied MercExchange's motion for a permanent injunction. The CAFC reversed that ruling, applying its 'general rule that courts will issue permanent injunctions against patent infringement absent exceptional circumstances.' The Supreme Court remanded the case to the District Court, stating that the District Court and the CAFC both erred by departing from the four-factor test in opposite directions.

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