Agustin Del Rio CalNet ID: 20772280 Date: October 27th, 2008
eBay uses technology for which MercExchange owns patents.
U.S. Patent 5,845,265.
In 2000, eBay initiated negotiations to outright purchase MercExchange's online auction patent portfolio.
This option allows the seller to specify a price at which he/she would be willing to sell, ending the usual auction procedure. For a buyer, the buy price offers an opportunity to stop the auction process and guarantees that he/she receives the item at this posted price.
BIN was introduced on eBay in 2000 and has become increasingly popular. One reason for the popularity of the BIN option may be the ever-expanding role of retailers on eBay.
BIN allows retailers to sell products via eBay in a form that approximates a posted price.
Use of the feature has grown over the years. In the fourth quarter of 2005, it accounted for about a third of the $12 billion in transactions on eBay.
TITLE 35 > PART III > CHAPTER 29 > § 283 INJUNCTION:
The several courts having jurisdiction of cases under this title may grant injunctions in accordance with the principles of equity to prevent the violation of any right secured by patent, on such terms as the court deems reasonable.
In determining whether or not a particular use is fair, the law states that at least four factors should be taken into consideration:
The purpose and character of the use
The nature of the work
The amount and substantiality of the portion used in relation to the work as a whole
The effect of the use on the market or potential market for the original work
The case began in 2001
MercExchange sued eBay, accusing it of willfully infringing three electronic commerce patents held by Thomas Woolston, founder of MercExchange, which he calls a network engineering firm.
In 2003, a federal court jury in Virginia found that eBay was violating two of the three patents, including the Buy It Now patent.
The court eventually ordered eBay to pay $25 million in damages.
But the judge presiding over the case refused to issue an injunction that would have barred eBay from continuing to use the patented methods in its Web operations.
The Supreme Court agreed to hear the case after the United States Court of Appeals for the Federal Circuit, overturned the lower court's decision and ruled that MercExchange was entitled to an injunction.
The appeals court said that injunctions were the "general rule" in patent infringement cases, and should be withheld only in such "rare instances" as "the need to use an invention to protect public health.“
In his decision to withhold the injunction, the district court judge noted that MercExchange "exists solely to license its patents or sue to enforce its patents, and not to develop or commercialize them."
The Supreme Court overturned the Federal Circuit's approval of the injunction.
It also ruled that District Court erred in denying an injunction on the basis that MercExchange does not itself practice the patented invention.
"That test requires a plaintiff to demonstrate: (1) that it has suffered an irreparable injury; (2) that remedies available at law are inadequate to compensate for that injury; (3) that considering the balance of hardships between the plaintiff and defendant, a remedy in equity is warranted; and (4) that the public interest would not be disserved by a permanent injunction. The decision to grant or deny such relief is an act of equitable discretion by the district court, reviewable on appeal for abuse of discretion. (...) Neither the District Court nor the Court of Appeals below fairly applied these principles."
On July 30, 2007, the District Court once again issued an order denying the injunction, ruling that, based on MercExchange's history of licensing or attempting to license the patent, monetary damages were sufficient remedy.
On February 28, 2008, the parties announced that they had reached a settlement after six years of litigation. Under the settlement, MercExchange was to assign the patents to eBay; the terms of the settlement were otherwise confidential.