[Ecommerce] Is the troll the scary thing under the bridge?

[Manon Ress]

and other good quotes:

Supreme Court weighs in on eBay patent fight

http://www.siliconvalley.com/mld/siliconvalley/news/editorial/
14213626.htm

On the web: Case docket (eBay v. MercExchange)
http://supreme.lp.findlaw.com/supreme_court/docket/2005/
march.html#05-130

On the web: Amended complaint

WASHINGTON (AP) - The Supreme Court debated the rights of inventors
Wednesday, weighing in on a dispute between eBay and a small Virginia
patent holder.

The case's outcome could mean millions of dollars for inventors
working in their garages or in large pharmaceutical labs -- including
those who develop a product and those who opt only to patent ideas.

The dispute between eBay, the San Jose, Calif.-based Web-based
marketplace, and MercExchange is one of several high-profile legal
battles that are calling attention to the nation's patent laws, which
some critics -- including Amazon.com, Yahoo! and Xerox Corp. -- say
need updating to keep up with rapidly changing technology.

Justices won't decide whether eBay stole MercExchange's idea for
selling goods over an electronic network. Rather, the high court is
being asked whether trial judges must automatically issue orders
prohibiting use of an idea after juries find a patent violation.

eBay and other high-tech companies warn that patent-holding companies
could use the threat of court injunctions to coerce larger firms into
settling lawsuits for huge sums of money.

Lawyers for the two sides traded barbs during the argument, with
MercExchange accusing eBay of stealing its idea for selling goods in
cyberspace and eBay calling the Virginia firm a ``patent troll,'' a
company that hoards patents for products it never develops.

``Is the troll the scary thing under the bridge,'' asked Justice
Anthony M. Kennedy, ``or is it a fishing technique?''

``For my client,'' attorney Carter Phillips said, ``it's the scary
thing under the bridge.''

Phillips, who represents eBay, urged the court to level a playing
field that he said favors patent-holders who sit on inventions and
file lawsuits when someone stumbles across similar ideas.

The eBay lawyer also complained that patent-holders file lawsuits in
certain parts of the country, such as Marshall, Texas, where they
know they are likely to win big-money verdicts against larger companies.

``Everybody's in this for money,'' said Justice Antonin Scalia. ``Why
can't we let the market take care of the problem?''

Scalia also said the high court shouldn't rewrite patent laws
``because we have renegade jurisdictions.''

Chief Justice John Roberts signaled his concern for protecting ``the
guy in his garage'' who can't -- or doesn't want to -- build his
invention. But he also seemed perplexed by the idea covered in
patents that eBay and MercExchange are fighting over.

MercExchange's founder, patent lawyer Thomas Woolston, came up with
the idea of using an electronic network of consignment stores that
would ensure legitimacy of sales by taking possession of goods being
offered. eBay's system was based on the belief that buyers and
sellers could trust each other and deal directly.

A jury sided with MercExchange, finding that its business method
patents had been infringed, and awarded the patent-holder $35 million.

A trial judge later reduced the award by $5.5 million and refused to
grant a permanent injunction, ruling that MercExchange would not
suffer because it had not used its inventions commercially and had
expressed an interest in licensing its patents to eBay.

Waxman told Roberts he was not a ``software developer'' and could not
explain the technical aspects of the disputed patents, adding, ``I
have reason to believe neither is your honor.''

Roberts conceded as much. But displaying pictures of goods for people
to pick what they want to buy didn't strike the chief justice as
anything special.

``I might have been able to do that,'' he said.

The case is eBay Inc. v. MercExchange, 05-130.

----

On the Net:

Supreme Court: http://www.supremecourtus.gov

************************************************
Manon Anne Ress
manon.ress@cptech.org,
www.cptech.org

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