'Buy It Now' Lives On - For Now - InformationWeek
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7/30/2007
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David  DeJean
David DeJean
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'Buy It Now' Lives On - For Now

A Federal District Court judge in Virginia on Friday ruled against patent troll MercExchange's request for an injunction that would prohibit eBay from using its "Buy It Now" feature. It's a victory in the ongoing struggle to fix the badly broken patent system, but it doesn't address the real issue: MercExchange should never have gotten a patent for something as simplemindedly obvious as "Buy It Now" in the first place.

A Federal District Court judge in Virginia on Friday ruled against patent troll MercExchange's request for an injunction that would prohibit eBay from using its "Buy It Now" feature. It's a victory in the ongoing struggle to fix the badly broken patent system, but it doesn't address the real issue: MercExchange should never have gotten a patent for something as simplemindedly obvious as "Buy It Now" in the first place.Judge Jerome B. Friedman's decision to permit eBay to continue to use "Buy It Now" was landmark of a sort. Historically an injunction has been almost automatically granted to any patent-holder that asks for one. But last year the Supreme Court overturned an appeals court's ruling against eBay, putting a stake in the heart of a "general rule" in patent suits that a permanent injunction should follow a finding of infringement of a valid patent.

eBay had been found guilty of infringement, and was eventually ordered to pay $25 million to MercExchange. But the Supremes evidently thought there was something undeserving about using a patent like a six-gun in a stick-up.

The unanimous decision (written, oddly enough, by Justice Clarence Thomas, who hardly ever favors a status that isn't quo) gave the boot to any "general rule." It said that requests for injunctions should be decided by the trial judges, and they should apply the same four-factor test that is used to judge requests for injunctions in more general cases. In that test a plaintiff must:

  • show it has suffered an irreparable injury
  • prove that remedies available at law, such as monetary damages, are inadequate to compensate for that injury
  • demonstrate that, considering the balance of hardships between the plaintiff and defendant, a remedy in equity is warranted
  • show that the public interest would not be disserved by a permanent injunction.

The decision effectively drew a distinction between patent suits brought by companies that are actively competing in the marketplace and those brought by companies like MercExchange that aren't active market participants. It's not surprising it took MercExchange most of a year to get around to renewing its request for an injunction, and Judge Friedman's decision shows why the company hesitated so long. He didn't just deny their request. He slapped them around.

The New York Times on Saturday carried the same Associated Press story other newspapers did, but it included a paragraph other papers didn't that quoted the judge's decision. It makes heartening reading:

"MercExchange has utilized its patents as a sword to extract money rather than as a shield to protect its right to exclude or its market share, reputation, good will, or name recognition, as MercExchange appears to possess none of these."

So at last patent trolls are being recognized for what they are. That's half the battle. Thank you, Judge Friedman.

Don't get me wrong. Patent licensing is a valid business, a way to reward inventors for their innovations and ensure that the benefits of that innovation are recognized in the marketplace. But patent licensing is a valid business only as long as the patents it licenses are valid.

That's the issue the Supremes should tackle: the MercExchange patent, and thousands more like it that cover software and business processes should never have been granted in the first place. A decision by the Supreme Court that the U.S. Patent and Trademark Office's decision to grant such patents has done irreparable damage to U.S. businesses like eBay would go a long way to resolving the mess. It should halt the practice and invalidate patents issued under such illegal terms.

And making the Patent Office liable for the judgment against eBay would carry a certain amount of poetic justice, as well.

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