Bryan Trinh

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• Bryan Trinh

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Background

• MercExchange, a small Virginia based company,
  held two patents on ecommerce granted in 1998 at
  the time when the company tried to establish
  itself as an online auction site.
• They left that market because of competition in
  2000 and adopted a new business plan

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Current state of MercExchange
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The First Case

• MercExchange filed two cases of infringement, one
  of which was tried.
• The Buy it Now feature in eBay went to court in
  2001.
• In 2003 the district court found that eBay did in
  fact infringe upon their patent and was granted
  25million.

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Injunction

• MercExchange then filed for a permanent
  injunction against eBay.
• This would prevent eBay from further using the
  Buy it Now feature on their website.

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The First Verdict

• The district court claimed that the injunction
  was uncalled for and that monetary compensation
  would be adequate.

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Second Verdict

• An appeals court overturned the decision
• This was potentially important because it would
  set a precedence that would lead to other such
  injunctions when a patent was infringed upon.
• At the time injunctions commonly followed when a
  patent was found to be infringed upon.

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Third Verdict

• eBay applied for an appeal before the Supreme
  Court on the basis that, automatically ordering
  an injunction once a patent is infringed would
  cripple the high tech companies.
• The Supreme Court ruled in favor of eBay under
  the four-factor test. All four of which must be
  satisfied in order to grant a permanent
  injunction.

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Four Factor Test

• Plaintiff must demonstrate
• That it has suffered an irreparable damage
• Remedies available at law are not adequate to
  compensate for the injury. (ie. money)
• A remedy in equity is warranted in light of the
  balance of hardships between the plaintiff and
  defendant
• The public interest would not be disserved by a
  permanent injunction.

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Final Verdict

• Supreme court ruled unanimously that in order for
  a party to gain the right of permanent injunction
  they must be able to meet the four factor test.

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Brief

• Before this case the current state was that many
  injunctions were handed out after a patent was
  found to be infringed upon
• The system somehow created a market in which
  companies built their businesses off of
  proactively searching for technologies that
  infringed their own patents.
• Some went to the extent of buying patents just to
  press charges.

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Closing Remarks

• Questions ?