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Thursday, March 30, 2006
Patent System Questionned in eBay Case

In the eBay versus MercExchange case, some U.S. Supreme Court justices suggested on Wednesday that the patent at the heart of the suit may be too vague and trivial to even be taken seriously.

Patent holder and small U.S, technology firm, MercExchange sued eBay in September 2001, accusing it of patent infringement through the "Buy it Now" feature, which allows shoppers to stop the auction process and purchase items at a fixed price.

A federal appeals court sided with MercExchange and granted it an injunction against eBay. The injunction is currently on hold as online auction house eBay is threatened to have one of its core services to shut down.

During the oral argument at the Supreme Court, chief Justice John Roberts drew laughter from the court audience when he made a quip about his interpretation of MercExchange's patent.

"It's displaying pictures of your wares on a computer monitor and picking the ones you want. I might be able to do that.It's very vague." he said.

eBay argues that judges should be able to deny injunctions in patent cases and instead choose to fine the perpetrator. The current threat of having their services immediately closed down if they are found guilty of patent abuse is unfair, according to the company.

It further adds that it leaves large technology companies such as itself open to victimisation and attack from small "patent trolls", who use the threat of immediate shutdown orders to force out-of-court settlements for huge sums of money.

Not all justices expressed skepticism about the patent though. Justice Antonin Scalia for instance, questioned eBay's argument that companies should be treated differently if they don't actually use the patents they own in business just like MercExchange.

"Why should we draw a distinction between the solo inventor who needs a patent speculation firm to market his invention and somebody else?" Scalia asked. "We're talking about a property right here, and a property right is the exclusive right to exclude others. That's what a patent right is ... give me my property back."

The lawsuit is part of a broader debate over the future of the U.S. patent system,involving the software and pharmaceutical industries as a verdict in favour of eBay would set a new precedent.

ebay claims that since the first 2003 court case it has sufficiently altered its "Buy it Now" tool to avoid breaching MercExchange's patents, but it remains to be seen what will be the final verdict of the Supreme Court that scheduled for June.

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