Bryan Trinh

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

Current state of MercExchange

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 In 2003 the district court found that eBay did in fact infringe upon their patent and was granted $25million.

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.

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

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.

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.

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.

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.

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.

Closing Remarks Questions ?