EBay takes on big pharma and the trolls

The US technology sector, led by eBay, is set for a Supreme Court showdown today with the companies it says risk strangling innovation through their exploitation of intellectual property laws.

The thing is, the world's largest internet auction house isn't just taking on a few pesky patent trolls. Rather, it's setting itself against the legal might of America's largest drug makers.

Today’s case, between eBay and a small American-based patent-holding company, MercExchange, will rule on whether companies whose patents are infringed may use court injunctions to stop others using protected technology, or whether they will be awarded only damages.

EBay has already been found to have infringed two patents held by MercExchange over the "buy it now" function on its site. This feature allows buyers to purchase items at a fixed price. However, eBay has not so far been required to stop using the function after a US district court decided not to issue an injunction and to instead award MercExchange damages.

If MercExchange gets its way, that will change and future disputes could see patent-holding companies enforce injunctions to take infringing businesses offline.

The impact this can have on businesses is clear. Research in Motion, the company behind the BlackBerry, was recently forced to pay a $612 million out-of-court settlement for alleged patent infringement,

Moreover, MercExchange has a weighty ally in the shape of Big Pharma. In a filing made on today's case, lawyers for the Pharmaceutical Research and Manufacturers of America wrote that if judges were not required to impose permanent injunctions it would "significantly undermine the confidence of innovators."

The debate would seem to be finely balanced: patent-hoarding companies that have no intention of bringing their ideas to market do little for innovation, but how do you dissuade such behaviour while protecting the research investments of true forward-looking firms?

Comments

[Martin]

Patent infringements can seem unreasonable when one business finds that it is infringing someone else's prior rights, but that's the rules we have to play by. First mover advantage wins every time.