eBay escapes injunction after $35m patent dispute

The Supreme Court has unanimously set aside judgment in favour of eBay in its patent dispute with MercExchange, which may make it harder for claimants to win permanent injunctions against patent infringers.

The dispute began in 2001, when MercExchange sued eBay for infringing its software patent over the “Buy it Now” feature, which gives customers the option of buying an item at a set price immediately, rather than through bidding.

MercExchange won $35 million damages in the Eastern District of Virginia and then tried to stop eBay infringing in the future with a permanent injunction.

The judge denied MercExchange’s injunction bid, ruling that the company would not be harmed by eBay’s use of the feature.

MercExchange took the case to the U.S. Court of Appeals for the Federal Circuit which rejected the Virginia Court’s reasoning, prompting eBay to take the case to the Supreme Court.

The Supreme Court set aside judgment, sending the case back to the Eastern District of Virginia which originally sided with eBay over the injunction.

The decision favours large technology companies, which are vulnerable to injunctions resulting from patent suits with smaller companies to claim big settlement payments. But large pharmaceutical companies, which rely on injunctions to prevent generic manufacturers copying their drugs, may be worried by the ruling.