High Court to Hear eBay Patent Case

The Supreme Court on Monday granted eBay's request for a writ of certiorari in a 2003 case, which found the auction site violated patents surrounding its "Buy it Now" feature.

A federal appeals court at the time awarded patent owner MercExchange $25 million in damages and granted a permanent injunction against eBay that would bar the site from using the feature.

A ruling in the case could have far-reaching implications for the technology industry. Some claim that the practice of granting injunctions in patent cases while they are on appeal cripple high-tech companies, and Microsoft and Cisco filed a joint amicus brief in support of eBay's case.

eBay will have until mid-January to file a brief with the Supreme Court. The company says it expects to have a hearing on the matter shortly afterwards. In the meantime, changes have been made to how the "Buy it Now" feature is implemented on its eBay and Half.com Web sites.

The U.S. Patent and Trademark Office is also reviewing the validity of MercExchange's patents.

"In filing its appeal, eBay took a lead role in challenging the constitutionality of the current rule, especially in cases where the patentee never intends to actually practice its inventions, but merely desires to enforce its patents for profitable license against others," intellectual property attorney Paul Stephens said.

"The debate almost came to a head this summer with the patent reforms being considered in Congress," he continued. "The current version of those reforms, however, excludes the originally-drafted changes that would have sought a new injunctive relief standard more favorable to market innovators like eBay."

MercExchange says it remains confident that it would prevail in the case, saying a judgement in eBay's favor would have to overrule established legal precendent.

According to the the MercExchange Web site, the company has already licensed its patent out to AutoTrader.com, uBid, Yahoo Overture, and Channel Advisor.