Patent Infringement & Resolution

BlackBerry is Saved by a Settlement: The Maker of Email Device Agrees to Pay $612.5 Million to Resolve a Patent Challenge

Patent infringement claims are easy to make and difficult to disprove. Just ask Research in Motion (RIM), eBay, Amazon, Dell and a host of other technology companies currently up to their legal eyeballs in patent litigation.

To these tech powerhouses, the patent system simply isn't fair. As tech sees it, trolls are patent litigation firms that buy patents not to use and to license the technology, but to initiate infringement lawsuits against those companies that are using the technology in a predominately non-infringing manner, as these people [trolls] acquire portfolios of patents, there's been an explosion of cease and desist letters and actual litigation, lawsuits called "opportunistic litigation."

For years, permanent injunctions were a classic remedy for patent infringement. If Company A is infringing on Company B's patents, the courts were likely to shut down A to minimize the damage to B.

eBay’s “Buy It Now”

In a case that will be heard by the Supreme Court later this month, eBay is facing much the same dilemma. MercExchange, another Virginia patent holding company, successfully claimed in 2003 that eBay's "Buy It Now" system infringed on patents held by MercExchange.

A Norfolk, Va., jury awarded MercExchange $35 million in damages, but, significantly, the presiding judge decided an injunction against eBay was unnecessary. MercExchange appealed and a U.S. Court of Appeals agreed with the company: a permanent injunction against eBay using Merc's "Buy It Now" process was in order.

The Appeals Court said the law dictates that a permanent injunction be issued once infringement and invalidity are established, except in cases of public safety. One small problem: the Patent Act does not require permanent injunctions. It expressly states that courts "may grant injunctions in accordance with the principles of equity."

In other words, judges have the option to impose an injunction, but they do not have the pull the trigger if money can make the litigation winner whole. If eBay prevails, those huge settlements may be considerably diluted. Courts would still have the power to impose an injunction, protecting legitimate claims, but only when the equitable situation demands