The Los Angeles Times is wrong in the discussion of the Supreme Court case, eBay v. MercExchange
In an editorial on the Supreme Court case eBay v. MercExchange, Los Angeles Times [May 17, B12] set:
[A]n short appeals [the Court of Appeals for the Federal Circuit, “CAFC”] ruled that MercExchange was automatically entitled to a court order against EBay.
In a unanimous ruling, the justices disagreed, not just with the appeals court but with a nearly 100-year Supreme Court precedent on patent law. That case, which arose out of a dispute over paper bag making techniques, held that a court order was mandatory in almost all cases of patent infringement, disproportionately rich license agreements.
On the “nearly 100-year-old” Supreme Court case, Justice Thomas wrote in the unanimous opinion on eBay:
Tea [district] The categorical rule of the court is also in tension with Continental Paper Bag Co. v. Eastern Paper Bag Co., 210 US 405, 422-430, 28 S. Ct. 748, 52 L. Ed. 1122, 1908 Dec. Comm’r Pat. 594 (1908), which rejected the argument that a court of equity does not have jurisdiction to grant injunctive relief to a patent owner who has unreasonably refused to use the patent.
Thomas’ opinion did not disagree with the Continental Paper case, contrary to what the Los Angeles Times said.
The CAFC did not state that MercExchange was automatically entitled to a permanent injunction. The CAFC went through the traditional 4-factor analysis to grant a permanent injunction and disagreed with the district court’s findings. The CAFC was wrong in suggesting that permanent injunctions be issued in the absence of exceptional circumstances.
The Times editorial also noted:
The patent office is also questioning some MercExchange patents, pointing to a fundamental issue that the Supreme Court did not address. The system generates too many bad patents, especially when it comes to business methods. Proposals that would significantly strengthen
the process has been repressed in Congress. Now that the Supreme Court has begun fixing the patent quagmire, lawmakers must finish the job.
On the subject of reexamination, I wrote in the February 2006 issue of Intellectual Property Today:
One of the reasons eBay provided the Supreme Court for the public interest factor in the 4-factor test on injunctions was the uncertain status of the validity of business method patents. In support, eBay’s brief noted that following the district court’s decision, the PTO had declared the claims for US 5,845,265 invalid. [In re-exam 90/006,956, filed by eBay under 37 CFR 1.510 on March 5, 2004, after the district court decision of August 6, 2003 in 275 F.Supp.2d 695, the PTO issued a non-final Office Action (signed on Feb. 11, 2005 but mailed March 24,
2005) rejecting claims 26-29 under 102(e) and claims 1-25 under 103 over US 5,664,111, the same art found not invalidating in the CAFC decision of March 16, 2005 (401 F.3d 1323).] To suggest that this was a more pervasive problem, eBay’s report stated that 74% of the time the PTO finds “the patent invalid” or
restricts claims. The eBay report did not mention that new examinations occur in only a fraction of the percentage of issued patents. The eBay report also quoted Cecil Quillen, 11 Fed. Cir. BJ 1, 3 to “estimate the rate of patent approvals by the PTO at 97%”. Sadly, Quillen and his co-author Ogden Webster never
estimated that the patent approval rate is 97%. Rather, they placed the Grant Rate in the range of 80% to 97%, with the upper limit of 97% invalidated by its recognition in footnote 17 that a patent can be issued from both a continuous application and a the corresponding main application. Although not mentioned in the
In the eBay summary, Quillen and Webster corrected their view of the subsidy rate number estimates the following year (12 Fed. Cir. BJ 35 (2002), discussed in 86 JPTOS 568 (2004)). In eBay’s report, the 97% number is not an accurate representation of what Quillen and Webster said or an accurate statement of the
patent grant fee at the PTO.
An earlier story in the Los Angeles Times had said:
The 9-0 decision in the closely watched case reversed a
court ruling that judges must almost always order the interruption of ordinary activities when it is determined that a company has infringed a valid patent.
The problem here is that only eight judges voted on eBay v. MercExchange.
The Los Angeles Times was wrong on many of the facts in the eBay case, even though it was wrong on matters related to the embryonic stem cell discussion. [Ebert, Lawrence. “Los Angeles Times Article Way Off Base on Stem Cell Issues.” EzineArticles 12 April 2006]