Intellectual Property Law

eBay and MercExchange have agreed to settle what has become one of the most important patent infringement cases in recent memory.  According to a press release issued by eBay yesterday, "[a]s part of the settlement, eBay will purchase all three patents involved in the lawsuit, as well as some additional related technology and inventions and a license to another search-related patent portfolio that was not part of the asserted lawsuit."  Ebay Inc. Press Release  Financial terms of the settlement were not released.

The action dates back to 2001, when MercExchange sued eBay for infringing its patents relating to online auction systems.  The case eventually ended up before the Supreme Court, which issued a decision in 2006 rejecting the Federal Circuit's holding that an injunction should ordinarily issue after a finding of patent infringement.  126 SCT 1837  The Supreme Court instead required that a plaintiff seeking a permanent injunction satisfy the traditional four-factor test before granting injunctive relief. 

The eBay decision is widely regarded as one of the most significant opinions in the patent area in recent years as it has fundamentally altered the bargaining power of those involved in patent licensing discussions.  While patent holders previously wielded enormous leverage with the threat of an almost-certain injunction if infringement were found, the eBay decision has greatly reduced this leverage.

Today?s Blogger:  Jeff Fisher