High Court Debates Rights of Inventors

From the Associated Press

The Supreme Court debated the rights of inventors Wednesday, weighing in on a dispute between EBay Inc. and a small Virginia patent holder.

The case's outcome could mean millions of dollars for inventors working in their garages or in large pharmaceutical labs -- including those who develop a product and those who opt only to patent ideas.

The dispute between San Jose-based EBay and MercExchange is one of several high-profile legal battles that are calling attention to the nation's patent laws, which some critics -- including Amazon.com Inc., Yahoo Inc. and Xerox Corp. -- say need updating to keep up with rapidly changing technology.

Justices won't decide whether EBay stole MercExchange's idea for selling goods via an electronic network. Rather, the court is being asked whether trial judges must automatically issue orders prohibiting use of an idea after juries find a patent violation.

EBay and other high-tech companies warn that patent-holding companies could use the threat of court injunctions to coerce larger firms into settling lawsuits for huge amounts of money.

Lawyers for the two sides traded barbs during the argument, with MercExchange accusing EBay of stealing its idea for selling goods in cyberspace and EBay calling the Virginia firm a "patent troll," a company that hoards patents for products it never develops.

Attorney Carter Phillips, who represents EBay, urged the court to level a playing field that he said favored patent holders who sit on inventions and sue when someone stumbles across similar ideas.

The EBay lawyer also complained that patent holders file lawsuits in certain parts of the country, such as Marshall, Texas, where they know they are likely to win big-money verdicts against larger companies.

"Everybody's in this for money," said Justice Antonin Scalia. "Why can't we let the market take care of the problem?"

Scalia also said the high court shouldn't rewrite patent laws "because we have renegade jurisdictions."

Chief Justice John Roberts signaled concern for protecting "the guy in his garage" who can't -- or doesn't want to -- build his invention. But he also seemed perplexed by the idea covered in patents that EBay and MercExchange are fighting over.

MercExchange's founder, patent lawyer Thomas Woolston, came up with the idea of using an electronic network of consignment stores that would ensure legitimacy of sales by taking possession of goods offered. EBay's system was based on the belief that buyers and sellers could deal directly.

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