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eBay earns minor victory at Supreme Court

WASHINGTON—The Supreme Court handed online auctioneer eBay a narrow victory Monday, saying the company shouldn't automatically lose the right to use its "Buy It Now" sales feature because of a patent dispute.

The justices, led by Clarence Thomas, ruled unanimously that a lower court should have considered a number of factors before deciding whether MercExchange, a small Virginia company that holds the patent on "Buy It Now," can prevent giant eBay from using it. An appeals court had said previously that courts should issue permanent injunctions unquestioningly when patents are infringed.

The decision strengthens the position of eBay and many other high-tech companies that find themselves increasingly roped into disputes over the technology that powers or enhances their products. So-called patent "trolls," who buy patents they don't intend to use and then search for products that might infringe them, have become adept at using the threat of permanent injunctions to force big payoffs from the companies.

BlackBerry, the maker of the popular communication device, recently coughed up more than a half-billion dollars to settle a dispute with a company that essentially had patented the idea of "wireless e-mail." The owner of the patent never developed that idea into any usable product, but simply bought it and waited for someone else to do so, then sued.

The court swiped that powerful hammer Monday from the patent-holders' hands.

But the ruling doesn't end the dispute for eBay or anyone else. The lower court still could find in favor of MercExchange after considering the factors the high court demanded. And three justices, led by Chief Justice John G. Roberts, said in a concurrence that they believed that even after the court's standards were met, a permanent injunction almost always should follow.

The ruling came on a busy day that begins the court's yearly end-of-term crush, which should produce nearly 35 opinions over the next 45 days.

The justices also:

_Ruled that a group of Ohio taxpayers couldn't sue in federal court to stop the state from offering tax incentives to lure businesses. In a unanimous opinion written by Roberts, the court said the taxpayers had no standing under the Constitution to challenge in federal court the way a state spends tax dollars. Taxpayers still can pursue their claims in state courts.

_Said federal clean-water rules applied to dam operators who mainly extracted water from rivers and returned it without adding pollutants. The court said the possibility of discharge qualified the dams for regulation.

_Ruled that an insurance company that paid for a couple's injuries in an auto accident could recover those costs from a judgment the couple won in a civil suit that arose from the accident.

_Agreed to settle a dispute over a Clinton administration effort to get tough on polluting factories. The justices will hear arguments to determine whether plants that modernize and operate for longer hours have to get permission from the Environmental Protection Agency.

The eBay ruling springs from a dispute that typifies the problems that some high-tech firms are encountering with the features they advertise.

MercExchange holds a patent on certain direct-buy software that allows customers to go onto a site and purchase items at a set price. MercExchange invented the technology but hasn't used it since 2000.

It's not an invention like the internal combustion engine, as Roberts noted during oral arguments in the case. But it's an idea that MercExchange owns.

It's also almost identical to eBay's "Buy it Now" feature, so much so that a court found that eBay had willfully infringed MercExchange's patent when it introduced the feature.

In addition to a monetary award, MercExchange sought a permanent injunction against eBay. The trial court refused, saying MercExchange could be paid for the continued use. An appeals court reversed that decision, saying injunctions should be routine after patent infringements. eBay then appealed to the Supreme Court.

While many high-tech firms backed the online auctioneer, many research-based universities and pharmaceutical companies lined up behind MercExchange, saying the threat of injunctions was the only way to ward off potential infringers.

The Supreme Court told the lower court Monday to balance the interests of MercExchange and eBay to determine whether the injunction is appropriate. The court should consider the harm done to MercExchange, the possibility that money could solve the problem and the potential disservice to the public interest, the justices said.

For coverage of the U.S. Supreme Court ruling in the patent case in which MercExchange, LLC, had obtained an injunction against eBay in lower federal courts, here are FindLaw's links to:

_The opinion (eBay Inc. v. MercExchange, LLC): http://caselaw.lp.findlaw.com/scripts/getcase.pl?court=US&vol=000&invol=05-130

_The appeals court ruling: http://caselaw.lp.findlaw.com/data2/circs/fed/031600p.pdf

_The original verdict: http://files.findlaw.com/news.findlaw.com/hdocs/docs/ebay/mercebay52603vrdct.pdf

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(c) 2006, Knight Ridder/Tribune Information Services.

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