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Patent Law: eBay's Loss a Small Gain for More Reasoned Approach to Intellectual Property
[May 17, 2006]

Patent Law: eBay's Loss a Small Gain for More Reasoned Approach to Intellectual Property

By TMCnet Special Guest
Author: Gene Retske
With all the bad news on patents, there was a glimmer of good news recently for anyone concerned about over the overall direction that patent law is taking. You may recall that eBay was sued by a company that has been described as a “patent troll,” a company whose only business is to acquire patents and enforce them.

Acquiring and enforcing patents can be a highly profitable business, especially for a law firm that has the assets to vigorously pursue them. It turns out that many of the almost 1000 patents that are issued every day are owned by lawyers.

Where you stand on patent law today probably depends on which end of a claim letter you happen to end up. If you have a patent, and see others infringing it, you want rigorous enforcement. Conversely, if you receive a letter from a patent attorney, you are likely to be more skeptical about the current state of patent law.
Complicating the picture is a mid-1990s law that enables so-called “business methods” patents. It was this type of patent that Amazon successfully enforced against Barnes & Noble over “One Click” ordering of books and other products. Patents in 1789 had to be for actual hardware; in 2006 you can patent business methods, which are very close to simple ideas.

One very powerful tool that patent trolls now have is the “automatic” issuance of a restraining order once a jury verdict is issued, effectively stopping the alleged infringer from using the “purloined” technology. This puts the defendant out of business before the appeals process starts, and is a strong reason not to appeal decisions. And, because these patent cases are not often appealed, they have not had higher court review.

But, eBay was sued over, and lost, a patent case regarding the use of fixed prices in an auction. Yes, Virginia, there was a patent covering fixed price auctions. eBay held on, and the Supreme Court ruled that the restraining orders in patent cases need not be automatic. The actual ruling is a lot more complex than that, but this is the essence.

While not be earth-shaking, this is a small victory—and perhaps the door to a more reasoned approach to Intellectual Property has been opened. It is time for Congress and the courts to address where we have come since the first patent law in 1789. The march of technology has significantly increased its pace, and software driven systems have blurred the line between abstract idea and patentable technology.

Gene Retske is a telecom expert, and widely published author, including two best-selling book. He also provides expert witness and litigation support services. He can be reached at [email protected], or through his website,

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