eBay changes everything: Patent trolls arrive at the Supreme Court and forever change the future of patent reform legislation

Last week, the Supreme Court granted certiorari in eBay v. MercExchange, a case directed squarely at the standard for granting injunctive relief in patent infringement suits. That legal standard, which currently results in the nearly automatic granting of an injunction once a patent is determined to be both valid and infringed, was the most controversial issue during the drafting of the Patent Act of 2005 earlier this year. Now, with the granting of certiorari, the injunctive relief issue stands to dramatically alter the future of the patent reform movement in the United States.

(Update May 15, 2006 - click here for an analysis of the Supreme Court decision)

The petitioner, eBay, seeks to change the standard in a manner that requires a court to consider various factors when determining whether a request for injunctive relief should be granted, including the extent to which the patentee makes use of the invention. This is exactly the same argument advanced by the Business Software Alliance during congressional patent reform hearings held earlier this year. The BSA had scored a major victory by getting an injunctive relief provision into the draft of the Act at the last minute, but suffered a setback when the provision was watered down with the introduction of H.R. 2795.

Now, as the issue moves out of Congress and into the Supreme Court, the argument for changing the legal standard is once again in the forefront. The granting of certiorari is another victory for the BSA agenda, particularly because the issue is now in absolutely pristine condition (free of all other patent reform proposals).

What does eBay mean for the future of patent reform legislation? I see three primary effects. First, the case very likely rings the death bell for H.R. 2795 as a vehicle for patent reform (if the bill isn’t dead already). Neither “side” (biotech/pharma and high-tech/software) has any motivation to advance that particular piece of legislation considering its attempt at compromise that has left both sides unsatisfied. Second, the case will very likely widen the chasm that already exists between these two sides on the proper scope and content of reform legislation, making future compromise in the legislative process even more difficult. Third, the case may shift the focus of future reform efforts in Congress as the losing side in eBay focuses its legislative resources on changing the law of injunctive relief as it stands after the Supreme Court decides the case.

A hearing in eBay will likely be held in April of next year and a decision is expected by June. Stay tuned.