In an Op-Ed piece in the New York Times entitled “Patently Ridiculous,” the editors state that “something has gone very wrong with the United States patent system.

That’s not really “new” as far as patent reform claims of this sort go but the editors do finally concede that the problem lies “not just with the short-staffed patent office, but also with the courts.” The article attempts to draw blame away from patent holders themselves and to shine light on the ease with which patent holders can get an injunction to shut down a competing business. Since injunctions are such a heavy hammer, many companies settle rather than fight it out à la RIM v. NTP.

The article provokes one to contemplate the questions raised by new technological advances. It also gives a nod to the fact that not everyone is effected equally — high-tech and pharmaceutical industries are at odds on reform since patents affect their businesses so differently. The bottom line is that an understaffed Patent and Trademark Office needs to work cooperatively with inventors to carve out their inventions’ proper niche.

Congress is currently looking at draft patent reform legislation to deal with the issue of patent infringement injunctions. Companies like eBay, which have to contend with the possibility that one device might be infringing hundreds of patents, want Congress to clarify existing rules that give district court judges discretion in deciding whether to issue injunctions while patent cases make their way through the appeals process.

The pharmaceuticals industry, by contrast, wants the legislation to reflect recent federal circuit court decisions – particularly the one eBay is appealing – which say injunctions against patent infringers should be standard during appeal except in extraordinary circumstances. Pharmaceutical and biotech companies tend to face fewer numbers of patents in developing a particular product and so immediate injunctions are more critical.

Meanwhile, in the eBay v. MercExchange case, the Court of Appeals for the Federal Circuit felt that eBay should be subject to an injunction in holding that a permanent injunction must follow all judgments of infringement unless such a decision would “frustrate an important public need,” such as protecting public health. Note that RIM made this argument against an injunction on testimonials that its Blackberry e-mail device, used by doctors and emergency workers, fit that description.

When deciding whether to grant injunctions, the other federal appellate courts use a four-part test where the courts consider whether the plaintiff will be irreparably harmed if an injunction is not issued, whether the plaintiff has some other adequate legal remedy, whether an injunction is in the public interest, and whether an injunction (or lack of one) would pose an undue hardship to the plaintiff or defendant. A much less hardline approach.

Counterbalancing all this is the importance of an injunction for the “little guy” in all this. The power of an injunction can be the only weapon that a small start-up has to combat it’s larger foes seeking to cruch it out of the marketplace using its vast cash resources. It’s all a matter of balance and, hopefully, the Supreme Court will provide some guidance. The U.S. Supreme Court has agreed to review the ruling in the eBay v. MercExchange case will begin taking up the general merits of that case on March 29, when it is scheduled to hear oral arguments.

The U.S. government filed its own brief in the case arguing that the court handling eBay’s appeal did not stick to a “general rule” but instead used ample “discretion” in issuing an injunction. The government said no special exemptions should be made in cases involving companies like MercExchange that do not make products using their patents but instead simply licence them. A 1908 Supreme Court decision established that injunctions can occur even if the patent holder itself has “‘unreasonably’ failed to practice its own invention.”

For a round-up of amici briefs in the eBay v. MercExchange case, see Dennis Crouch’s Review: EBay v. MercExchange Amici Briefs, Patently-O, March 13, 2006.

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