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eBay in 'Buy It Now' Patent Dispute
smooth wombat writes "The Office of the Solicitor General of the United States has filed a brief with the Supreme Court, taking the side of MercExchange who is in a patent dispute with eBay over eBays Buy It Now feature. Two lower courts have already upheld MercExchange's patents including finding that eBay had willfully infringed on the Buy It Now patent.
Later this month the U.S. Supreme Court will hear oral arguments. The Office of Solicitor General is arguing eBay should be barred from using Buy It Now due to the decision of two lower courts that upheld MercExchange's patents. eBay is arguing that infringements should not automatically result in injunctions and shutdowns."
Whatever happened to the whole "non-obvious" part of a patent?
How is this different from a market order or a limit order? Are they going to sue the NY exchange or the NASDAQ next?
Without getting into the actual validity of either of these groups of patents, I think these types of patent wars are both inevitable and good. They are inevitable with a system that allows for patenting the kind of obvious and basic things ours does, and good because eventually, the government and the large companies that hold sway over it may soon realize the folly of our current patent system, when everything becomes patented, and nobody can build or do anything without horrendously expensive and complicated licensing. The more patents and patent snits like this, the better. Only when the system reaches "critical mass" will it implode.
"Who are in control, they are not in control of anything - they don't even control themselves!" - Glen Beck
I have not read the patent in detail. However, for a moment, assuming the article and summary are correct, then I think one of the big issues is whether or not a given business activity should be shut down/suspended when a patent challenger indicates infringement.
If eBay patently (no pun intended) infringed on the patent, then they must reach settlement with the patent holder, no doubt. But - I don't think the business activity should necessarily be shut down until such a settlement can be reached. (Please bear in mind that I'm over-simplifying to stimulate the point here...)
If a patent holder wishes to interrupt the business of an alleged infringer, there should be a fixed set of things that must occur before the alleged infringer must cease the patented activity or product. OTOH, two judges have already agreed that eBay is infringing. Are the judges' decisions enough evidence for suspension of activity or product?
A Passionate Independent Musician
It's not just that; the patent in the story covers every single retail outlet in the world. All of them have "buy it now" prices for their merchandise.
Rank my idea: http://www.sinceslicedbread.com/node/531
"...because eventually, the government and the large companies that hold sway over it may soon realize the folly of our current patent system..." Large companies will own the majority of useful patents ( when - on some rare occasion - some small company gets a good one, they will become a big company using the profits from the patent ) and will not want things to change. And governments will be influenced by the lobbyists hired by those companies.
Depending on how you lay things out, every vendor for the last, oh, 40'000 years (you know, since "you give club, I give sheepskin") has been "infringing" on this "patent". Basically what eBay is doing is they have a shop, on the web, where people can peddle their wares. The "buy it now" price is the selling price (the club, the sheepskin), and the "OBO" is covered by the auction logic.
What astounds me is that there is a person out there, who has managed to stand up on his hind legs, and is stating that this is his invention. How does this guy interface with other people? How does he stand being laughed out of every conversation where his job or his "abilities" come up? Is ripping off one of the rare successes from the internet bubble a legitimate career now? Do these guys have no pride whatsoever?
yes, we have no bananas
It's all fuckin' bullshit.
In fact, there is ton of prior evidence. Shoot, I myself have said "I'm selling my xyz thing, to whoever offers me the most for it. But if you give x $$$ I'll give it to you now."
I don't see the validity of patents like these. The workflow already existed. Just cause it's incorporated in a different medium does not seem to have validity before my eyes.
It's crap, everyone knows it....and in some ways, I am just waiting for enough of these crappy patents to happen that we say !@#$% the whole patent system and re-write the whole damn thing.
Patents should be issued for physical inventions - actual physical products that you can hold in your hand - a propeller-hat or Dippy Drinking Bird for example. Patents should not be issued for business methods - a.k.a. any idea that comes out of my ass at work. It's patents like these and the ones behind the Blackberry case that show that these types of patents are completely anti-productive and against the original purpose of the patent system.
Basically, they are existing ideas or "business methods" applied to a new medium. There's nothing novel or unique about them. Someone just said, Hey, you could do auctions on the Internet, let's patent that! or Hey, you can do email on a cell phone, let's patent that!. I might as well start applying for patents for Email in Space! or Auctions in Space! That'll make me rich.
These things are so stupid and obvious I'm surprised that Judges will uphold them. Technically I suppose they're probably just following the law and their hands are tied. But that just means that the law needs to be changed - fat chance of that though considering the lobbying power of the large patent holders.
infested with jello like fishes no melotron wishes
"Buy it now" isn't a "limit type order", which would be on the bidder side, not the sellers side. It's a slight variant on "or best offer" -- that is, "I'll sell this for $50 or best offer", the variant being that the $50 offer is only good until the first non-$50 offer. The idea that this is patentable merely because it's done as part of an online auction (as opposed to an online classified ad) is ludicrous (like much of the rest of the patent system).
Of course, MercExchange has dressed this simple idea up in excess verbiage to disguise the fact that it's neither novel nor non-obvious. EBay would probably rather not point that out as they have a bunch of similar patents on non-novel ideas.
Should court proceedings hinge on who has the biggest customer base?
I'm anti-patent in every way (even for the drug companies). Patents were initially meant to help the individual invent. Instead, we see it being used as device used to create new legal force where none existed before -- and it is never used to protect an individual.
Look at any average device patented today -- cell phones, TV remotes, even your fob for your remote keyless entry. How many of these patents really protects something completely unique that was invented without using a previous invention as a source? How quickly do other companies use the exact same technique with a slight change to work around the patents of others, and then patent this technique with the change?
Patents can not work to help the individual -- there is no ability to fix this system. In the long run, this will work counter the original intent: instead of protecting individuals, it has created a cartel of patent attorneys who will be happy to help the ultrawealthy find ways to keep the average inventor out of the market.
Patents create incredible high costs to enter any market nowadays. When I sold paintball markets ("guns") at retail, I was amazed at the amount of lawsuits between various manufacturers all protecting the same basic idea. Do a search for "Smart Parts Patent" to see the most ridiculous patent around -- the electric switch.
Want to level the playing field? Just give up the patent schemes entirely. Let people admit that their inventions are based on the prior inventions of others. Making something better doesn't create a marketable product: the invention itself is only a small part of bringing something to the consumer. I believe the patent process is the reason we see fewer inventors and less research and development. $1 for R&D means $5 for the patent attorneys.
This is the great thing about software patents. Change three words and voila, a new patent.
I'm not a lawyer, exactly, but I have some law school under my belt.
That said, I think the patent in question would be US5845265: "That when a bona fide purchase price is tendered by a participant 900 or another retailer 902 the legal title to a good as represented by the record will transfer to the buyer with an immediate or nearly immediate finality to the transaction." That is, the listing closes the instant the fixed price is met.
Note that this is one of the earlier ones listed; the patent you gave actually references Ebay as prior art.
There are a couple of interesting things here. What I find most unique in MercExchange's patent constellation is the idea of virtual transfer of ownership of items among possibly competing virtual stores which all exist within the same patent system. This would be just like ebay stores, except they would exchange goods electronically between each other and relist them in hopes that better advertising or a new virtual store location will bring a better sale. Also, they have some fairly hilarious stuff about using a "sound blaster" for "audio stream cues" of an actual auctioneer announcing bids. Thanks, but no thanks.
I take the limit price that you mention as a buyer submitting a quantity and maximum price for an item, and if a suitable item is posted at a below price, a buy will automatically take place. This is sort of a reverse auction, not a buy it now.
That aside, I side with Ebay regarding the injunction issue. Companies which purely license patents, as opposed to create products, should not be allowed to halt the businesses of operating companies until the patent dispute is finalized. That's not necessarily how the law sees it, though.
In my quick review I didn't see anything about combining fixed price offerings with auctions, and especially the ebay model of offering the fixed price only until a lower bid is submitting, at which case the fixed price offer is withdrawn and a regular auction continues. I think this makes ebay's system sufficiently unique. I'm sure ebay's lawyers are on top of that one, though.
All that aside, patents suck ass. And it's a slow day at work.
~e
I believe this is correct - the 'offer to tender' is the price on the label. There's nothing which says it actually has to be sold for that price.
How many people can read hex if only you and dead people can read hex?
Certainly the sticker price for a car is the "buy it now" price, even though the vast magority of people will make a counter-offer that the car dealer will accept.
Right now I am unsure about whether or not I should be safe when crossing the street. Someone just might have patented the obvious "look both ways" activity prior to making an attempt at crossing.
"Buy it now" is just OBVIOUS and should be revoked as a patent. It's ridiculous that business methods are patentable in the first place. Who ever thought "You can't do business in the same way that I do!" was a good idea? Has someone patented the idea of "do a good service for your customers?" That would go a long way to explain why so many industries do not seem interested in good customer service.
I'm hopeful that the business method and software patents are continually blocked in the EU. The EU is our last real hope as possibly reversing the damage that has been done to the system in the U.S.
"The patent seems rather focused on e-commerce and on there being both an auction (best offer) and a "direct buy" (buy it now) price"
This concept is not exclusive to e-commerce and is likely as old as the concept of auctioning. It is certainly as old as the concept of haggling. Regardless, an existing concept does not become unique or non-obvious simply because it is implemented online.
Any practice that has been used in trade for over 100 years is obvious and has over 100 years worth of prior art. Using such a practice on a website does not suddenly make it a new patentable practice.
How can someone even claim "buy it now" is a tangible invention in the first place? Concepts and ideas are not supposed to be patentable!
You are so right. Back before Ebay even had a "Buy it Now" I would look at an auction and think, "Damn, I wish I could just buy that now".
Maybe there should be a clause in the patent code that says, "if it is so stupendously obvious that any fucktard would have eventually thought of it you can't patent it."
Every invention involves using using other things that are already invented. Otherwise it wouldn't be possible ot make head or tails of them.
It's using those pieces in novel ways that constitutes invention.
Consider: a lever is one of the "basic machines". It occurs in copious numbers in a wide variety of machines. But supposing I find a place in the drive train where adding one doubles fuel economy. Would it not be an invention because it combines two things that already existed?
By analogy (which is how legal precedent works after all -- analogy to paradigmatic cases), just because some commercial mechanism already exists doesn't mean that you can't patent adding that mechanism to a business method, provided it hadn't been done before or is not otherwise obvious.
Post may contain irony: discontinue use if experiencing mood swings, nausea or elevated blood pressure.
USPTO link for 5,960,411
Then again, Buy It Now does involve more than one step...
I'm an inventor and I have invented a very simple product that I would like to put in the market. In many respects the product is obvious and the best way to do it is a little more expensive than a poor boy solution and has been used for probably 1000's of years. However I'm afraid that some dumb ass will think that its non-obvious and the patent office will of course have agreed so if I create the product and hense create some jobs I'm afraid I'll be sued.
OTOH there is a poor boy solution that probably is patentable and probaby has not been patented and is actually easy to do but not quite obvious. If I spend my time and money and get a patent then I cannot defend a patent attack.
Purely and simply the system acts as a restraint on trade. The consequence is that people who are aware of the legalities may choose to not do business and the obvious consequence of this is higher prices and fewer jobs. A not so obvious consequence is that the product I am looking at is really a very effective saftey measure and without it people can get injured!
The district court and the Court of Appeals have already decided that eBay is infringing the patent. The patent is a business method patent, and as with most business method patents, it is fairly obvious. Nevertheless, the Patent Office is in the unfortunate habit of granting these stupid patents.
So, eBay is infringing. The Supreme Court will not even be reviewing that fact. The real question in the case is whether or not MercExchange can get a permanent injunction, disallowing eBay from using the Buy It Now feature until they reach a licensing agreement.
The district court sided with eBay on the issue, saying that the hardship an injunction would create for eBay outweighed MercExchange's property right in their patent.
The Court of Appeals reversed, citing the "usual rule" that a permanent injunction would be granted unless there are "special circumstances" involved.
The Supreme Court is reviewing the question of whether a court should presume that an injunction should issue, or whether the court should look at the individual case and decide whether it is necessary and/or appropriate to issue the injunction. More specifically, the sole question the Supreme Court has certified is:
Here is the docket for the case, the Question Presented in the case, and a great summary of the arguments for either side.
barzelay.net
From reading this Amicus brief, it appears the issue is that the rule in the courts has evolved from authorization to issue injunctions "in accordance with the principles of equity" to a situation where a patent holder is entitled to an injunction "absent exceptional circumstances."
The brief makes a pretty good point about why that's not appropriate in terms of the financial services industry. I'm not sure that the fact that ebay has a ton of customers who could continue to auction things without a 'buy it now' price means an injunction would be inequitable. If ebay is considered a willful infringer, it seems like you have to enjoin them in circumstances short of huge disruptions to non-parties.
Without question, you are correct.
Now, please tell me how assigning a retail price to an item is novel and I'll gladly concede that MercExchange isn't a pack of frickin' thieves that would have been dragged out and shot in less litigious times.
Dewey, what part of this looks like authorities should be involved?
In the mid 90s, I went to a big store near where I live to buy a TV. Another nearby store was sellig the same TV for approx 10% less, but their service sucks.
I made the store where I bought it an offer of 7.5% below their price, and they accepted. THey asked why I did that, but noone looked funny at me, rather, the clerk had to check with his boss and then made the deal..
Oh, and if you ever get to places in South East Asia, people won't look funny at you at all for sucha thing, rather, they laugh their ass off behind your back for not doing it (you often end up paying twice or more of what you should)
At any rate, that such concepts can be patented is one of the best signs I've seen so far that the USPTO approves things that it really really shouldn't, and again makes me doubt the level of understanding and intelligence of those who approved this patent.
Prior art + prior well known motivation == obvious in the legal sense. Both clearly exist in this case (not to mention the concept is obvious in the common sense of the word as well)