U.S. Supreme Court Deals a Blow to Patent Trolls

Anonymous Coward writes "Forbes is reporting that the Supreme Court has just limited the power of patent trolls to obtain permanent injunctions against infringers as a matter of course. The court has ruled that the principles of equity apply, meaning that a court considering slapping an injunction on the infringer must consider how much damage is really being done ... which in the case of EBay's Buy It Now feature, isn't much, since the company that owns this so-called patent only has it for the purposes of suing other people." From the article: "The high court's decision deals a blow to patent trolls, which are notorious for using the threat of permanent injunction to extort hefty fees in licensing negotiations as well as huge settlements from companies they have accused of infringing. Often, those settlements can be far greater than the value of the infringing technology: Recall the $612.5 million that Canada's Research in Motion forked over to patent-holding company NTP to avoid the shutting down of its popular BlackBerry service."

Comments

The problem with the "patent trolls" idea

[JanneM]

The problem with the "patent trolls" idea is that it's all but indistinguishable from the "small inventor with few resources" one in many cases.

This ruling does mean that if you're a small-time inventor that couldn't afford to implement your idea yourself, you can freely be ripped off by large corps that can, with impunity, since you wouldn't have made a lot of money without a major partner in any case.

Tell me again how patents are protecting the inventor against large corporations?

The Decision

[servoled]

The decision itself can be found here along with countless other places.

For the most part it is a pretty cut and dry decision stating that a 4-part based on the principles of equality should be applied before an injunction is granted. Specifically:

A plaintiff must demonstrate: (1) that it has suffered an irreparable injury; (2) that remedies available at law, such as monetary damages, are inadequate to compensate for that injury; (3) that, considering the balance of hardships between the plaintiff and defendant, a remedy in equity is warranted; and (4) that the public interest would not be disserved by a permanent injunction. See, e.g., Weinberger v. Romero-Barcelo, 456 U. S. 305, 311-313 (1982) ; Amoco Production Co. v. Gambell, 480 U. S. 531, 542 (1987) .

There is an interesting part of Thomas opinion:

Although the District Court recited the traditional four-factor test, 275 F. Supp. 2d, at 711, it appeared to adopt certain expansive principles suggesting that injunctive relief could not issue in a broad swath of cases. Most notably, it concluded that a "plaintiff's willingness to license its patents" and "its lack of commercial activity in practicing the patents" would be sufficient to establish that the patent holder would not suffer irreparable harm if an injunction did not issue. Id., at 712. But traditional equitable principles do not permit such broad classifications. For example, some patent holders, such as university researchers or self-made inventors, might reasonably prefer to license their patents, rather than undertake efforts to secure the financing necessary to bring their works to market themselves.

This basically lays out that just because a patent owner has no intention of selling or making the product does not mean that they automatically fail the 4-part test. Presumably if they also have no intention of licensing the patent to someone they would fail the test, but this isn't specifically said in the decision. Might be something to watch for in the future.

Off to read the two concurring opinions.