ebay patent case

[ibolui82]

What is the name of your state? not in US

hi, i have read the article about ebay patent case from internetnews.com. ebay was ordered to pay $35m to MercExchange because of patents problem. i am quite confused about the whole thing, and will like to seek help. i hope someone can take a little time to clear my doubts. thank you.


i wish to know why is only ebay being sued? there are also many auctions website operating in the US like ubid.com and yahoo! auction. if the patents are filed in the US and if they are valid, wouldnt all those auctions websites infringed the patents as well?


does the patents apply to other countries as well? for example the patents are being filed in the US. but in other country like china or japan, if there are similiar auction websites like ebays, will they infringed the patents as well?

 

[divgradcurl]

"i wish to know why is only ebay being sued?"

The patent holder may choose to enforce his patent or not against whomever he wants. In this case, maybe he has already sued everyone else, but they didn't make the paper. The othert guys may have taken a license to avoid a lawsuit. Another possibility is that if they sue the biggest guy on the block -- eBay -- and win, then the smaller guys may be much more willing to go into a licensing negotiation than they would have prior to the litigation.

"the patents are filed in the US and if they are valid, wouldnt all those auctions websites infringed the patents as well?"

There may be something unique about eBay's auction system such that only eBay infringes on the patent. Who knows -- infringement is a complicated issue -- you would really have to delve into the patents being asserted and the specifics of each auction system in order to determine if infringement was likely to be occuring.

"does the patents apply to other countries as well"

Yes and no. A U.S. patent holder can assert the patent against foreign companies who import an infringing item into the U.S. and prevent them from importing (and maybe even enforce a judgment if they have assets here in the U.S.), but the patent holder cannot assert a U.S. patent in a foreign country.

"example the patents are being filed in the US. but in other country like china or japan, if there are similiar auction websites like ebays, will they infringed the patents as well?"

Again, if the auctions are identical to eBay's (or are otherwise infringing), and U.S. citizens are using the sites, then, in principle, an infringement case could be brought against the companies. However, the problem is, even if a judgment is awarded against, say, a China-based company, how do you enforce it? The Chinese courts are not going to enforce a U.S. judgment, and you can't take the U.S. patent into Chinese court, so you are stuck. Again, unless the foreign company has assets within the U.S. (that the U.S. has jurisdiction over), the U.S. judgment will do you little good.

Companies that expect to have to assert patents in other countries or against foreign-based corporations will also seek to obtain patents in these other countires through the Patent Cooperation Treaty (PCT).

 

[ibolui82]

hi, thanks for the reply! i really appreciated it. however i still have some doubts that need help.


A U.S. patent holder can assert the patent against foreign companies who import an infringing item into the U.S. and prevent them from importing (and maybe even enforce a judgment if they have assets here in the U.S.), but the patent holder cannot assert a U.S. patent in a foreign country.

i dont quite understand what is meant by this. i suppose that the case is when the 'objects' are in tangible form, like a chair. let's say in the US there is a patent for the chair. then foreign companies who bring the chairs to sell in the US will be infringing the patent. but if the companies do not sell the chairs in the US but in their local countries, they are not considered infringing the patents. am i right to say this?


Again, if the auctions are identical to eBay's (or are otherwise infringing), and U.S. citizens are using the sites, then, in principle, an infringement case could be brought against the companies. However, the problem is, even if a judgment is awarded against, say, a China-based company, how do you enforce it? The Chinese courts are not going to enforce a U.S. judgment, and you can't take the U.S. patent into Chinese court, so you are stuck. Again, unless the foreign company has assets within the U.S. (that the U.S. has jurisdiction over), the U.S. judgment will do you little good.

this apply to the patents of intangible goods like the service of auction? so does it means that the patents owner CANNOT sue the auction websites in other countries or the owner can sue them but he may not win the case? if yes, is this the reason why there are many auction websites in other countries that are very very similiar to ebay but they are not being sued?


Companies that expect to have to assert patents in other countries or against foreign-based corporations will also seek to obtain patents in these other countires through the Patent Cooperation Treaty (PCT).

emm...what do you mean by this? can you explain in simpler terms?


thanks in advance,

 

[divgradcurl]

"i suppose that the case is when the 'objects' are in tangible form, like a chair. let's say in the US there is a patent for the chair. then foreign companies who bring the chairs to sell in the US will be infringing the patent. but if the companies do not sell the chairs in the US but in their local countries, they are not considered infringing the patents. am i right to say this?"

Correct.

"this apply to the patents of intangible goods like the service of auction? so does it means that the patents owner CANNOT sue the auction websites in other countries or the owner can sue them but he may not win the case?"

They can sue them IN THE U.S. if an infringing activity is taking place in the U.S. They cannot go to another country and enforce a U.S. patent.

"if yes, is this the reason why there are many auction websites in other countries that are very very similiar to ebay but they are not being sued?"

Possibly. If the company holds patents in other countries, however, then they may get sued eventually.

"emm...what do you mean by this? can you explain in simpler terms?"

The Patent Cooperation Treaty essentially allows an inventor to file for a patent simultaneously in any number of countries that are signatories to the PCT. There is no "world patent," though -- each country decides whether or not to issue a patent, and each patent is only good in the country in which it is granted. Companies who need protection in the U.S. only can get away with just a U.S. patent, but companies that wicsh to protect their rights in other countries must obtain patents in each country in which they desire protection.

Patent law is complicated enough in the U.S., but internationally, it is even more complicated, as each country has its own set of patent laws, and has its own set of enforcement mechanisms. One problem with the eBay patent here is that the patent, if I remember correctly, was actually a type of patent known as a "business method" patent -- while business methods are patentable in the U.S., they are not patentable in most countries (I don't think any EU countries, for example, recognize business method patents), so this may be another reason for not asserting such a patent against a foreign company.

 

[ibolui82]

hey thanks i am getting a better picture of it now. just one more thing...


"""this apply to the patents of intangible goods like the service of auction? so does it means that the patents owner CANNOT sue the auction websites in other countries or the owner can sue them but he may not win the case?

They can sue them IN THE U.S. if an infringing activity is taking place in the U.S. They cannot go to another country and enforce a U.S. patent."""


i think i still need some clarification in this part. let's say auction websites very very similiar to ebay are being setup in other countries. but these websites's scope of market is international. that means they also offer services in the US. does this means these websites are infringing the patents and can be sued?

in another example where these websites' scope of market is not international. that means their market is in their local countries. however as they become more popular, users from around the world, including the US also begin to use these websites. now, do these websites infringe the patents and can be sued?

 

[divgradcurl]

"but these websites's scope of market is international. that means they also offer services in the US. does this means these websites are infringing the patents and can be sued?"

In principle yes, but, as I noted before, unless there are some assets in the U.S., a judgment is essentially unenforceable, so its hard to say whether a patent owner would bother with a lawsuit or not.

One thing -- if a patent owner did decide to sue an overseas infringer in the U.S. for infringement, and the infringer failed to show up in the U.S. for the suit, the patent owner could potentially win a default judgment against the infringer. Of course, there would be no way to enforce the default judgment -- but default judgments can be kept alive essentially indefinitely, so if the infringer EVER came to U.S. or otherwise obtained U.S. assets, he could be liable to pay up the judgment -- even if the original patent is long since expired.

If you are planning on building a potentially-infringing eBay-type auction system, make sure that the company doesn't have a patent in your country first...