The Software Patent Mess

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Lichtman and his fellow legal scholars see a similar unfair threat of injunction in the eBay case. "EBay is a vibrant electronic marketplace with millions of users," they argue in their brief. "MercExchange can likely obtain a larger royalty from eBay by settlement if it can threaten to shut down eBay altogether. But in doing so it will not be capturing value associated with its invention, but value that eBay has actually contributed to the world."

Rooklidge, an attorney who has worked on both the plaintiff and defense sides of patent cases, however, sees the bias toward plaintiffs in most patent cases as a simple reflection of the U.S. legal system's bias toward all private-property owners. Once a violation has been shown in court, it takes a sea change to compel any judge to allow the violation to continue.

"You start out with a thumb on the scale once a patentee proves his patent is valid and has been infringed," Rooklidge says.

That bias creates an inevitable tension, argues Jason Schultz, a staff attorney and patent specialist with the Electronic Frontier Foundation (EFF), considering that the Internet, as both a business and technology platform, historically has rewarded innovations in which the creator traded exclusive control for huge user-adoption rates. At the O'Reilly Emerging Technology Conference earlier this month, Schultz warned attendees to be prepared for the inevitable wave of lawsuits now that "mashup" applications -- Web services built from third-party components and powered by merged coding standards such as AJAX (Asynchronous JavaScript and XML) -- have taken off in the Internet marketplace.

"If you look at the name AJAX, it's just a new exciting name for very a long list of prior actions," Schultz told the audience. "Now that companies are using it successfully and receiving a lot of investment capital because of that success, the potential is there for a whole suite of patents covering the AJAX approach."

One reason so many eyes are focused on the Supreme Court, says Schultz, is that the Patent Reform Act of 2005 -- the latest Congressional attempt to modernize the patent system -- is still lodged in the House intellectual property subcommittee. Authored by Rep. Lamar Smith (R-TX), the bill seeks to cap damages, force the publication of patents, and establish a post-grant opposition system. It also seeks to "remove the legal gamesmanship" in patent law, by making it harder for plaintiffs to shop their cases between various judges and jurisdictions.

But the bill hasn't garnered consensus support from the pharmaceutical industry, which generally supports strong penalties, and the IT industry, which is learning to love softer penalties, as well as many other industries with a stake in U.S. patent law.

"We are looking at a number of options," writes Congressman Smith (who declined to discuss the eBay case, but answered questions related to his patent bill). "But ultimately we would prefer a uniform policy that does not offer special treatment to any one industry."

That puts the Supreme Court at center stage for now. If the court agrees with eBay that public interest should play a bigger role in setting post-verdict injunctions, that decision might put a chill on the current land rush in patent litigation, says the EFF's Schultz. If the Supreme Court doesn't agree with eBay, he says, the industry's best hope will be another high-profile case like NTP v. RIM, which would annoy Internet users, and might just ignite Congressional concern for the economic well-being of the high-tech industry's largest employers.

"I think it will take three or four more years of this kind of lawsuit 'hell' before we see a full-scale [patent law] revision," Schultz says.