eBay Gets Its Day in Court

High-tech companies have long complained that the often Byzantine patent process unfairly rewards companies known as "patent trolls" that have no intention of manufacturing products. Earlier this year, Research In Motion(RIMM) agreed to pay patent-holding company NTP $612 million to settle their dispute, which threatened to shut down its BlackBerry service.

"The federal circuit has made patents more potent, easier to get and assert, and available for an unlimited range of subject matters," the Computer & Communications Industry Association wrote in a friend of the court brief. "In addition, the PTO's (Patent & Trademark Office) own bureaucratic incentives have led it to grant patents in increasing number, and arguably decreasing quality."

For the pharmaceutical industry, which spent $39.4 billion last year on discovering and developing new medicines, the stakes are much higher, according to the Pharmaceutical Research and Manufacturers of America (PhRMA), whose members include Bristol-Myers Squibb (BMY) and Amgen (AMGN). The group argues that the courts need to protect the rights of patent holders.

"Limiting the availability of an injunction after a judge or jury have found a patent to be valid and infringed would severely undermine the patent system and drive up the cost of innovation," PhRMA says in its friend of the court brief.

General Electric (GE), DuPont (DD), 3M (MMM), Johnson & Johnson (JNJ) and Procter & Gamble(PG) also urged the Court to rule in favor of MercExchange. The Bush administration and the American Bar Association also are backing MercExchange.

eBay's supporters include Yahoo! (YHOO), Microsoft (MSFT), Time Warner(TWX), Intel(INTC) and Oracle(ORCL).

Shares of eBay rose 8 cents to $37.38 in trading Monday. They have dropped 13% this year.

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