Patently Absurd

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RIM may have trumped eBay in terms of high-level access: it appears to have met with the patent office's general counsel, James Toupin, and another senior official, John Whealan. According to a document obtained through a Freedom of Information Act request and provided to TIME, RIM chairman and co-CEO Jim Balsillie was scheduled to meet with patent-office officials on Jan. 4, 2005, along with representatives from the U.S. Department of Commerce (such meetings are highly unusual). In February a Canadian government official contacted a patent-office lawyer to find out if the Canadian Patent Office should "exert an interest or pressure" on its American counterpart. That November Canada's Minister of Industry, David Emerson, wrote to U.S. Secretary of Commerce Carlos Gutierrez, urging that the patent office expedite the review of NTP's patents or at least lay out a timetable in public. "We knew nothing about these contacts and weren't given a chance to respond," says Kevin Anderson, a lawyer for NTP.

No wonder a MercExchange lawyer fumed in early March when the Buy It Now patent was reassigned to a new examiner after staff in the technology center had spent 21/2 years dealing with it. The new examiner rejected MercExchange's application after only a few days, although the shift may reflect the new way the patent office handles re-examinations in cases more than two years old, with an emphasis on speed.

Arcane as it may seem, the eBay case deals with the balance of power between patent holders and users, and corporate America is keenly interested in the verdict. Silicon Valley types from Yahoo! to Intel have lined up behind eBay, while more traditional companies such as General Electric (inventor Thomas Edison's outfit) and Procter & Gamble support MercExchange, along with the entire drug industry, whose business model hinges on patent protection.

At issue is whether judges should automatically issue injunctions against infringers, as they do now in most cases. eBay wants judges to have more discretion, which could weaken patent holders' bargaining power. "The only thing that will bring a major company to the table is that in the end they have to [negotiate]," says Nathan Myhrvold, former chief technology officer for Microsoft, who runs a patent-acquisition shop and knows a bit about how big companies wield power.

On the other side are those who argue that small-time patent holders with dodgy claims and no actual businesses are using the legal system to extract payments from firms with established operations and products--lurking like fairy-tale trolls under bridges, popping out to collect a toll. "The trolls are turning patents into lottery tickets instead of rewards for late nights in the lab," says Rob Merges, a Berkeley law professor backing eBay. Merges says semiconductors and software may be covered by hundreds of patents, each with distinct claims, yet it may take only one case of infringement for a judge to issue an injunction, compelling many companies to pay the trolls to go away. U.S. House Republican Lamar Smith, co-sponsor of a reform bill, wants to slow the litigation gravy train. "We need a judicial system that does not reward people who file shaky claims on patents," he says.