The Supreme Court of the United States of America has unanimously rejected an application by MercExchange seeking a permanent injunction against eBay to restrain its conduct of online auction services allegedly in contravention of MercExchange’s patents. The case concerned the following facts:

At issue are two patents filed for in 1995 by MercExchange, which began life as an online auction site similar to eBay. One of its patents covers the concept of an online auction; the other is for what they called a direct-buy patent, which works almost identically to eBay’s familiar Buy It Now feature.

A few months after MercExchange filed its two patent applications, eBay began operations and grew to dominate the online auction scene. … eBay subsequently entered into negotiations with the company to license the patents. In 2001, negotiations broke down and MercExchange subsequently sued the online auction giant for patent infringement.

Since then, eBay has found itself on the losing end of most of the court activity related to the case. … [The Court of Appeals] upheld the lower court’s finding [that the patents were infringed] and issued an injunction against eBay’s use of the Buy It Now feature, which it then stayed pending the inevitable appeal to the Supreme Court.

Similar threats last month forced the hand of Research in Motion, manufacturer of the popular BlackBerry email device, which settled with the patentee for the princely sum of US$612.5m to avoid just such an injunction — which would have spelt chaos for its customers and business. The unavailability of an injunction to support a prima facie case of infringement will come as a sigh of relief to eBay — at least for the time being — and may significantly alter the way disputes of this nature are negotiated in the future.