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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...
...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...
...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...
Whatever the eBay verdict, the patent office looks overwhelmed. It received a stunning 409,532 applications in its 2005 fiscal year, up from around 126,000 in 1985. Examiners average just 19.7 hours per application. None of this is news to Jon Dudas, director of the office, who admits that his staff can't keep up. "It's not that we're taking longer," he says, "but the line just gets longer out the door." In January Dudas announced steps to streamline the process and hire more examiners...
That helps the bureaucracy, but it won't end the patent arms race. "Companies know that it's easier to get patents and that patent protection is more powerful than it was in the past," says Harvard Business School professor Josh Lerner. Microsoft alone filed 3,000 patents in 2004. Which is fine, say experts like Lerner. The problem is that companies also file patents defensively, to stymie competition. "There are large firms that used to be big innovators, but no more," he says. Those large firms, he says, aren't much different from small-time trolls...