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. Last Updated: 07/27/2016

Microsoft, Intel Battle Pfizer Over EBay Case

WASHINGTON -- The legal principle that almost scuttled the BlackBerry e-mail service is at the heart of a U.S. Supreme Court patent battle involving eBay, pitting technology companies against drugmakers, with billions of dollars at stake.

The dispute revolves around whether patent holders are entitled to an almost-automatic court order to stop infringers from using their inventions. EBay, the world's largest Internet auctioneer, is appealing such an order that would force it to shut down a sales option accounting for one-third of the $12 billion in goods sold on its site last year.

Microsoft and Intel are among companies supporting eBay. They say they are under siege from small patent owners who use the threat of those orders to seek high licensing fees. Arrayed against them are drugmakers including Pfizer and Johnson & Johnson, which counter that any lessening of that threat would reduce the value of their inventions.

The case, which is being argued before the justices on Wednesday, "potentially impacts every single company in the United States," says Brian Ferguson, a patent lawyer at McDermott, Will & Emery in Washington, who has clients on both sides of the debate. "Intellectual property is becoming the most valuable asset for a company."

The case centers on whether judges should have more authority to make patent owners accept money as an alternative to an order to shut down or change a product, especially when the patent owner does not use the invention itself.

In the eBay case, a jury found that the company's "Buy It Now" service, which lets customers buy products at a set price instead of bidding in an auction, infringed on a software patent owned by MercExchange. A trial judge rejected a bid by MercExchange, based in Great Falls, Virginia, to force eBay to stop using the software.

The case "could have some meaningful impact" on eBay if it has to pay a large amount of money or change the way it does business, says Safa Rashtchy, a Piper Jaffray analyst in Palo Alto, California. "It hasn't been a major overhang for the stock yet, but we'll be watching the outcome."