The Supreme Court vacated a U.S. Appeals Court decision that favored MercExchange's request for an injunction against eBay's Buy It Now feature and has sent the case back to the District Court. The case arose out of a patent lawsuit against eBay in which a jury found eBay to be infringing MercExchange patents.

While eBay and MercExchange both expressed satisfaction with the ruling in press releases on Monday, it's not a clear victory for either side.

It's been almost 3 years since the District Court denied MercExchange's request for an injunction. In that time, the Appeals Court and the Supreme Court both found fault with the District Court's reasoning in making the injunction ruling. And the United States government, which weighed in with an amicus brief in the matter, said the District Court had "improperly relied on inappropriate considerations, which amounted to an abuse of discretion," in making its injunction ruling.

The Supreme Court said the decision whether to grant or deny injunctive relief rests within the equitable discretion of the district courts, and that such discretion must be exercised consistent with traditional principles of equity. In remanding the case, it said "In doing so, we take no position on whether permanent injunctive relief should or should not issue in this particular case, or indeed in any number of other disputes arising under the Patent Act."

Along with the issue of injunction, the District Court in Norfolk, Virginia, must decide whether eBay continues to infringe on MercExchange patents.

Related Story
"Supreme Court: No Injunction in eBay Case, Back to District Court," 5/15/06 http://auctionbytes.com/cab/abn/y06/m05/i15/s00

New York Times does a good analysis of the issues, free registration is required: http://www.nytimes.com/2006/05/16/technology/16bizcourt.htm