Tech group applies lobbying techniques to court case

A group of high-tech companies, wanting to influence a Supreme Court patent case, began obliquely, first trying to win support from the other two branches of government.

The American Innovators’ Alliance, which includes Microsoft, Micron, Intel and Oracle, didn’t have a direct stake in the case, eBay v. MercExchange. But how the court decided could affect similar patent-infringement cases brought against Alliance members.

Believing courts take special consideration of the government’s position, the Alliance set about persuading government agencies to weigh in on its side, which shows that while the Supreme Court is not lobbied in the sense that the legislative and executive branches are, some firms do work indirectly to influence its decisions beyond filing their own briefs to the court.

The “government is not a monied interest” in a case, and therefore its position is often viewed by the court as more objective, said Makan Delrahim, who put together the Alliance as a lawyer-lobbyist at Brownstein Hyatt Farber. Previously, Delrahim was a chief counsel and staff director to the Senate Judiciary Committee under then-Chairman Orrin Hatch (R-Utah) and was later deputy assistant attorney general for the antitrust division.

In eBay v. MercExchange, the justices were reviewing whether the U.S. Court of Appeals for the Federal Circuit was correct in ruling that an injunction must automatically be issued in cases in which a patent has been infringed.

The high-tech group maintained that the circuit court’s decision left the door open to “patent trolls.” The phrase is a derogatory term used to describe companies or patent holders that have no interest in developing the technology but try to shake down larger companies for royalty or license fees for use of similar technologies under threat of a patent infringement suit.

Delrahim said that while he was at the Justice Department there was an informal group of lawyers who scoured cases that held implications for public policy. Government lawyers, in speeches before the American Bar Association and other groups, often encouraged lawyers to let them know about such cases, Delrahim said.

With Congress unable to pass patent-reform legislation that would address some of the same issues prevalent in the eBay case, Alliance members said, eBay v. MercExchange represented just such a public-policy case.

A jury had determined that eBay infringed on two patents held by MercExchange in the use of the online auction company’s “Buy It Now” feature.

What the Alliance objected to was the circuit court’s decision that injunctions are automatically applied where patents have been infringed. The group said that the court should have applied a four-part test that includes finding that the plaintiff has suffered irreparable injury.

“This case has profound implications for technological innovation in the United States,” the amicus brief to the court stated.

Lawyers from Gibson, Dunn & Crutcher, including former Solicitor General Theodore Olson, and Delrahim wrote the brief.

The Alliance, using similar arguments later made in the court brief, first appealed to lawmakers to encourage the government to object to the automatic-injunction ruling.

Delrahim said he also appealed to the solicitor general’s office in the Justice Department, the Federal Trade Commission, the Civil Division of the Justice Department, the White House counsel’s office and the Patent and Trademark Office.

He drew a distinction between this effort and traditional lobbying, which he said relies more on relationships. The Alliance was making legal appeals to the government.

The government eventually did weigh in, arguing that the federal circuit correctly ruled that an injunction against eBay be issued. But the government also argued that the four-part test should have been used, which was the main point the Alliance made in its brief.

The Supreme Court unanimously agreed that the circuit court erred in ruling for automatic injunctions, even though Chief Justice John Roberts and Justices Antonin Scalia and Ruth Bader Ginsburg also noted that “at least since the early 19th century, courts have granted injunctive relief upon a finding of infringement in the vast majority of patent cases.”

In a line more favored by Alliance members, Justices Anthony Kennedy, John Paul Stevens, David Souter and Stephen Breyer noted, however, that, “an industry has developed in which firms use patents not as a basis for producing and selling goods but, instead, primarily for obtaining licensing fees.”